EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0812003
Customs Act 1901
Background
Part XVA of the Customs Act 1901 (the Act) sets out a scheme under which Tariff Concession Orders (TCOs) may be made by the Chief Executive Officer of Customs (the CEO). A lower rate of customs duty applies to goods that are the subject of a TCO.
Under section 269F of the Act, a person may apply to the CEO for a TCO in respect of goods. If the CEO is satisfied that the application is not in respect of goods specified in section 269SJ of the Act, which sets out those goods that cannot be subject to a TCO, the CEO must decide whether the application meets the core criteria.
Section 269C of the Act provides that a TCO application meets the core criteria if, on the day on which the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business. Section 269B of the Act provides that ‘goods produced in Australia’ has the meaning given by section 269D, ‘ordinary course of business’ has the meaning given by section 269E and ‘substitutable goods’ in respect of goods the subject of a TCO application, means goods produced in Australia that are put, or are capable of being put, to a use that corresponds with a use (including a design use) to which the goods the subject of the application can be put.
Subsection 269P(3) of the Act provides that if the CEO is satisfied that a TCO application meets the core criteria, the CEO must make a written order (a TCO) declaring that the goods the subject of the TCO application are goods to which a prescribed item of Schedule 4 to the Customs Tariff Act 1995 (the Tariff) specified in the order applies.
Freudenberg Pty Ltd applied for a TCO in respect of certain hydro entangled non woven fabric on 10 June 2008.
Instrument
TCO No 0812003 was made on 22 August 2008. It declares that those certain hydro entangled non woven fabric are goods to which item 50 of Schedule 4 to the Tariff applies since the CEO was satisfied that no substitutable goods were produced in Australia. The general rate of duty on these goods is 5%. The rate of duty for the goods subject to the TCO is free.
Consultation
Subsection 269K(1) of the Act provides in part that as soon as practicable after accepting a TCO application as a valid application, the CEO must publish a notice in the Gazette which includes an invitation to any person who considers that there are reasons why the TCO should not be made to lodge a submission with the CEO. The CEO did not receive any submissions in response to this invitation.
Commencement
Subsection 269S(1) relevantly provides that a TCO is to be taken to have come into force on the day on which the application for the TCO was lodged. TCO No. 0812003 is taken to have come into force on 10 June 2008.
The TCO does not affect the rights of a person (other than the Commonwealth) as at the date of registration so as to disadvantage that person or impose liabilities on a person (other than the Commonwealth) in respect of anything done or omitted to be done before the date of registration. The rights of importers will be beneficially affected. Under paragraph 126(1)(r) of the Regulations, importers of such goods will be able to apply for a refund of duty on goods imported since the day on which the TCO is taken to have come into force. The TCO does not impose any liabilities on any person.
Overview
The Tariff Concession Instrument No. 0812003, enacted in 2008, is an instrument made under the Customs Act 1901 to provide a concession in the rate of customs duty on certain goods. This instrument was introduced to address the need for tariff concessions for specific goods where no substitutable products are produced in Australia. The instrument was made by the Chief Executive Officer of Customs (CEO) following an application by Freudenberg Pty Ltd for a Tariff Concession Order (TCO) concerning certain hydro entangled non woven fabric. The CEO was satisfied that no substitutable goods were produced in Australia in the ordinary course of business, thereby meeting the core criteria for a TCO. Consequently, the instrument declares that the specified goods are subject to a free rate of duty as opposed to the general rate of 5%. This change is effective from the date the TCO application was lodged, 10 June 2008. The instrument also ensures that the rights of importers are beneficially affected, allowing them to apply for a refund of duty on goods imported since the effective date.
Scope and Application
The Tariff Concession Instrument No. 0812003 under the Customs Act 1901 applies to specific goods that are subject to a Tariff Concession Order (TCO) made by the Chief Executive Officer of Customs. In this instance, the Act applies to certain hydro entangled non-woven fabrics as designated by Freudenberg Pty Ltd, aiming to provide a concession on the customs duty for these goods. The legislation operates on a national level, as it is an instrument under the Commonwealth’s Customs Act. The application for a TCO must meet the core criteria specified under the Act, particularly ensuring that no substitutable goods are produced in Australia at the time of application. The TCO, once made, applies a zero rate of duty on the specified goods, reducing the general rate of 5% that would otherwise apply. The Act mandates consultation by publishing a notice in the Gazette inviting submissions from interested parties, although in this case, no submissions were received. The TCO has retroactive effect from the date the application was lodged, meaning it takes effect from 10 June 2008, and it does not disadvantage any person by affecting rights or imposing liabilities for actions taken before its registration.
Key Provisions
Section 269F of the Customs Act 1901 allows for an application to be made to the Chief Executive Officer of Customs (the CEO) for a Tariff Concession Order (TCO) in respect of certain goods, such as the hydro entangled non woven fabric in this case. If the CEO is satisfied that the application is valid and does not involve goods specified in section 269SJ of the Act, the CEO must determine if the application meets the core criteria (section 269C). If so, the CEO is required to make a written order (section 269P(3)) specifying that the goods in question are subject to a particular item in Schedule 4 of the Customs Tariff Act 1995. For Freudenberg Pty Ltd's application, TCO No. 0812003 was issued, declaring that the specified hydro entangled non woven fabric is subject to item 50 of Schedule 4, with a reduced duty rate of free compared to the general rate of 5%.
The Act imposes several obligations on parties applying for a TCO and on the CEO in considering such applications. An applicant must ensure their application is valid and does not pertain to goods excluded by section 269SJ. The CEO, on the other hand, must promptly publish a notice in the Gazette (subsection 269K(1)) inviting submissions from interested parties if they believe the TCO should not be made. The CEO must also evaluate whether the application meets the core criteria, which includes confirming that no substitutable goods were produced in Australia at the time the application was lodged (section 269C). The CEO must then decide whether to make the TCO and publish it accordingly.
Under the Customs Act 1901, there are potential consequences for breaches related to Tariff Concession Orders. While the explanatory statement does not detail specific criminal penalties, it is worth noting that breaches of customs regulations can lead to serious civil and criminal penalties, including fines and imprisonment. For example, knowingly making a false statement in an application for a TCO could result in penalties as outlined in sections 256A and 256B of the Act. These sections typically provide for significant fines and/or imprisonment for offences related to fraudulent activities in customs matters. Additionally, failure to comply with the terms of a TCO could lead to further penalties, including the imposition of duties and interest on the goods involved.
The TCO No. 0812003, which came into effect on 10 June 2008, benefits importers of the specified hydro entangled non woven fabric by allowing them to apply for a refund of duty paid on goods imported since the date of the TCO's effective commencement (paragraph 126(1)(r) of the Regulations). Importantly, the TCO does not affect the rights of any person other than the Commonwealth and does not impose any liabilities on any person in respect of actions taken prior to the date of registration. This ensures that the rights of importers are positively impacted without disadvantaging any other party or imposing retroactive liabilities.