EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0812004
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 0812004 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. 0812004 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 Customs Act 1901, enacted by the Australian Parliament, provides a framework for the administration of customs and excise, including the imposition of tariffs on imported goods. To address specific economic needs and facilitate trade, the Act allows for Tariff Concession Orders (TCOs) that can reduce or eliminate customs duties on certain goods. This mechanism was introduced to ensure that Australia can effectively manage its trade policies and respond to industry needs by offering concessions that support economic growth and competitiveness. In line with this, TCO No. 0812004 was introduced on 22 August 2008, in response to an application by Freudenberg Pty Ltd for tariff concessions on certain hydro entangled non woven fabric, effective from 10 June 2008. The order was made under the authority granted by section 269F of the Act, ensuring that no substitutable goods were being produced in Australia at the time of application, thereby meeting the core criteria set out in section 269C. This concession aims to benefit importers by potentially reducing their duty liabilities and encouraging the import of these specific goods.
Scope and Application
The Customs Act 1901, through Part XVA, provides a framework for the Chief Executive Officer of Customs to issue Tariff Concession Orders (TCOs) which apply a lower rate of customs duty to specified goods. Any person may apply to the CEO for a TCO concerning goods, provided the goods are not explicitly excluded under section 269SJ of the Act. The CEO's decision to grant a TCO hinges on whether the goods do not have substitutable equivalents produced in Australia, as per section 269C. This legislative provision ensures that if no such domestically produced substitutes exist, a TCO can be issued, thereby granting tariff concessions to the applicant. In the case of Freudenberg Pty Ltd, a TCO was granted for certain hydro entangled non-woven fabrics, resulting in a reduction of the duty rate from 5% to free. The process mandates public notice and consultation, although no objections were received in this instance. The TCO's effective date aligns with the application date, ensuring no retroactive disadvantages or liabilities are imposed on non-Commonwealth entities.
Key Provisions
The primary operative sections of the Customs Act 1901, particularly relevant to Tariff Concession Orders (TCOs), include sections 269C, 269F, 269K, 269P, 269S, and 269SJ (269C, 269F, 269K, 269P, 269S, 269SJ). Section 269F allows an applicant to request a TCO for goods, while section 269C sets out the core criteria that must be satisfied for the Chief Executive Officer (CEO) of Customs to approve the application. If the CEO determines that the application meets these criteria, they must issue a written TCO under section 269P(3). Section 269K mandates that the CEO must publish a notice in the Gazette inviting submissions regarding the proposed TCO. Section 269S specifies that a TCO comes into effect on the date the application is lodged. Lastly, section 269SJ lists goods that are ineligible for a TCO.
The Customs Act imposes several obligations on the CEO and applicants. The CEO is required to determine whether a TCO application meets the core criteria outlined in section 269C. This involves assessing whether the goods in question are substitutable by Australian-produced goods. The CEO must also publish a notice in the Gazette (269K) inviting submissions and consider any submissions received before making a decision. For applicants, the primary obligation is to ensure their application is valid and meets the criteria specified in section 269C. This includes demonstrating that no substitutable goods are produced in Australia.
Breach of the provisions under the Customs Act can lead to various consequences. While the explanatory statement does not explicitly mention offences or penalties, it is reasonable to infer that any failure to comply with the requirements for applying for or issuing a TCO could result in administrative actions. For instance, if an applicant submits a fraudulent application, they could face civil or criminal penalties for providing false information. The CEO may also face administrative scrutiny or legal action if they fail to follow the prescribed processes. However, the specific penalties are not detailed in the explanatory statement and would need to be examined within the broader context of the Customs Act and related regulations.