EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0812469
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.
Hillmark Industries applied for a TCO in respect of certain microfibre cleaning cloths on 12 June 2008.
Instrument
TCO No 0812469 was made on 22 August 2008. It declares that those certain microfibre cleaning cloths 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 7.5%. 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. 0812469 is taken to have come into force on 12 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. 0812469 was introduced under the Customs Act 1901 to address the need for tariff concessions on specific imported goods that do not have Australian-made equivalents. Enacted by the Chief Executive Officer of Customs, this instrument aims to facilitate the importation of certain microfibre cleaning cloths by applying a zero rate of customs duty, thereby providing economic benefits to importers and potentially to consumers. The instrument was made following an application by Hillmark Industries, which was accepted by the CEO after a review to ensure the application met the core criteria outlined in the Act. Notably, no submissions were received from the public opposing the tariff concession, indicating broad acceptance of the measure. The instrument came into force on the date of the application, 12 June 2008, and ensures that it does not adversely affect any rights or impose liabilities on persons other than the Commonwealth.
Scope and Application
The Tariff Concession Instrument No. 0812469, made under the Customs Act 1901, applies to the specific microfibre cleaning cloths for which Hillmark Industries submitted an application. This instrument is applicable to entities involved in the importation of these goods, effectively reducing their customs duty from 7.5% to free under certain conditions. The Act, which is of Commonwealth jurisdiction, allows the Chief Executive Officer of Customs to grant tariff concessions if specific criteria are met, primarily focusing on whether substitutable goods are produced in Australia. The application of this concession does not disadvantage any person other than the Commonwealth and does not impose new liabilities. The concession comes into effect on the date the application was lodged, which was 12 June 2008, and allows importers to apply for a refund of duty on goods imported since that date.
Key Provisions
The Customs Act 1901, through Part XVA, provides a framework for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO) (section 269F). These orders can lower the rate of customs duty on specific goods. To qualify, the goods must not be specified in section 269SJ of the Act, which lists items that cannot be subject to a TCO. If the CEO determines that an application meets the core criteria, they must issue a written TCO. This involves confirming that, on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business (section 269C). Definitions for terms such as "goods produced in Australia," "ordinary course of business," and "substitutable goods" are provided in sections 269D, 269E, and 269P(3) of the Act respectively.
The CEO has obligations under the Act to process TCO applications in a timely and methodical manner. When a valid application is received, the CEO must publish a notice in the Gazette, inviting any interested parties to submit reasons why the TCO should not be made (subsection 269K(1)). This notice was published following Hillmark Industries’ application for a TCO on certain microfibre cleaning cloths on 12 June 2008, though no submissions were received. If the CEO is satisfied that the application meets the core criteria, they must make a TCO that specifies the prescribed item of Schedule 4 to the Customs Tariff Act 1995 (section 269P(3)). In this instance, TCO No. 0812469 was made on 22 August 2008, declaring that the microfibre cleaning cloths are subject to the provisions of item 50 of Schedule 4, resulting in a duty-free rate for these goods.
Breaches of the Customs Act 1901 or its regulations can lead to various penalties. These may include fines and imprisonment, depending on the severity of the offence. For instance, knowingly making a false statement in a customs document can attract a penalty of up to 10,000 penalty units or imprisonment for five years, or both (subsection 254D(1) of the Act). Similarly, fraudulent attempts to evade duty can result in fines of up to 22,200 penalty units or imprisonment for ten years, or both (subsection 254E(1) of the Act). The Act ensures that the imposition of penalties is aligned with the intent to uphold the integrity of the customs duty system and protect the economic interests of the Commonwealth.