EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0815769
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.
Hennessy Corporation Pty Ltd applied for a TCO in respect of certain warp knit fabrics on 03 July 2008.
Instrument
TCO No 0815769 was made on 13 September 2008. It declares that those certain warp knit fabrics 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 10%. 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. 0815769 is taken to have come into force on 03 July 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. 0815769 was enacted in 2008 as an amendment to the Customs Act 1901, aiming to address the need for tariff concessions for specific goods. This instrument, made by the Chief Executive Officer of Customs, provides for lower customs duty rates for certain warp knit fabrics, which were the subject of an application by Hennessy Corporation Pty Ltd. The core objective of this legislation is to facilitate the import of goods that are not substitutable by Australian-produced products, thereby promoting economic efficiency and competitiveness. The instrument was introduced following a formal application process and after no objections were raised during the public consultation period. It effectively reduces the duty rate on the specified fabrics from 10% to free, enhancing the rights of importers to claim duty refunds on goods imported since the instrument's commencement date.
Scope and Application
The Tariff Concession Instrument No. 0815769, made under the Customs Act 1901, applies to specific goods, in this case, certain warp knit fabrics, which are now subject to a lower rate of customs duty due to a Tariff Concession Order (TCO) issued by the Chief Executive Officer of Customs. The legislation enables individuals or entities to apply for tariff concessions if certain criteria are met, specifically when no substitutable goods are produced in Australia. The TCO applies to the Commonwealth and affects the rights of importers by allowing them to seek refunds of duty paid on these goods since the date the TCO was lodged. The Act applies on a national level and operates in accordance with the definitions and criteria outlined in the Customs Act 1901 and the Customs Tariff Act 1995. The scope of the TCO does not extend to imposing any new liabilities on persons other than the Commonwealth, nor does it retroactively disadvantage any individual or entity. The TCO’s commencement date aligns with the date the application was lodged, ensuring timely benefits for importers while maintaining the integrity of pre-existing rights and obligations.
Key Provisions
The Tariff Concession Instrument No. 0815769, made under the Customs Act 1901 (section 269F), provides for tariff concessions on certain warp knit fabrics. The instrument declares that these fabrics are goods to which item 50 of Schedule 4 to the Customs Tariff Act 1995 applies, effectively granting them a duty-free status. The CEO of Customs must be satisfied that no substitutable goods were produced in Australia on the day the application was lodged for a tariff concession order (TCO) to be made (section 269C). The CEO also needs to ensure that the application is not in respect of goods specified in section 269SJ of the Act. If these conditions are met, the CEO must make a written order declaring the goods subject to a prescribed item of the Customs Tariff (section 269P(3)).
Entities and individuals subject to the Act must comply with the conditions set out for making a TCO application. Specifically, they must ensure that no substitutable goods were produced in Australia on the day the application is lodged. The CEO must also be satisfied that the goods are not specified in section 269SJ of the Act, which lists goods that cannot be subject to a TCO. Additionally, entities must adhere to the process of applying for a TCO as outlined in section 269F of the Act. Upon acceptance of a valid application, the CEO must publish a notice in the Gazette inviting submissions from any person who believes the TCO should not be made (subsection 269K(1)).
Failure to comply with the requirements of the Customs Act 1901 or the terms of the TCO may result in civil or criminal penalties. While specific penalties are not detailed in the explanatory statement, breaches of the Customs Act can generally lead to fines and, in severe cases, imprisonment. The exact penalties depend on the nature and severity of the breach. Importers should be aware that they can apply for a refund of duty on goods imported since the day the TCO is taken to have come into force, under paragraph 126(1)(r) of the Regulations. However, the TCO does not impose any liabilities on any person.