EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0821697
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.
Taito Membrane Corporation applied for a TCO in respect of certain polyester fabric on 21 July 2008.
Instrument
TCO No 0821697 was made on 10 October 2008. It declares that those certain polyester 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 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. 0821697 is taken to have come into force on 21 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. 0821697, enacted in 2008, serves to amend the Customs Act 1901 by introducing a concession in the customs duty rates for specific goods. This instrument was introduced to address the issue of granting lower customs duty rates for certain goods that are not produced domestically, thereby supporting Australian importers by reducing their costs and enhancing their competitiveness. Enacted by the Australian Government, the policy objective of this instrument is to provide tariff relief for imported goods that have no domestic equivalent, thus encouraging the import of goods and stimulating economic activity.
The Tariff Concession Order (TCO) was applied for by Taito Membrane Corporation for certain polyester fabrics, and after the Chief Executive Officer of Customs was satisfied that no substitutable goods were produced in Australia, a TCO was issued, setting the duty rate for these fabrics to zero. This initiative ensures that importers of these specific fabrics will benefit from the reduced customs duty rates, effective from the date the application was lodged, without imposing any liabilities or disadvantaging any parties. The issuance of this TCO aligns with the broader aim of the Customs Act 1901 to regulate and facilitate international trade effectively.
Scope and Application
The Customs Act 1901, as supplemented by Tariff Concession Order No. 0821697, applies to the importation of certain polyester fabrics, providing a concession on the rate of customs duty for these goods. Specifically, the Act authorises the Chief Executive Officer of Customs to issue a Tariff Concession Order, which grants a lower rate of customs duty to goods that meet specific criteria, in this case, those for which no substitutable goods are produced in Australia in the ordinary course of business. The application for a Tariff Concession Order was made by Taito Membrane Corporation, and upon the CEO's satisfaction that no substitutable goods were being produced domestically, the CEO issued the order, effective from 21 July 2008. This order reduces the general duty rate from 5% to free for the specified goods, benefiting importers who can now apply for a refund of duty for goods imported since the effective date. The order does not retroactively disadvantage any person or impose new liabilities, only providing prospective benefits to importers.
The legislation operates on a national level within Australia, overseen by the Commonwealth. There are no exclusions or exemptions specified for this particular order, though the Customs Act generally excludes certain goods from being subject to a Tariff Concession Order as per section 269SJ. The scope of the Act is further extended through subordinate instruments such as the Customs Tariff Act 1995, which specifies the duty rates and items in the Customs Tariff. The Tariff Concession Order is a tool within the Customs Act to provide tariff relief on specific goods, subject to the core criteria being met, and is an example of how the Act can be applied to facilitate trade by reducing the cost of imported goods.
Key Provisions
The Customs Act 1901, under Part XVA, governs the creation and operation of Tariff Concession Orders (TCOs), which allow for lower customs duty rates on specific goods. Section 269F allows any person to apply to the Chief Executive Officer (CEO) of Customs for a TCO if the goods in question are not specified in section 269SJ, which lists goods ineligible for TCOs. If the application is valid, the CEO must determine if it meets the core criteria under section 269C, which requires that no substitutable goods were produced in Australia at the time of application. This definition of "substitutable goods" is further clarified in sections 269D and 269E. If the CEO is satisfied that the application meets the core criteria, they must make a TCO under section 269P(3), specifying the applicable tariff item from Schedule 4 of the Customs Tariff Act 1995.
Under the Act, the CEO has specific obligations when handling TCO applications. Once a TCO application is accepted, the CEO must publish a notice in the Gazette under subsection 269K(1), inviting any interested parties to submit objections to the TCO. However, in the case of TCO No. 0821697, no submissions were received. The TCO comes into effect on the day the application was lodged, as per subsection 269S(1). Importantly, the TCO does not retroactively affect any rights or impose liabilities on anyone except the Commonwealth, thus protecting the rights of importers and allowing them to apply for duty refunds from the effective date of the TCO.
The Act also outlines the consequences of non-compliance with its provisions. While the specific offences and penalties for breaches of the Customs Act are not detailed in the Explanatory Statement, it is understood that breaches of customs laws can lead to significant penalties. Generally, under the Customs Act, penalties for breaches can include substantial fines and, in some cases, imprisonment. The exact penalties depend on the nature and severity of the breach, and they are determined by the courts. It is crucial for all parties involved in the importation and exportation of goods to adhere strictly to the provisions of the Act to avoid these potential penalties.