EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0413698
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.
Tetrapak Marketing PtyLtd applied for a TCO in respect of certain laminated paperboard packaging closures on 14 December 2004.
Instrument
TCO No 0413698 was made on 19 May 2005. It declares that those certain laminated paperboard packaging closures 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 0%.
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. One submission objecting to the TCO application was received from Brickwood Holdings Pty Ltd.
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. 0413698 is taken to have come into force on 14 December 2004.
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. 0413698 was enacted in 2005 as part of the Customs Act 1901, aiming to address the need for tariff concessions for specific goods that do not have substitutable alternatives produced within Australia. The Tariff Concession Orders (TCOs) scheme allows the Chief Executive Officer of Customs to apply reduced customs duty rates on eligible imported goods, provided they meet specific criteria and are not already being produced domestically. This legislative measure was introduced to facilitate trade by making certain goods more affordable for consumers and businesses, thereby encouraging importation and potentially fostering competition in the Australian market. The policy objective, as implied in the Act, is to support economic efficiency and consumer benefit by ensuring that imported goods are competitively priced relative to any domestic production.
The process for establishing a TCO involves an application to the CEO, public consultation, and the CEO's decision based on whether the goods in question have substitutable alternatives produced in Australia. In the case of Tetrapak Marketing Pty Ltd's application for laminated paperboard packaging closures, the CEO determined that no such domestic alternatives existed, leading to a concession that reduced the customs duty rate from 5% to 0%. The commencement of this particular TCO aligns with the date of the application, ensuring that importers can benefit retroactively from the reduced duty rate. The implementation of this instrument is designed to avoid any retroactive disadvantages to persons other than the Commonwealth, and it allows for potential duty refunds for importers of the specified goods.
Scope and Application
The Tariff Concession Instrument No. 0413698 under the Customs Act 1901 applies to specific goods for which a Tariff Concession Order (TCO) has been granted. The Act permits the Chief Executive Officer of Customs to issue a TCO, which reduces the customs duty rate for certain goods, provided that no substitutable goods are produced in Australia and the application meets the core criteria specified in the Act. This instrument was applied to certain laminated paperboard packaging closures, reducing their customs duty rate from 5% to 0%. The Act extends its jurisdiction nationally, as it is a Commonwealth legislation. The application for a TCO can be made by any person, and the process involves a public consultation period where objections can be lodged. The TCO No. 0413698 came into force on the date the application was lodged, 14 December 2004, and it does not affect any existing rights or impose any new liabilities on persons other than the Commonwealth.
Key Provisions
The primary sections of the Customs Act 1901 that pertain to Tariff Concession Orders (TCO) are sections 269C, 269B, 269D, 269E, 269F, 269P, and 269S. Section 269F enables an application to be made to the Chief Executive Officer (CEO) of Customs for a TCO. Section 269C stipulates that an application meets the core criteria if, on the day it was lodged, no substitutable goods were produced in Australia in the ordinary course of business (sections 269B and 269E). If the CEO is satisfied that the application meets these criteria, they must make a written TCO (section 269P(3)). Section 269S provides that a TCO is taken to have come into force on the day on which the application for the TCO was lodged. The TCO then applies to goods from that date, but does not affect the rights of a person as at the date of registration.
The Act imposes specific obligations on parties applying for a TCO. An applicant must ensure that their application complies with section 269F and that it does not pertain to goods specified in section 269SJ, which cannot be subject to a TCO. The CEO is required to publish a notice in the Gazette inviting submissions from any person who considers there are reasons why the TCO should not be made (subsection 269K(1)). The CEO must also consider all submissions received and make a decision based on the core criteria outlined in sections 269B and 269C.
Failure to comply with the requirements of the Act can result in various consequences. Although the explanatory statement does not specify particular offences, breaches of the Act could lead to administrative penalties under section 283 of the Customs Act 1901. The maximum penalties for breaches of the Customs Act can be significant, potentially including substantial fines and imprisonment. For example, under section 283, an individual may face a penalty of up to 10,000 penalty units or imprisonment for five years, or both, for serious breaches. It is important to note that the exact penalties depend on the nature and severity of the breach.