EXPLANATORY STATEMENT
Tariff Concession Instrument No.0501829
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.
Kodak Australasia Pty Ltd applied for a TCO in respect of certain photographic paper on 10 February 2005.
Instrument
TCO No 0501829 was made on 22 April 2005. It declares that those certain photographic papers 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 3%.
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. 0501829 is taken to have come into force on 10 February 2005.
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, established a framework for the administration of customs duties and the facilitation of trade. To address gaps in the tariff regime and promote trade efficiency, the Act introduced the mechanism for Tariff Concession Orders (TCOs) under Part XVA. This provision allows the Chief Executive Officer of Customs to grant tariff concessions on certain goods, effectively reducing customs duty rates for eligible imports. The policy objective of this mechanism is to support Australian industries by lowering the cost of imported goods that do not have local substitutes, thus encouraging competition and potentially reducing consumer prices. The Tariff Concession Instrument No. 0501829, issued in 2005, is an example of this process, where Kodak Australasia Pty Ltd successfully applied for a reduced tariff rate on specific photographic papers, illustrating the practical application of the TCO scheme.
Scope and Application
The Tariff Concession Instrument No. 0501829 under the Customs Act 1901 applies to the specific photographic papers for which Kodak Australasia Pty Ltd has applied for a Tariff Concession Order (TCO). The Act allows for the application of a lower rate of customs duty on goods specified in a TCO, provided that certain criteria are met. In this case, the Chief Executive Officer of Customs (CEO) determined that no substitutable goods were produced in Australia in the ordinary course of business, thereby satisfying the core criteria for the TCO. The TCO applies to the goods from the date the application was lodged, which is 10 February 2005. The geographic reach of this legislation is national, as it pertains to the Commonwealth of Australia and its customs regulations. The rights of importers are beneficially affected as they can apply for a refund of duty on goods imported since the effective date of the TCO, while the rights of other persons are not adversely affected by the imposition of new liabilities. The TCO does not extend to goods specified in section 269SJ of the Act, which are ineligible for tariff concessions.
Key Provisions
The main operative sections of this legislation pertain to Tariff Concession Orders (TCOs) under the Customs Act 1901 (section 269F). Section 269C stipulates that a TCO application meets the core criteria if no substitutable goods are produced in Australia on the day the application was lodged. Section 269P(3) mandates that if the Chief Executive Officer of Customs (CEO) is satisfied that the application meets these criteria, a written order must be made declaring that the goods in question are subject to a specified lower rate of customs duty. This is exemplified in TCO No. 0501829, which applies a 3% duty rate to certain photographic papers, down from the general 5% rate.
The obligations imposed by this Act on the parties it governs are primarily on the CEO of Customs. The CEO must ensure that applications for TCOs are processed in accordance with the core criteria outlined in section 269C. This includes verifying that no substitutable goods are produced in Australia on the date of application and making a written TCO if these criteria are met. Additionally, subsection 269K(1) requires the CEO to publish a notice in the Gazette inviting submissions from interested parties if a TCO application is accepted as valid. In this case, the CEO did not receive any submissions, indicating that no objections were raised against the TCO.
Failure to comply with the requirements of the Customs Act 1901 regarding TCOs could lead to civil or criminal consequences. While specific offences and penalties are not detailed in the Explanatory Statement, breaches of customs regulations generally carry significant penalties under Australian law. For instance, under section 220 of the Customs Act, penalties for customs fraud or evasion can include substantial fines and imprisonment. The precise penalties would depend on the nature and severity of the breach but could be severe given the potential for significant revenue loss if duties are improperly avoided.
In summary, the key provisions of this legislation facilitate the reduction of customs duties on certain goods through Tariff Concession Orders, provided specific criteria are met. The CEO of Customs has the primary responsibility of ensuring applications are processed correctly and must consider any submissions received. Non-compliance with the Act’s requirements can lead to significant legal consequences, including fines and imprisonment.