EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0601598
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.
ABC Paper Mills applied for a TCO in respect of certain Yankee dryers on 23 December 2005.
Instrument
TCO No 0601598 was made on 17 March 2006. It declares that those certain Yankee dryers 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. 0601598 is taken to have come into force on 23 December 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 Tariff Concession Instrument No. 0601598 was enacted in 2006 under the Customs Act 1901. This legislative instrument was introduced to address the need for tariff concessions on specific goods, ensuring that Australian industries can remain competitive by reducing customs duties on imported goods for which there are no local alternatives. The instrument was made by the Chief Executive Officer of Customs in accordance with the Act, following an application by ABC Paper Mills for tariff concessions on certain Yankee dryers. The instrument aims to provide tariff relief by reducing the duty rate from the general 5% to free, thereby facilitating the importation of these goods without financial burden. The Tariff Concession Order was made effective from the date of application, 23 December 2005, and no submissions were received opposing the order.
Scope and Application
The Customs Act 1901, through Part XVA, facilitates the issuance of Tariff Concession Orders (TCO) by the Chief Executive Officer of Customs (CEO) to reduce customs duty on specified goods. A person may apply for a TCO if the goods in question are not prohibited under section 269SJ and meet the core criteria outlined in section 269C, which requires that no substitutable goods are produced in Australia in the ordinary course of business. Once an application meets these criteria and the CEO is satisfied, a TCO is issued, as occurred with ABC Paper Mills’ application for certain Yankee dryers on 23 December 2005, which led to Instrument TCO No. 0601598 on 17 March 2006. This instrument declares that these Yankee dryers are subject to item 50 of Schedule 4 of the Customs Tariff Act 1995, resulting in a reduced duty rate from 5% to free. The application process involves publishing a notice in the Gazette to invite objections, although in this case, no submissions were received. The TCO's commencement date is considered to be the application date, thereby ensuring that the rights of importers are positively affected, allowing them to apply for duty refunds on goods imported since the TCO's effective date.
Key Provisions
The Customs Act 1901, specifically under Part XVA, establishes a framework for Tariff Concession Orders (TCOs) that can be issued by the Chief Executive Officer of Customs (CEO) (s 269F). An applicant can request a TCO for certain goods, provided they do not fall under the list of goods specified in section 269SJ of the Act that are ineligible for a TCO. The CEO must then assess whether the application meets the core criteria outlined in section 269C, which requires that no substitutable goods were produced in Australia on the day the application was lodged (s 269B, 269C, 269D, 269E).
The obligations under the Act require the CEO to publish a notice in the Gazette inviting submissions from any interested parties if a TCO application is accepted as valid (s 269K(1)). This notice serves as an opportunity for stakeholders to voice any objections or concerns regarding the proposed TCO. Once the application meets the core criteria and no objections are received, the CEO must issue a written TCO that specifies the goods and the corresponding item in Schedule 4 of the Customs Tariff Act 1995 that will apply to those goods (s 269P(3)).
Breaching the conditions of a TCO or failing to comply with the requirements set forth in the Customs Act 1901 can result in legal consequences. While the explanatory statement does not explicitly state the penalties for non-compliance, under Australian law, breaches of customs regulations can lead to criminal charges, including fines and imprisonment. The maximum penalties depend on the severity of the breach and are determined by the relevant sections of the Customs Act 1901 and other applicable legislation. For instance, knowingly making a false statement or document in relation to customs can result in penalties up to a maximum of 10 years imprisonment or a fine of up to $220,000, or both, under section 237 of the Customs Act 1901.
In the case of TCO No. 0601598, which was issued to ABC Paper Mills for certain Yankee dryers, the TCO became effective on the date the application was lodged, 23 December 2005 (s 269S(1)). This TCO exempts the specified goods from the general duty rate, which is 5%, and instead imposes a duty rate of free. Importantly, this TCO does not retroactively affect any rights or liabilities of persons other than the Commonwealth; it only applies to actions taken after its effective date. Importers can benefit from this TCO by applying for a refund of duty on goods imported since the effective date of the TCO, as per paragraph 126(1)(r) of the Regulations.