EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0602559
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.
Paperlinx Pty Ltd applied for a TCO in respect of certain self copy carbonless paper on 18 January 2006.
Instrument
TCO No 0602559 was made on 7 April 2006. It declares that those certain self copy carbonless paper 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. 0602559 is taken to have come into force on 18 January 2006.
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 Parliament of Australia, establishes a framework under which Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs (CEO) to reduce the rate of customs duty on certain goods. This legislation addresses the gap by providing a mechanism for businesses to apply for tariff concessions where they can demonstrate that no substitutable goods are produced in Australia. Paperlinx Pty Ltd, for example, applied for a TCO for specific self-copy carbonless paper on 18 January 2006, which was granted on 7 April 2006. The policy objective is to benefit importers by potentially reducing their duty liabilities while ensuring no existing rights or liabilities of non-Commonwealth persons are adversely affected.
Scope and Application
The Customs Act 1901, through its Part XVA, provides a mechanism for the Chief Executive Officer of Customs to make Tariff Concession Orders (TCOs) which apply a lower rate of customs duty on specified goods. This applies to any person who applies for a TCO in relation to goods, provided that the goods are not specified in section 269SJ of the Act, which outlines those goods ineligible for tariff concessions. The application process requires the CEO to determine whether the goods in question are substitutable by Australian-produced goods. If no substitutable goods are produced in Australia, the CEO must issue a TCO, as per section 269C of the Act. The TCO applies nationally and allows for the reduction of customs duty on specific goods, in this case, certain self-copy carbonless paper, which under normal circumstances would attract a duty of 5% but is now duty-free due to the TCO. The application and issuance of a TCO do not retroactively affect the rights of any party other than the Commonwealth and do not impose new liabilities on any person. The TCO No. 0602559 was issued on 7 April 2006, and it came into force on 18 January 2006, the date the application was lodged.
Key Provisions
The Customs Act 1901 (the Act) includes a provision under which Tariff Concession Orders (TCOs) can be made, as detailed in Part XVA. A TCO results in a lower rate of customs duty being applied to the goods it covers. Section 269F of the Act allows a person to apply to the Chief Executive Officer of Customs (the CEO) for a TCO in respect of certain goods. If the application does not pertain to goods specified in section 269SJ of the Act, which are ineligible for TCO, the CEO must evaluate the application against the core criteria outlined in section 269C. This section requires that, on the date the application is lodged, no substitutable goods were produced in Australia in the ordinary course of business. Definitions for key terms like 'goods produced in Australia', 'ordinary course of business', and'substitutable goods' are provided in sections 269D, 269E, and 269B respectively.
The obligations imposed by the Act on parties applying for a TCO are significant. An applicant must ensure that their application is valid and that it does not involve goods that are explicitly barred from TCO eligibility under section 269SJ. Additionally, the CEO has a duty to assess the application against the criteria in section 269C and to make a written order if the application meets these criteria. This includes publishing a notice in the Gazette, as per subsection 269K(1), to invite any interested parties to submit objections or reasons why the TCO should not be made. The CEO must also consider any submissions received before finalising the order. The Act ensures that the rights of persons other than the Commonwealth are not adversely affected by the issuance of a TCO, as clarified in subsection 269S(1).
The Act also delineates the consequences for non-compliance or breaches related to TCOs. While the Act does not explicitly list civil or criminal penalties for breaches, it is implicit that any misuse or improper application of the TCO provisions could lead to legal repercussions. The CEO's role in monitoring and enforcing compliance ensures that the benefits of TCOs are correctly applied and that the integrity of the tariff concession scheme is maintained. In the case of TCO No. 0602559, which applied to certain self-copy carbonless paper, the CEO determined that the application met the core criteria, resulting in the goods being subject to a free rate of duty instead of the general 5% rate. This decision, if improperly made or applied, could potentially lead to legal challenges or penalties if it were found that the conditions for issuing the TCO were not correctly fulfilled.