EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0610530
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 & Paper Mills Pty Ltd applied for a TCO in respect of certain paper production silos on 16 June 2006.
Instrument
TCO No 0610530 was made on 01 September 2006. It declares that those certain paper production silos 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. 0610530 is taken to have come into force on 16 June 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 Tariff Concession Instrument No. 0610530, enacted under the Customs Act 1901, addresses the problem of ensuring that certain imported goods receive preferential tariff treatment, thereby encouraging their import and potentially stimulating local industries by providing lower-cost inputs. This instrument was introduced to enable the Chief Executive Officer of Customs to grant tariff concessions on goods where no substitutable domestic product exists, thus fostering economic efficiency and competitiveness. The policy objective is to facilitate the importation of goods that are not domestically produced, thereby supporting industries that rely on imported materials and potentially reducing the overall cost of production.
The instrument was enacted by the relevant legislature and became effective on the date the application was lodged, in this case, 16 June 2006. It provides a mechanism for the CEO to make written orders that declare specific goods as eligible for reduced customs duty rates, as long as they meet the core criteria outlined in the Customs Act. In the specific instance of ABC Paper & Paper Mills Pty Ltd, the CEO granted a tariff concession on certain paper production silos, reducing the duty rate from the general 5% to free, effective from the date of the application. This legislative measure ensures that the rights of importers are not adversely affected and allows for potential duty refunds for those who imported the specified goods after the concession took effect.
Scope and Application
The Customs Act 1901, through its Part XVA, provides a framework for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs. These orders can lower the rate of customs duty for specific goods, as long as the application for the concession meets the core criteria stipulated in the Act. The legislation applies to individuals or entities seeking to import goods that are eligible for a reduced duty rate under a TCO, provided that such goods are not explicitly excluded under section 269SJ of the Act and meet the criteria that no substitutable goods are produced in Australia. The scope of the Act is national, as it falls under the Commonwealth jurisdiction. However, the Act allows for the extension and restriction of its application through subordinate instruments, such as the Customs Tariff Act 1995, which specifies the applicable tariff items for goods under a TCO. For instance, Instrument TCO No. 0610530 applies to certain paper production silos, reducing their duty rate from the general 5% to free, following a successful application by ABC Paper & Paper Mills Pty Ltd. The process involves the CEO publishing a notice in the Gazette to invite objections, although in this case, no submissions were received.
Key Provisions
The main operative sections of the Customs Act 1901, specifically those pertaining to Tariff Concession Orders (TCOs), are sections 269C, 269B, 269D, 269E, 269F, 269P, and 269SJ (sections 269C, 269B, 269D, 269E, 269F, 269P, and 269SJ). Section 269F allows a person to apply to the Chief Executive Officer of Customs (CEO) for a TCO in respect of goods. If the application meets the core criteria, which include that no substitutable goods were produced in Australia in the ordinary course of business (section 269C), the CEO must make a written order declaring that the goods are subject to a lower rate of duty as specified in Schedule 4 to the Customs Tariff Act 1995. The definitions of "goods produced in Australia," "ordinary course of business," and "substitutable goods" are provided by sections 269D, 269E, and 269SJ, respectively.
The Act imposes specific obligations on both the CEO and the applicant. The CEO is obligated to determine whether an application meets the core criteria and to make a written order if the criteria are met (section 269P(3)). The applicant must ensure that the application is not in respect of goods specified in section 269SJ, which are ineligible for TCO. Upon receiving a valid application, the CEO must publish a notice in the Gazette inviting any person to lodge a submission if they believe the TCO should not be made (subsection 269K(1)). The CEO must also consider any submissions received before making a decision.
The Act provides for potential consequences for non-compliance with its provisions. Although the explanatory statement does not explicitly mention penalties, breaches of customs laws, including those related to the incorrect application of TCOs, may result in civil and criminal penalties under the Customs Act 1901 and related regulations. Civil penalties can include fines, and criminal penalties may include imprisonment, depending on the severity of the breach. The exact penalties are detailed in the Customs Act and associated regulations, but they are not specified in the explanatory statement for this particular TCO. The commencement of the TCO does not affect the rights of any person as at the date of registration, and it does not impose any liabilities on any person other than the Commonwealth.