EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0610789
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.
The Papercup Company Pty Ltd applied for a TCO in respect of certain paperboard on 26 June 2006.
Instrument
TCO No 0610789 was made on 10 November 2006. It declares that those certain paperboard 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 Visy Industries Australia 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. 0610789 is taken to have come into force on 26 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 Customs Act 1901, enacted by the Commonwealth Parliament, provides a framework for the regulation of customs and excise duties in Australia. It establishes the procedures and criteria for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs, designed to grant preferential tariff rates to specified goods under certain conditions. This legislation was introduced to address the need for a flexible mechanism to alleviate customs duty burdens on specific imported goods, thereby supporting economic efficiency and competitiveness in targeted sectors. TCOs are created when an application is made, and the CEO determines that no suitable Australian-made alternatives exist, ensuring that the concession does not undermine domestic production. The aim is to provide tariff relief to importers, enhancing their ability to compete in the market while safeguarding the interests of Australian producers.
Scope and Application
The Customs Act 1901, through Part XVA, facilitates the establishment of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs, which allows for reduced customs duties on specific goods. An application for a TCO must be lodged under section 269F, and if it pertains to goods not excluded by section 269SJ, the CEO assesses whether it meets the core criteria outlined in section 269C. These criteria include the absence of substitutable goods produced in Australia, as defined by sections 269D and 269E, when the application is made. If the CEO determines that the application meets these criteria, they must issue a TCO specifying the reduced duty rate applicable to the goods in question. For instance, in the case of the Papercup Company Pty Ltd, a TCO was issued for certain paperboard, effectively reducing the duty rate from 5% to 0%. The commencement of a TCO is deemed to occur on the date the application is lodged, as per subsection 269S(1), and it does not retroactively affect the rights of any party other than the Commonwealth, thus protecting existing rights and imposing no new liabilities. Importers can benefit by applying for duty refunds on goods imported since the effective date of the TCO, as per Regulation 126(1)(r).
Key Provisions
The key sections of the Customs Act 1901 (the Act) relevant to Tariff Concession Orders (TCOs) are sections 269C, 269B, 269D, 269E, 269F, 269P, and 269K. Section 269F allows a person to apply to the Chief Executive Officer (CEO) of Customs for a TCO in respect of goods. If the application meets the core criteria outlined in section 269C, and the CEO is satisfied that no substitutable goods are produced in Australia as per section 269B, the CEO must make a written TCO. The CEO must also publish a notice in the Gazette inviting objections to the TCO application under section 269K(1). A TCO is considered to have come into force on the day the application was lodged, as per section 269S(1).
The obligations imposed on parties by the Act include the requirement for applicants to ensure their TCO application meets the core criteria, which involves demonstrating that no substitutable goods are produced in Australia. The CEO of Customs is obligated to assess the application, make a decision based on the criteria, and publish a notice in the Gazette inviting objections. Importers must apply for a refund of duty on goods imported since the TCO came into force under paragraph 126(1)(r) of the Regulations.
The Act does not explicitly outline offences or penalties for breaches of the TCO provisions. However, failure to comply with the provisions may lead to civil consequences such as the denial of tariff concessions or the imposition of duties at the standard rate. If an entity fails to apply for a refund of duty under paragraph 126(1)(r) of the Regulations, they may miss out on the benefits of the TCO. The absence of specific criminal penalties suggests that any enforcement actions would likely be civil in nature, focusing on compliance and the rights of importers.