EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0615150
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.
Encore Tissue (Aust) Pty Ltd applied for a TCO in respect of certain paper roll unwind stands on 29 September 2006.
Instrument
TCO No 0615150 was made on 22 December 2006. It declares that those certain paper roll unwind stands 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. 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. 0615150 is taken to have come into force on 29 September 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 was enacted by the Australian Parliament and establishes a framework for the regulation of customs and excise duties. The Act was designed to provide a structured and efficient means of managing the import and export of goods, ensuring that duties are appropriately levied while facilitating trade. The introduction of Tariff Concession Orders (TCOs) under Part XVA of the Act addresses the problem of ensuring that Australian businesses can access necessary goods without the burden of prohibitive customs duties, particularly when no suitable domestic alternatives exist. This mechanism aims to promote competitiveness and economic efficiency by allowing the Chief Executive Officer of Customs to grant tariff concessions on specific goods, thereby lowering the duty rates and benefiting businesses and consumers alike.
The Explanatory Statement outlines the process for issuing a TCO, as exemplified by TCO No. 0615150, which was granted to Encore Tissue (Aust) Pty Ltd for certain paper roll unwind stands. The instrument was made on 22 December 2006, following an application lodged on 29 September 2006, and came into force on the latter date. The CEO determined that no substitutable goods were produced in Australia, thus meeting the core criteria for a concession. The primary policy objective here is to enable businesses to operate more cost-effectively by reducing the customs duty on specific imported goods, which in turn supports economic activity and consumer welfare.
Scope and Application
The Customs Act 1901 applies to the application process for Tariff Concession Orders (TCO) as outlined in Part XVA, where the Chief Executive Officer of Customs can grant a concession to reduce the customs duty on specific goods. This concession applies to an applicant who lodges an application for TCO and meets the core criteria, namely that no substitutable goods are produced in Australia in the ordinary course of business on the day the application was lodged. The Act provides clear definitions for terms such as "goods produced in Australia," "ordinary course of business," and "substitutable goods" to assist in determining the eligibility for a TCO. The instrument TCO No. 0615150, made on 22 December 2006, pertains to certain paper roll unwind stands and declares that these goods are subject to a 0% duty rate, down from the general rate of 5%. This instrument extends across the Commonwealth of Australia and affects the rights of importers who can now apply for a refund of duty on these goods from the date the TCO was taken to have come into force. Notably, the TCO does not disadvantage any person other than the Commonwealth or impose any liabilities on any person in relation to actions taken prior to the date of registration.
Key Provisions
The Customs Act 1901 allows for the making of Tariff Concession Orders (TCO) by the Chief Executive Officer of Customs (CEO) (section 269F). An application for a TCO can be submitted by any person under section 269F, provided that the goods in question are not those specified in section 269SJ, which are ineligible for tariff concessions. If the CEO determines that the application complies with the core criteria, they are required to issue a written order that declares the goods subject to the application as being subject to a specified item in Schedule 4 of the Customs Tariff Act 1995 (section 269P(3)). The key criterion for a TCO is that, on the date of application, no substitutable goods must be produced in Australia in the ordinary course of business (section 269C). Definitions for these terms are provided in sections 269D, 269E and 269F.
Under this Act, the CEO has obligations to assess applications against the core criteria and, if satisfied, to make a TCO (section 269P(3)). The CEO must also publish a notice in the Gazette inviting submissions from any interested parties who believe the TCO should not proceed (subsection 269K(1)). The TCO does not retroactively affect the rights of any person, including the ability for importers to apply for refunds of duty on goods imported since the TCO's effective date (paragraph 126(1)(r) of the Regulations). The Act ensures that the rights of persons other than the Commonwealth are not disadvantaged by the TCO, and no new liabilities are imposed.
Failure to comply with the requirements of the Customs Act 1901 can result in various consequences. For instance, if the CEO fails to make a TCO when the application meets the core criteria, this could potentially lead to legal challenges regarding the application of customs duties. Conversely, if the CEO makes a TCO when the application does not meet the core criteria, this could also result in legal challenges or the nullification of the TCO by a court. Additionally, if an entity intentionally provides false information in an application, this could be considered a criminal offence under the Crimes Act 1914, with potential penalties including fines and imprisonment. The specific penalties for breaches would depend on the nature and severity of the breach.