EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0617405
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.
Australian Paper applied for a TCO in respect of certain paper pulp screeners and/or strainers parts on 20 September 2006.
Instrument
TCO No 0617405 was made on 08 December 2006. It declares that those certain paper pulp screeners and/or strainers parts 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. 0617405 is taken to have come into force on 20 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, enacted by the Australian Parliament, established a framework under which Tariff Concession Orders (TCOs) could be implemented by the Chief Executive Officer of Customs (CEO) to provide tariff concessions on specific goods. This legislative instrument addresses the gap in tariff regulation by allowing for targeted relief on goods not produced in Australia, thus encouraging the importation of such goods and supporting industries that rely on imported components. The primary policy objective of the Act is to foster economic efficiency and competitiveness by allowing for reduced customs duties on goods that are not domestically produced, thereby supporting the broader economic interests of Australia. In the context of the 2006 instrument, TCO No. 0617405 was introduced following an application from Australian Paper for tariff concessions on certain paper pulp screeners and/or strainers parts, which was granted as no substitutable goods were produced in Australia at the time. This concession effectively reduced the duty on these goods from the general rate of 5% to free, effective from the date of application, 20 September 2006, without retroactively affecting any rights or imposing new liabilities on non-Commonwealth entities.
Scope and Application
The Tariff Concession Instrument No. 0617405 applies to the customs duty on certain paper pulp screeners and/or strainers parts, specifically those identified by Australian Paper in their application to the Chief Executive Officer of Customs under the Customs Act 1901. This instrument provides for a concession that effectively grants a free rate of duty for these goods, as determined by the CEO, on the basis that no substitutable goods were produced in Australia in the ordinary course of business at the time of the application. The application of this concession is governed by the criteria outlined in the Customs Act, including the requirement that the CEO must not have reasons to believe the application is in respect of goods specified as ineligible under section 269SJ of the Act. This Instrument has a national jurisdictional reach and applies to all entities and persons involved in the importation of the specified goods into Australia. The exemption from duty is applicable from the date the application was lodged, which in this case was 20 September 2006. The application of this Tariff Concession Order does not retroactively affect any rights or impose liabilities on any person for actions taken prior to the date of the Instrument’s registration, thus protecting the interests of importers who may be eligible for refunds of duty paid on imports of these goods since the effective date of the concession.
Key Provisions
The key operative sections of this legislation, specifically section 269C and section 269P, set out the criteria for Tariff Concession Orders (TCOs). According to section 269C, a TCO application meets the core criteria if, on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business. Section 269P(3) mandates that if the Chief Executive Officer (CEO) is satisfied that the application meets these criteria, they must make a written order (a TCO) declaring that the goods in question are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995, effectively granting them a lower rate of duty or even making them duty-free. In this case, the TCO applies to certain paper pulp screeners and/or strainers parts, which are now subject to a free rate of duty under item 50 of Schedule 4 to the Tariff.
The obligations and requirements imposed by this Act primarily rest on the CEO of Customs. Upon receiving a valid TCO application, the CEO must determine whether the application meets the core criteria as outlined in section 269C. If satisfied, the CEO must issue a TCO as per section 269P. The CEO must also publish a notice in the Gazette inviting submissions from any interested parties who might have reasons to oppose the making of the TCO, as stipulated in subsection 269K(1). The TCO, once made, will come into force on the date the application was lodged, as per subsection 269S(1).
Breaches of the provisions of the Customs Act 1901, including those related to TCOs, can result in various civil and criminal consequences. The specific penalties for breaches are detailed in the Customs Act and the Customs Regulations 1995. While the Explanatory Statement does not specify maximum penalties, breaches could lead to fines, imprisonment, or both, depending on the severity of the offence. Additionally, any person who imports goods without the required TCO may face penalties, including the repayment of duties and interest. Conversely, a person who improperly claims a concession under a TCO may also face penalties.
The Tariff Concession Instrument No. 0617405, which was made on 8 December 2006, provides a clear example of how these provisions operate in practice. By declaring that certain paper pulp screeners and/or strainers parts are subject to a free rate of duty, the CEO has granted a significant concession that benefits importers. This case highlights the importance of ensuring that the criteria for TCOs are met to avoid any potential legal or financial repercussions for those involved.