EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0618074
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 defibrator hydraulic packs on 01 November 2006.
Instrument
TCO No 0618074 was made on 30 January 2007. It declares that those certain paper pulp defibrator hydraulic packs 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. 0618074 is taken to have come into force on 01 November 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) can be made by the Chief Executive Officer of Customs. This Act was introduced to address the need for a systematic approach to granting tariff concessions, ensuring that such concessions are applied fairly and transparently. The policy objective is to provide a mechanism through which Australian businesses can apply for lower rates of customs duty on specific goods, provided certain criteria are met, such as the absence of substitutable goods produced in Australia. Australian Paper applied for a TCO concerning certain paper pulp defibrator hydraulic packs, and following the CEO’s satisfaction that no substitutable goods were produced domestically, TCO No. 0618074 was issued, setting the duty rate for these goods at free, as opposed to the general rate of 5%. This order came into effect on the date of application, 1 November 2006, and no submissions were received opposing the concession.
Scope and Application
The Tariff Concession Instrument No. 0618074 under the Customs Act 1901 applies to individuals or entities seeking tariff concessions for specific goods, namely certain paper pulp defibrator hydraulic packs, which are now subject to a zero rate of customs duty as opposed to the general rate of 5%. This instrument specifically targets the importation of these goods by reducing the associated customs duty, thereby benefiting the importers by potentially lowering their costs and making the goods more competitively priced in the Australian market. The application of this concession is effective from the date the application was lodged, which in this case was 01 November 2006, and it does not retroactively affect any rights or impose any liabilities on persons other than the Commonwealth. Importantly, the instrument does not impact any existing rights or obligations incurred before its registration, ensuring that no disadvantage or additional burdens are placed upon importers or other stakeholders as a result of this legislative action.
Key Provisions
The main operative sections of this legislation are sections 269C, 269F, 269K, 269P, and 269S of the Customs Act 1901. Section 269F allows for an application to be made to the Chief Executive Officer (CEO) of Customs for a Tariff Concession Order (TCO) in respect of goods. If the CEO is satisfied that the application meets the core criteria set out in section 269C, and that the goods are not specified in section 269SJ, then a TCO must be made (section 269P(3)). The CEO is required to publish a notice in the Gazette inviting submissions from interested parties regarding the TCO application (section 269K(1)). If no submissions are received, the TCO comes into force on the date the application was lodged (section 269S(1)). In this case, TCO No. 0618074 was made on 30 January 2007, and it applies to certain paper pulp defibrator hydraulic packs.
The Act imposes several obligations on the parties involved. The CEO of Customs must assess TCO applications to determine if they meet the core criteria. This includes verifying that no substitutable goods are being produced in Australia. If the CEO determines that the application meets the criteria, they must make a written TCO. The CEO is also required to publish a notice in the Gazette inviting any interested parties to submit their views on the proposed TCO. Importers of the goods affected by the TCO may apply for a refund of duty paid on goods imported since the TCO came into force.
Under the Customs Act, breaches of the provisions related to TCOs can lead to civil or criminal penalties. For example, knowingly making a false statement in an application for a TCO can result in a civil penalty of up to $11,000 or criminal penalties including fines of up to $22,000 and/or imprisonment for up to 2 years. However, the explanatory statement does not specify any penalties for failure to comply with the requirements of the TCO itself, such as by importing goods that should have duty paid on them. The focus appears to be on the process for making and assessing TCO applications.