EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0830244
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 Pty Ltd applied for a TCO in respect of certain paper making machines on 08 September 2008.
Instrument
TCO No 0830244 was made on 28 November 2008. It declares that those certain paper making machines 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. 0830244 is taken to have come into force on 08 September 2008.
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 amended to include the Tariff Concession Instrument No. 0830244, which was enacted in 2009 to facilitate tariff concessions for certain imported goods, thereby addressing the problem of potentially prohibitive customs duties on specific items that are not produced domestically. This instrument empowers the Chief Executive Officer of Customs to make Tariff Concession Orders, which lower the duty rates on specified goods if no substitutable goods are produced in Australia. This legislative measure was introduced to ensure that Australian businesses can compete fairly in the market by not being unduly burdened by high import duties on goods that are not manufactured locally. The policy objective is to provide economic relief to industries that rely on importing specific machinery or goods not produced domestically, thereby fostering a competitive business environment.
Scope and Application
The Customs Act 1901, specifically under Part XVA, provides the framework for the creation of Tariff Concession Orders (TCOs) through the authority of the Chief Executive Officer of Customs. This Act applies to any person who can apply for a TCO in relation to goods not specified in section 269SJ of the Act, which excludes certain goods from tariff concessions. The TCO scheme is applicable nationally within the Commonwealth of Australia, governing the tariff concessions for goods that are not produced domestically in the ordinary course of business. The Act outlines specific criteria under section 269C that an application must meet, ensuring that substitutable goods are not produced in Australia on the day the application is lodged. If the application satisfies these core criteria, the CEO is mandated to issue a written TCO, as was the case for Australian Paper Pty Ltd regarding certain paper-making machines. The issuance of TCO No. 0830244 on 28 November 2008, applying a free rate of duty to these specific machines, demonstrates the Act's application in granting tariff concessions based on the outlined criteria. The Act further stipulates that the TCO does not retroactively disadvantage any person or impose new liabilities, thus safeguarding existing rights and obligations of parties involved.
Key Provisions
The Tariff Concession Instrument No. 0830244 under the Customs Act 1901 (section 269P(3)) declares that specific paper-making machines are subject to a tariff concession order (TCO). The CEO of Customs made this declaration as Australian Paper Pty Ltd applied for the concession on 08 September 2008. As a result, these paper-making machines are now subject to item 50 of Schedule 4 to the Customs Tariff Act 1995, meaning that the general rate of duty, which is 5%, is waived, and these goods can be imported duty-free. The TCO came into force on the day the application was lodged, which is 08 September 2008 (section 269S(1)).
The obligations under the Customs Act 1901 require that a TCO application meets the core criteria. Specifically, for the CEO to be satisfied with an application, it must be demonstrated that no substitutable goods were produced in Australia on the day the application was lodged (section 269C). For this purpose, 'substitutable goods' refers to those produced in Australia that could be used in a way corresponding to the goods in question (section 269B). Once the CEO is satisfied that the application meets these criteria, they must publish a notice in the Gazette inviting submissions from any person who might object to the TCO (subsection 269K(1)). If no objections are received, the CEO must proceed to make the TCO (section 269P(3)).
In terms of compliance and enforcement, the Act does not specify any particular offences or penalties for breaches related to the TCO itself. However, any breach of the Customs Act 1901 or Customs Tariff Act 1995 in general could lead to civil or criminal penalties. These penalties can include fines up to $126,000 for individuals and $630,000 for corporations, as well as potential imprisonment terms. The severity of the penalty depends on the nature and circumstances of the offence. The Act ensures that the rights of importers are beneficially affected and that the TCO does not impose any liabilities on any person (section 269S).