EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0843774
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 crown controlled rolls and roll shells on 12 December 2008.
Instrument
TCO No 0843774 was made on 06 March 2009. It declares that those certain crown controlled rolls and roll shells 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. 0843774 is taken to have come into force on 12 December 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 enacted to provide for the imposition of customs duty and the regulation of the import and export of goods. One of the mechanisms introduced under this Act to provide relief on certain goods is the Tariff Concession Order (TCO). The Customs Tariff Concession Instrument No. 0843774, made on 6 March 2009, addresses a specific gap by providing a concession on the customs duty for certain crown controlled rolls and roll shells, as applied for by Australian Paper on 12 December 2008. This instrument was introduced to ensure that the application for the concession was processed in accordance with the core criteria set out in the Act, particularly under sections 269C and 269P(3). The instrument declares that these goods are subject to a prescribed item in Schedule 4 to the Customs Tariff Act 1995, resulting in a duty rate of free, down from the general rate of 5%. The instrument was subject to public consultation, with no objections received, and came into effect on the date the application was lodged, 12 December 2008, without affecting the rights of any person other than the Commonwealth.
Scope and Application
The Customs Act 1901, through Part XVA, provides a framework for the Chief Executive Officer of Customs to issue Tariff Concession Orders (TCOs) that apply a lower rate of customs duty to specified goods. This Act applies to any person or entity that wishes to apply for a TCO in respect of goods that are not specified in section 269SJ, which lists those goods that cannot be subject to a TCO. The application process requires that the CEO must be satisfied that no substitutable goods are produced in Australia in the ordinary course of business, as per section 269C, and the application meets the core criteria as outlined in section 269B. Once a TCO is issued, it grants tariff concessions to the specified goods, effectively reducing or eliminating customs duty on those goods. The TCO applies nationwide across Australia and is effective from the date the application is lodged. The rights of importers are positively affected as they can apply for a refund of duty on goods imported since the TCO's effective date. The instrument does not impose any liabilities on any person and does not disadvantage anyone as it only affects rights and liabilities prospectively. The CEO is mandated to publish a notice in the Gazette inviting submissions on the TCO application; however, no submissions were received in this case.
Key Provisions
The main operative sections of the Customs Act 1901 (section 269C and 269P) provide the framework for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO). Under 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. If the CEO is satisfied that the application meets these core 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 (section 269P(3)). This means that the goods specified in the TCO application are subject to a tariff concession, which in this case is a reduction from the general rate of duty of 5% to a duty-free rate.
The obligations and requirements imposed by the Act on the parties or entities it governs are primarily directed towards the CEO and the applicant. The CEO is obligated to assess whether a TCO application meets the core criteria specified in section 269C and to make a written order if the criteria are satisfied. The applicant, such as Australian Paper in this case, must ensure that their application provides all necessary information and evidence to support the claim that no substitutable goods were produced in Australia. Additionally, under subsection 269K(1), the CEO must publish a notice in the Gazette, inviting submissions from any person who believes there are reasons why the TCO should not be made. In this instance, no submissions were received.
The Act also outlines potential offences, penalties, or consequences for breaches. Although the explanatory statement does not specify particular penalties, breaches of the Customs Act 1901 can generally lead to civil and criminal consequences. Civil penalties may include fines, while criminal penalties can include imprisonment, reflecting the seriousness with which the Act regards non-compliance. The specific maximum penalties would be determined based on the nature and severity of the breach, as outlined in other sections of the Customs Act 1901 and related regulations.