EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0945730
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.
Norske Skog Paper Mill applied for a TCO in respect of certain drum debarkers on 05 January 2009.
Instrument
TCO No 0945730 was made on 27 March 2009. It declares that those certain drum debarkers 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. 0945730 is taken to have come into force on 05 January 2009.
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 Parliament of Australia, establishes a framework through which Tariff Concession Orders (TCOs) can be implemented by the Chief Executive Officer of Customs (CEO). This legislation aims to address the need for concessional tariff rates on specific goods by allowing applications from interested parties to the CEO for such concessions, provided certain criteria are met. The policy objective is to facilitate trade by reducing customs duty on goods for which no substitutable domestic product exists, thereby supporting industries that rely on imported goods for their operations. TCO No. 0945730, made on 27 March 2009, is an example of this process in action, where a tariff concession was granted to Norske Skog Paper Mill for certain drum debarkers, effectively reducing the duty rate from 5% to free. This instrument came into effect on the date of the application, 5 January 2009, without retroactive effects on the rights of persons other than the Commonwealth, and with potential benefits for importers in the form of duty refunds.
Scope and Application
The Customs Act 1901, through Part XVA, allows the Chief Executive Officer of Customs to issue Tariff Concession Orders (TCOs) that apply lower rates of customs duty to specified goods, subject to certain conditions. A TCO can be applied for by any person, and if the CEO determines that the application meets the core criteria, such as the absence of substitutable goods produced in Australia, a TCO will be issued. This specific instrument, TCO No. 0945730, was made on 27 March 2009, and it applies to certain drum debarkers, granting them duty-free status as they are not produced in Australia. The TCO applies nationally and affects the rights of importers by enabling them to seek refunds for duties paid on imports of these goods since 5 January 2009, the date the TCO is deemed to have come into force. Notably, the TCO does not disadvantage any person or impose liabilities on anyone in relation to actions taken before its registration.
Key Provisions
The Customs Act 1901, through Part XVA, enables the Chief Executive Officer of Customs (CEO) to issue Tariff Concession Orders (TCO) that reduce customs duty rates on certain goods. This process begins when an individual or entity applies to the CEO for a TCO under section 269F, provided the goods do not fall under the prohibited list specified in section 269SJ. For the application to be considered, it must meet the core criteria outlined in section 269C, which essentially requires that on the date of application, no substitutable goods are being produced in Australia in the ordinary course of business. The terms "substitutable goods," "goods produced in Australia," and "ordinary course of business" are further defined in sections 269D, 269E, and 269F respectively. If the CEO determines that these criteria are met, they are mandated to issue a TCO, as stipulated in subsection 269P(3).
The obligations imposed by the Act on the CEO are clear and specific. Upon receiving a valid TCO application, the CEO must publish a notice in the Gazette, inviting any interested parties to submit any objections to the concession. This notice is a critical procedural requirement, as outlined in subsection 269K(1). In the case of TCO No. 0945730, which pertains to certain drum debarkers, the CEO accepted the application and subsequently issued the order on 27 March 2009. This TCO specifies that these goods are subject to item 50 of Schedule 4 of the Customs Tariff Act 1995, with a duty rate of free, whereas the general rate is 5%. The CEO's decision to issue the TCO was based on the absence of substitutable goods produced in Australia, thereby satisfying the criteria set forth in section 269C.
The legislation also sets forth consequences for non-compliance with the Act's provisions. While the explanatory statement does not detail specific criminal or civil penalties for breaches, the broader Customs Act 1901 includes a range of sanctions for non-compliance with customs regulations. These can include fines and imprisonment for more severe breaches, reflecting the seriousness with which the Act treats violations of its customs duty provisions. For instance, section 257 of the Act outlines penalties for smuggling, which include fines of up to $220,000 or imprisonment for up to 10 years, or both, for individuals, and fines of up to $1,100,000 for corporations. While the specific consequences for breaching a TCO might not be explicitly detailed in this explanatory statement, they would likely align with the general penalties outlined in the Customs Act.