EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1005050
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.
Power Customs Services Pty Ltd applied for a TCO in respect of certain paper and paperboard on 22 January 2010.
Instrument
TCO No 1005050 was made on 16 April 2010. It declares that those certain paper and paperboard 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. 1005050 is taken to have come into force on 22 January 2010.
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 for the administration of customs and excise, including provisions for Tariff Concession Orders (TCOs). The Tariff Concession Instrument No. 1005050 was introduced to address the specific issue of providing tariff concessions for certain paper and paperboard imported into Australia. The problem this instrument aimed to resolve was the need for a lower rate of customs duty on these goods, thereby encouraging their importation and use in Australia. The instrument was developed under section 269F of the Customs Act 1901, which allows for the application to the Chief Executive Officer of Customs for such concessions, provided that the goods do not fall under the restricted categories outlined in section 269SJ. Upon satisfying the core criteria stipulated in sections 269C, 269B, and 269D of the Act, the CEO issued TCO No. 1005050, reducing the duty on the specified paper and paperboard from the general rate of 5% to free, effective from 22 January 2010. This initiative aligns with the policy objective of supporting industries by reducing import costs and potentially stimulating economic activity.
Scope and Application
The Tariff Concession Instrument No. 1005050, made under the Customs Act 1901, applies to the application of tariff concessions for specific paper and paperboard products. This instrument was made following an application by Power Customs Services Pty Ltd and came into effect on 22 January 2010, the date on which the application was lodged. The instrument declares that certain paper and paperboard products are subject to a tariff concession, meaning they are eligible for a reduced customs duty rate of free, as opposed to the general rate of 5%. The instrument is applicable to the entities involved in the import of these goods, effectively benefiting importers by potentially allowing them to claim a refund for duties paid on imports of these goods since the effective date of the instrument. The instrument does not extend to any other goods not specified in the application, nor does it impose any liabilities on any person other than the Commonwealth. The instrument operates within the federal jurisdiction of Australia and is subject to the conditions and definitions provided by the Customs Act 1901 and the Customs Tariff Act 1995.
Key Provisions
The primary sections of the Customs Act 1901 that are relevant to Tariff Concession Orders (TCOs) include sections 269C, 269F, 269P, and 269SJ (Sections 269C, 269F, 269P, and 269SJ). Section 269F allows individuals or entities to apply to the Chief Executive Officer (CEO) of Customs for a TCO, which would then apply a lower rate of customs duty to the specified goods. Section 269C outlines the core criteria that must be met for an application to be considered, primarily focusing on whether substitutable goods are produced in Australia at the time of the application. If the CEO is satisfied with the application and the core criteria are met, section 269P requires the CEO to issue a written TCO. Section 269SJ specifies the types of goods that cannot be subject to a TCO.
The Act imposes several obligations on the parties involved. Firstly, the applicant must ensure that the goods in question do not have substitutable equivalents produced in Australia, as per section 269C (Section 269C). The CEO, upon receiving a valid application, is required to assess whether the core criteria are satisfied and, if so, to issue a TCO in accordance with section 269P (Section 269P). Additionally, under section 269K, the CEO must publish a notice in the Gazette inviting any objections to the TCO application, although in this instance, no objections were received (Section 269K).
The Act also outlines specific consequences for breaches of its provisions. While the explanatory statement does not detail specific offences under the Customs Act related to TCOs, it is reasonable to infer that any misuse or fraudulent application for a TCO could lead to penalties under general customs legislation. The Customs Act 1901 provides for various penalties, including fines and imprisonment, for breaches related to customs duties and related offences (Customs Act 1901). The precise penalties would depend on the nature and severity of the breach.
In this particular case, Tariff Concession Order No. 1005050 was issued on 16 April 2010, following an application by Power Customs Services Pty Ltd on 22 January 2010. The TCO specifies that certain paper and paperboard are subject to a 5% duty rate, down from the general rate (Section 269P(3)). The TCO came into effect on the date the application was lodged, 22 January 2010, and does not affect any pre-existing rights or liabilities (Section 269S(1)). Importers of these goods can now apply for a refund of duty paid on imports since the effective date of the TCO.