EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1005052
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 1005052 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. 1005052 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 was enacted to facilitate the regulation of customs and excise, among other duties, in Australia. The Act provides a framework for the application and administration of tariffs, including the ability to grant tariff concessions to importers for specific goods. This is achieved through Tariff Concession Orders (TCOs) made by the Chief Executive Officer of Customs (CEO). Tariff Concession Instrument No. 1005052, made on 16 April 2010, addresses the gap in tariff application by providing a lower rate of customs duty for certain paper and paperboard goods, which were found to have no substitutable goods produced in Australia, thus meeting the core criteria outlined in the Act. This instrument was introduced to provide tariff relief to importers of these specific goods, thereby encouraging trade and potentially reducing costs for businesses. The CEO was required to publish a notice in the Gazette inviting submissions from interested parties, though none were received in response to this notice. The TCO came into force on 22 January 2010, the date the application was lodged, and it does not affect existing rights or impose any liabilities on persons other than the Commonwealth.
Scope and Application
The Customs Act 1901, specifically under Part XVA, governs the scheme for Tariff Concession Orders (TCOs), which are used to provide lower rates of customs duty on certain goods. The Act applies to any individual or entity seeking to import goods that are not specified in section 269SJ of the Act, which excludes certain goods from tariff concessions. The application process involves an assessment by the Chief Executive Officer of Customs to determine if the goods in question are substitutable by Australian-produced goods, and if not, a TCO may be issued. The geographic reach of this Act is national, applying across all states and territories of Australia, as it is a Commonwealth Act. The TCO No 1005052, which was issued on 16 April 2010, applies to certain paper and paperboard, granting them a duty-free status under item 50 of Schedule 4 to the Customs Tariff Act 1995. The TCO took effect on the date of the application, 22 January 2010, and does not impose any liabilities on any person other than the Commonwealth, nor does it affect the rights of any person as at the date of registration in a manner that would disadvantage them or impose liabilities for actions taken prior to the registration date. Importers of the specified goods will benefit from the ability to apply for a refund of duty on goods imported since the effective date of the TCO.
Key Provisions
The Tariff Concession Order No. 1005052 (the Order) under the Customs Act 1901 (the Act) was made on 16 April 2010. It grants a tariff concession on certain paper and paperboard, as specified in the application by Power Customs Services Pty Ltd on 22 January 2010 (section 269F). The Order applies to goods that are subject to item 50 of Schedule 4 to the Customs Tariff Act 1995, effectively reducing the general rate of duty of 5% to free (section 269P(3)).
The Order imposes certain obligations on the parties it governs. Firstly, the Chief Executive Officer of Customs (the CEO) is required to consider whether an application for a Tariff Concession Order (TCO) meets the core criteria as outlined in sections 269C and 269B of the Act. This involves determining if no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged. Furthermore, the CEO must publish a notice in the Gazette inviting any interested parties to submit objections to the TCO, although in this case, no submissions were received (subsection 269K(1)). The TCO itself has the effect of coming into force on the date the application was lodged, 22 January 2010 (subsection 269S(1)).
The Act imposes specific requirements on the CEO in processing TCO applications. If the CEO is satisfied that the application meets the core criteria, they must make a written TCO declaring that the goods in question are subject to a prescribed tariff item. This was done in this instance by specifying that certain paper and paperboard are subject to item 50 of Schedule 4 to the Tariff, with a duty rate of free (subsection 269P(3)). The CEO must also ensure that the TCO does not disadvantage any person other than the Commonwealth by affecting their rights or imposing liabilities for actions taken before the TCO's registration date. In this case, the Order does not impose any such liabilities.
Under the Customs Act 1901, there are potential consequences for non-compliance with the requirements of a TCO. Although the explanatory statement does not detail specific offences, breaches of customs regulations generally may lead to penalties. For example, under section 226 of the Act, a person who contravenes a provision of the Act or the Customs Regulations 1993 may be liable for a penalty. The maximum penalties for such offences can be significant, including fines up to $22,200 for individuals and $111,000 for bodies corporate, depending on the severity of the breach. Additionally, civil and criminal proceedings may be initiated for serious violations, resulting in further penalties and potential imprisonment.