EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1045649
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.
Klingspor Australia applied for a TCO in respect of certain sanding paper rolls on 08 October 2010.
Instrument
TCO No 1045649 was made on 07 January 2011. It declares that those certain sanding paper rolls 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. 1045649 is taken to have come into force on 08 October 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 provide for the administration of customs and excise duties in Australia. The Act, which is administered by the Australian Parliament, seeks to facilitate trade while protecting the revenue of the Commonwealth. The Customs Act 1901 introduced a scheme under which Tariff Concession Orders (TCOs) can be made by the Chief Executive Officer of Customs to reduce customs duties on certain goods, thereby addressing a gap in the tariff system by providing relief to businesses that may be adversely affected by high customs duties. Tariff Concession Instrument No. 1045649 was made under this scheme, as part of the ongoing effort to ensure fair and efficient trade practices in Australia. The policy objective is to provide tariff relief where appropriate, supporting Australian industries and consumers by making certain goods more affordable.
Scope and Application
The Tariff Concession Instrument No. 1045649 under the Customs Act 1901 pertains to the application of Tariff Concession Orders (TCOs) for specific goods, in this case, certain sanding paper rolls, and establishes a lower rate of customs duty for these goods. The Act applies to any person or entity seeking to import these specified goods and is administered at the national level by the Chief Executive Officer of Customs. The application of the Act is limited to goods that are not specified in section 269SJ of the Act, which includes goods that cannot be subject to a TCO. The TCO takes effect from the date the application was lodged, meaning that any imports of the specified goods from that date will benefit from the reduced duty rate. Importantly, the TCO does not disadvantage any person by affecting their rights as they stood prior to the registration of the order, nor does it impose any new liabilities on any person. The TCO is an extension of the core legislative framework provided by the Customs Act 1901, with its specific application and scope determined through subordinate instruments such as the Customs Tariff Act 1995.
Key Provisions
The key provisions of Tariff Concession Instrument No. 1045649 under the Customs Act 1901 (the Act) are primarily found in sections 269C, 269F, 269P, and 269SJ (subsection 269K(1) is also relevant). Section 269F allows an application to be made to the Chief Executive Officer of Customs (the CEO) for a Tariff Concession Order (TCO) in respect of certain goods, provided the goods are not listed in section 269SJ. Section 269C sets out the core criteria that must be met for the CEO to consider making a TCO, which includes the requirement that no substitutable goods were produced in Australia on the day the application was lodged (subsection 269P(3)). If the application meets these criteria, the CEO must issue a TCO, as outlined in section 269P. In this specific case, TCO No. 1045649 was issued for certain sanding paper rolls on 07 January 2011, reducing the duty on these goods from 5% to free, as they are now covered by item 50 of Schedule 4 to the Customs Tariff Act 1995.
The obligations imposed by the Act on the parties involved, particularly Klingspor Australia as the applicant and the CEO as the decision-maker, include the requirement for the applicant to submit a valid application that meets the core criteria set out in the Act. The CEO is obliged to review the application, determine whether it meets the core criteria, and if so, to make a TCO. The CEO must also publish a notice in the Gazette inviting any person to lodge a submission if they believe the TCO should not be made, as required by subsection 269K(1). In this instance, the CEO did not receive any submissions, which facilitated the making of the TCO.
The Act does not explicitly outline specific offences or penalties for breach of a TCO or the process of applying for one; however, breaches of other provisions within the Customs Act 1901 can result in both civil and criminal penalties. For example, providing false or misleading information in an application could lead to fines and/or imprisonment under sections 236 and 237 of the Act. The maximum penalties for these offences can vary depending on the severity and intent behind the breach but generally include substantial fines and/or imprisonment for up to five years. The consequences for non-compliance with the terms of a TCO, once issued, would likely involve financial penalties or the revocation of the TCO, but such specific penalties are not detailed in the Act itself.