EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1107043
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.
O I Australia applied for a TCO in respect of certain fibreboard pallet dividers on 22 February 2011.
Instrument
TCO No 1107043 was made on 11 May 2011. It declares that those certain fibreboard pallet dividers 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. 1107043 is taken to have come into force on 22 February 2011.
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, establishes a framework through which Tariff Concession Orders (TCOs) can be made by the Chief Executive Officer of Customs. This Act aims to provide relief by reducing or eliminating customs duty on certain goods, thereby facilitating trade and promoting economic efficiency. In particular, the Act addresses the problem of ensuring that goods for which an applicant seeks tariff concessions are not already being produced domestically, thus maintaining a competitive edge for Australian industries while also encouraging the importation of goods that are not locally manufactured. The policy objective behind the introduction of TCOs is to balance the interests of domestic producers with those of importers, ensuring that consumers benefit from competitive pricing and a wider variety of goods.
Scope and Application
The Customs Act 1901 applies to individuals and entities that import goods into Australia, providing a framework for the imposition and concession of customs duties. Specifically, the Act facilitates the process by which Tariff Concession Orders (TCO) can be applied for and granted by the Chief Executive Officer of Customs (CEO). The TCOs provide a lower rate of customs duty on specified goods, contingent upon meeting certain criteria such as the non-existence of substitutable goods produced in Australia. This concession is intended to benefit importers by reducing their duty costs on specified goods. The geographic scope of this legislation is national, as it pertains to customs duties across Australia. Notably, the Act excludes certain goods from being subject to TCOs, as outlined in section 269SJ. The application and scope of the Act can be further defined and extended through subordinate instruments, which may include regulations and orders that specify detailed procedures and additional criteria. The commencement of a TCO is effective from the date of the application, as stipulated by the Act, and it does not disadvantage or impose liabilities on persons for actions taken before the order's registration.
Key Provisions
The Customs Act 1901 provides a framework under which Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs (section 269F). These orders can significantly reduce the customs duty on specific goods, as demonstrated in TCO No. 1107043. This particular order, made on 11 May 2011, pertains to certain fibreboard pallet dividers, setting their duty rate at zero percent, as opposed to the general rate of five percent. The application for this TCO was submitted on 22 February 2011, and it is deemed to have come into effect from that date, although it was officially registered later (subsection 269S(1)).
Under section 269C of the Act, a TCO application is eligible for consideration if it meets certain core criteria. These criteria, detailed in section 269B, necessitate that on the date the application was submitted, no goods that could substitute for the ones in question were being produced in Australia. The definitions of key terms like "goods produced in Australia," "ordinary course of business," and "substitutable goods" are further clarified in sections 269D, 269E, and 269F, respectively. For the fibreboard pallet dividers, the CEO was satisfied that no substitutable goods were being produced domestically, thereby meeting the criteria for a TCO.
The obligations imposed by the Act on parties involved with the TCO process include the requirement for the CEO to make a written order if the application meets the core criteria (subsection 269P(3)). Additionally, the CEO must publish a notice in the Gazette inviting submissions from any interested parties who may have reasons against the TCO being issued (subsection 269K(1)). In this case, no submissions were received. The TCO does not affect the rights of any person other than the Commonwealth and does not impose any liabilities on any individual or entity. Importers, however, benefit from the ability to apply for a refund of duty on goods imported since the TCO was deemed to come into force.
Any breach of the provisions of the Customs Act 1901, including the misuse of TCOs, can lead to legal consequences. While the specific offences and penalties related to TCOs are not detailed in the provided text, the Act generally allows for criminal and civil penalties for non-compliance with customs regulations. These penalties can include fines and imprisonment, depending on the severity of the breach. However, the maximum penalties are not specified in this particular explanatory statement.