EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1114143
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.
Integrated Packaging applied for a TCO in respect of certain silage bags on 04 May 2011.
Instrument
TCO No 1114143 was made on 25 July 2011. It declares that those certain silage bags 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. 1114143 is taken to have come into force on 04 May 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 Commonwealth Parliament, was amended to introduce the mechanism for Tariff Concession Orders (TCOs) through Part XVA, addressing the gap in tariff relief for specific goods not produced domestically. The Act empowers the Chief Executive Officer of Customs to make TCOs, reducing customs duty on goods subject to such orders, provided they meet certain criteria and do not relate to excluded goods. The policy objective is to support Australian importers by lowering the cost of certain imported goods, thereby enhancing competitive parity with locally produced alternatives. TCO No. 1114143, issued on 25 July 2011, exemplifies this by granting a tariff concession on specific silage bags, reducing their duty rate from 5% to free, following an application by Integrated Packaging. This process included a public consultation period with no objections received, ensuring the transparency and fairness of the decision-making process.
Scope and Application
The Tariff Concession Instrument No. 1114143, pursuant to the Customs Act 1901, applies to the importation of specific silage bags. The Act authorises the Chief Executive Officer of Customs to grant tariff concessions under certain conditions, particularly when the goods in question are not produced in Australia or do not have substitutable goods produced domestically. The instrument was made in response to an application by Integrated Packaging on 04 May 2011, and it came into force on the same date. The TCO does not disadvantage any persons or impose liabilities on any person for actions taken before its registration. However, it does entitle eligible importers to apply for a refund of duty paid on the importation of these goods since the TCO's effective date. This legislation is applicable nationally across Australia and does not extend to any goods specified in section 269SJ of the Customs Act 1901, which are ineligible for tariff concessions.
Key Provisions
The Tariff Concession Instrument No. 1114143, made under the Customs Act 1901, applies to certain silage bags and provides a tariff concession reducing the duty on these goods from 5% to free (Section 269P(3)). This instrument was made on 25 July 2011, after Integrated Packaging applied for the concession on 4 May 2011, and is effective from that date (Section 269S(1)). The key provision of this instrument is that it allows the specified silage bags to benefit from a reduced customs duty rate, provided no substitutable goods are produced in Australia (Section 269C).
The obligations imposed by this Act on the parties involved are primarily administrative and procedural. For applicants, such as Integrated Packaging, the obligation is to ensure that their application for a Tariff Concession Order (TCO) is made in accordance with the requirements of the Customs Act 1901, particularly satisfying the core criteria outlined in Section 269C (Section 269F). For the Chief Executive Officer of Customs, the obligation is to assess the application against these criteria and, if satisfied, to issue the TCO. Additionally, the CEO must publish a notice in the Gazette inviting submissions from interested parties before making the decision (Section 269K(1)).
In terms of consequences for breach, the Customs Act 1901 does not explicitly outline specific offences, penalties, or consequences for non-compliance with the TCO provisions. However, breaches of customs regulations generally can result in civil or criminal penalties, including fines and imprisonment. For instance, under Section 238 of the Customs Act 1901, an individual or entity found guilty of an offence can face fines and imprisonment. The exact penalties depend on the nature and severity of the breach but can include substantial financial penalties and periods of incarceration.
The instrument ensures that the rights of importers will be beneficially affected, allowing them to apply for a refund of duty on goods imported since the effective date of the TCO (Regulations, paragraph 126(1)(r)). Importantly, the TCO does not affect the rights of any person (other than the Commonwealth) in a way that disadvantages them or imposes liabilities in respect of actions taken before the registration date. This means that while the concession provides a benefit to importers of the specified silage bags, it does not impose any new liabilities or disadvantage any party who acted in good faith before the concession was registered.