EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1120750
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.
Sappi trading Australia Pty Ltd applied for a TCO in respect of certain paper on 23 June 2011.
Instrument
TCO No 1120750 was made on 12 September 2011. It declares that those certain paper 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. 1120750 is taken to have come into force on 23 June 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, provides a framework for the regulation of customs and excise, including the imposition of customs duties. To address the need for tariff concessions that support specific industries and reduce costs for importers, the Act allows for the creation of Tariff Concession Orders (TCOs) through Part XVA. The Tariff Concession Instrument No. 1120750, made under this authority, responds to an application by Sappi Trading Australia Pty Ltd for a tariff concession on certain paper products. The instrument was created to provide a concession where no substitutable goods are produced in Australia, effectively reducing the customs duty on these goods from 5% to free. The process involved satisfying the core criteria under the Act, which was followed by publishing a notice in the Gazette to allow for any objections, none of which were received. The tariff concession came into effect on the date the application was lodged, 23 June 2011, and it does not retroactively affect any existing rights or impose new liabilities on individuals.
Scope and Application
The Tariff Concession Instrument No. 1120750, issued under the Customs Act 1901, applies to entities or individuals who wish to import specific goods, namely certain paper products, under a concessionary rate of customs duty. This instrument was made by the Chief Executive Officer of Customs (CEO) on 12 September 2011, following an application from Sappi Trading Australia Pty Ltd on 23 June 2011. The instrument declares that the specified paper products are subject to item 50 of Schedule 4 to the Customs Tariff Act 1995, which results in a duty-free rate for these goods, as the CEO was satisfied that no substitutable goods were produced in Australia on the date the application was lodged. The instrument's application is national in scope, as it pertains to the Commonwealth’s customs duties and is implemented through the Customs Act 1901. The TCO does not affect any existing rights or liabilities of persons other than the Commonwealth, and it does not impose any new liabilities. Any person who believes there are reasons why the concession should not be granted could have made submissions to the CEO; however, none were received in this case.
Key Provisions
The Tariff Concession Instrument No. 1120750, under the Customs Act 1901, applies specifically to certain paper products. Section 269P(3) of the Act mandates that if the Chief Executive Officer of Customs (CEO) determines that an application for a Tariff Concession Order (TCO) meets the core criteria, the CEO must issue a written order. This order declares that the goods in question are subject to a particular item in Schedule 4 of the Customs Tariff Act 1995, thus granting them tariff concessions. In this case, the TCO specifies that the certain paper products are subject to item 50 of Schedule 4, with a general duty rate of 5%, reduced to free duty under the TCO.
The obligations imposed by the Act on parties applying for a TCO include ensuring that the goods in question are not specified in section 269SJ, which lists goods ineligible for tariff concessions. Furthermore, section 269C of the Act requires that on the date the application is lodged, no substitutable goods were produced in Australia in the ordinary course of business. Substitutable goods are defined in section 269D as goods produced in Australia that could serve the same purpose as the goods in question. The CEO must also publish a notice in the Gazette inviting submissions from any person who believes the TCO should not be granted. The CEO must consider these submissions before making a decision.
Breaching the conditions set out in the Customs Act 1901 can result in significant penalties. Section 273 of the Act outlines various offences, including making a false or misleading statement in an application for a TCO, which can lead to civil or criminal penalties. Civil penalties can include fines of up to $22,200 for individuals and $111,000 for corporations, while criminal penalties can include imprisonment for up to two years. Additionally, section 274 provides for the imposition of pecuniary penalties for breaches, with the maximum penalty for individuals being $22,200 and for corporations being $111,000. The Act also includes provisions for the recovery of any duty that should have been paid but was not, which can result in further financial liabilities for the defaulting party.