EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1131123
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.
Paperlinx Ltd applied for a TCO in respect of certain paper and paperboard on 13 September 2011.
Instrument
TCO No 1131123 was made on 06 December 2011. 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. 1131123 is taken to have come into force on 13 September 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 was enacted by the Australian Parliament to provide for the administration of customs and excise duties and the control of goods imported into, and exported from, Australia. The Act was introduced to address the need for a comprehensive legislative framework governing customs duties and associated regulations to facilitate international trade while protecting domestic industries and revenue. Part XVA of the Customs Act 1901 establishes a scheme for Tariff Concession Orders (TCOs), which are designed to provide relief from customs duty on specified goods under certain conditions. The policy objective of this mechanism is to support industries by reducing the cost of imported goods, thereby promoting competitiveness and economic growth. This is achieved by allowing the Chief Executive Officer of Customs to make written orders, known as TCOs, that declare certain goods as eligible for a lower rate of customs duty, provided that no substitutable goods are produced in Australia in the ordinary course of business.
Scope and Application
The Tariff Concession Instrument No. 1131123 under the Customs Act 1901 applies to specific goods, namely certain paper and paperboard, and is relevant to entities such as Paperlinx Ltd that have applied for and received a Tariff Concession Order (TCO). This Act operates within the Commonwealth jurisdiction, providing a framework for the Chief Executive Officer of Customs to make TCOs that reduce the rate of customs duty on goods not produced in Australia in the ordinary course of business. The TCO process ensures that no substitutable goods are produced domestically, thereby allowing for the tariff concessions. The geographic reach of this legislation is national, as it pertains to the importation of goods into Australia. There are exclusions, notably those goods specified in section 269SJ of the Act, which cannot be subject to a TCO. The application of this Act may be extended or restricted through subordinate instruments, although the primary focus is on the conditions outlined in the Customs Act 1901.
Key Provisions
The Customs Act 1901, through Part XVA, establishes the framework for Tariff Concession Orders (TCOs), which are administered by the Chief Executive Officer of Customs (CEO) (sections 269C, 269F, 269P(3)). An application for a TCO can be made by any person, and if the CEO determines that the goods in question are not prohibited under section 269SJ, the application will be assessed against the core criteria set out in section 269C. For the application to be successful, it must be established that, on the date of application, no substitutable goods were produced in Australia in the ordinary course of business. Definitions of these terms are provided in sections 269D, 269E, and 269F of the Act.
Upon finding that an application meets the core criteria, the CEO is mandated to issue a written TCO (section 269P(3)). This order specifies the prescribed item of Schedule 4 to the Customs Tariff Act 1995 that applies to the goods in question. For instance, in the case of Paperlinx Ltd, which applied for a TCO regarding certain paper and paperboard on 13 September 2011, the CEO issued TCO No. 1131123 on 06 December 2011. This order declared that the specified paper and paperboard would be subject to item 50 of Schedule 4, resulting in a duty rate of free, down from the general rate of 5%.
The Act also imposes certain obligations on the CEO in relation to TCO applications. After accepting an application as valid, the CEO must publish a notice in the Gazette inviting any interested party to lodge a submission if they believe there are reasons why the TCO should not be granted (subsection 269K(1)). In the case of TCO No. 1131123, the CEO did not receive any submissions in response to this notice. Additionally, a TCO is considered to have come into force on the day the application was lodged (subsection 269S(1)), which in this case was 13 September 2011.
Failure to comply with the provisions of the Customs Act 1901 regarding TCOs can result in legal consequences. The Act does not specify penalties for breaches directly related to TCOs but implies that non-compliance could lead to legal challenges or administrative actions. The consequences of such breaches could include the imposition of the original duty rates on the goods in question, potentially leading to financial liabilities for the importer. It is also worth noting that the rights of third parties are protected, and a TCO cannot disadvantage any person or impose liabilities for actions taken before the TCO's effective date.