EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0504760
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.
Bluescope Steel Ltd applied for a TCO in respect of certain Heater Elements on 28 April 2005.
Instrument
TCO No 0504760 was made on 16 September 2005. It declares that those certain Heater Elements 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 0%.
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. 0504760 is taken to have come into force on 28 April 2005.
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, facilitates the application of lower rates of customs duty to certain goods through the mechanism of Tariff Concession Orders (TCOs). This was introduced to address the need for tariff reductions in specific cases where no domestic production of substitutable goods exists. The Tariff Concession Instrument No. 0504760, created in 2005, exemplifies the application of this scheme. Specifically, it was introduced to provide tariff concessions to Bluescope Steel Ltd for certain Heater Elements, reducing the customs duty from 5% to 0%, effective from the date of the application, 28 April 2005. The policy objective is to encourage import competition and protect domestic consumers by lowering the cost of imported goods, provided no domestic production of similar goods exists.
Scope and Application
The Customs Act 1901, under Part XVA, provides the framework for Tariff Concession Orders (TCOs), which allow for reduced rates of customs duty on certain goods. Specifically, Section 269F of the Act allows individuals or entities to apply for a TCO if the goods in question do not fall under the restrictions specified in Section 269SJ. The Chief Executive Officer of Customs (CEO) is tasked with determining whether an application meets the core criteria outlined in Section 269C, which requires that no substitutable goods are produced in Australia in the ordinary course of business. The definitions of key terms such as 'goods produced in Australia', 'ordinary course of business', and'substitutable goods' are provided in Sections 269D, 269E, and 269B respectively. Once the CEO is satisfied that the application meets these criteria, a TCO is issued, as demonstrated in the case of Bluescope Steel Ltd's application for Heater Elements, where the duty rate was reduced from 5% to 0%. The application process includes a requirement for the CEO to publish a notice in the Gazette, inviting any interested parties to submit objections; however, no objections were received in this instance. The TCO applies retroactively to the date the application was lodged, thus benefiting importers by potentially allowing them to claim duty refunds for goods imported since that date.
Key Provisions
The main operative sections of this legislation, found in the Customs Act 1901, pertain to Tariff Concession Orders (TCOs) and their application. Specifically, section 269F outlines the process for applying for a TCO, while section 269C sets the criteria that such applications must meet (269C). An application is deemed to meet the core criteria if, on the day it is lodged, no substitutable goods were produced in Australia in the ordinary course of business (269C). If these criteria are satisfied, the Chief Executive Officer of Customs (CEO) is required to make a written order declaring that the goods in question are subject to a specified rate of duty under the Customs Tariff Act 1995 (269P(3)). In the case of TCO No. 0504760, Heater Elements are declared to be subject to a 0% duty rate under item 50 of Schedule 4 to the Tariff, instead of the general rate of 5%.
The obligations imposed by the Customs Act 1901 on the parties involved primarily concern the CEO of Customs. Once a valid application for a TCO is received, the CEO must ensure that the application meets the core criteria and, if satisfied, must make a written order (269C, 269P(3)). Additionally, the CEO is required to publish a notice in the Gazette inviting submissions from any person who may have reasons why the TCO should not be made (269K(1)). In this instance, no submissions were received. The CEO also has the obligation to ensure that the TCO does not affect the rights of any person other than the Commonwealth in a way that disadvantages them or imposes liabilities for actions taken before the TCO was registered (269S(1)).
Under the Customs Act 1901, breaches of the provisions concerning Tariff Concession Orders could potentially lead to civil or criminal consequences, although no specific offences, penalties, or consequences are detailed in this particular legislation. The potential for legal action would typically arise from the improper application of the TCO or any resultant misuse, such as fraud or misrepresentation. However, the specifics of any penalties would be governed by the broader customs legislation and any applicable regulations, which are not detailed in this explanatory statement.