EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0510522
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.
BHP Billiton Iron Ore Pty Ltd applied for a TCO in respect of certain rail track on 10 August 2005.
Instrument
TCO No 0510522 was made on 28 October 2005. It declares that those certain rail tracks 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. 0510522 is taken to have come into force on 10 August 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 Tariff Concession Instrument No. 0510522, enacted under the Customs Act 1901, aims to provide relief from customs duty on specific goods by allowing for tariff concessions. This instrument was introduced to address the need for targeted duty relief on certain imports, facilitating economic efficiency and competitive advantage for Australian businesses. Enacted by the Chief Executive Officer of Customs, the policy objective is to ensure that no substitutable goods are produced in Australia when considering tariff concessions, thereby supporting industries that rely on imported materials or components. The instrument was made on 28 October 2005, and it came into force on 10 August 2005, the date the application was lodged. The legislation ensures that the rights of importers are protected and that they may apply for refunds of duties paid on the specified goods since the effective date of the concession.
Scope and Application
The Customs Act 1901, through its Part XVA, facilitates the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO), which apply a lower rate of customs duty to specified goods. The application process for a TCO requires an applicant, such as BHP Billiton Iron Ore Pty Ltd, to submit a request to the CEO, who will then assess whether the application meets the core criteria set out in section 269C of the Act. This assessment hinges on the absence of substitutable goods produced in Australia at the time the application was lodged, as defined under sections 269D, 269E, and 269F. If the application meets these criteria, the CEO is obligated to issue a written TCO, which is effective from the date the application was made. In the specific case of TCO No. 0510522, the CEO made the order on 28 October 2005, following BHP Billiton Iron Ore Pty Ltd's application on 10 August 2005, applying a zero-rate duty to certain rail tracks, down from the general rate of 5%. The process includes public consultation, where the CEO invites submissions from interested parties, although in this instance, no submissions were received. The TCO does not affect existing rights or impose new liabilities on persons other than the Commonwealth, but it does provide benefits to importers by potentially allowing them to claim refunds on duties paid on the specified goods since the effective date of the TCO.
Key Provisions
The main operative sections of Tariff Concession Instrument No. 0510522 are sections 269C, 269P, and 269SJ of the Customs Act 1901 (the Act). Section 269C outlines the core criteria that a Tariff Concession Order (TCO) application must meet, such as ensuring no substitutable goods are produced in Australia in the ordinary course of business. Section 269P mandates that if the Chief Executive Officer of Customs (CEO) is satisfied that the application meets the core criteria, a written order must be made, declaring the goods to which the prescribed tariff item applies. Section 269SJ specifies the goods that cannot be subject to a TCO. This instrument declares certain rail tracks to be subject to a zero rate of duty under item 50 of Schedule 4 to the Customs Tariff Act 1995.
The Act imposes several obligations and requirements on the parties involved. The CEO must ensure that a TCO application meets the core criteria, which involves verifying that no substitutable goods are produced in Australia in the ordinary course of business. If the application meets these criteria, the CEO is required to make a written TCO. Additionally, the CEO must publish a notice in the Gazette inviting submissions from any interested parties. In this case, the CEO published a notice but did not receive any submissions. Importers of the specified goods are entitled to apply for a refund of duty on goods imported since the TCO is taken to have come into force.
The Act provides for civil and criminal consequences for breaches. The explanatory statement does not specify any penalties or offences directly related to the making of a TCO. However, general provisions of the Customs Act may apply to breaches of its provisions, including fines and imprisonment for serious offences. The maximum penalties for contraventions of the Customs Act can vary widely depending on the nature and severity of the breach. For example, penalties for offences involving fraud or deceit can include fines up to $220,000 or imprisonment for up to 10 years, or both. Lesser offences may incur lower penalties, such as fines up to $22,000. These penalties are intended to deter non-compliance and ensure adherence to the provisions of the Customs Act.