EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0510727
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 applied for a TCO in respect of certain Walking Beam Furnace Valves on 16 August 2005.
Instrument
TCO No 0510727 was made on 28 October 2005. It declares that those certain Walking Beam Furnace Valves 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. 0510727 is taken to have come into force on 16 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 Customs Act 1901, enacted by the Parliament of Australia, established a framework for the administration of customs duties and included provisions for Tariff Concession Orders (TCOs) to provide tariff relief for certain goods. The Tariff Concession Instrument No. 0510727, made under the authority of the Customs Act, addresses the specific issue of providing tariff concessions for certain Walking Beam Furnace Valves by reducing the rate of customs duty from 5% to 0%. This instrument was introduced following an application by Bluescope Steel and was enacted to ensure that no substitutable goods were produced in Australia at the time of the application, thus meeting the core criteria set out in the Act. The instrument aims to benefit importers by allowing them to apply for a refund of duty on goods imported since the TCO came into force, without imposing any new liabilities on individuals or entities.
Scope and Application
The Customs Act 1901, through its Part XVA, provides the framework for Tariff Concession Orders (TCOs) which can be applied for by any person, including entities within various industries, to obtain a lower rate of customs duty on certain goods. Specifically, the Act applies to the Chief Executive Officer of Customs (CEO) who is responsible for deciding whether to grant a TCO based on certain criteria, such as whether substitutable goods are produced in Australia. The geographic reach of the Act is national, with the TCOs applying across the Commonwealth of Australia. The Act does not apply to goods specified in section 269SJ, which are ineligible for tariff concessions. The application of the Act can be extended through subordinate instruments such as the Customs Tariff Act 1995, which specifies the rates of duty applicable to goods subject to TCOs. An example of this is Tariff Concession Instrument No. 0510727, which was applied to certain Walking Beam Furnace Valves, reducing the duty rate from 5% to 0%. The CEO is mandated to consult the public when accepting a TCO application, although in this case, no submissions were received. The TCO becomes effective from the date the application was lodged and does not affect any pre-existing rights or liabilities of persons other than the Commonwealth.
Key Provisions
The Tariff Concession Order No. 0510727, as provided in F2005L03406, outlines the conditions under which certain Walking Beam Furnace Valves will be subject to a concessionary rate of customs duty. Specifically, Section 269P(3) of the Customs Act 1901 mandates that if the Chief Executive Officer (CEO) of Customs is satisfied that no substitutable goods are produced in Australia, a lower rate of duty applies to the goods in question. In this instance, the CEO has determined that the general rate of duty of 5% is reduced to 0% for the specified valves, as per item 50 of Schedule 4 to the Customs Tariff Act 1995. The TCO is effective from the date the application was lodged, which is 16 August 2005.
The Act imposes certain obligations on the parties involved. For instance, under Section 269C of the Customs Act 1901, an application for a Tariff Concession Order must meet core criteria, which includes the absence of substitutable goods being produced in Australia. Additionally, Section 269K(1) requires the CEO to publish a notice in the Gazette inviting submissions from any interested parties who might have objections to the TCO being made. In this case, the CEO published the notice and did not receive any submissions, allowing the TCO to proceed without opposition.
Failure to comply with the requirements of the Customs Act 1901 and the associated regulations could lead to various consequences. While the specific Act does not outline penalties for breach, the broader Customs Act 1901 does provide for a range of civil and criminal penalties. For example, providing false or misleading information in an application could result in fines of up to $11,000 for individuals and significantly higher amounts for corporations, as well as potential criminal charges. Furthermore, any breaches of the duty provisions could lead to financial penalties, including the payment of the difference between the concessionary rate and the full rate of duty, plus interest and additional charges.