EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0510892
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 Heating Elements on 17 August 2005.
Instrument
TCO No 0510892 was made on 28 October 2005. It declares that those certain Heating 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. 0510892 is taken to have come into force on 17 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. 0510892 was enacted in 2005 under the Customs Act 1901 with the aim of addressing the gap in tariff concessions for specific goods not produced domestically. This instrument was introduced to provide relief to importers by reducing the customs duty on certain Heating Elements, which Bluescope Steel had applied for. The enacting body for this instrument was the Chief Executive Officer of Customs, who was mandated to make Tariff Concession Orders (TCOs) if the application met the core criteria, including the non-existence of substitutable goods produced in Australia. The policy objective was to facilitate the importation of these goods at a reduced duty rate, thereby benefiting importers and ensuring that no existing rights of other stakeholders were adversely affected.
This legislation was intended to provide a streamlined process for applying and assessing tariff concessions, ensuring that the application criteria were met before any concession was granted. The Customs Act 1901 established a clear framework under which the CEO could make informed decisions on tariff concessions, as seen in the case of the Heating Elements, where the duty rate was reduced from 5% to 0%. This approach ensured that the tariff concessions were both justifiable and beneficial to the relevant parties without imposing any new liabilities.
Scope and Application
The Tariff Concession Instrument No. 0510892, under the Customs Act 1901, applies to entities or individuals who seek to import goods that are eligible for reduced customs duty rates through a Tariff Concession Order (TCO). The Act primarily targets the importation of goods, specifically Heating Elements in this instance, and regulates the application process for tariff concessions by the Chief Executive Officer of Customs. It is applicable on a national level across Australia, with the scope defined by the Customs Act 1901. The application of the Act is restricted by section 269SJ, which specifies goods that are ineligible for a TCO. Moreover, the Act mandates that no substitutable goods were produced in Australia on the day the application was lodged, as per section 269C, and that the goods are produced in the ordinary course of business as defined in section 269E. The application of the Act may be further refined or extended through subordinate instruments, although specific details of such instruments are not provided in the explanatory statement.
Key Provisions
The main sections of the Tariff Concession Instrument No. 0510892 include sections 269C, 269B, and 269P(3) of the Customs Act 1901. Section 269C sets out the core criteria that must be met for a Tariff Concession Order (TCO) application to be considered valid, while section 269B provides definitions for terms such as "goods produced in Australia," "ordinary course of business," and "substitutable goods." If the Chief Executive Officer (CEO) of Customs is satisfied that the application meets the core criteria, section 269P(3) mandates that the CEO make a written TCO order, declaring that the goods in question are subject to a prescribed rate of duty as outlined in Schedule 4 of the Customs Tariff Act 1995.
The Customs Act 1901 imposes several obligations on the CEO of Customs in relation to TCOs. Firstly, the CEO must ensure that the application does not concern goods specified in section 269SJ, which are ineligible for a TCO. Secondly, the CEO must verify that the application meets the core criteria outlined in section 269C, specifically by confirming that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged. Thirdly, the CEO is required to publish a notice in the Gazette as soon as practicable after accepting a TCO application as valid, inviting any person who believes the TCO should not be made to lodge a submission. If no submissions are received, the CEO can proceed with making the TCO.
Under the Customs Act 1901, there are potential consequences for failure to comply with the requirements for TCOs. While the explanatory statement does not explicitly state any offences, penalties, or civil/criminal consequences for breach, it is reasonable to assume that any non-compliance could result in legal action. For example, if the CEO were to make a TCO without properly verifying the core criteria or publishing the required notice in the Gazette, they could be subject to judicial review or other legal challenges. Additionally, if a person were to knowingly import goods subject to a TCO without paying the appropriate duty, they could face criminal charges under the Customs Act 1901, which carries a maximum penalty of 10 years imprisonment or a fine of up to $220,000, or both, for serious offences.