EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0512186
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 hot strip mill motor drive inverters on 14 September 2005.
Instrument
TCO No 0512186 was made on 25 November 2005. It declares that those certain hot strip mill motor drive inverters 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. 0512186 is taken to have come into force on 14 September 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, provides a framework for the administration of customs duties and includes provisions for Tariff Concession Orders (TCOs). The Tariff Concession Instrument No. 0512186, issued under this Act, aims to address the issue of applying lower customs duties to specific goods, provided certain conditions are met. The instrument was introduced to facilitate the concession of tariff rates for goods where no substitutable products are produced domestically. The policy objective is to encourage the import of goods that are not domestically produced, thereby supporting industries that rely on imported components. The instrument was made effective from the date the application was lodged, ensuring timely benefits for the importer and avoiding any retrospective disadvantages.
Scope and Application
The Customs Act 1901, through Part XVA, enables the Chief Executive Officer of Customs to make Tariff Concession Orders (TCOs) which provide for a lower rate of customs duty on specified goods. An application for a TCO can be made by any person, provided the goods in question are not those specified in section 269SJ of the Act that are ineligible for such concessions. For an application to be considered, it must meet the core criteria set out in section 269C, which includes the condition that no substitutable goods are produced in Australia in the ordinary course of business. The TCOs apply nationally, affecting the customs duty on the specified goods as per the prescribed items in Schedule 4 of the Customs Tariff Act 1995. For instance, Instrument TCO No 0512186, made on 25 November 2005, applied to certain hot strip mill motor drive inverters, reducing their duty from 5% to free. The application of a TCO does not retroactively affect any rights or liabilities of persons other than the Commonwealth, and it does not impose any new liabilities. The process requires public consultation, with the CEO publishing notices in the Gazette inviting submissions on the application, although in this case, no objections were received.
Key Provisions
The Customs Act 1901 establishes a framework under which Tariff Concession Orders (TCOs) can be made by the Chief Executive Officer (CEO) of Customs, as outlined in section 269F (1). When a TCO is granted, it applies a lower rate of customs duty on specified goods, as indicated in section 269P(3). In this instance, Tariff Concession Instrument No. 0512186 was made on 25 November 2005, declaring that certain hot strip mill motor drive inverters are subject to a TCO, meaning they are exempt from the general rate of duty of 5% (Schedule 4, item 50). This concession was granted on the basis that no substitutable goods were being produced in Australia at the time the application was lodged, satisfying the core criteria set out in section 269C.
The obligations imposed by the Act on parties such as Bluescope Steel Ltd, who applied for the TCO, require them to ensure that the goods they seek to import are not substitutable by any domestically produced equivalent. The CEO of Customs must verify this by confirming that no such substitutable goods are produced in Australia in the ordinary course of business, as defined in sections 269D and 269E. Additionally, the CEO is mandated to publish a notice in the Gazette under subsection 269K(1) to invite submissions from any interested parties who may have reasons why the TCO should not be granted. In this case, no submissions were received.
Failure to comply with the requirements of the Customs Act 1901 may result in legal consequences. While the explanatory statement does not detail specific offences under the Act, it is implied that any misrepresentation or non-compliance in the application process could lead to penalties. However, the statement does not provide details on the maximum penalties for such breaches. It is essential for parties to adhere strictly to the provisions and obligations set out in the Act to avoid potential legal ramifications.