EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0516889
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 Regenerative Thermal Oxidizer Parts on 30 November 2005.
Instrument
TCO No 0516889 was made on 13 February 2006. It declares that those certain Regenerative Thermal Oxidizer Parts 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. 0516889 is taken to have come into force on 30 November 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 was enacted to establish a comprehensive framework for the administration of customs duties and related matters in Australia. One of the mechanisms introduced by Part XVA of the Act is the Tariff Concession Order (TCO), which allows for the reduction of customs duties on specified goods. This provision was introduced to address the need for temporary tariff reductions to facilitate trade and industrial development, particularly for goods where no substitutable domestic production exists. The instrument in question, Tariff Concession Instrument No. 0516889, was enacted in 2006 following an application by Bluescope Steel Ltd for a concession on certain Regenerative Thermal Oxidizer Parts, resulting in a zero per cent duty rate on these items. The instrument was issued by the Chief Executive Officer of Customs, who is responsible for administering the TCO scheme, and was subject to public consultation as per the Act’s requirements, although no submissions were received. The objective of the TCO, as stated in the explanatory statement, is to provide tariff relief where appropriate, thereby encouraging trade and economic activity.
Scope and Application
The Customs Act 1901, specifically under Part XVA, establishes a scheme whereby the Chief Executive Officer (CEO) of Customs can issue Tariff Concession Orders (TCOs) to apply a lower rate of customs duty on certain goods. This mechanism applies to any person who makes an application to the CEO under section 269F of the Act for a TCO, provided the goods in question are not specified in section 269SJ, which outlines goods that cannot be subject to a TCO. The CEO must then assess whether the application meets the core criteria set out in section 269C of the Act, which involves determining if no substitutable goods were produced in Australia at the time of application, as defined by sections 269D and 269E. If these criteria are met, the CEO issues a written TCO, specifying the reduced duty rate applicable to the goods in question. In the case of TCO No 0516889, the CEO determined that no substitutable goods were produced in Australia for certain Regenerative Thermal Oxidizer Parts, thus granting a zero percent duty rate on these goods instead of the general rate of five percent. The application of this legislation is national in scope, impacting importers of the specified goods by providing potential duty refunds for imports since the effective date of the TCO.
Key Provisions
The Customs Act 1901, specifically under Part XVA, enables the Chief Executive Officer of Customs (CEO) to make Tariff Concession Orders (TCOs) that provide for a lower rate of customs duty on specified goods (s 269F). An application for a TCO can be submitted by a person, provided that the goods in question are not listed in section 269SJ of the Act as those that cannot be subject to a TCO (s 269C). The CEO must then assess whether the application meets the core criteria, which is determined by the absence of substitutable goods being produced in Australia in the ordinary course of business on the day the application is lodged (s 269C, s 269D, s 269E).
The obligations under the Customs Act 1901 for the CEO when processing a TCO application involve several steps. Firstly, the CEO must ensure that the application pertains to goods not listed in section 269SJ, and then verify the absence of substitutable goods being produced in Australia in the ordinary course of business on the application date (s 269C, s 269D, s 269E). If the core criteria are satisfied, the CEO is required to make a written order (TCO) specifying the prescribed item of Schedule 4 to the Customs Tariff Act 1995 that applies to the goods (s 269P(3)). Additionally, the CEO must publish a notice in the Gazette inviting submissions from any person who believes there are reasons why the TCO should not be made (s 269K(1)).
In the case of TCO No. 0516889, Bluescope Steel Ltd applied for tariff concessions on certain Regenerative Thermal Oxidizer Parts, which the CEO approved, resulting in a 0% duty rate for these goods as opposed to the general 5% rate (s 269F, s 269P(3)). The TCO came into effect on 30 November 2005, the date the application was lodged (s 269S(1)). Importantly, the TCO does not affect any rights of a person other than the Commonwealth as of the registration date, nor does it impose any liabilities on such a person in respect of actions taken or omitted before the registration date (s 269S(1)). Importers of the specified goods can apply for a refund of duty on goods imported since the TCO came into force (Reg 126(1)(r)).
There are no specific offences or penalties outlined in the Act for breaches related to TCOs; however, any actions taken in contravention of the Customs Act 1901 or Customs Tariff Act 1995 could result in civil or criminal penalties as prescribed under those Acts. The potential penalties could range from fines to imprisonment, depending on the severity and intent of the breach. For instance, under the Customs Act, unauthorised importation or exportation of goods can attract significant fines and/or imprisonment (s 133, s 134).