EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0603139
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 ball valves on 30 January 2006.
Instrument
TCO No 0603139 was made on 7 April 2006. It declares that those certain ball 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. 0603139 is taken to have come into force on 30 January 2006.
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. 0603139 was enacted under the Customs Act 1901 to provide tariff concessions for certain goods, addressing the need for economic incentives that could potentially stimulate local production and trade. This instrument was developed in response to an application by Bluescope Steel Ltd for tariff concessions on specific ball valves, which are critical components in various industrial applications. The Customs Act 1901 allows for such tariff concessions through Tariff Concession Orders (TCOs) made by the Chief Executive Officer of Customs. The problem this legislation aimed to solve was the potential disadvantage faced by Australian businesses in competing with imported goods, particularly where local production was not feasible or economically viable.
The instrument was enacted by the Commonwealth of Australia, specifically by the Chief Executive Officer of Customs, in accordance with section 269F of the Customs Act 1901. The policy objective of this measure is to support local industries by reducing the duty on certain goods, thereby making them more competitive in the market. The instrument ensures that no substitutable goods were produced in Australia when the application was made, thus fulfilling the core criteria for a TCO as outlined in the Act. The tariff on the specified ball valves has been reduced from the general rate of 5% to 0%, effective from the date the application was lodged, 30 January 2006.
Scope and Application
The Customs Act 1901, specifically through Part XVA, outlines the procedure for the Chief Executive Officer of Customs to make Tariff Concession Orders (TCOs) that apply reduced rates of customs duty to certain goods. This mechanism is available to any person who applies for a TCO in respect of goods that are not specified in section 269SJ of the Act. The core criteria for approving such an application, as stipulated in section 269C, include the absence of substitutable goods produced in Australia in the ordinary course of business on the day the application was lodged. This application process is integral to the national scope of the Act, affecting all individuals and entities involved in the importation of goods within Australia. The TCO does not disadvantage any person by imposing liabilities for actions taken prior to the order's registration, thus maintaining the status quo for those not directly involved in the concession. Once a TCO is made, it comes into effect from the date the application was lodged, and importers can apply for duty refunds on goods imported since that date.
Key Provisions
The primary operative sections of the Tariff Concession Instrument No. 0603139 are found under section 269C, 269F, 269P, and 269S of the Customs Act 1901. Section 269F allows a person to apply to the Chief Executive Officer of Customs (CEO) for a Tariff Concession Order (TCO) in respect of goods. The CEO is required to assess the application against the core criteria set out in section 269C. If the application meets the core criteria, the CEO must make a written order declaring that the goods are subject to a specified item of Schedule 4 to the Customs Tariff Act 1995, which can result in a concession on the rate of customs duty. This particular TCO (No. 0603139) pertains to certain ball valves, reducing their customs duty rate from 5% to 0%.
The Act imposes several obligations on the parties involved. The CEO has the responsibility to assess the validity of TCO applications (section 269F), ensuring they meet the core criteria outlined in section 269C. This includes verifying that no substitutable goods are produced in Australia. Additionally, under section 269K, the CEO must publish a notice in the Gazette inviting submissions from interested parties if they believe the TCO should not proceed. In this instance, no submissions were received. The Act also requires the CEO to ensure that the rights of persons, excluding the Commonwealth, are not adversely affected by the TCO and that no new liabilities are imposed as a result of the order.
Failing to comply with the requirements of the Customs Act 1901 can result in various civil or criminal consequences. Under section 269M of the Act, the CEO may cancel a TCO if it was made in error or if there has been a change in circumstances that renders the TCO invalid. Section 269N imposes penalties on individuals or entities that fail to comply with the Act or the regulations, which can include fines. While the specific penalties are not detailed in the explanatory statement, they are significant and designed to enforce compliance with the Act's provisions.
The Tariff Concession Instrument No. 0603139 provides specific benefits to importers of the affected goods, allowing them to apply for a refund of duty paid on those goods since the TCO is taken to have come into force on 30 January 2006. This refund provision is intended to mitigate any financial impact on importers who may have already paid duty prior to the TCO's effective date. The Act ensures that the rights of importers are beneficially affected by the concession, without imposing any new liabilities on any person.