EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0603342
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 water to air coolers on 3 February 2006.
Instrument
TCO No 0603342 was made on 18 April 2006. It declares that those certain water to air coolers 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. 0603342 is taken to have come into force on 3 February 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 Customs Act 1901, enacted by the Australian Parliament, establishes the framework for the imposition of customs duties on imported goods. One of the provisions within this Act allows for the creation of Tariff Concession Orders (TCOs) to provide reduced rates of duty on specified goods under certain conditions. The objective is to facilitate trade by reducing the cost of imported goods that do not have Australian-made equivalents, thereby supporting industry and consumer interests. In 2006, the Tariff Concession Instrument No. 0603342 was introduced in response to an application from Bluescope Steel Ltd for tariff concessions on certain water to air coolers. The instrument was issued after it was determined that no substitutable goods were produced in Australia, thus meeting the criteria set out in the Act. The policy objective was to provide a tariff concession that would benefit importers of these goods by reducing their duty costs from the general rate of 5% to 0%.
Scope and Application
The Tariff Concession Instrument No. 0603342, made under the Customs Act 1901, applies to specific goods for which a Tariff Concession Order (TCO) has been sought and granted. In this case, the Act applies to Bluescope Steel Ltd's application for a TCO concerning certain water to air coolers. The scope of the Act includes the imposition of a lower rate of customs duty on goods that are the subject of a TCO, provided that the CEO is satisfied that the application meets the core criteria and that no substitutable goods are produced in Australia. The instrument’s jurisdictional reach is national, as it is enacted under Commonwealth legislation. The TCO does not affect the rights of persons as at the date of registration, and it does not impose any liabilities on any person. Additionally, the Act allows for the extension or restriction of its application through subordinate instruments, such as regulations or further orders, to refine the specifics of the concessions granted.
Key Provisions
The key provisions of Tariff Concession Instrument No. 0603342, which was made under the Customs Act 1901, are contained in sections 269C, 269B, 269D, 269E, and 269P(3). Section 269C sets out the core criteria that a Tariff Concession Order (TCO) application must meet for the Chief Executive Officer of Customs (the CEO) to grant a concession. Specifically, for the CEO to be satisfied with an application, it must be shown that on the date the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business. Definitions for "substitutable goods," "goods produced in Australia," and "ordinary course of business" are provided in sections 269B, 269D, and 269E respectively. If the CEO is satisfied that the application meets these criteria, they must make a TCO under section 269P(3), specifying the lower rate of duty applicable to the goods in question.
The obligations imposed by the Act on the parties governed by it are primarily on the CEO. When an application for a TCO is received, section 269K(1) requires the CEO to publish a notice in the Gazette inviting any person who believes the TCO should not be granted to submit their reasons to the CEO. The CEO must then consider these submissions and decide whether to make the TCO. In this case, no submissions were received. Once a TCO is made, the CEO is responsible for ensuring that the rights of any person, other than the Commonwealth, are not adversely affected by the concession. The rights of importers will be beneficially affected by this TCO as they can apply for a refund of duty on goods imported since the TCO is taken to have come into force.
In terms of offences, penalties, and consequences for breach, the Customs Act 1901 does not specify any criminal penalties for failing to comply with the TCO process or for making false or misleading statements in an application. However, any person who is found to have contravened the Act or the Regulations could face civil penalties. For example, under section 283 of the Act, a person who imports goods in contravention of the Act or the Regulations may be liable for a penalty of up to $11,100 per occurrence or, in the case of a continuing failure to comply, up to $222,000 per day. There are also potential administrative consequences for businesses that fail to comply with the requirements of the TCO, such as being unable to claim a refund of duty on imported goods or facing legal action from the Commonwealth.