EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0603537
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.
Zinifex Limited applied for a TCO in respect of certain Sag Mills on 8 February 2006.
Instrument
TCO No 0603537 was made on 18 April 2006. It declares that those certain sag mills 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. 0603537 is taken to have come into force on 8 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 Tariff Concession Instrument No. 0603537, enacted in 2006, is an instrument made under the Customs Act 1901 with the aim of facilitating the reduction of customs duty on specific goods. The Customs Act 1901 provides a framework for Tariff Concession Orders (TCOs) through which the Chief Executive Officer of Customs can reduce the customs duty on certain imported goods. This instrument was introduced to address the problem of high customs duties on particular goods that have no local substitutes produced in Australia, thereby making Australian products less competitive. The instrument was enacted by the Australian Parliament and the policy objective is to provide a mechanism through which the CEO can grant tariff concessions, thus promoting trade and economic efficiency. In this specific case, the instrument was applied to certain Sag Mills, reducing their customs duty rate from the general rate of 5% to free, in response to an application by Zinifex Limited.
Scope and Application
The Customs Act 1901, specifically under Part XVA, facilitates the granting of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO). These orders apply to specific goods, reducing the rate of customs duty on them. The application for a TCO is made by any person who is not seeking a concession for goods listed in section 269SJ of the Act, which outlines goods that cannot be subject to a TCO. The CEO considers the application against the core criteria set out in sections 269C, 269B, and 269D of the Act, focusing on whether substitutable goods are produced in Australia. If the CEO is satisfied that no substitutable goods were produced in Australia, they must issue a written TCO, as per section 269P(3). The TCO in question, No. 0603537, applies to certain sag mills, reducing their duty rate from 5% to free, as no substitutable goods were produced in Australia. The TCO was published in the Gazette inviting submissions, none of which were received, and it is deemed to have come into force on the date the application was lodged, 8 February 2006. The TCO does not affect existing rights or impose liabilities, though it does allow for duty refunds for importers of these goods from the effective date of the TCO.
Key Provisions
The primary sections of Tariff Concession Instrument No. 0603537 pertain to the process of applying for and making Tariff Concession Orders (TCOs) under the Customs Act 1901 (the Act) (s 269F, s 269C, s 269P(3)). An application for a TCO can be submitted by any person to the Chief Executive Officer of Customs (the CEO) (s 269F). If the CEO determines that the application pertains to goods that are not listed in section 269SJ of the Act and meets the core criteria, they are required to issue a written order, declaring the goods to which a specific item of Schedule 4 to the Customs Tariff Act 1995 applies (s 269C, s 269P(3)). This instrument declares that certain Sag Mills are goods to which item 50 of Schedule 4 to the Tariff applies because no substitutable goods were produced in Australia (s 269P(3)).
The Act imposes specific obligations on the CEO and applicants. The CEO must evaluate whether an application meets the core criteria, which include the absence of substitutable goods produced in Australia at the time of the application (s 269C). Additionally, the CEO must publish a notice in the Gazette inviting any interested parties to submit reasons against the making of a TCO if they believe such reasons exist (s 269K(1)). In this case, no submissions were received in response to the published notice.
Failure to comply with the provisions of the Customs Act 1901 and the associated regulations could result in various consequences. The Act does not specify particular offences or penalties for non-compliance with TCOs. However, any misuse of the concessions or fraudulent claims could lead to broader legal ramifications under other sections of the Customs Act or related legislation. For instance, any attempt to evade duty or submit false information could result in fines and imprisonment under the broader customs laws. The Act ensures that the rights of persons other than the Commonwealth are not adversely affected by the issuance of a TCO (s 269S(1)).