EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0603540
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 Ltd applied for a TCO in respect of certain blast furnaces on 8 February 2006.
Instrument
TCO No 0603540 was made on 21 April 2006. It declares that those certain blast furnaces 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. 0603540 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 Customs Act 1901, enacted by the Australian Parliament, provides a framework for the administration of customs duties and other import charges. Among its provisions, Part XVA introduces a scheme for Tariff Concession Orders (TCOs) which can reduce the rate of customs duty for specific goods. The introduction of this scheme was to address the need for flexibility in customs duties to support specific industries or economic needs by allowing the Chief Executive Officer of Customs to grant lower duty rates on certain goods under specific conditions. TCO No. 0603540, made in 2006, exemplifies this mechanism by reducing the duty on certain blast furnaces from 5% to 0%, following an application by Zinifex Ltd and a determination by the CEO that no substitutable goods were produced in Australia at the time. This instrument aims to ensure that the rights of importers are beneficially affected and no existing rights or liabilities are adversely impacted by the concession.
Scope and Application
The Tariff Concession Instrument No. 0603540 under the Customs Act 1901 applies to goods that are the subject of a Tariff Concession Order (TCO) made by the Chief Executive Officer of Customs. Specifically, it concerns the application of a lower rate of customs duty to certain blast furnaces, as applied to Zinifex Ltd. The Act allows for the concession of tariffs on specific goods that are not substitutable by Australian-produced goods, provided certain criteria are met. The scope of the Act includes any entity or individual that imports goods eligible for tariff concessions as outlined under section 269F of the Act. The Act has a national reach, applying across the Commonwealth of Australia and affecting the importation process governed by the Customs Act 1901. However, it excludes goods specified in section 269SJ of the Act, which cannot be subject to a TCO. The Act may be extended or restricted through subordinate instruments, allowing for flexibility in its application. The commencement of the TCO is deemed to have occurred on the date the application was lodged, which in this case was 8 February 2006.
Key Provisions
The primary sections of the Tariff Concession Instrument No. 0603540 under the Customs Act 1901 (section 269F) pertain to the application and approval process for Tariff Concession Orders (TCOs). An application for a TCO can be made by a person seeking to have a lower rate of customs duty applied to specific goods (section 269F). The Chief Executive Officer of Customs (CEO) must then assess whether the application complies with the core criteria, specifically ensuring that no substitutable goods were produced in Australia at the time of the application (section 269C). If these criteria are met, the CEO is required to issue a written order (section 269P(3)). For the blast furnaces in question, item 50 of Schedule 4 to the Customs Tariff Act 1995 applies, reducing the duty rate from 5% to 0% (section 269P(3)).
The Act imposes several obligations on the parties involved. Firstly, applicants must ensure that their applications meet the stipulated criteria, particularly concerning the absence of substitutable goods produced in Australia. The CEO, on the other hand, is obligated to publish a notice in the Gazette as soon as practicable after receiving a valid TCO application, inviting any interested party to submit objections (subsection 269K(1)). In this case, no submissions were received. Additionally, the CEO must decide whether the application meets the core criteria and, if so, issue the TCO. The TCO itself is effective from the date the application was lodged (subsection 269S(1)).
In terms of potential consequences, breaches of the Act's provisions or the terms of a TCO could lead to various penalties. While the explanatory statement does not detail specific penalties, under Australian law, breaches of customs regulations can generally result in both civil and criminal penalties. Civil penalties may include fines, and in severe cases, criminal penalties could involve imprisonment. However, the explanatory statement specifically notes that the TCO does not affect existing rights or impose new liabilities on anyone, thereby safeguarding the rights of importers who can apply for refunds of duties paid prior to the TCO's effective date (paragraph 126(1)(r) of the Regulations).