EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0603729
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 niobium shell and tube heat exchangers on 13 February 2006.
Instrument
TCO No 0603729 was made on 28 April 2006. It declares that those certain niobium shell and tube heat exchangers 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. 0603729 is taken to have come into force on 13 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. 0603729, enacted under the Customs Act 1901, was introduced to address the need for tariff concessions for specific imported goods. This legislation allows for a reduced rate of customs duty on goods that are subject to a Tariff Concession Order (TCO). The instrument was enacted to ensure that the application process for such concessions is transparent and accessible, allowing businesses like Bluescope Steel Ltd to apply for reduced duties on certain goods, such as niobium shell and tube heat exchangers, provided no substitutable goods are produced in Australia. The policy objective is to facilitate trade by reducing duty rates where appropriate, thereby potentially lowering costs for businesses and consumers.
The instrument was developed by the Chief Executive Officer of Customs following an application by Bluescope Steel Ltd for a tariff concession on niobium shell and tube heat exchangers. After satisfying the core criteria that no substitutable goods were produced in Australia, a TCO was issued, reducing the duty rate from 5% to 0% for these specific goods. This decision was made transparently, with an invitation for public submissions, although none were received. The TCO came into effect on the date of the application, 13 February 2006, and it does not disadvantage any existing rights or impose new liabilities on individuals or entities. Importers can benefit by applying for a refund of duty paid on these goods since the effective date of the TCO.
Scope and Application
The Customs Act 1901 applies to all persons and entities importing goods into Australia, with a particular focus on those seeking tariff concessions for specific goods. The Act allows for Tariff Concession Orders (TCOs) to be made by the Chief Executive Officer of Customs, reducing the customs duty on certain goods if specific criteria are met. Notably, the Act excludes goods specified in section 269SJ, which cannot be subject to a TCO. The geographic reach of this legislation is national, impacting all importers across Australia. The instrument, Tariff Concession Instrument No. 0603729, specifies that certain niobium shell and tube heat exchangers qualify for a zero per cent duty rate, provided no substitutable goods are produced in Australia. The commencement date for this order is 13 February 2006, the date the application was lodged, and it does not affect any existing rights or impose new liabilities on importers or other persons. This legislative framework allows for further expansion or restriction of application through subordinate instruments, ensuring flexibility and responsiveness to industry needs.
Key Provisions
The Tariff Concession Instrument No. 0603729 under the Customs Act 1901 applies specifically to certain niobium shell and tube heat exchangers. According to section 269P(3), the Chief Executive Officer (CEO) of Customs must make a written order, known as a Tariff Concession Order (TCO), if satisfied that the application for tariff concession meets the core criteria as outlined in section 269C. In this case, the CEO determined that no substitutable goods were produced in Australia, thus allowing for the concession. The TCO, declared under item 50 of Schedule 4 to the Customs Tariff Act 1995, effectively reduces the duty rate from the general 5% to 0% for these specific goods.
Entities governed by this Act, such as Bluescope Steel Ltd, must ensure their applications meet the specified criteria, primarily the absence of substitutable goods produced in Australia. The CEO has an obligation under section 269K(1) to publish a notice in the Gazette inviting any interested parties to submit objections or reasons why the TCO should not be made. In this instance, no such submissions were received. The TCO, once registered, is retroactive to the date the application was lodged, meaning that importers can apply for a refund of duties on goods imported from the application date.
The Act imposes several obligations on the CEO and applicants. The CEO must carefully assess each application against the core criteria to ensure that the concession is appropriately granted. Applicants, such as Bluescope Steel Ltd, must provide all necessary information and evidence to substantiate their claim for tariff concession. Additionally, the CEO is mandated to publish notices in the Gazette to allow for public consultation, although in this case, no objections were received.
Failure to comply with the provisions of the Customs Act 1901 and associated regulations can result in legal consequences. Under the Act, breaches may lead to civil penalties, which can include fines up to a maximum of $22,200 for individuals and $111,000 for corporations, as stipulated by section 282. Criminal penalties may also apply, with potential imprisonment terms and additional fines, depending on the severity and intent of the breach. It is critical for all parties to adhere to the statutory requirements to avoid these penalties.