EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0605625
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.
Atco Controls Pty Ltd applied for a TCO in respect of certain non orientated electrical steel on 23 March 2006.
Instrument
TCO No 0605625 was made on 16 June 2006. It declares that those certain non orientated electrical steel 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. 0605625 is taken to have come into force on 23 March 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 was enacted to establish and regulate the collection of customs duties, and it provides a framework for making Tariff Concession Orders (TCOs). The Tariff Concession Instrument No. 0605625 was introduced in 2006 to address a specific gap in the tariff system by providing tariff concessions on certain non-orientated electrical steel, which were not being produced in Australia. This instrument was developed in response to an application from Atco Controls Pty Ltd, and it was created under the authority of the Chief Executive Officer of Customs, who must determine whether an application meets the core criteria for a TCO, which includes ensuring that no substitutable goods are produced in Australia. The policy objective of this instrument is to facilitate the import of these goods at a reduced rate of duty, benefiting importers while not imposing any liabilities on other stakeholders.
Scope and Application
The Customs Act 1901, specifically under Part XVA, provides the legislative framework for the creation of Tariff Concession Orders (TCOs) which can result in tariff concessions for certain goods. This scheme applies to individuals and entities who can apply to the Chief Executive Officer (CEO) of Customs for a TCO on goods not specified in section 269SJ, which outlines goods ineligible for such concessions. The application process requires the CEO to assess whether the goods in question meet the core criteria set out in sections 269C and 269D, including the absence of substitutable goods produced in Australia. If the CEO is satisfied that the application meets these criteria, a TCO is issued, thereby applying a prescribed tariff rate from Schedule 4 of the Customs Tariff Act 1995 to the specified goods. This Act applies on a national level across Australia, extending its reach to all states and territories. There are no exclusions, exemptions, or thresholds specified within the Act itself, but the process of determining substitutable goods and ordinary course of business is further detailed in subordinate sections of the Customs Act 1901. The TCOs themselves can extend or restrict application through subordinate instruments, as evidenced by TCO No. 0605625 for certain non-orientated electrical steel, which came into effect from the date of the application, 23 March 2006.
Key Provisions
The main operative sections of this legislation (section 269C, 269P(3), and 269S(1)) outline the process for making Tariff Concession Orders (TCOs) under the Customs Act 1901. Specifically, section 269C establishes the core criteria that a TCO application must meet, focusing on whether substitutable goods are produced in Australia. If no such goods are produced, the Chief Executive Officer of Customs (CEO) must make a written order granting the concession. Section 269P(3) mandates that if the core criteria are met, the CEO must issue a TCO. Finally, section 269S(1) specifies that a TCO comes into force on the date the application is lodged.
The obligations imposed by the Act on parties such as the CEO and applicants for TCOs include ensuring that applications meet the core criteria set out in section 269C. The CEO must publish a notice in the Gazette inviting submissions on the application and consider any submissions received. Additionally, the CEO must ensure that TCOs do not disadvantage any person or impose liabilities on them in respect of actions taken before the TCO comes into force.
Breaches of the Act or non-compliance with the obligations and requirements it sets out can lead to various civil and criminal consequences. While the explanatory statement does not detail specific offences or penalties, it is likely that violations could result in penalties under the Customs Act 1901. Typically, breaches of customs legislation can attract substantial fines and, in serious cases, criminal charges. The maximum penalties would depend on the specific nature and severity of the breach, but they can include fines of up to $22,000 per offence for individuals and significantly higher amounts for corporations, along with potential imprisonment terms.