EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0606251
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 drive shafts on 6 April 2006.
Instrument
TCO No 0606251 was made on 30 June 2006. It declares that those certain drive shafts 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. 0606251 is taken to have come into force on 6 April 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. 0606251 was enacted in 2006 under the Customs Act 1901 to address the specific need for tariff concessions on certain goods. This legislative instrument allows for the application of lower rates of customs duty on goods that are the subject of a Tariff Concession Order (TCO), as determined by the Chief Executive Officer of Customs (CEO). Bluescope Steel Ltd applied for a TCO concerning certain drive shafts, and following the CEO's determination that no substitutable goods were produced in Australia, the CEO issued TCO No. 0606251, effectively applying a 0% duty rate to these goods, down from the general rate of 5%. The instrument was published in the Gazette, inviting submissions, though none were received. The TCO is effective from the date of the application, 6 April 2006, and benefits importers by allowing them to apply for duty refunds for goods imported since that date. Importantly, the TCO does not disadvantage or impose liabilities on any person other than the Commonwealth.
Scope and Application
The Tariff Concession Instrument No. 0606251 under the Customs Act 1901 applies to goods that are the subject of a Tariff Concession Order (TCO), specifically certain drive shafts in this case. This legislation is pertinent to any entity or individual importing these particular drive shafts into Australia. The scope of the Act extends to the geographic jurisdiction of Australia, impacting the customs duty rates on the specified goods. The Act applies to the conduct of importing goods that qualify for tariff concessions as determined by the Chief Executive Officer of Customs (CEO). The application of this Act is restricted by the criteria outlined in the Customs Act 1901, particularly under sections 269C and 269SJ, which detail the eligibility of goods for tariff concessions and those that are excluded respectively. The Act’s application can be further extended or modified through subordinate instruments, such as regulations, which may specify additional conditions or exceptions. Importantly, the TCO does not affect the rights of any person as at the date of its registration, ensuring that it does not disadvantage or impose new liabilities on individuals or entities in respect of actions taken before the TCO's effective date.
Key Provisions
The key operative sections of this legislation are sections 269C, 269B, 269E, 269P(3), 269F, and 269K(1) of the Customs Act 1901. Section 269F allows an individual or entity to apply to the Chief Executive Officer (CEO) of Customs for a Tariff Concession Order (TCO) in respect of specific goods. Section 269C outlines the core criteria that the CEO must assess to determine whether the application meets the requirements for a TCO. Specifically, section 269C stipulates that a TCO application meets the core criteria if no substitutable goods were produced in Australia on the day the application was lodged. The definitions provided in sections 269B and 269E help clarify what is meant by "goods produced in Australia" and "ordinary course of business," while section 269D further defines "substitutable goods." If the CEO is satisfied that the application meets the core criteria, section 269P(3) requires the CEO to issue a written order declaring the goods to which a prescribed item of Schedule 4 to the Customs Tariff Act 1995 applies. Section 269K(1) requires the CEO to publish a notice in the Gazette inviting submissions from any interested parties who might have reasons why the TCO should not be made.
The Act imposes several obligations on the parties involved in the TCO process. The CEO of Customs must assess applications for TCOs against the core criteria outlined in section 269C. If the CEO determines that an application meets these criteria, they are required to issue a written TCO as specified in section 269P(3). The CEO must also publish a notice in the Gazette as soon as practicable after accepting a TCO application as valid, inviting any interested parties to lodge submissions opposing the TCO (subsection 269K(1)). Additionally, any entity that benefits from a TCO must adhere to the conditions and rates specified in the order. For instance, in this case, Bluescope Steel Ltd must ensure that the drive shafts they import or produce comply with the terms of the TCO.
Failure to comply with the requirements of the Customs Act 1901 or the terms of a TCO may result in various penalties and consequences. Although the specific penalties are not detailed in the explanatory statement, breaches of customs regulations generally carry significant fines and potential criminal charges. For instance, knowingly making a false statement in an application for a TCO could lead to penalties under section 252 of the Customs Act 1901, which imposes fines of up to $22,000 or imprisonment for up to two years, or both. Furthermore, any failure to adhere to the terms of the TCO could result in the imposition of duties and penalties for non-compliance with the conditions specified in the order. These could include financial penalties or other corrective actions as deemed appropriate by the CEO.