EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0606252
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 continuous paint line parts on 7 April 2006.
Instrument
TCO No 0606252 was made on 30 June 2006. It declares that those certain continuous paint line parts 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. 0606252 is taken to have come into force on 7 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 Customs Act 1901, enacted by the Commonwealth Parliament, establishes a framework for the application of customs duties on imported goods. To address the issue of potentially supporting domestic industries and enhancing economic efficiency, the Act allows for the creation of Tariff Concession Orders (TCOs) through section 269F. These orders, managed by the Chief Executive Officer of Customs, provide for reduced customs duty rates on specific goods, provided certain criteria are met. Tariff Concession Instrument No. 0606252, issued on 30 June 2006, exemplifies this process by granting a 0% duty rate on certain continuous paint line parts, effective from the application date of 7 April 2006. This measure aligns with the policy objective of ensuring that Australian businesses are not unduly burdened by customs duties on goods for which no domestic substitutes are produced, thereby fostering a competitive market environment.
Scope and Application
The Tariff Concession Instrument No. 0606252, made under the Customs Act 1901, applies to specific goods as determined by the Chief Executive Officer of Customs (CEO) when processing an application for a Tariff Concession Order (TCO). The Act enables the CEO to grant concessions on customs duty rates for certain goods if no substitutable goods are produced in Australia in the ordinary course of business, thereby allowing for reduced tariff rates on imported goods. In this instance, the CEO made a TCO for certain continuous paint line parts, reducing the duty from 5% to 0%, effective from the date the application was lodged, 7 April 2006. This instrument applies to entities involved in the importation of these specific goods, providing them with the benefit of the reduced duty rate. The application process includes a mandatory publication in the Gazette to allow for public submissions, although none were received for this particular TCO. The TCO does not impose any liabilities or affect the rights of any person except to provide a benefit to importers by potentially allowing them to apply for a refund of duties paid on these goods since the commencement date of the TCO.
Key Provisions
The Tariff Concession Instrument No. 0606252 made under the Customs Act 1901 (the Act) provides for a tariff concession order (TCO) for certain continuous paint line parts, effectively granting a duty-free status on these goods. The instrument declares that these specific goods are subject to item 50 of Schedule 4 to the Customs Tariff Act 1995, with the general rate of duty reduced from 5% to 0% (sections 269F, 269P(3)). This means that Bluescope Steel Ltd, the applicant, will no longer incur customs duty on these goods, provided they meet the conditions set out in the TCO.
Entities subject to the Act, particularly importers of the specified goods, have the obligation to ensure compliance with the terms of the TCO. This includes maintaining records and documentation that demonstrate the goods are indeed those specified in the TCO and that they have not been produced in Australia as substitutable goods (sections 269C, 269D, 269E). Importers must also be aware of the effective date of the TCO, which is the date the application was lodged (subsection 269S(1)), and can apply for duty refunds for imports made since this date (paragraph 126(1)(r) of the Regulations).
Failure to comply with the requirements of the TCO or the Customs Act may lead to various consequences. Although the explanatory statement does not explicitly outline specific offences or penalties, breaches of the Customs Act generally can result in substantial financial penalties. For example, under section 223 of the Customs Act, an entity found guilty of an offence may face penalties including fines up to 10,000 penalty units for individuals and 50,000 penalty units for corporations, in addition to potential imprisonment terms. The CEO is also empowered to issue compliance notices and take further enforcement actions against non-compliance.
Given the potential financial and legal repercussions, it is crucial for entities governed by the Customs Act to understand and adhere to the provisions of the TCO and the overarching legislation. This includes ensuring that the goods subject to the concession are correctly identified and that all necessary documentation is maintained to substantiate compliance.