EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0606714
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 pickle line tank parts on 7 April 2006.
Instrument
TCO No 0606714 was made on 30 June 2006. It declares that those certain pickle line tank 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. 0606714 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 Parliament of Australia, establishes a framework for the application of customs duties, including the provision for Tariff Concession Orders (TCOs) under Part XVA. This legislation aims to address the gap in providing relief from customs duties on specific imported goods where no substitutable goods are produced in Australia. The Act allows the Chief Executive Officer of Customs to grant concessions, reducing the customs duty on eligible imported goods to zero, provided certain core criteria are met. The introduction of Instrument TCO No. 0606714 on 30 June 2006, in response to an application by Bluescope Steel Ltd, exemplifies this mechanism by reducing the duty on certain pickle line tank parts from 5% to 0%. The policy objective behind this concession is to support industries by reducing costs associated with importing critical components, thereby fostering economic efficiency and competitiveness within Australia’s manufacturing sector.
Scope and Application
The Customs Act 1901 provides a framework under which the Chief Executive Officer of Customs can grant Tariff Concession Orders (TCO) to reduce the duty on specific imported goods. These concessions are applicable to goods that do not have substitutable Australian-produced alternatives, as per the criteria set out in the Act. The legislation applies to any person or entity that seeks to import goods eligible for a TCO, with the scope of such orders being limited to the goods specified in the application and meeting the core criteria as outlined in the Act. The application of TCOs is national in scope, as they pertain to the importation of goods into Australia. Any person may lodge a submission with the CEO if they believe a TCO should not be made, though in the case of TCO No. 0606714 concerning pickle line tank parts, no such submissions were received. The TCO No. 0606714, which applies a zero percent duty rate to certain pickle line tank parts, commenced on the date the application was lodged, 7 April 2006. This order does not affect the rights of any person in relation to actions taken before its registration, and it notably benefits importers by potentially allowing them to apply for a refund of duty paid on these goods since the effective date of the concession.
Key Provisions
The Tariff Concession Instrument No. 0606714, under the Customs Act 1901 (the Act), establishes a framework for the Chief Executive Officer of Customs (the CEO) to issue Tariff Concession Orders (TCOs) that reduce customs duties on certain goods. Specifically, section 269F of the Act allows for the application for a TCO, which, if approved, results in a lower duty rate for the specified goods (section 269P(3)). For the application to be considered, it must not pertain to goods that are ineligible under section 269SJ. Moreover, the application is deemed to meet the core criteria if, at the time of application, no substitutable goods were being produced in Australia (section 269C). The definitions for key terms such as 'substitutable goods', 'goods produced in Australia', and 'ordinary course of business' are provided in sections 269D, 269E, and 269F respectively.
Entities or individuals applying for a TCO under this Act must ensure their application meets the specified criteria. This includes demonstrating that no substitutable goods are produced in Australia. Additionally, section 269K(1) mandates that the CEO must publish a notice in the Gazette inviting submissions from any interested parties who believe the TCO should not be granted. The CEO must also consider these submissions before making a decision. For instance, in the case of Bluescope Steel Ltd, the CEO was satisfied that the application for pickle line tank parts met the criteria and subsequently issued TCO No. 0606714.
Failure to comply with the provisions of the Customs Act 1901 can lead to various penalties and consequences. Section 269AA of the Act specifies that any person who contravenes a provision of the Act may be liable for a penalty. The maximum penalty for such offences can vary, depending on the nature and severity of the breach. These penalties may include fines and, in some cases, imprisonment. For example, if an entity fails to adhere to the terms of a TCO or misrepresents information in their application, they could face legal action and the associated penalties.
The commencement date of a TCO is critical, as outlined in subsection 269S(1) of the Act. A TCO is effective from the date the application is lodged, meaning that any goods imported on or after this date will benefit from the reduced duty rate. For TCO No. 0606714, this date is 7 April 2006. It is also stipulated that the TCO does not affect the rights of any person, except the Commonwealth, in a manner that would disadvantage them or impose liabilities for actions taken prior to the registration date. Importers, however, will benefit from this arrangement as they can apply for a refund of duty on goods imported since the effective date of the TCO.