EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0607162
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 gate valves on 19 April 2006.
Instrument
TCO No 0607162 was made on 14 July 2006. It declares that those certain gate valves 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. 0607162 is taken to have come into force on 19 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. 0607162, enacted in 2006, is a legislative measure designed to address the need for tariff concessions on specific goods under the Customs Act 1901. This legislation allows for the reduction of customs duty on goods that are not substitutable by products manufactured in Australia, thereby encouraging the importation of certain goods by reducing their associated costs. The instrument was enacted by the Australian government through the Customs Act 1901, with the primary policy objective being to facilitate trade by lowering the duty on specific imported goods, which in turn supports economic activities and competition within the Australian market.
The instrument was triggered by an application from Bluescope Steel Ltd for tariff concessions on certain gate valves, which the Chief Executive Officer of Customs assessed and approved. This specific measure aims to benefit importers by reducing the duty on these goods from 5% to 0%, effective from the date of application. The instrument was published in the Gazette, inviting submissions from interested parties, though none were received. The tariff concession does not affect any pre-existing rights or impose new liabilities, ensuring that the transition to the new duty rate is smooth and beneficial for importers eligible for duty refunds.
Scope and Application
The Customs Act 1901, specifically under Part XVA, establishes a framework for the creation of Tariff Concession Orders (TCOs) which can result in a reduced rate of customs duty on certain goods. The Act applies to individuals and entities that seek to import goods eligible for a tariff concession. This includes businesses and importers who can apply for a TCO when there are no substitutable goods produced in Australia for the specific items in question. The application process involves meeting core criteria, such as the absence of Australian production of substitutable goods, as defined under sections 269C, 269D, and 269E of the Act. The geographic reach of this legislation is national, given the Commonwealth's responsibility for customs duties, and it applies to all states and territories within Australia. Notably, the Act excludes certain goods from being subject to a TCO, as specified in section 269SJ. The implementation and administration of the TCOs may be extended or refined through subordinate instruments, which can provide further detail on the application process and eligibility criteria.
Key Provisions
The Customs Act 1901, specifically under Part XVA, provides a framework for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO) (s 269F). When a person applies for a TCO in respect of certain goods (s 269C), the CEO must determine if the application complies with the core criteria. If satisfied that the application meets these criteria, the CEO is obligated to issue a TCO, declaring the specified goods to be subject to a particular rate of customs duty as outlined in Schedule 4 of the Customs Tariff Act 1995 (s 269P(3)). In the case of Bluescope Steel Ltd, the CEO issued TCO No 0607162 on 14 July 2006, applying a 0% duty rate to certain gate valves, based on the CEO’s determination that no substitutable goods were produced in Australia (s 269C).
The Act imposes several obligations on the CEO, including the requirement to publish a notice in the Gazette inviting submissions from any interested parties who might oppose the TCO (s 269K(1)). The CEO must also ensure that the TCO does not disadvantage any person, other than the Commonwealth, by affecting their rights or imposing liabilities for actions taken prior to the TCO's registration (s 269S(1)). The TCO's effective date is the day the application is lodged (s 269S(1)). For Bluescope Steel Ltd's TCO, the effective date was 19 April 2006.
Breaches of the provisions under the Customs Act 1901 can lead to civil and criminal consequences. Specifically, under the Customs Act, incorrect classification of goods, fraudulent claims, or failure to comply with the conditions of a TCO can result in penalties. The maximum penalty for these offences varies depending on the severity and intent behind the breach. For instance, under section 224A of the Customs Act, a person can face a penalty of up to 10,000 penalty units for fraudulent behaviour. Additionally, under section 269U, any person found guilty of an offence against the Customs Act can face fines and imprisonment, with the specifics of the penalties determined by the severity and circumstances of the offence. The implications of these provisions ensure compliance and maintain the integrity of the customs duty system.