EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0607963
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 air quench parts on 5 May 2006.
Instrument
TCO No 0607963 was made on 14 July 2006. It declares that those certain air quench 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. 0607963 is taken to have come into force on 5 May 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, provides a framework for the administration of customs and excise duties in Australia. The Act facilitates the efficient movement of goods across borders by establishing processes for the assessment and collection of duties. It was introduced to address the need for a structured and systematic approach to customs regulation, ensuring that duties are levied fairly and efficiently. Part XVA of the Act, specifically, introduces the scheme for Tariff Concession Orders (TCOs), which allows for the reduction or exemption of customs duty on certain goods under specific conditions. This mechanism was designed to promote economic efficiency and competitiveness by reducing the cost of imported goods that have no local alternatives. The policy objective is to support Australian industries by ensuring that businesses have access to competitively priced inputs, thereby enhancing their ability to produce goods and services efficiently. The instrument F2006L02392, TCO No. 0607963, was introduced to provide tariff concessions on certain air quench parts, effectively reducing the customs duty on these goods from 5% to 0%, subject to the conditions specified in the Act.
Scope and Application
The Customs Act 1901, under which Tariff Concession Orders (TCOs) can be made, applies to individuals or entities seeking tariff concessions on imported goods. Specifically, the Act allows for applications to the Chief Executive Officer (CEO) of Customs to reduce the rate of customs duty on certain goods through a TCO. The application process is governed by section 269F of the Act, which stipulates that a TCO can be applied for by any person, provided the goods in question are not specified in section 269SJ of the Act, which lists goods that cannot be subject to a TCO. The geographic reach of this legislation is national, as it applies throughout Australia. Additionally, the Act provides that a TCO application meets the core criteria if no substitutable goods were produced in Australia on the day the application was lodged, as outlined in section 269C. This legislation does not apply to goods that are already being produced domestically, ensuring that local industries are protected. Subordinate instruments, such as the Customs Tariff Act 1995, further define the specific rates and categories of goods eligible for tariff concessions.
Key Provisions
The main operative sections of Tariff Concession Instrument No. 0607963 under the Customs Act 1901 (section 269C, 269P(3)) stipulate that a Tariff Concession Order (TCO) may be made by the Chief Executive Officer of Customs (CEO) if the application for the TCO meets the core criteria, which is determined if no substitutable goods were produced in Australia on the day the application was lodged. Upon the CEO's satisfaction, a TCO is issued that applies a prescribed lower rate of customs duty to the specified goods, in this case, certain air quench parts, which now attract a 0% duty rate as opposed to the general 5% rate.
The obligations imposed by the Act on the parties governed by this legislation include the requirement for any person wishing to apply for a TCO to ensure that the application adheres to the stipulated criteria (section 269F). The CEO, on receiving a valid application, has the duty to decide whether it meets the core criteria, including the absence of substitutable goods produced in Australia (section 269C, 269E, 269D). Additionally, the CEO must publish a notice in the Gazette inviting submissions from any person who may have objections to the TCO being made (subsection 269K(1)).
In terms of consequences for non-compliance, the Act does not explicitly state any offences or penalties for failing to comply with the provisions of a TCO. However, it is implied that any misuse or incorrect application of the concession could potentially lead to disputes regarding duty refunds or liabilities. Importers who have paid duty on goods imported since the TCO was taken to have come into force (subsection 269S(1)) can apply for a refund (paragraph 126(1)(r) of the Regulations). The Act ensures that the rights of persons other than the Commonwealth are not adversely affected by the issuance of the TCO, which means that no new liabilities are imposed on any person as a result of the concession.