EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0609673
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.
Onesteel Manufacturing Pty Ltd applied for a TCO in respect of certain conveyor drive gears on 01 June 2006.
Instrument
TCO No 0609673 was made on 11 August 2006. It declares that those certain conveyor drive gears 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 free.
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. 0609673 is taken to have come into force on 01 June 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 Australian Parliament, establishes a framework for the imposition of customs duties on imported goods. This Act aims to regulate the import of goods into Australia by providing a mechanism through which certain goods can receive tariff concessions, thereby reducing the financial burden on businesses and consumers. The Tariff Concession Instrument No. 0609673, introduced in 2006, operates under this legislative framework to address specific economic needs by providing tariff relief on certain goods. The instrument allows for the application of a lower rate of customs duty on goods that are not being produced domestically, thus supporting the policy objective of promoting economic efficiency and facilitating competitive market conditions. This particular instrument was enacted in response to an application by Onesteel Manufacturing Pty Ltd for tariff concessions on conveyor drive gears, which were not produced in Australia at the time of application, resulting in a reduction of duty from 5% to free.
Scope and Application
The Customs Act 1901, through Part XVA, provides a framework for the Chief Executive Officer of Customs to issue Tariff Concession Orders (TCOs) that apply lower rates of customs duty to specified goods. These orders are subject to stringent criteria, ensuring that the goods in question are not substitutable by any produced in Australia and are not restricted by section 269SJ of the Act. The instrument in question, TCO No. 0609673, was applied for by Onesteel Manufacturing Pty Ltd for certain conveyor drive gears on 1 June 2006 and was subsequently made on 11 August 2006, following the CEO's satisfaction that no substitutable goods were produced in Australia. The TCO stipulates that the specified conveyor drive gears are subject to item 50 of Schedule 4 of the Customs Tariff Act 1995, effectively granting them a free rate of duty as opposed to the general rate of 5%. This concession is retrospective to the date the application was lodged and does not affect any pre-existing rights or liabilities of persons other than the Commonwealth, though it does benefit importers by allowing them to apply for duty refunds from the date of the TCO's effective commencement.
Key Provisions
The Customs Act 1901, as amended, allows the Chief Executive Officer of Customs (CEO) to issue Tariff Concession Orders (TCOs) under Part XVA. Section 269F provides the mechanism for a person to apply for a TCO concerning specific goods. If the CEO determines that the application is not for goods listed in section 269SJ, which are ineligible for TCOs, the CEO must then assess whether the application meets the core criteria. A TCO application meets these criteria if, on the date of application, no substitutable goods were produced in Australia in the ordinary course of business (section 269C). Section 269B further defines 'goods produced in Australia', 'ordinary course of business', and'substitutable goods' in the context of TCO applications.
The CEO’s obligations under the Act are to ensure that any TCO application meeting the core criteria is processed and a written order is issued. Section 269P(3) mandates that the CEO must issue a TCO if satisfied that the application meets the criteria. This was demonstrated in the case of TCO No. 0609673, issued on 11 August 2006, concerning certain conveyor drive gears. The CEO concluded that no substitutable goods were produced in Australia, thereby satisfying the core criteria. This TCO specified that these gears are subject to item 50 of Schedule 4 of the Customs Tariff Act 1995, with a duty rate of free instead of the general 5%.
There are no specific obligations on the parties governed by the Act beyond the application and assessment process for TCOs. However, section 269K(1) requires the CEO to publish a notice in the Gazette inviting submissions from any interested parties if they believe the TCO should not proceed. In this case, no submissions were received. The TCO does not disadvantage any person or impose liabilities on them for actions taken before the TCO’s registration date (subsection 269S(1)). Importers benefit from this TCO as they can apply for duty refunds on goods imported since the TCO’s effective date, as per paragraph 126(1)(r) of the Regulations.
There are no explicit offences, penalties, or consequences for breaches of the Act mentioned in the explanatory statement. However, the legislation implicitly enforces compliance by ensuring that TCOs are only issued when the core criteria are met. Any failure to comply with the provisions of the Customs Act 1901 related to TCOs could result in legal challenges or administrative penalties as per other relevant sections of the Act or associated regulations. The maximum penalties for breaches of customs regulations generally can vary widely depending on the nature and severity of the offence, but these are not specified in this particular TCO instrument.