EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0613390
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 Limited applied for a TCO in respect of certain hot strip mill edge heater exchanger fans on 10 August 2006.
Instrument
TCO No 0613390 was made on 03 November 2006. It declares that those certain hot strip mill edge heater exchanger fans 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. 0613390 is taken to have come into force on 10 August 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 was enacted to provide a framework for the administration of customs duties and other charges on imported and exported goods. In particular, Part XVA of the Act establishes a scheme for Tariff Concession Orders (TCOs), which were introduced to address the problem of ensuring that certain goods, where no substitutable goods are produced in Australia, receive tariff concessions when imported. The authority to make these orders lies with the Chief Executive Officer of Customs (CEO), who must be satisfied that the application meets specific criteria, including that no substitutable goods are produced in Australia in the ordinary course of business. The explanatory statement for Tariff Concession Instrument No. 0613390, enacted in 2006, details the process by which Bluescope Steel Limited successfully applied for a TCO for certain hot strip mill edge heater exchanger fans, resulting in a reduction of the duty rate from 5% to free. The instrument was published in the Gazette with no objections received, and it came into force on the date of the application, 10 August 2006, without affecting any pre-existing rights or imposing new liabilities.
Scope and Application
The Customs Act 1901, through Part XVA, allows the Chief Executive Officer of Customs to issue Tariff Concession Orders (TCOs) which apply lower rates of customs duty on specific goods. This mechanism is available to entities such as Bluescope Steel Limited, which can apply for TCOs if their goods meet certain criteria, primarily that no substitutable goods are produced in Australia. These concessions are applicable nationally, with the scope extending to any entity or individual importing or exporting the specified goods. The geographic reach of this legislation is thus nationwide, affecting all importers and exporters within Australia. There are exclusions; goods specified in section 269SJ of the Act are ineligible for TCOs. Furthermore, the application of the Act can be extended or clarified through subordinate instruments, although this particular TCO does not create new liabilities or disadvantage existing rights of non-Commonwealth persons. The TCO in question, No. 0613390, pertains specifically to certain hot strip mill edge heater exchanger fans, reducing their duty rate from 5% to free, effective from the date of application, 10 August 2006.
Key Provisions
The key provisions of the Customs Act 1901, specifically Tariff Concession Instrument No. 0613390, relate to the process for applying for and receiving Tariff Concession Orders (TCOs) for goods. Under section 269F, a person may apply to the Chief Executive Officer of Customs (the CEO) for a TCO in respect of goods. Section 269C outlines the core criteria for an application to be considered, namely that on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business (s 269C). If the CEO is satisfied that the application meets these criteria, they must make a TCO (s 269P(3)).
The obligations imposed by the Customs Act 1901 on parties include the requirement for the CEO to make a TCO if the core criteria are met (s 269P(3)). The CEO must also publish a notice in the Gazette as soon as practicable after accepting a TCO application as a valid application, inviting any person who considers that there are reasons why the TCO should not be made to lodge a submission (s 269K(1)). Bluescope Steel Limited fulfilled their obligation by applying for a TCO in respect of certain hot strip mill edge heater exchanger fans on 10 August 2006.
In terms of consequences for breach, the Act does not specify any offences, penalties, or consequences for failure to comply with the TCO process. However, if the CEO determines that the core criteria are not met, they are not required to make a TCO (s 269P(3)). 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 (s 269S(3)). The rights of importers will be beneficially affected, as they 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 (Reg 126(1)(r)).