EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0617186
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 Ltd applied for a TCO in respect of certain pipes on 14 September 2006.
Instrument
TCO No 0617186 was made on 8 December 2006. It declares that those certain pipes 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. 0617186 is taken to have come into force on 14 September 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 comprehensive framework for the regulation of customs and excise, including the administration of tariffs and duties on imported goods. The Tariff Concession Instrument No. 0617186, made under Part XVA of the Act, was introduced to address a specific gap in the application process for Tariff Concession Orders (TCOs) which allow for lower rates of customs duty on certain goods. The instrument was enacted by the Chief Executive Officer of Customs (CEO) and aims to streamline the process of applying for and granting tariff concessions where appropriate, ensuring that the concessions do not disadvantage existing Australian producers or impose new liabilities. This particular instrument was made in response to an application by Onesteel Ltd for a TCO on certain pipes, where the CEO determined that no substitutable goods were produced in Australia, thus meeting the core criteria for concession. The instrument came into force on the date the application was lodged and provides a 0% duty rate on the specified pipes, differing from the general rate of 5%.
Scope and Application
The Customs Act 1901, through its Part XVA, facilitates the establishment of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO). These TCOs reduce the rate of customs duty for specified goods, provided that the CEO determines the application meets the core criteria, notably that no substitutable goods are produced in Australia in the ordinary course of business. The application process for a TCO is open to any person, and the CEO is mandated to publish notices in the Gazette to invite submissions from interested parties. Once a TCO is granted, it applies retroactively to the date of the application, benefiting importers by potentially allowing them to claim refunds on duties paid on imports of the specified goods since that date. Importantly, the TCO does not affect existing rights or impose new liabilities on any person other than the Commonwealth. The geographic reach of this legislation is national, applying across Australia, as it pertains to the administration of customs duties under the Customs Act 1901.
Key Provisions
The Tariff Concession Instrument No. 0617186 primarily involves the application of a Tariff Concession Order (TCO) to specific pipes, reducing their customs duty from 5% to 0%. This is achieved under section 269F of the Customs Act 1901, whereby an application for a TCO can be submitted to the Chief Executive Officer of Customs (CEO) if certain conditions are met. The CEO, after ensuring the application does not pertain to goods listed in section 269SJ, evaluates the application against the core criteria outlined in section 269C. If the CEO is satisfied that no substitutable goods were produced in Australia on the date the application was lodged, they are required to issue a TCO. This instrument, made on 8 December 2006, was effective from 14 September 2006, the date the application was lodged, as per subsection 269S(1).
The obligations imposed by the Act on parties involved, particularly the CEO, include assessing the validity of TCO applications and ensuring they meet the core criteria. Section 269K(1) mandates that the CEO must publish a notice in the Gazette inviting any interested party to submit objections to the proposed TCO. In this instance, no submissions were received, allowing the CEO to proceed with the TCO. Additionally, section 269P(3) requires the CEO to issue a written order specifying the application of the prescribed tariff item to the goods in question. The obligations extend to ensuring that the TCO does not disadvantage any person, except the Commonwealth, in respect of actions taken before the order's registration date.
The Customs Act 1901 stipulates consequences for breaches of the provisions outlined within it. Although the specific penalties for non-compliance with TCO regulations are not detailed in the explanatory statement, general breaches of the Customs Act may attract civil or criminal penalties. Civil penalties can include fines, while criminal penalties may result in imprisonment, reflecting the seriousness with which the Act treats non-compliance. It is important for parties governed by the Act to adhere strictly to its provisions to avoid such repercussions.