EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0618383
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 abrasive fluid conveying hoses on 8 November 2006.
Instrument
TCO No 0618383 was made on 19 January 2007. It declares that those certain abrasive fluid conveying hoses 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. 0618383 is taken to have come into force on 8 November 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 for the regulation of customs and excise in Australia, ensuring efficient and effective management of international trade. One of the mechanisms introduced under the Act is the scheme for Tariff Concession Orders (TCOs), which allows for the application of lower customs duty rates on specific goods. This scheme was designed to address gaps in the market where certain goods are not produced locally, thereby providing a competitive edge to importers of such goods. The Tariff Concession Instrument No. 0618383 was enacted by the Chief Executive Officer of Customs under section 269C of the Customs Act 1901, following an application by Onesteel Manufacturing Pty Ltd for tariff concessions on abrasive fluid conveying hoses. The instrument was made to provide a 0% duty rate on these goods, as no substitutable goods were produced in Australia at the time of application. The objective of this measure is to encourage the importation of goods that are not domestically produced, thereby benefiting importers and supporting the competitive landscape of the Australian market.
Scope and Application
The Customs Act 1901, specifically under Part XVA, establishes a framework for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs. This legislation applies to any person who may apply to the CEO for a TCO concerning goods that are not specified in section 269SJ of the Act, which outlines goods ineligible for TCOs. The application process hinges on the CEO determining whether the applicant's goods meet the core criteria set out in sections 269C, 269D, and 269E, primarily focusing on whether substitutable goods are produced in Australia in the ordinary course of business. The TCO scheme is applicable nationwide, affecting all individuals and entities involved in the importation of goods subject to the concessions. The TCO No 0618383, for example, applies to certain abrasive fluid conveying hoses, reducing their customs duty rate from 5% to 0%. The Act ensures that the rights of parties other than the Commonwealth are not adversely affected by the TCO, and it mandates that the CEO publish notices in the Gazette to invite submissions on the proposed TCOs, although in the case of TCO No 0618383, no submissions were received.
Key Provisions
The Tariff Concession Instrument No. 0618383 under the Customs Act 1901 (section 269F) allows for the application of tariff concessions on certain goods. If an individual or entity applies for a Tariff Concession Order (TCO) in respect of goods (section 269F), the Chief Executive Officer of Customs (CEO) must assess whether the application meets the core criteria. A key provision is that a TCO application will be approved if, on the date the application is lodged, no substitutable goods are produced in Australia in the ordinary course of business (section 269C). Substitutable goods, as defined by section 269D, are those produced in Australia that can be used for the same purpose as the goods subject to the TCO application.
The CEO has a duty to consult with interested parties when assessing an application. This involves publishing a notice in the Gazette, inviting any person who believes there are reasons why the TCO should not be made to submit their views to the CEO (subsection 269K(1)). Once the CEO is satisfied that the application meets the core criteria, they must make a written TCO (subsection 269P(3)). In this instance, the CEO determined that certain abrasive fluid conveying hoses qualified for a TCO because no substitutable goods were produced in Australia (section 269C). This led to the creation of TCO No. 0618383, which declared these hoses as goods to which item 50 of Schedule 4 to the Customs Tariff Act 1995 applies, resulting in a duty rate of 0% instead of the general rate of 5% (section 269P(3)).
The obligations imposed by the Act require applicants to provide all necessary information for the CEO to assess whether the application meets the core criteria for a TCO (section 269F). The CEO must then publish a notice in the Gazette to allow interested parties to submit their views (subsection 269K(1)). The CEO’s decision to make or not make a TCO is based on whether the application meets the core criteria and whether any submissions are received that could affect the decision (section 269P(3)). If a TCO is made, it comes into force on the date the application was lodged (subsection 269S(1)). In this case, the TCO No. 0618383 came into force on 8 November 2006.
There are potential civil and criminal consequences for breaches of the Act’s provisions. Section 269P(5) of the Customs Act 1901 provides that a person who makes a false or misleading statement in an application for a TCO commits an offence. The maximum penalty for such an offence is a fine of 10,000 penalty units or imprisonment for five years, or both (subsection 269P(6)). Additionally, any misuse or misrepresentation in the application process could lead to penalties under other sections of the Act, such as section 137 which deals with offences related to false statements and fraudulent behaviour in customs matters. The penalties for these offences can include significant fines and imprisonment.