EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0618436
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 storage silo outlets on 10 November 2006.
Instrument
TCO No 0618436 was made on 2 February 2007. It declares that those certain storage silo outlets 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. 0618436 is taken to have come into force on 10 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, enacted by the Parliament of Australia, establishes a framework within which Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs. The primary purpose of this legislation is to facilitate tariff concessions for goods that meet specific criteria, thereby providing economic benefits to businesses and consumers. Onesteel Manufacturing Pty Ltd applied for a TCO concerning certain storage silo outlets on 10 November 2006. Following the application, Tariff Concession Instrument No. 0618436 was issued on 2 February 2007, which declared that the storage silo outlets would be subject to a 0% duty rate under item 50 of Schedule 4 to the Customs Tariff Act 1995, effective from 10 November 2006. This decision was made after the CEO was satisfied that no substitutable goods were produced in Australia, thereby fulfilling the core criteria set out in the Customs Act. The policy objective is to ensure that tariff concessions are granted in a manner that promotes fair trade practices and economic efficiency, without disadvantaging any party.
Scope and Application
The Customs Act 1901, under Part XVA, facilitates the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs. These TCOs apply to specific goods, allowing for a reduced rate of customs duty for these goods if certain conditions are met. Specifically, an applicant must demonstrate that the goods in question are not prohibited under section 269SJ of the Act and that no substitutable goods are being produced in Australia at the time the application is lodged. This process aims to provide relief to industries where domestic production is not viable or does not exist. The TCO mechanism is jurisdictional, applying nationally within Australia. It is noteworthy that the TCO does not retroactively affect any rights or liabilities of persons other than the Commonwealth, ensuring that the application of the concession does not disadvantage anyone who acted in good faith prior to the TCO's effective date. The scope of the TCO is further clarified through subordinate instruments and regulations, which may provide additional details on the application process and eligibility criteria.
Key Provisions
The primary operative sections of this Tariff Concession Instrument No. 0618436, under the Customs Act 1901, include sections 269C, 269B, 269D, 269E, and 269P, which collectively outline the conditions and criteria for granting a Tariff Concession Order (TCO). Section 269C stipulates that an application for a TCO will meet the core criteria if, on the day the application is lodged, no substitutable goods were produced in Australia in the ordinary course of business (269C). Section 269B defines the terms ‘goods produced in Australia’, ‘ordinary course of business’, and ‘substitutable goods’ (269B), while sections 269D and 269E provide further clarification on these definitions. If the Chief Executive Officer of Customs (CEO) is satisfied that the application meets these criteria, section 269P(3) requires the CEO to make a written order declaring that the goods in question are subject to a prescribed item in Schedule 4 of the Customs Tariff Act 1995, effectively applying a reduced or zero duty rate to these goods (269P).
The obligations imposed by the Customs Act 1901 on parties and entities under this legislation include the requirement for an applicant, such as Onesteel Manufacturing Pty Ltd, to apply for a TCO in respect of specified goods (269F). The CEO is obligated to evaluate the application against the core criteria and, if satisfied, must make a TCO (269C, 269P). The CEO must also publish a notice in the Gazette inviting submissions from any interested parties who may oppose the TCO, although in this case, no submissions were received (269K). The CEO must ensure that the TCO does not disadvantage any person other than the Commonwealth or impose liabilities on any person in respect of actions taken before the TCO was lodged (269S).
Should there be a breach of the provisions of the Customs Act 1901 or the associated regulations, various offences and penalties may apply. While the explanatory statement does not detail specific offences or penalties, breaches of customs laws generally can lead to civil or criminal consequences. For example, under section 226 of the Customs Act 1901, an offence involving fraud or other dishonest conduct may result in a penalty of up to 10 years imprisonment or a fine of up to $220,000, or both, for an individual. For corporate entities, the maximum penalty can be significantly higher, up to $1,100,000 (226). The precise penalties would depend on the nature and severity of the breach, as well as any applicable provisions within the Customs Act or related legislation.