EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0619970
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 Ltd applied for a TCO in respect of certain refractory bricks and/or shapes on 18 December 2006.
Instrument
TCO No 0619970 was made on 9 March 2007. It declares that those certain refractory bricks and/or shapes 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. 0619970 is taken to have come into force on 18 December 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, established a framework for the regulation of customs and excise duties, including provisions for Tariff Concession Orders (TCOs) to reduce customs duty on certain goods. This framework was designed to address the need for economic incentives and to facilitate trade by reducing the cost of imported goods that do not have domestic equivalents. The Tariff Concession Instrument No. 0619970, issued on 9 March 2007, was introduced in response to an application by Bluescope Steel Ltd for a TCO on certain refractory bricks and shapes. The policy objective of this instrument was to provide tariff relief, recognising that no substitutable goods were produced in Australia, thus ensuring that the import of these goods would not compete with any domestic industry. This instrument was intended to provide economic benefits to importers by lowering the duty rate from the general 5% to 0%, effective from the date of the application on 18 December 2006.
Scope and Application
The Customs Act 1901, specifically under Part XVA, enables the Chief Executive Officer of Customs to issue Tariff Concession Orders (TCOs) which provide lower rates of customs duty on certain goods. The Act applies to any person who can apply for a TCO for goods that are not specified as ineligible under section 269SJ of the Act. A TCO application is considered valid if the CEO determines that there are no substitutable goods produced in Australia in the ordinary course of business, as defined by sections 269D, 269E and 269F of the Act. Once an application meets these core criteria, the CEO must issue a written TCO, which specifies the prescribed tariff item for the goods in question. The scope of the Act is national, applying across all states and territories of Australia, and it can be extended through subordinate instruments. Notably, TCOs do not retroactively disadvantage any person or impose liabilities for actions taken before the order's registration date. Instead, they prospectively benefit importers by potentially allowing them to claim refunds for duties paid on the eligible goods imported since the date the TCO is deemed to have come into force.
Key Provisions
The key operative sections of the Tariff Concession Instrument No. 0619970, under the Customs Act 1901, pertain to the creation and application of Tariff Concession Orders (TCOs) as outlined in section 269F (2). This section allows for an application to the Chief Executive Officer of Customs (CEO) for a TCO in respect of specified goods, provided these goods are not listed in section 269SJ, which enumerates goods that are ineligible for TCOs. For a TCO application to meet the core criteria, as stipulated in section 269C, it must be established that no substitutable goods were produced in Australia at the time of the application. The definitions of key terms such as "goods produced in Australia", "ordinary course of business", and "substitutable goods" are further elaborated in sections 269D, 269E, and 269F respectively.
The obligations and requirements imposed by this Act on the parties involved include the necessity for the CEO to publish a notice in the Gazette inviting submissions from interested parties regarding the validity of the TCO application, as per section 269K(1). Additionally, section 269S(1) mandates that a TCO is effective from the date the application was lodged, ensuring that any rights of importers are protected from retroactive disadvantages or liabilities. This protection is particularly significant under paragraph 126(1)(r) of the Regulations, which allows for duty refunds on goods imported since the effective date of the TCO.
Regarding offences, penalties, or consequences for breach, the Customs Act 1901 does not specify particular criminal penalties for failing to comply with TCO regulations. However, any breach of the terms set out in the TCO could potentially lead to civil consequences, including the obligation to repay any unjustifiably received duty rebates. The maximum penalties for breaches of related customs regulations are detailed in the Customs Act 1901 and can include substantial fines and imprisonment, depending on the severity and intent of the breach. It is important for all parties to adhere to the terms of the TCO to avoid these potential consequences.