EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0700863
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 refractory fittings on 16 January 2007.
Instrument
TCO No 0700863 was made on 10 April 2007. It declares that those certain refractory fittings 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. 0700863 is taken to have come into force on 16 January 2007.
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, includes provisions for the establishment of Tariff Concession Orders (TCOs) that provide reduced customs duty rates for certain goods. The Tariff Concession Instrument No. 0700863, enacted in 2007, is one such instrument designed to address the gap in tariff regulation by allowing the Chief Executive Officer of Customs to grant concessions based on specific criteria, including the absence of substitutable goods produced in Australia. This mechanism aims to foster the importation of goods that are not domestically manufactured, thereby supporting economic efficiency and consumer choice. The policy objective is to ensure that applications for tariff concessions are carefully evaluated to prevent the imposition of undue burdens on domestic industries while promoting the benefits of tariff reductions to importers and consumers.
Scope and Application
The Customs Act 1901, specifically Part XVA, provides a framework for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO). These orders apply to particular goods, granting them a lower rate of customs duty than is generally applicable. An application for a TCO can be made by any person, but it must be for goods not specified in section 269SJ of the Act, which outlines the goods ineligible for tariff concessions. The CEO evaluates the application against core criteria, particularly whether substitutable goods are produced in Australia in the ordinary course of business, as outlined in sections 269C, 269D, 269E, and 269F. If the criteria are met, the CEO issues a written TCO, as demonstrated by TCO No. 0700863 for certain refractory fittings, reducing the duty from 5% to free. The Act ensures that the TCO does not retroactively affect rights or impose liabilities on non-Commonwealth entities. The process includes a requirement for the CEO to publish a notice in the Gazette inviting submissions, although in this case, no submissions were received. The TCO is effective from the date of the application, providing importers with the opportunity to apply for a refund of duties paid on the goods since the commencement date.
Key Provisions
The main operative sections of Tariff Concession Instrument No. 0700863 include sections 269C and 269P of the Customs Act 1901. Section 269C specifies that a Tariff Concession Order (TCO) application meets the core criteria if no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged. Section 269P(3) mandates that if the Chief Executive Officer (CEO) of Customs is satisfied that the application meets the core criteria, they must make a written TCO declaring that the goods in question are subject to a prescribed item in Schedule 4 of the Customs Tariff Act 1995.
The Act imposes several obligations and requirements on the parties involved. Firstly, an applicant, such as Bluescope Steel Limited, must submit an application to the CEO for a TCO in respect of goods. The CEO must then determine if the application meets the core criteria and whether it applies to goods that are not specified in section 269SJ of the Act. Once satisfied, the CEO must publish a notice in the Gazette inviting any interested party to lodge a submission if they believe the TCO should not be made. If no submissions are received, the CEO must proceed to make the TCO. The TCO then comes into force on the day the application was lodged.
Any breach of the provisions set out in the Customs Act 1901 may lead to various offences and penalties. While the Explanatory Statement does not detail specific penalties, under the general terms of the Act, breaches can result in both civil and criminal consequences. Civil penalties may include fines, while criminal penalties can encompass imprisonment or fines, depending on the severity of the breach. The maximum penalties are not explicitly stated in the Explanatory Statement but would typically be found in the relevant sections of the Customs Act 1901. Additionally, non-compliance with the TCO could potentially result in the forfeiture of any tariff benefits intended under the concession.