EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0701553
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 steam turbine valves on 29 January 2007.
Instrument
TCO No 0701553 was made on 20 April 2007. It declares that those certain steam turbine valves 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. 0701553 is taken to have come into force on 29 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 Australian Parliament, governs the imposition and collection of customs duties and the administration of customs and excise. The Tariff Concession Instrument No. 0701553, issued in 2007, addresses the problem of ensuring that certain imported goods benefit from reduced customs duties when no suitable Australian-made alternatives exist. This legislative instrument allows the Chief Executive Officer of Customs to grant tariff concession orders, reducing the duty on specific goods, such as certain steam turbine valves, from a general rate of 5% to 0%. This initiative aims to support industries by making imported goods more competitively priced relative to locally produced goods, thus encouraging fair trade practices and economic efficiency. The process involves public consultation, as mandated by the Act, although in this instance, no submissions were received.
Scope and Application
The Customs Act 1901, through Part XVA, facilitates the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs. These orders apply to specific goods, granting them a reduced rate of customs duty. The scope of the Act applies to any person or entity that seeks to import goods that can benefit from a lower customs duty under a TCO, provided the goods are not specified in section 269SJ of the Act which outlines those ineligible for TCOs. The Act operates on a national level across Australia, including all states and territories. The application process requires that no substitutable goods, meaning those produced in Australia and serving a similar function, are being produced in the ordinary course of business at the time of the application. The application must meet these core criteria for the CEO to consider and potentially grant a TCO. Once a TCO is registered, it does not affect any pre-existing rights or impose new liabilities on individuals or entities other than the Commonwealth, although it may benefit importers by potentially allowing them to apply for duty refunds on previously imported goods.
Key Provisions
The Tariff Concession Instrument No. 0701553, as established under the Customs Act 1901, pertains to a tariff concession order (TCO) for specific steam turbine valves, granting them a zero percent duty rate instead of the standard 5% (sections 269P(3) and 269S(1)). This concession applies to goods that Bluescope Steel Ltd applied for on 29 January 2007 and which the Chief Executive Officer of Customs (CEO) deemed eligible on 20 April 2007. The CEO's decision was based on the fact that no substitutable goods were produced in Australia at the time of the application (section 269C). The TCO allows the specified steam turbine valves to be treated under item 50 of Schedule 4 to the Customs Tariff Act 1995.
Under the Customs Act 1901, the CEO has the obligation to review applications for TCOs and ensure they meet the core criteria, which include verifying that no substitutable goods are produced in Australia in the ordinary course of business at the time of the application (section 269C). The CEO is also required to publish a notice in the Gazette inviting any interested parties to submit objections if they believe the TCO should not be granted (subsection 269K(1)). In this case, the CEO did not receive any submissions against the application (Explanatory Statement). Furthermore, the CEO must ensure that the concession does not disadvantage any person other than the Commonwealth and does not impose liabilities on any person in respect of actions taken before the registration of the TCO (subsection 269S(1)).
Breaching the provisions of the Customs Act 1901, including the requirements and obligations related to TCOs, can lead to various civil or criminal consequences. Although the Explanatory Statement does not specify particular offences or penalties for failing to comply with TCO provisions, general penalties for contraventions of the Customs Act 1901 can be severe. These may include substantial fines, imprisonment, or both, depending on the nature and severity of the offence. The exact penalties are determined by the courts, taking into account the specific circumstances of each case. Importers, however, can apply for a refund of duty on goods imported since the day the TCO is taken to have come into force (paragraph 126(1)(r) of the Regulations).