EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0704131
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 (AIS) Pty Ltd applied for a TCO in respect of certain rotor induction squirrel cage AC motors on 19 March 2007.
Instrument
TCO No 0704131 was made on 08 June 2007. It declares that those certain rotor induction squirrel cage AC motors 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. 0704131 is taken to have come into force on 19 March 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 was enacted by the Parliament of Australia to provide a framework for the regulation of customs and excise, including the imposition of duties and the facilitation of trade. One of its provisions allows for the creation of Tariff Concession Orders (TCOs), which can reduce or eliminate customs duty on certain goods. The problem this legislation addresses is the potential for excessive tariffs to hinder the competitiveness of Australian industries by making imported goods more expensive. The policy objective is to promote economic efficiency by ensuring that Australian industries can compete effectively both domestically and internationally. This is achieved by allowing the Chief Executive Officer of Customs to grant tariff concessions where it is determined that no substitutable goods are produced in Australia, thereby encouraging trade and industrial growth.
Scope and Application
The Tariff Concession Instrument No. 0704131 under the Customs Act 1901 applies to certain rotor induction squirrel cage AC motors, following an application by Bluescope Steel (AIS) Pty Ltd. This Act applies to individuals or entities that are seeking tariff concessions for goods, specifically those that are not substitutable by products manufactured in Australia and are not specified in section 269SJ of the Act. The scope extends nationally, governed by the Commonwealth, and involves the process of applying for and granting tariff concessions to ensure that such concessions do not disadvantage existing rights or impose new liabilities on individuals or entities. The Act ensures that the tariff concessions do not affect any rights as at the date of registration, particularly safeguarding the interests of importers who may benefit from duty refunds for goods imported since the effective date of the concession. The application of this Act is further defined and potentially extended through subordinate instruments, which may include regulations and orders that specify additional details or conditions for tariff concessions.
Key Provisions
The primary sections of the Customs Act 1901, as relevant to Tariff Concession Orders (TCOs), are sections 269C, 269B, 269D, 269E, and 269P. Section 269C mandates that a TCO application meets the core criteria if, on the date of application, no substitutable goods were produced in Australia in the ordinary course of business. Definitions for key terms such as "goods produced in Australia," "ordinary course of business," and "substitutable goods" are provided in sections 269B, 269D, and 269E respectively. If the Chief Executive Officer (CEO) of Customs is satisfied that the application meets these core criteria, section 269P(3) requires the CEO to issue a written order that declares the goods to which the prescribed item of Schedule 4 to the Customs Tariff Act 1995 applies. The TCO in question, No. 0704131, declares that certain rotor induction squirrel cage AC motors are subject to a duty-free rate as specified in item 50 of Schedule 4 to the Tariff.
The Act imposes several obligations on parties involved in the TCO process. For applicants, the main requirement is to ensure that the goods for which the TCO is being sought are not substitutable by any goods produced in Australia in the ordinary course of business. The CEO, on receiving a valid application, must 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)). The CEO must also consider whether the application meets the core criteria, as outlined in section 269C. If the CEO decides to issue a TCO, they must do so in writing, specifying the prescribed item of the Tariff that applies to the goods in question.
Failure to comply with the requirements of the Customs Act 1901 or the conditions of a TCO may lead to various civil or criminal consequences. While the specific penalties for breaches are not detailed in the explanatory statement, under Australian law, breaches of customs regulations can typically result in financial penalties, legal action, or both. The severity of the penalty often depends on the nature and extent of the breach. For instance, wilful or negligent breaches can result in more severe penalties, including fines or imprisonment, especially if the breach involves fraud or smuggling.
In the context of TCOs, if an applicant provides false or misleading information in their application, they may face penalties for misleading or deceptive conduct. Such penalties could include fines or other civil remedies. Additionally, if a TCO is misused, such as by applying it to goods that do not meet the criteria, the person responsible could face penalties under the Customs Act 1901. These penalties might include financial penalties, recovery of duties, or even criminal charges if the misuse is found to be deliberate or negligent.