EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0704652
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 gas scrubber parts on 28 March 2007.
Instrument
TCO No 0704652 was made on 15 June 2007. It declares that those certain gas scrubber parts 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. 0704652 is taken to have come into force on 28 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, enacted by the Australian Parliament, established a framework under which Tariff Concession Orders (TCOs) can be made by the Chief Executive Officer of Customs (CEO) to provide a lower rate of customs duty for certain goods. The Tariff Concession Instrument No. 0704652 was introduced to address the specific need for tariff concessions on certain gas scrubber parts, following an application by Bluescope Steel Ltd. The policy objective, as per the explanatory statement, was to ensure that the application of the concessional tariff rate did not disadvantage any person and did not impose liabilities on individuals prior to the date of registration. The TCO was implemented to benefit importers by allowing them to apply for a refund of duty on goods imported since the effective date of the concession.
Scope and Application
The Tariff Concession Instrument No. 0704652, pursuant to the Customs Act 1901, applies to the Chief Executive Officer of Customs (the CEO) and any entities or individuals seeking tariff concessions on specific goods. The scope of the Act is limited to goods that are not produced in Australia in the ordinary course of business and do not have substitutable goods manufactured domestically. The CEO is mandated to assess applications for Tariff Concession Orders (TCOs) and determine whether they meet the criteria outlined in the Act. The geographic reach of the Act is national, as it pertains to the Australian customs regime and applies across all states and territories within Australia. The Act does not impose any liabilities on individuals or entities other than the Commonwealth and does not disadvantage any person by affecting their rights as they stood before the registration of the TCO. The Act may extend its application through subordinate instruments such as regulations, which can provide further details on the administration and enforcement of tariff concessions.
Key Provisions
The main operative sections of the Tariff Concession Instrument No. 0704652 (F2007L01948) are contained within sections 269C, 269F, 269P, and 269S of the Customs Act 1901. Section 269F allows a person to apply to the Chief Executive Officer of Customs (CEO) for a Tariff Concession Order (TCO) in respect of certain goods. Section 269C specifies the core criteria that must be met for a TCO application to be considered, namely that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged. If the CEO is satisfied that these core criteria are met, section 269P(3) requires the CEO to make a written order (a TCO) declaring that the goods in question are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995. In this instance, the TCO applies item 50 of Schedule 4 to the Tariff, resulting in a duty rate of 0% for the specified gas scrubber parts, down from the general rate of 5%.
The Act imposes several obligations on parties involved with the TCO process. The CEO has the duty, under section 269F, to consider applications for TCOs and decide whether they meet the core criteria set out in section 269C. If the CEO decides that an application meets the criteria, they are required by section 269P(3) to make a written TCO. The CEO is also mandated by subsection 269K(1) to publish a notice in the Gazette as soon as practicable after accepting a TCO application, inviting any person who believes the TCO should not be made to lodge a submission. In this case, no submissions were received in response to the notice published. Importers of the goods subject to the TCO have the right to apply for a refund of duty on goods imported since the day the TCO is taken to have come into force, under paragraph 126(1)(r) of the Regulations.
Failure to comply with the provisions of the Customs Act 1901 may result in civil or criminal consequences. While the explanatory statement does not specify offences or penalties for breaches of the TCO provisions, general penalties for breaches of the Customs Act may include fines and imprisonment. For example, under section 256 of the Act, a person who contravenes any provision of the Act or the Regulations may be fined up to 10,000 penalty units or imprisonment for up to five years, or both. The maximum penalties for more serious offences can be significantly higher, with fines up to 100,000 penalty units and imprisonment for up to 10 years or more, depending on the nature and severity of the offence. The explanatory statement does not provide specific details on penalties for the TCO provisions, but it is understood that general penalties applicable to breaches of the Act would apply.