EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0705424
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 chain conveyor parts on 30 August 2007.
Instrument
TCO No 0705424 was made on 9 November 2007. It declares that those certain chain conveyor 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. 0705424 is taken to have come into force on 30 August 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, addresses the need for tariff concessions to foster fair trade practices and support industry competitiveness. The Act provides a framework for the Chief Executive Officer of Customs to issue Tariff Concession Orders (TCOs) that reduce the rate of customs duty on certain goods. This mechanism was introduced to ensure that Australian industries remain competitive by providing tariff relief for goods that cannot be substituted by domestically produced alternatives. The objective, as stated in the explanatory statement, is to facilitate the import of goods that are not produced in Australia, thereby benefiting importers and supporting the broader economic interests of the country. Instrument No. 0705424, made under the Act, exemplifies this process by granting a concession to Bluescope Steel Ltd for certain chain conveyor parts, reducing their duty rate from 5% to 0%.
Scope and Application
The Customs Act 1901, specifically under Part XVA, governs the procedure for making Tariff Concession Orders (TCOs) which allow for a reduced rate of customs duty on certain goods. This Act applies to any individual or entity seeking a concession on customs duties for goods imported into Australia, provided the goods are not specified in section 269SJ of the Act as ineligible for such concessions. The Act's application extends to all Commonwealth territories and is administered by the Chief Executive Officer of Customs. The process involves an application to the CEO, who must determine whether the application meets the core criteria set out in section 269C, primarily that no substitutable goods are produced in Australia at the time the application is made. Exclusions from TCO eligibility are outlined in section 269SJ, which lists goods that cannot be subject to a TCO. Additionally, the CEO has the discretion to extend or restrict the application of TCOs through subordinate instruments, ensuring flexibility in the administration of tariff concessions.
Key Provisions
The main operative sections of the Tariff Concession Instrument No. 0705424 under the Customs Act 1901 (section 269P(3)) require the Chief Executive Officer (CEO) of Customs to make a Tariff Concession Order (TCO) if satisfied that the application for a TCO meets the core criteria (section 269C). The core criteria are met if no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged (section 269C). The TCO specifies that the goods in question are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995 (section 269P(3)). This instrument, TCO No. 0705424, was made on 9 November 2007, and it declares that certain chain conveyor parts are subject to a 0% duty rate, as opposed to the general rate of 5% (section 269S(1)).
The Customs Act 1901 imposes specific obligations on the CEO of Customs, including the duty to make a TCO if the core criteria are met (section 269P(3)), and to publish a notice in the Gazette inviting submissions from interested parties (subsection 269K(1)). In this case, the CEO did not receive any submissions regarding TCO No. 0705424. The Act also requires the CEO to ensure that the TCO does not disadvantage any person or impose liabilities on any person other than the Commonwealth in respect of actions taken prior to the TCO’s registration (section 269S).
Failure to comply with the provisions of the Customs Act 1901 or the terms of a TCO can result in various consequences. While specific offences and penalties are not detailed in the explanatory statement, breaches of customs regulations generally can lead to both civil and criminal penalties. Civil penalties may include fines and the confiscation of goods, while criminal penalties can include imprisonment and fines. The maximum penalties will depend on the nature and severity of the breach, as outlined in the Customs Act 1901 and related regulations. For instance, knowingly making a false statement in a customs declaration can result in fines up to $22,000 or imprisonment for up to two years, or both (subsection 247(1) of the Customs Act 1901).