EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0706512
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 squirrel cage ac motors on 3 May 2007.
Instrument
TCO No 0706512 was made on 20 July 2007. It declares that those certain 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 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. 0706512 is taken to have come into force on 3 May 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, provides a framework for managing customs duties, including the establishment of a scheme for Tariff Concession Orders (TCOs) under Part XVA. The primary problem this legislation aims to address is the facilitation of access to imported goods by reducing customs duty rates for specified goods, provided certain criteria are met. The policy objective is to ensure that the Australian market receives necessary goods without undue financial barriers, particularly when local production alternatives do not exist or are insufficient. Instrument No. 0706512, made on 20 July 2007, exemplifies this by applying a zero percent duty rate on certain squirrel cage AC motors, a decision based on the absence of substitutable goods produced in Australia. The enactment of this TCO ensures that importers of these motors can benefit from reduced duty rates, effective from the date of the application, 3 May 2007, without any retrospective financial implications or liabilities imposed on parties other than the Commonwealth.
Scope and Application
The Customs Act 1901, specifically Part XVA, facilitates the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs, which apply reduced customs duties to certain goods. These orders are applicable to any entity or person seeking tariff concessions for goods not produced in Australia in the ordinary course of business, and where no substitutable goods are being produced domestically. The application process mandates that the CEO must consider the core criteria specified in the Act, such as the non-existence of substitutable goods in Australia, before proceeding to make a TCO. Notably, the Act outlines specific exclusions, such as goods listed in section 269SJ, which are ineligible for tariff concessions. The application of a TCO, such as Instrument TCO No. 0706512 made in respect of certain squirrel cage AC motors, becomes effective from the date of application lodgement. This legislation ensures that no existing rights or liabilities are adversely affected by the issuance of a TCO, safeguarding the interests of importers who can apply for duty refunds for imports made from the effective date of the TCO.
Key Provisions
The main operative sections of this legislation involve the creation of Tariff Concession Orders (TCOs) under section 269F of the Customs Act 1901 (section 269F). When an application for a TCO is lodged, the Chief Executive Officer (CEO) of Customs must decide if the application meets the core criteria (section 269C). If the CEO is satisfied that the application meets these criteria, a TCO can be made, and it is considered to have come into force on the day the application was lodged (subsection 269S(1)). The CEO must also publish a notice in the Gazette inviting submissions from any person who believes the TCO should not be made (subsection 269K(1)). In this case, the CEO made TCO No. 0706512 on 20 July 2007, which applies to certain squirrel cage ac motors, and the TCO was taken to have come into force on 3 May 2007 (subsection 269S(1)).
The obligations imposed by this Act on the parties and entities it governs include the requirement for the CEO to assess the application for a TCO against the core criteria, which involves determining whether substitutable goods were produced in Australia on the day the application was lodged (section 269C). The CEO must also ensure that the TCO does not affect the rights of any person adversely and does not impose any liabilities (subsection 269S(3)). The CEO must publish a notice in the Gazette inviting submissions from interested parties (subsection 269K(1)). Bluescope Steel Ltd, the applicant, must provide sufficient information to satisfy the CEO that the core criteria are met. The CEO is required to make a written order if satisfied that the application meets the core criteria (subsection 269P(3)).
Any breaches of this legislation may not be explicitly stated in the provided text, but generally, failure to comply with the requirements of the Customs Act 1901 can result in penalties under the Act or related legislation. For instance, incorrect or misleading information provided in an application could potentially lead to civil or criminal penalties as outlined in other sections of the Customs Act or the Crimes Act 1914. The maximum penalties for offences under the Customs Act can vary widely depending on the nature and severity of the offence but can include fines and imprisonment. In the context of TCOs, non-compliance by the applicant or improper decisions by the CEO could potentially lead to revocation of the TCO or other administrative consequences.