EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0707246
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.
Midwest Corporation Limited applied for a TCO in respect of certain iron ore wagons on 15 May 2007.
Instrument
TCO No 0707246 was made on 27 July 2007. It declares that those certain iron ore wagons 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. 0707246 is taken to have come into force on 15 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 Tariff Concession Instrument No. 0707246, enacted in 2007, was created to provide tariff concessions under the Customs Act 1901, facilitating a lower rate of customs duty on certain specified goods. This instrument was introduced to address the need for tariff relief where no suitable domestic alternatives are available, thereby encouraging the importation of goods essential for particular industries. The instrument was developed by the Chief Executive Officer of Customs in accordance with the legislative framework established by the Customs Act, which allows for the application of tariff concessions to support economic activities and international trade. The policy objective is to ensure that importers of these goods benefit from reduced customs duties, enhancing their competitiveness and the overall efficiency of the relevant industry sectors.
The instrument was brought into effect following an application by Midwest Corporation Limited for certain iron ore wagons, and it was implemented without any submissions opposing the tariff concession. This concession applies retroactively from the date the application was lodged, with no adverse impact on existing rights or imposition of new liabilities on non-Commonwealth entities. Importers of the specified goods are now eligible for duty refunds from the effective date of the concession, demonstrating the government's commitment to supporting industry needs through strategic tariff adjustments.
Scope and Application
The Customs Act 1901, specifically Part XVA, governs the issuance of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO). This legislative framework applies to any person or entity that seeks a TCO for goods, ensuring that the application aligns with the core criteria set out in the Act. The CEO must assess whether the goods in question are substitutable by any produced in Australia and whether they are used in the ordinary course of business. If the CEO determines that the application meets these criteria, a TCO is issued, resulting in a concessional rate of customs duty. The TCO applies nationally and provides benefits to importers by potentially reducing the duty rate on the specified goods, as seen in the case of Midwest Corporation Limited’s application for certain iron ore wagons. The TCO does not disadvantage existing parties or impose new liabilities but allows importers to apply for duty refunds on goods imported since the effective date of the TCO. The application process includes a public notice period for submissions, though no objections were raised in this instance.
Key Provisions
The primary operative sections of Tariff Concession Instrument No. 0707246 under the Customs Act 1901 (section 269C) stipulate that if the Chief Executive Officer (CEO) of Customs is satisfied that an application for a Tariff Concession Order (TCO) meets the core criteria, they must make a written order declaring the goods subject to the TCO application. For this specific instrument (section 269P(3)), the CEO confirmed that the iron ore wagons in question were not substitutable with any goods produced in Australia, hence the concession was granted. The instrument (section 269P) then specifies that these iron ore wagons are subject to the free duty rate, in contrast to the general rate of 5% duty.
The Act imposes specific obligations on the parties involved. Midwest Corporation Limited, the applicant, must ensure their application meets the core criteria, particularly that no substitutable goods are produced in Australia. The CEO is obligated to evaluate the application against these criteria and, if satisfied, to issue the TCO. Furthermore, the CEO must publish a notice in the Gazette inviting submissions from interested parties, although no submissions were received in this case (subsection 269K(1)).
Failure to comply with the provisions of the Customs Act 1901 can result in various consequences. If the CEO makes a TCO without meeting the statutory criteria, the order may be subject to judicial review, and there could be civil or administrative penalties for any misrepresentations or misleading statements made during the application process. Additionally, any subsequent misuse of the tariff concession could lead to further penalties under the Customs Act, including fines and potential imprisonment. The specific penalties for breaches are not detailed in the explanatory statement but would typically be found in the Act and related regulations.