EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0707723
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 air filter elements and cartridges on 24 May 2007.
Instrument
TCO No 0707723 was made on 14 September 2007. It declares that those certain air filter elements and cartridges 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 10%. 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. One submission objecting to the TCO application was received from Blastmaster Trading Trust.
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. 0707723 is taken to have come into force on 24 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 Parliament of Australia, was amended to introduce the scheme of Tariff Concession Orders (TCOs) to address the problem of providing tariff relief for specific goods, thereby promoting trade and industry competitiveness. The 2007 instrument, F2007L03812, exemplifies this by providing tariff concessions on certain air filter elements and cartridges, lowering the customs duty from 10% to 0% as per item 50 of Schedule 4 to the Customs Tariff Act 1995. This concession was made after the Chief Executive Officer of Customs was satisfied that no substitutable goods were produced in Australia. The policy objective here is to facilitate the import of these specific goods by removing customs duty barriers, thereby encouraging their use and potentially boosting local industries that rely on these components.
Scope and Application
The Customs Act 1901 applies to individuals, businesses, and entities involved in the import and export of goods in Australia, with its scope extending to the entire Commonwealth. The Act establishes a framework for imposing tariffs and provides mechanisms for tariff concessions through Tariff Concession Orders (TCOs), which are issued by the Chief Executive Officer of Customs. These orders provide lower rates of customs duty on specific goods, provided the goods meet certain criteria such as not having substitutable alternatives produced in Australia. The Act also mandates consultation processes where public submissions can be made on TCO applications, ensuring transparency and stakeholder engagement. The geographic reach of this legislation is national, as it pertains to all imports and exports within Australia. There are exclusions for certain goods specified in section 269SJ of the Act, which cannot be subject to a TCO. The application of the Act may be further detailed through subordinate instruments, which provide additional regulations and clarifications to ensure the effective implementation of tariff concessions.
Key Provisions
The Customs Act 1901 (the Act) outlines a framework in Part XVA for Tariff Concession Orders (TCOs), which can be made by the Chief Executive Officer of Customs (the CEO) to lower the customs duty on specified goods. Section 269F of the Act allows an application for a TCO to be made by a person, provided the goods are not those listed in section 269SJ of the Act, which are ineligible for a TCO. The CEO must then determine if the application meets the core criteria set out in section 269C of the Act. This determination hinges on whether, on the day the application was lodged, no substitutable goods were being produced in Australia in the ordinary course of business, as defined in sections 269D, 269E, and 269F of the Act.
Under section 269C, a TCO application is deemed to meet the core criteria if, on the application's lodgement date, there were no substitutable goods produced in Australia in the ordinary course of business. The CEO must then issue a written order (a TCO) if satisfied that the application meets these criteria. The order declares that the goods in question are subject to a specified duty rate listed in Schedule 4 of the Customs Tariff Act 1995 (the Tariff). This process was followed when Bluescope Steel Ltd applied for a TCO for certain air filter elements and cartridges on 24 May 2007. The CEO was satisfied that no substitutable goods were produced in Australia, and a TCO was issued on 14 September 2007, reducing the duty on these goods from 10% to 0%.
The Act imposes specific obligations on the CEO and applicants for TCOs. Upon receiving a valid TCO application, the CEO must publish a notice in the Gazette, as stipulated in subsection 269K(1) of the Act, inviting submissions from any interested parties who may oppose the concession. This was done in the case of TCO No. 0707723, which received one objection from Blastmaster Trading Trust. Furthermore, the Act stipulates that a TCO comes into effect on the day the application is lodged, as per subsection 269S(1). TCO No. 0707723 is therefore considered effective from 24 May 2007. Importantly, the TCO does not affect the rights of any person other than the Commonwealth in a way that would disadvantage them or impose liabilities for actions taken before the TCO's registration date.
Failure to comply with the requirements of the Customs Act 1901 and its associated regulations can result in various penalties and consequences. While the specific sections detailing offences and penalties are not explicitly stated in the text, breaches of customs regulations typically result in substantial fines and potential imprisonment for criminal offences. For civil breaches, penalties can include financial penalties and administrative actions. In the case of TCOs, failure to adhere to the conditions of the concession may lead to revocation of the concession and the imposition of back duties, along with interest and potential fines. The exact penalties would depend on the nature and severity of the breach, as outlined in the broader framework of the Customs Act 1901 and the Customs Regulations 1999.