EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0710069
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 (AIS) Pty Ltd applied for a TCO in respect of certain hot strip steel mill stands motor to gearbox couplings on 27 June 2007.
Instrument
TCO No 0710069 was made on 07 September 2007. It declares that those certain hot strip steel mill stands motor to gearbox couplings 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. 0710069 is taken to have come into force on 27 June 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, establishes a framework for the imposition of customs duties on imported goods. One of the significant mechanisms within this Act is the provision for Tariff Concession Orders (TCOs) under Part XVA, which allows for the reduction or exemption of customs duties on certain imported goods. This legislative provision was introduced to address the need for facilitating trade by providing tariff concessions that can make imported goods more competitive with locally produced alternatives. In particular, the 2007 Tariff Concession Instrument No. 0710069 was issued to provide a zero-rate duty on certain hot strip steel mill stands motor to gearbox couplings, as applied by Bluescope Steel (AIS) Pty Ltd. This concession was granted after the Chief Executive Officer of Customs determined that no substitutable goods were produced in Australia, thus meeting the core criteria set out in the Act. The policy objective behind such concessions is to encourage trade and investment by reducing the cost of importing specific goods, thereby benefiting importers and potentially the broader market.
Scope and Application
The Tariff Concession Instrument No. 0710069, made under the Customs Act 1901, applies to specific hot strip steel mill stands motor to gearbox couplings that were the subject of a Tariff Concession Order (TCO) application by Bluescope Steel (AIS) Pty Ltd. This instrument extends to the Commonwealth and concerns the application of a reduced rate of customs duty to the specified goods, which are not substitutable by any goods produced in Australia in the ordinary course of business. The application of the TCO does not affect any rights or liabilities of persons other than the Commonwealth, and importantly, it allows for the refund of duty paid on the specified goods imported since the date the TCO was deemed to come into force. The CEO of Customs must ensure that the application meets the core criteria before making the TCO, which involves considering whether any substitutable goods are produced in Australia. This instrument reflects the legislative intent to provide tariff concessions where appropriate, facilitating trade and benefiting importers of the specified goods.
Key Provisions
The Customs Act 1901 includes a provision under section 269F, which allows for the application of Tariff Concession Orders (TCO) by any person to the Chief Executive Officer of Customs (CEO) in respect of goods. If the application meets the core criteria, the CEO must make a written order (section 269C). For an application to meet these core criteria, it must be shown that no substitutable goods were produced in Australia on the day the application was lodged (section 269P(3)). In the case of TCO No. 0710069, the CEO was satisfied that the application for tariff concession for certain hot strip steel mill stands motor to gearbox couplings met the core criteria and subsequently issued the order on 7 September 2007 (section 269P(3)). This order declared that the specified goods are subject to item 50 of Schedule 4 of the Customs Tariff Act 1995, with a duty rate of free, down from the general rate of 5% (section 269P(3)).
The obligations imposed by the Customs Act 1901 on the parties involved include the requirement for the CEO to publish a notice in the Gazette as soon as practicable after accepting a TCO application as valid (subsection 269K(1)). This notice must invite any person who considers there are reasons why the TCO should not be made to lodge a submission with the CEO. If the CEO does not receive any submissions, they are to proceed with making the TCO (subsection 269K(1)). Additionally, the Act ensures that a TCO does not affect the rights of any person (other than the Commonwealth) as at the date of registration to their disadvantage or impose liabilities for actions taken before the registration date (subsection 269S(1)). The rights of importers will be beneficially affected, as they will be able to apply for a refund of duty on goods imported since the day the TCO is taken to have come into force (paragraph 126(1)(r) of the Regulations).
In terms of consequences for breach, the Act does not specify any criminal offences or penalties for failing to comply with the TCO provisions. However, it does outline that the rights of a person (other than the Commonwealth) will not be adversely affected by the TCO, and no liabilities will be imposed on any person for actions taken before the TCO comes into force. This is to ensure that the tariff concession does not unjustly burden any party and maintains the integrity of the customs duty system. The Act focuses more on the procedural correctness and the benefits for importers rather than punitive measures for non-compliance.