EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0716978
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 plate mill parts on 8 October 2007.
Instrument
TCO No 0716978 was made on 14 December 2007. It declares that those certain plate mill 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 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. 0716978 is taken to have come into force on 8 October 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 Commonwealth Parliament, includes a scheme under which Tariff Concession Orders (TCOs) may be made by the Chief Executive Officer of Customs (CEO). These concessions allow for lower rates of customs duty on specified goods. The Tariff Concession Instrument No. 0716978, made on 14 December 2007, was introduced in response to an application by Bluescope Steel Ltd for a TCO in respect of certain plate mill parts, aiming to address the problem of higher customs duties on these specific goods. The CEO determined that no substitutable goods were produced in Australia, thus meeting the core criteria for a TCO. The resulting concession allows for a duty-free rate on these goods, which otherwise carry a 5% duty rate. The policy objective is to provide relief to importers of these goods by potentially allowing them to apply for a refund of duty on goods imported since the TCO came into effect on 8 October 2007.
Scope and Application
The Customs Act 1901 provides a framework through which Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs (CEO). The Act applies to persons or entities that seek tariff concessions for specific goods, provided these goods are not specified as ineligible in section 269SJ of the Act. The application process involves the applicant satisfying core criteria outlined in sections 269C, 269B, and 269D of the Act, which pertain to the non-existence of substitutable goods produced in Australia and the ordinary course of business. If the CEO determines that the application meets these criteria, a TCO is issued, which then applies to the specified goods, setting a lower rate of customs duty. The geographic reach of this Act is national, as it applies across Australia, and the application process is governed by federal law. However, the Act does not impose any liabilities on persons other than the Commonwealth and does not affect existing rights as of the registration date of the TCO. The commencement of a TCO is effective from the day the application is lodged, as stipulated in subsection 269S(1) of the Act.
Key Provisions
The primary operative sections of this legislation (sections 269C, 269B, 269D, 269E, and 269F of the Customs Act 1901) outline the process for making Tariff Concession Orders (TCOs). Specifically, section 269F allows a person to apply to the Chief Executive Officer of Customs (the CEO) for a TCO in respect of goods, provided that the goods are not specified in section 269SJ of the Act. If the CEO is satisfied that the application meets the core criteria, as defined in section 269C, which involves ensuring that no substitutable goods were produced in Australia in the ordinary course of business, the CEO must make a written order (a TCO) declaring that the goods in question are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995. This effectively means that the goods are subject to a lower rate of customs duty, in this case, free of duty instead of the general rate of 5%.
The obligations and requirements imposed by this Act on the parties or entities it governs include the duty of the CEO to carefully consider whether the application for a TCO meets the core criteria. This involves assessing whether substitutable goods were produced in Australia and if the goods in question can be put to a use that corresponds with the use of the substitutable goods. Furthermore, the CEO must publish a notice in the Gazette inviting submissions from any person who may have objections to the making of the TCO, as outlined in subsection 269K(1) of the Act. Additionally, importers of the goods subject to the TCO will have the right to apply for a refund of duty on goods imported since the day the TCO is taken to have come into force.
The Act also stipulates the consequences for breaches. While the explanatory statement does not specify criminal or civil penalties for non-compliance with the TCO provisions, it does highlight that the TCO does not affect the rights of a person (other than the Commonwealth) as at the date of registration 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. This suggests that any non-compliance or misuse of the TCO provisions could potentially lead to legal action or administrative penalties, although the specifics of these consequences are not detailed in the explanatory statement.