EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0720742
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 sinter cooler parts on 7 December 2007.
Instrument
TCO No 0720742 was made on 29 February 2008. It declares that those certain sinter cooler 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. 0720742 is taken to have come into force on 7 December 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. 0720742, made under the Customs Act 1901, was enacted in 2008 to address a specific issue regarding the tariff concession orders (TCOs) for certain sinter cooler parts. This legislation was introduced to facilitate the granting of tariff concessions for goods that are not produced domestically and thereby benefit from a lower rate of customs duty, in this case, reducing the duty to zero for the specified parts. The instrument was created following an application by Bluescope Steel Ltd, which sought to apply for a TCO for certain sinter cooler parts. The Australian Parliament established this legislative framework to ensure that the Chief Executive Officer of Customs could make informed decisions regarding tariff concessions, balancing economic interests and encouraging competitiveness without disadvantaging existing rights holders. The policy objective of this act is to provide tariff relief for imported goods where there is no domestic production, thus supporting industries that rely on imported components.
Scope and Application
The Customs Act 1901 applies to any person or entity involved in the importation of goods into Australia, including importers, exporters, customs brokers, and manufacturers of goods that are subject to customs duties. The Act governs the imposition and collection of customs duty, along with the administrative processes and procedures for the importation and exportation of goods. The application of the Act is national in scope, applying across the Commonwealth of Australia, and is enforced by the Australian Border Force. The Act’s provisions can be extended or modified through subordinate instruments such as regulations and orders, including Tariff Concession Orders (TCOs) which provide relief from certain customs duties under specific conditions. TCOs are subject to certain exclusions, notably they cannot apply to goods specified in section 269SJ of the Act. The Act’s application is not limited by specific thresholds but rather by the criteria outlined within its provisions, including the requirement that no substitutable goods are produced in Australia in the ordinary course of business for a TCO to be granted.
Key Provisions
The main sections of Tariff Concession Instrument No. 0720742 under the Customs Act 1901, establish the conditions under which a Tariff Concession Order (TCO) can be made by the Chief Executive Officer of Customs (CEO) (section 269F). A TCO applies a lower rate of customs duty to goods specified in the order. According to section 269C, a TCO application meets the core criteria if no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged (section 269P(3)). If the CEO is satisfied that these criteria are met, they must make a written TCO order (section 269P(3)). This particular TCO, number 0720742, made on 29 February 2008, applies to certain sinter cooler parts, declaring that these goods are subject to item 50 of Schedule 4 to the Tariff, and the rate of duty on these goods is free, as opposed to the general rate of 5%.
The Customs Act 1901 imposes several obligations and requirements on parties involved in the TCO process. The CEO must decide if an application meets the core criteria, which include ensuring that no substitutable goods were produced in Australia in the ordinary course of business (section 269C). If the CEO decides to make a TCO, they must publish a notice in the Gazette inviting submissions from any person who believes there are reasons why the TCO should not be made (subsection 269K(1)). Additionally, the TCO must be made on the day the application is lodged (subsection 269S(1)). In this case, the CEO did not receive any submissions in response to the notice published in the Gazette.
The Customs Act 1901 also outlines the consequences for breach of the legislation. While the Act does not specify penalties for failing to comply with the TCO requirements, it does state that a 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 (subsection 269S(4)). This means that any existing rights and liabilities remain unchanged. However, 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 on which the TCO is taken to have come into force (paragraph 126(1)(r) of the Regulations). The TCO does not impose any new liabilities on any person.