EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0720892
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.
Intercast & Forge Pty Limited applied for a TCO in respect of certain rolled bars on 07 December 2007.
Instrument
TCO No 0720892 was made on 29 February 2008. It declares that those certain rolled bars 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. 0720892 is taken to have come into force on 07 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 Customs Act 1901, enacted by the Parliament of Australia, provides a framework for the imposition of customs duty on imported goods. One of the mechanisms within this framework is the Tariff Concession Order (TCO), which allows for the reduction or exemption of customs duty on certain goods under specific circumstances. The Customs Act 1901 was amended to include this scheme, and the Tariff Concession Instrument No. 0720892, issued in 2008, is an example of how this scheme operates. This instrument was introduced to address the gap in providing tariff concessions to importers who can demonstrate that the goods they seek to import are not being produced in Australia, thus ensuring that Australian industry is not unfairly disadvantaged by the availability of cheaper imported alternatives. The policy objective of this legislative instrument is to promote fair competition by preventing the importation of goods that would otherwise undercut local production without providing any significant benefit to consumers.
Scope and Application
The Customs Act 1901, specifically Part XVA, outlines the framework for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs. This legislation applies to individuals and entities seeking tariff concessions for specific goods, which are not restricted by section 269SJ of the Act. To qualify for a TCO, the goods in question must not have substitutable equivalents produced in Australia on the date the application was lodged, as per sections 269C and 269D. The geographic scope of this Act is national, with its application extending across the Commonwealth of Australia. The instrument in question, TCO No. 0720892, was applied to certain rolled bars and came into effect on 7 December 2007. It is noteworthy that this TCO does not retroactively affect the rights of any person, except for potentially benefiting importers who may apply for a duty refund under the Customs Act Regulations. The Act allows for the extension of its application through subordinate instruments, such as the Customs Tariff Act 1995, which specifies the applicable duty rates in the Tariff.
Key Provisions
The main operative sections of Tariff Concession Instrument No. 0720892 under the Customs Act 1901 (section 269C) require the Chief Executive Officer of Customs (CEO) to consider an application for a Tariff Concession Order (TCO) if it meets the core criteria. If the CEO is satisfied that the application is not in respect of goods specified in section 269SJ and that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged, the CEO must make a written order (section 269P(3)). This written order, or TCO, declares that the goods subject to the application are goods to which a prescribed item of Schedule 4 to the Customs Tariff Act 1995 applies. In this particular case, the TCO No. 0720892 was made on 29 February 2008, declaring that certain rolled bars are goods to which item 50 of Schedule 4 applies, resulting in a duty rate of free instead of the general rate of 5%.
The obligations and requirements imposed by the Act on the parties it governs primarily involve the application process and the criteria that must be met. The applicant must submit an application for a TCO to the CEO, ensuring it is not in respect of goods specified in section 269SJ and that no substitutable goods were produced in Australia in the ordinary course of business. Once the CEO receives the application, 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)). The CEO must then decide whether the application meets the core criteria and, if so, make a written TCO. Additionally, the Act mandates that 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.
Any breach of the provisions under the Customs Act 1901 can lead to civil and criminal consequences. While specific offences and penalties are not detailed in the explanatory statement, breaches of customs legislation generally attract significant penalties. For example, section 266 of the Customs Act 1901 imposes a penalty of up to 10,000 penalty units or imprisonment for five years, or both, for serious breaches. Additionally, section 267 imposes a penalty of up to 1,100 penalty units or imprisonment for six months, or both, for lesser breaches. These penalties underscore the importance of compliance with the Act's provisions.