EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0800038
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.
Mount Isa Mines Limited applied for a TCO in respect of certain refractory bricks and shapes on 28 December 2007.
Instrument
TCO No 0800038 was made on 14 March 2008. It declares that those certain refractory bricks and shapes 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. 0800038 is taken to have come into force on 28 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 was amended by the Tariff Concession Instrument No. 0800038, enacted in 2008, to address the need for tariff concessions for certain imported goods where no substitutable goods are produced in Australia. The instrument, issued by the Chief Executive Officer of Customs, was designed to facilitate the application process for tariff concession orders (TCOs) and provide relief on customs duties for specific goods, thereby enhancing trade efficiency and competitiveness. This legislative measure ensures that the application of tariff concessions aligns with the core criteria outlined in the Act, particularly where no substitutable domestic goods are produced, and aims to benefit importers by potentially allowing them to claim refunds for duties paid on such goods since the effective date of the concession.
Scope and Application
The Tariff Concession Instrument No. 0800038 under the Customs Act 1901 applies to the specific refractory bricks and shapes for which Mount Isa Mines Limited applied, allowing these goods to be subject to a lower rate of customs duty. The application of this Instrument is contingent on the Chief Executive Officer of Customs being satisfied that no substitutable goods are produced in Australia, thereby meeting the core criteria as outlined in the Act. The geographic scope of this legislation pertains to Australia, extending its application nationally. The Instrument does not impose any disadvantages or liabilities on individuals or entities other than the Commonwealth and is effective from the date the application was lodged. There were no submissions opposing the Tariff Concession Order, indicating a lack of contention regarding its implementation. Additionally, the Instrument allows for refunds of duty to importers of these goods from the date the order is deemed to have come into effect.
Key Provisions
The Customs Act 1901 (the Act) provides the framework for Tariff Concession Orders (TCOs), which apply a lower rate of customs duty to specified goods. Section 269F of the Act allows a person to apply to the Chief Executive Officer of Customs (the CEO) for a TCO in respect of goods. For a TCO to be considered, the application must not relate to goods specified in section 269SJ of the Act, which are ineligible for a TCO. Section 269C of the Act stipulates that a TCO application meets the core criteria if, on the day the application is lodged, no substitutable goods were produced in Australia in the ordinary course of business. "Substitutable goods" are defined in section 269D as goods produced in Australia that could be used for the same purpose as the goods in the TCO application. If the CEO is satisfied that the application meets the core criteria, they are required under section 269P(3) to make a written TCO, specifying that the goods in question are subject to a prescribed rate of duty as outlined in Schedule 4 to the Customs Tariff Act 1995.
The obligations imposed on the parties governed by the Act include the requirement for the CEO to assess the validity of a TCO application and to determine whether it meets the core criteria set out in section 269C. This involves verifying that no substitutable goods were produced in Australia at the time the application was lodged. The CEO must also publish a notice in the Gazette as soon as practicable after accepting the application as valid, inviting any person who believes the TCO should not be made to lodge a submission. Failure to meet these obligations can result in the CEO not being able to proceed with the TCO, which would mean the goods would continue to be subject to the higher rate of duty. Additionally, if the CEO does not follow the prescribed procedures, this could lead to legal challenges regarding the validity of the TCO.
Breach of the provisions under the Customs Act 1901 can result in both civil and criminal consequences. For instance, if a person knowingly or recklessly provides false information in a TCO application, they could face criminal charges. Section 278 of the Act provides for penalties, including fines and imprisonment, for offences such as providing false information. The maximum penalties can vary based on the severity of the offence, but generally, fines can reach up to $22,000 for individuals and $110,000 for corporations, along with potential imprisonment terms. Civil penalties may also apply, where the CEO can impose fines for breaches of the Act or Regulations. These penalties are intended to ensure compliance with the Act and to maintain the integrity of the customs duty system.