EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0801270
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.
Rio Tinto Aluminium Limted applied for a TCO in respect of certain alumina slurry and or liquor heaters on 23 January 2008.
Instrument
TCO No 0801270 was made on 28 March 2008. It declares that those certain alumina slurry and or liquor heaters 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. 0801270 is taken to have come into force on 23 January 2008.
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, outlines a scheme under which Tariff Concession Orders (TCOs) can be made by the Chief Executive Officer of Customs (CEO) to lower the rate of customs duty on specified goods. This was introduced to address the need for tariff concessions on goods where no substitutable goods are produced in Australia, thereby encouraging the importation of specific goods that may benefit from such concessions. Tariff Concession Instrument No. 0801270 was enacted on 28 March 2008, in response to an application by Rio Tinto Aluminium Limited for a TCO on certain alumina slurry and liquor heaters, effective from 23 January 2008. The policy objective of this instrument is to facilitate the importation of these goods by setting their duty rate at free, thereby removing the previously applicable 5% duty. The CEO ensured there was an opportunity for public consultation before making the order, though no submissions were received. This TCO does not retroactively affect any rights or impose liabilities on any person other than the Commonwealth, and importers can apply for duty refunds on goods imported since the TCO's effective date.
Scope and Application
The Customs Act 1901, specifically under Part XVA, provides a framework for the issuance of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO). This legislation applies to any person or entity that seeks to apply for a TCO for certain goods, provided these goods are not specified in section 269SJ of the Act, which outlines goods that cannot be subject to a TCO. The application process requires the CEO to determine if the goods for which a TCO is sought meet the core criteria, primarily focusing on whether there are no substitutable goods produced in Australia. If these criteria are met, the CEO is mandated to issue a TCO, which effectively reduces the rate of customs duty for the specified goods. The application of TCOs is governed by both federal and state jurisdictions within Australia, and while the primary application lies under federal law, state laws may also come into play regarding specific trade practices and business operations.
The scope of the TCO, as exemplified by TCO No. 0801270, is limited to certain alumina slurry and liquor heaters, which benefit from a tariff rate of free, down from the general rate of 5%. This TCO came into effect on 23 January 2008, the date the application was lodged, and it does not retroactively affect any rights or impose liabilities on persons other than the Commonwealth. It is noteworthy that the CEO published a notice in the Gazette inviting any interested parties to submit reasons against the TCO, although no submissions were received in response. The application of this TCO is thus both geographically and jurisdictionally confined to the specified goods within the Australian context, without extending to any broader exclusions or exemptions beyond those outlined in the Act.
Key Provisions
The main operative sections of the Customs Act 1901 relevant to Tariff Concession Orders (TCOs) are sections 269C, 269F, and 269P, among others. Section 269C sets out the core criteria that must be satisfied for a TCO application to be considered, which includes ensuring that no substitutable goods were produced in Australia at the time the application was lodged (section 269C). Section 269F allows any person to apply to the Chief Executive Officer of Customs (CEO) for a TCO concerning specific goods (section 269F). If the CEO is satisfied that the application meets the core criteria, section 269P mandates that a written order, or TCO, be made (section 269P(3)). These provisions together establish the framework for tariff concessions on specific imported goods.
The Customs Act 1901 imposes several obligations and requirements on the parties involved in the TCO process. The CEO must first determine whether the application for a TCO is valid and not concerning goods listed in section 269SJ, which cannot be subject to a TCO. If the application is valid, the CEO must assess whether the application meets the core criteria specified in section 269C, particularly focusing on whether substitutable goods were produced in Australia at the time of the application. If these criteria are satisfied, the CEO is required to issue a written TCO. Additionally, under section 269K, the CEO must publish a notice in the Gazette inviting any interested party to submit their views on the proposed TCO, although no submissions were received in this case.
Failure to comply with the requirements of the Customs Act 1901 in relation to TCOs may result in various consequences. While the Act does not explicitly outline specific offences or penalties for non-compliance with the TCO provisions, breaches of other sections of the Customs Act may result in civil or criminal penalties. For example, section 244 of the Act provides for penalties for providing false or misleading information in relation to customs matters, which could include fines or imprisonment. The absence of specific penalties for TCO-related breaches suggests that compliance is expected to be managed through the administrative process established by the Act, including the issuance of TCOs and potential audits or reviews by the CEO.
The TCO No. 0801270, made on 28 March 2008, declares that certain alumina slurry and liquor heaters are subject to a concessional duty rate of free, down from the general rate of 5%. This concession applies from the date the application was lodged, 23 January 2008, under the provisions of section 269S(1) of the Act. Importantly, this TCO does not affect the rights of any person as at the date of registration, ensuring that no one is disadvantaged or incurs new liabilities as a result of the concession. Importers of the affected goods can benefit from this TCO by applying for a refund of duty on goods imported since the concession came into effect, as provided under paragraph 126(1)(r) of the Regulations. The TCO is designed to facilitate trade by reducing the cost burden on importers without imposing additional liabilities on any party.