EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0803404
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 Ltd applied for a TCO in respect of certain pipe flanges on 20 February 2008.
Instrument
TCO No 0803404 was made on 02 May 2008. It declares that those certain pipe flanges 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. 0803404 is taken to have come into force on 20 February 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 was enacted by the Parliament of Australia to regulate the import and export of goods, including the imposition of customs duties. Part XVA of the Act establishes a scheme for Tariff Concession Orders (TCOs), allowing the Chief Executive Officer of Customs to reduce or eliminate customs duty on certain goods under specific conditions. The problem this legislation addresses is the potential for unfair competitive disadvantage faced by Australian industries if goods subject to TCOs are readily available in the domestic market. The policy objective is to encourage investment and production within Australia by ensuring that the TCO scheme only benefits goods that are not domestically produced.
In the context of Tariff Concession Instrument No. 0803404, Rio Tinto Aluminium Ltd applied for a TCO concerning certain pipe flanges. The CEO of Customs was satisfied that no substitutable goods were produced in Australia, thus meeting the core criteria outlined in the Act. As a result, the CEO issued TCO No. 0803404, which came into force on the date of the application, 20 February 2008. This order effectively grants free duty status to the specified pipe flanges, while ensuring that the rights of importers are protected and no new liabilities are imposed on anyone. The TCO aims to benefit importers by allowing them to claim refunds on duties paid on these goods imported since the TCO's effective date.
Scope and Application
The Tariff Concession Instrument No. 0803404, which operates under the Customs Act 1901, applies to any entity or individual seeking a tariff concession order (TCO) for specific goods that are imported into Australia. The Act allows for a lower rate of customs duty to be applied to goods that are the subject of a TCO, provided the application meets the core criteria as outlined in the Act. This legislation is relevant to industries that import goods for which a tariff concession may be beneficial and encompasses the conduct and transactions associated with such imports. The geographic reach of this Act is national, as it pertains to the Commonwealth of Australia. However, it excludes goods specified in section 269SJ of the Customs Act 1901, which are ineligible for a TCO. The Act extends its application through subordinate instruments such as the Customs Tariff Act 1995, which specifies the applicable duty rates. The commencement of the TCO is effective from the date of the application, and it does not disadvantage any person other than the Commonwealth or impose any liabilities on such persons in relation to actions taken prior to the registration of the TCO.
Key Provisions
The key operative sections of this legislation are sections 269C, 269F, 269K, and 269S of the Customs Act 1901 (the Act). Section 269F allows a person to apply to the Chief Executive Officer (CEO) of Customs for a Tariff Concession Order (TCO). If the CEO is satisfied that the application meets the core criteria set out in section 269C, they must make a written order 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 applies (section 269P(3)). Section 269K requires the CEO to publish a notice in the Gazette inviting submissions from any person who believes the TCO should not be made. Section 269S states that a TCO is taken to have come into force on the day on which the application for the TCO was lodged.
The Act imposes several obligations on the parties it governs. Firstly, the CEO must assess whether an application for a TCO meets the core criteria, specifically that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged (section 269C). Secondly, if the CEO is satisfied that the application meets the core criteria, they must make a written order (section 269P(3)). Thirdly, as soon as practicable after accepting a TCO application as a valid application, the CEO must publish a notice in the Gazette inviting any person who considers there are reasons why the TCO should not be made to lodge a submission with the CEO (section 269K(1)). The CEO did not receive any submissions in response to this invitation.
The Act does not specify any offences or penalties for breach of the TCO. However, it does outline the civil consequences of the TCO. Under the TCO, the general rate of duty on the certain pipe flanges is reduced to free, which benefits importers of such goods. Importers can 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 liabilities on any person and does not affect the rights of a person as at the date of registration so as to disadvantage that person or impose liabilities in respect of anything done or omitted to be done before the date of registration.