EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0807603
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 Coal Australia Pty Limited applied for a TCO in respect of certain coal mine and or iron ore facility parts on 12 May 2008.
Instrument
TCO No 0807603 was made on 01 August 2008. It declares that those certain coal mine and or iron ore facility 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. 0807603 is taken to have come into force on 12 May 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 Tariff Concession Instrument No. 0807603 was enacted under the Customs Act 1901 to address the need for tariff concessions on specific imported goods. This instrument, introduced to facilitate trade and economic efficiency, allows for a reduced or free rate of customs duty on particular goods, provided certain criteria are met. The instrument was established to ensure that tariff concessions are granted where no equivalent goods are produced domestically, thereby supporting Australian industries that cannot feasibly manufacture the required goods. The Tariff Concession Order (TCO) No. 0807603, concerning certain coal mine and iron ore facility parts, exemplifies this approach by setting the duty rate at zero, effective from the date of application, thereby benefiting importers and aligning with the policy objective of enhancing trade competitiveness. This legislative instrument was created by the Chief Executive Officer of Customs, following the requisite legislative process and public consultation, to ensure that the interests of both domestic industries and importers are balanced.
Scope and Application
The Customs Act 1901 applies to the process of applying for and granting Tariff Concession Orders (TCOs), which are used to reduce the rate of customs duty on certain goods. The Act permits the Chief Executive Officer of Customs to make a TCO if an application is made and certain criteria are met. The application must not be for goods specified in section 269SJ of the Act, which lists those goods that cannot be subject to a TCO. For a TCO to be granted, it must be established that no substitutable goods were produced in Australia on the date the application was lodged. Once a TCO is made, it comes into effect on the date the application was lodged, and the benefits of the TCO apply to the rights of importers. Notably, the TCO does not affect any pre-existing rights of persons other than the Commonwealth or impose any liabilities on such persons. The Act extends its application through subordinate instruments, such as the Customs Tariff Act 1995, which specifies the applicable duty rates.
Key Provisions
The primary provisions of Tariff Concession Instrument No. 0807603 under the Customs Act 1901 (section 269P) involve the declaration of certain coal mine and iron ore facility parts as goods eligible for a Tariff Concession Order (TCO). The instrument, issued on 1 August 2008, specifies these parts as goods to which item 50 of Schedule 4 to the Customs Tariff Act 1995 applies, resulting in a concession from the usual 5% duty to a zero rate of duty (section 269P(3)). This concession is effective from the date the TCO application was lodged, 12 May 2008 (subsection 269S(1)).
Entities and individuals governed by this Act must adhere to the stipulations that the goods in question are not substitutable by any goods produced in Australia in the ordinary course of business (section 269C). This means that if, on the date of the application, no such substitutable goods are being produced domestically, the CEO must proceed with the TCO application (section 269B). Furthermore, the CEO is obligated to publish a notice in the Gazette inviting submissions on the application as soon as practicable after accepting it as valid (subsection 269K(1)). In this instance, no submissions were received, allowing the CEO to proceed with the TCO without any objections.
Failure to comply with the obligations set forth in this Act could result in legal repercussions. While the explanatory statement does not explicitly mention offences or penalties, the broader Customs Act 1901 includes provisions for both civil and criminal penalties for breaches. Civil penalties can include fines up to a substantial amount, while criminal penalties may include imprisonment, reflecting the seriousness with which the law treats non-compliance. The specific penalties would be determined based on the nature and severity of the breach.
The TCO does not adversely affect the rights of any person, except the Commonwealth, as at the date of registration, nor does it impose any new liabilities on any person (subsection 269S(2)). This means that while the rights of importers will be positively affected, as they may apply for a refund of duty on goods imported since the TCO came into effect (paragraph 126(1)(r) of the Regulations), there are no additional burdens placed on any party due to the TCO.