EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0809491
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 applied for a TCO in respect of certain reduction cell collector bars on 22 May 2008.
Instrument
TCO No 0809491 was made on 04 August 2008. It declares that those certain reduction cell collector 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. 0809491 is taken to have come into force on 22 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 Customs Act 1901 was enacted to establish a framework for the administration of customs duties and to regulate the import and export of goods. One of its key provisions is the ability for the Chief Executive Officer of Customs to grant Tariff Concession Orders (TCOs), which provide for a lower rate of customs duty on specified goods. This scheme aims to promote fair trade practices by ensuring that Australian businesses are not unfairly disadvantaged by high import duties on goods that cannot be produced domestically. The Tariff Concession Instrument No. 0809491, introduced in 2008, is an example of such an order, allowing for free customs duty on certain reduction cell collector bars as no substitutable goods were produced in Australia at the time of the application. The instrument was introduced following an application by Rio Tinto Aluminium, and the process involved publishing a notice in the Gazette inviting submissions, none of which were received. The policy objective here is to ensure that Australian businesses can compete fairly in the global market by reducing the cost of imported goods that are not produced locally.
Scope and Application
The Customs Act 1901, specifically Part XVA, facilitates the issuance of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs. These orders apply a reduced rate of customs duty to specific goods, as long as the application for a TCO meets the core criteria outlined in the Act. A TCO application can be submitted by any person, but it must not pertain to goods that are expressly excluded under section 269SJ. For an application to satisfy the core criteria, it must demonstrate that, on the day the application is lodged, no goods that can substitute the ones in question are produced in Australia in the ordinary course of business. The application process involves a review by the CEO, who must ensure that the goods do not have Australian-made alternatives. If the application is approved, a TCO is issued, as seen in the case of TCO No. 0809491 for certain reduction cell collector bars, effective from the date the application was lodged. This Act's provisions apply across Australia, with the CEO having the authority to make TCOs based on applications from any person or entity. The Act does not impose any disadvantages or liabilities on persons other than the Commonwealth, and it does not affect rights as they stood before the TCO was registered.
Key Provisions
The main operative sections of the Tariff Concession Instrument No. 0809491 under the Customs Act 1901 (section 269P(3)) establish the framework for the issuance of Tariff Concession Orders (TCO) by the Chief Executive Officer of Customs (CEO). This instrument specifies that certain reduction cell collector bars are subject to a TCO, which applies a zero rate of customs duty instead of the usual 5% rate (section 269P(3)). This tariff concession applies to goods that are not substitutable by any goods produced in Australia, as defined in section 269D of the Act (section 269C).
The obligations imposed by this legislation on the parties involved primarily rest with the CEO of Customs. The CEO is tasked with determining whether an application for a TCO meets the core criteria specified in the Act. If the CEO is satisfied that the application meets these criteria, they must make a written order declaring the goods to which the TCO applies (section 269P(3)). Furthermore, as per section 269K(1), the CEO must publish a notice in the Gazette inviting submissions from any interested parties who believe the TCO should not be made. In this instance, no submissions were received.
In terms of potential consequences for breach, the Customs Act 1901 does not explicitly outline offences, penalties, or specific civil or criminal consequences for failing to comply with a TCO. However, any breach of the terms under which the TCO is granted could lead to scrutiny from customs authorities, and potentially to the revocation of the concession. Such revocation would reinstate the original duty rates, and importers who have already benefited from the concession may face additional duty payments or other financial liabilities. The Act ensures that the TCO does not affect the rights of any person adversely as of the date of registration, and it does not impose any liabilities on any person (section 269S(1)).