EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0816955
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.
Bluescope Steel Ltd applied for a TCO in respect of certain combustion air fan parts on 10 July 2008.
Instrument
TCO No 0816955 was made on 03 October 2008. It declares that those certain combustion air fan 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. 0816955 is taken to have come into force on 10 July 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 Australian Parliament, provides a framework for the administration of customs duties and tariffs. One of the mechanisms introduced by this Act is the Tariff Concession Order (TCO), which allows for the reduction or exemption of customs duties on specified goods. The problem or gap that the TCO scheme addresses is the potential economic disadvantage faced by businesses importing goods for which no domestic substitute exists, thereby promoting fair competition and supporting Australian industries where appropriate. Under the Act, the Chief Executive Officer of Customs is empowered to grant TCOs upon application if certain criteria are met, including the absence of substitutable goods produced in Australia. The policy objective behind this is to encourage the importation of goods that are not produced domestically, thereby benefiting consumers and businesses that rely on these imports.
Tariff Concession Instrument No. 0816955, made in 2008, exemplifies this mechanism in action. Bluescope Steel Ltd applied for a TCO for certain combustion air fan parts, which was granted as no substitutable goods were produced in Australia. This order reduces the duty from the general rate of 5% to free, effective from the date of the application. The process involved publishing a notice in the Gazette to invite submissions, none of which were received, and the order came into force on the date of the application. This instrument ensures that the rights of importers are not adversely affected by the new tariff rates and allows for duty refunds on imports made since the effective date of the TCO.
Scope and Application
The Customs Act 1901, specifically under Part XVA, establishes a framework for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO). This legislative instrument applies to individuals or entities that seek a reduction in customs duty on specified goods through an application process to the CEO. A TCO is issued if the CEO determines that the application meets the core criteria, including the absence of substitutable goods produced in Australia, as outlined in sections 269C and 269D of the Act. The TCO, such as Instrument TCO No. 0816955, which was made on 3 October 2008, applies to the goods described in the order, in this case, certain combustion air fan parts. The concessional rate is specified in Schedule 4 to the Customs Tariff Act 1995, with the TCO reducing the general duty rate of 5% to free duty for the specified goods. The application of the TCO is national in scope, affecting all entities importing the specified goods within Australia. The TCO does not disadvantage any person other than the Commonwealth and does not impose any liabilities on any person. Importers of the goods will benefit from the reduced duty rates and may apply for duty refunds for goods imported since the TCO's effective date.
Key Provisions
The Customs Act 1901 (section 269F) establishes a framework through which Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs (CEO). These orders allow for a reduced rate of customs duty on specified goods, provided that certain criteria are met. An application for a TCO can be submitted by any person, but the CEO must first ensure that the goods in question are not excluded by section 269SJ of the Act. If the application does not involve such excluded goods, the CEO must then determine if the application meets the core criteria outlined in section 269C, which generally requires that no substitutable goods are being produced in Australia at the time the application is made.
The obligations imposed by the Act on the parties involved primarily revolve around the application and assessment process. The applicant must ensure that their application is complete and compliant with the Act's requirements. Once an application is accepted, the CEO has the obligation to publish a notice in the Gazette (subsection 269K(1)) inviting submissions from interested parties. In the case of TCO No. 0816955, the CEO did not receive any submissions, indicating that no objections were raised against the tariff concession. Additionally, the CEO must make a written order if the application meets the core criteria, as stated in section 269P(3), effectively granting the tariff concession.
Breaches of the provisions outlined in the Customs Act 1901 can lead to various consequences, both civil and criminal. While specific offences and penalties are not detailed within the explanatory statement, the general framework of the Act implies that non-compliance with tariff regulations could result in fines or other penalties as prescribed by relevant laws. The maximum penalties for such breaches would depend on the specific nature of the offence and the applicable legal provisions, which may include provisions under the Customs Act itself or other related legislation. The Act ensures that the rights of importers are positively affected, particularly in relation to duty refunds for goods imported since the TCO came into force, as outlined under paragraph 126(1)(r) of the Regulations.