EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0818903
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.
King Springworks Pty Ltd applied for a TCO in respect of certain hot rolled alloy steel bars on 15 July 2008.
Instrument
TCO No 0818903 was made on 10 October 2008. It declares that those certain hot rolled alloy steel 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. 0818903 is taken to have come into force on 15 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 Parliament of Australia, provides a framework for the administration of customs and excise. One of its provisions allows for the creation of Tariff Concession Orders (TCOs) to provide duty concessions on certain goods. The 2008 Explanatory Statement outlines the Tariff Concession Instrument No. 0818903, which was introduced to address the specific needs of businesses that import certain hot rolled alloy steel bars, where a lower rate of customs duty was required due to the absence of domestic production of substitutable goods. This instrument was made to ensure that the application met the core criteria as stipulated in the Act, which includes the absence of substitutable goods produced in Australia in the ordinary course of business. The Chief Executive Officer of Customs accepted the application and made the order after satisfying the conditions, and no objections were received from the public during the consultation period. The policy objective is to provide tariff concessions where appropriate, facilitating trade and supporting economic activities without disadvantaging existing rights or imposing new liabilities.
Scope and Application
The Customs Act 1901, specifically under Part XVA, allows for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs, which can apply reduced rates of customs duty on certain goods. The Act applies to any person who may apply for such a concession on goods, provided that the goods are not specified in section 269SJ of the Act, which lists those ineligible for a TCO. The CEO evaluates whether the application meets the core criteria, primarily if no substitutable goods are produced in Australia, as defined under sections 269C, 269D and 269E. If satisfied, the CEO issues a written TCO, specifying the reduced duty rate for the goods in question. The geographical scope of this legislation is national, affecting all Australian importers of the specified goods. The Act does not disadvantage any existing rights or impose liabilities on persons other than the Commonwealth, ensuring that the concession does not retrospectively affect past transactions. Any application for a TCO triggers a publication in the Gazette, inviting submissions from interested parties, although in this instance, no submissions were received. The Tariff Concession Order No. 0818903, made in respect of certain hot rolled alloy steel bars, exemplifies the application of these provisions by granting a duty-free status to these goods, effective from the date the application was lodged.
Key Provisions
The main operative sections of Tariff Concession Instrument No. 0818903 under the Customs Act 1901 (section 269F) allow for the application to the Chief Executive Officer of Customs (CEO) for a Tariff Concession Order (TCO) in respect of specific goods. If the CEO determines that the application does not pertain to goods that are prohibited by section 269SJ of the Act and that the application meets the core criteria outlined in section 269C, the CEO is mandated to issue a TCO (section 269P(3)). This instrument, TCO No. 0818903, specifies that certain hot rolled alloy steel bars are subject to item 50 of Schedule 4 of the Customs Tariff Act 1995, reducing the duty from 5% to free.
The obligations imposed by the Act on the parties involved require King Springworks Pty Ltd to submit an application to the CEO for a TCO. The CEO must then assess whether the application meets the core criteria stipulated by the Act. The core criteria (section 269C) necessitate that on the date the application is lodged, no substitutable goods were produced in Australia in the ordinary course of business. If these conditions are met, the CEO must make a written order declaring the goods subject to a prescribed item in the Tariff. Additionally, the CEO is required to publish a notice in the Gazette inviting any interested parties to submit reasons why the TCO should not be made (subsection 269K(1)).
Any breaches of the obligations set out in the Act may lead to civil or criminal consequences. However, the explanatory statement does not specify the exact nature of these consequences or the penalties associated with non-compliance. The Act does stipulate that the TCO does not affect the rights of any person as at the date of registration so as to disadvantage that person or impose liabilities in respect of anything done or omitted before the registration date (subsection 269S(1)). Therefore, while the Act provides a clear framework for the application and approval of TCOs, it does not explicitly detail the penalties for failing to comply with these provisions.