EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0838638
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 Limited applied for a TCO in respect of certain hydraulic actuators on 05 November 2008.
Instrument
TCO No 0838638 was made on 30 January 2009. It declares that those certain hydraulic actuators 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. 0838638 is taken to have come into force on 05 November 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. 0838638, enacted in 2009 under the Customs Act 1901, addresses the need to provide tariff concessions for specific goods not produced domestically. The Australian Parliament introduced this legislation to streamline the process by which businesses can apply for lower customs duties on goods, provided no substitutable goods are produced in Australia. The policy objective of this Act is to facilitate the import of specific goods by reducing the financial burden on businesses and consumers while ensuring that the application process is transparent and includes opportunities for public consultation.
The Chief Executive Officer of Customs is responsible for deciding on tariff concession orders (TCOs) after reviewing applications. If the CEO determines that the application meets the core criteria, a TCO is issued, granting tariff concessions for the specified goods. In this particular instance, Bluescope Steel Limited applied for a TCO for certain hydraulic actuators, and the CEO issued Instrument TCO No. 0838638 on 30 January 2009, effective from 5 November 2008, the date the application was lodged. The CEO ensured that the process included a public consultation period, although no submissions were received in response to the published notice.
Scope and Application
The Customs Act 1901, specifically under Part XVA, establishes a framework through which the Chief Executive Officer of Customs (CEO) can issue Tariff Concession Orders (TCOs) that apply lower rates of customs duty to certain goods. This process is available to any person who can demonstrate that the goods for which they are seeking a tariff concession are not substitutable by goods produced in Australia in the ordinary course of business. The TCO mechanism is designed to benefit importers by reducing the duty on specific items, as demonstrated by TCO No. 0838638 which was granted to Bluescope Steel Limited for certain hydraulic actuators. This order, effective from 5 November 2008, lowered the duty rate from 5% to free, subject to the CEO's satisfaction that no substitutable goods were produced in Australia. The application of TCOs is subject to certain exclusions, particularly those outlined in section 269SJ of the Act, which specifies goods that cannot be subject to a TCO. The CEO is mandated to publish notices in the Gazette inviting submissions from interested parties, although in this instance, no objections were received. The Act ensures that the rights of third parties are not adversely affected by the concessions granted under a TCO, and it provides a mechanism for importers to seek refunds on duties paid prior to the effective date of the TCO.
Key Provisions
The Tariff Concession Instrument No. 0838638 (Instrument) under the Customs Act 1901 (the Act) provides a lower rate of customs duty for certain hydraulic actuators. Section 269F of the Act allows for an application 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 outlined in sections 269C and 269P(3), they must make a written TCO. The CEO was satisfied that no substitutable goods were produced in Australia in the ordinary course of business for these hydraulic actuators, so Instrument 0838638 was made on 30 January 2009, declaring that these goods are subject to item 50 of Schedule 4 to the Customs Tariff Act 1995, with a duty rate of free, down from the general rate of 5%.
Entities applying for a TCO under the Act must meet certain criteria as specified in section 269C. The CEO must be satisfied that on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business, as defined in sections 269D and 269E of the Act. The CEO is required to publish a notice in the Gazette inviting submissions if the application is accepted as valid, as per subsection 269K(1). In this case, no submissions were received. A TCO is deemed to come into force on the day the application is lodged, in this case, 5 November 2008, according to subsection 269S(1).
The obligations imposed by the Act on the parties include ensuring that applications for TCOs meet the specified criteria and that no substitutable goods are produced in Australia in the ordinary course of business. The CEO has a duty to process applications and make written orders if the criteria are met. Importers of goods subject to a TCO can apply for a refund of duty on goods imported since the TCO came into force, under paragraph 126(1)(r) of the Regulations. The TCO does not affect the rights of a person, other than the Commonwealth, to disadvantage that person or impose liabilities in respect of anything done or omitted before the date of registration.
Any failure to comply with the requirements of the Act, including the submission of false information in an application for a TCO, may result in criminal or civil penalties. While the specific penalties are not detailed in the explanatory statement, breaches of the Customs Act 1901 can generally result in fines, imprisonment, or both, depending on the nature and severity of the offence. The Act empowers the CEO to take necessary actions to enforce compliance and ensure that the concessions are granted appropriately.