EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0840248
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 travelling crane fixed support parts on 18 November 2008.
Instrument
TCO No 0840248 was made on 06 February 2009. It declares that those certain travelling crane fixed support 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. 0840248 is taken to have come into force on 18 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 Customs Act 1901, enacted by the Australian Parliament, establishes a framework for the administration of customs and excise through the Australian Customs Service. This Act was designed to streamline the customs process and provide clarity on the tariffs applicable to imported goods. One of the significant mechanisms introduced under the Act is the Tariff Concession Order (TCO), which allows for the reduction or exemption of customs duty on specific goods under certain conditions. This legislative instrument addresses the problem of ensuring fair and efficient trade practices by providing relief to businesses importing goods that are not domestically produced. The policy objective behind the TCO scheme is to promote economic efficiency and competitiveness by reducing the cost of imported goods where there are no domestic substitutes, thus facilitating trade and supporting industry needs.
Scope and Application
The Customs Act 1901, through Part XVA, facilitates the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO), with the aim of applying lower customs duties to specific goods. This process is applicable to any individual or entity seeking tariff concessions for goods that are not produced domestically and for which no substitutable goods are manufactured in Australia. The application must meet specific criteria, including the absence of substitutable goods produced in the ordinary course of business. Once an application is approved, the CEO issues a written TCO that specifies the reduced duty rate for the designated goods. For instance, in the case of Bluescope Steel Limited, a TCO was issued for certain travelling crane fixed support parts, reducing the duty rate from 5% to free. The CEO is also required to publish notices in the Gazette inviting any interested parties to submit objections, although in this instance, no objections were received. The TCO's effective date aligns with the application date, ensuring that the rights of third parties are not adversely affected by the concession.
Key Provisions
The main operative sections of this Tariff Concession Order (TCO) are sections 269C, 269F, and 269P of the Customs Act 1901. Section 269C specifies the core criteria that must be satisfied for a TCO application to be approved, namely that no substitutable goods are produced in Australia on the date the application was lodged. Section 269F allows a person to apply to the Chief Executive Officer (CEO) of Customs for a TCO in respect of goods. If the CEO is satisfied that the application meets the core criteria, they must make a written order (a TCO) under section 269P(3), 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 applies.
The obligations imposed on the parties governed by this Act include the requirement for applicants to ensure their application meets the core criteria set out in section 269C of the Customs Act 1901. Specifically, the CEO must be satisfied that no substitutable goods were produced in Australia on the day the application was lodged. Additionally, the CEO is required to publish a notice in the Gazette inviting submissions from any person who believes there are reasons why the TCO should not be made, as per subsection 269K(1) of the Act. The CEO must consider any submissions received in response to the Gazette notice.
In terms of consequences for non-compliance or breach of the Act, the specific provisions of this TCO do not detail penalties or consequences for failing to comply with the Act or the TCO. However, under the broader Customs Act 1901, breaches of the Act can result in civil or criminal penalties. For example, section 259 of the Act provides that any person who wilfully contravenes any provision of the Act is liable to a penalty of up to 10,000 penalty units for an individual and up to 50,000 penalty units for a body corporate. Additionally, section 276 of the Act outlines various criminal offences related to fraud, smuggling, and other prohibited activities, which can result in substantial fines and imprisonment.