EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0840864
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.
CMI Forge Pty Ltd applied for a TCO in respect of certain high alloy steel bars or rods on 21 November 2008.
Instrument
TCO No 0840864 was made on 27 February 2009. It declares that those certain high alloy steel bars or rods 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. 0840864 is taken to have come into force on 21 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 was enacted by the Australian Parliament to regulate the importation and exportation of goods, among other purposes. One of the key mechanisms established by this Act is the Tariff Concession Order (TCO) scheme, which allows for lower rates of customs duty on certain goods. This scheme was introduced to address the need for flexibility in duty rates to support specific economic or industrial needs. Tariff Concession Instrument No. 0840864, made in 2009, exemplifies this scheme by granting a tariff concession on certain high alloy steel bars or rods, reducing the duty rate from 5% to free. This instrument was made after CMI Forge Pty Ltd applied for the concession on 21 November 2008, and the Chief Executive Officer of Customs was satisfied that no substitutable goods were produced in Australia, meeting the core criteria set out in section 269C of the Act. The instrument came into effect on the date of the application, 21 November 2008, and does not affect any pre-existing rights or liabilities of parties other than the Commonwealth.
Scope and Application
The Customs Act 1901, through Part XVA, facilitates the establishment of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs, aiming to provide reduced customs duty rates on specific goods. This legislative framework applies to individuals and entities that seek to import goods eligible for tariff concessions, provided the goods are not specified as ineligible in section 269SJ of the Act. The TCO mechanism is triggered by an application made to the CEO under section 269F, with a requirement that the application must meet core criteria set out in section 269C, such as the absence of substitutable goods produced in Australia. In the instance of Tariff Concession Instrument No. 0840864, certain high alloy steel bars or rods were granted a concession, with the duty rate reduced from the general 5% to free, effective from the date of application, 21 November 2008. This instrument does not affect existing rights or impose new liabilities on individuals or entities other than the Commonwealth, thereby safeguarding against retrospective disadvantage. The scope of this Act is national, applying across Australia, and while it does not explicitly state exclusions or thresholds, the criteria for TCO applications inherently set boundaries on eligibility.
Key Provisions
The Customs Act 1901, particularly Part XVA, establishes a framework for Tariff Concession Orders (TCOs), which can be applied for and granted by the Chief Executive Officer of Customs (CEO) to lower the customs duty on certain goods. Under section 269F, a person can apply to the CEO for a TCO regarding specific goods, provided the goods do not fall under section 269SJ, which lists goods that cannot be subject to a TCO. Section 269C stipulates that for a TCO application to meet the core criteria, there must be no substitutable goods produced in Australia in the ordinary course of business on the day the application is lodged. The terms 'goods produced in Australia', 'ordinary course of business', and'substitutable goods' are defined in sections 269D, 269E, and 269F respectively.
The obligations imposed by the Act on parties and entities include ensuring that any application for a TCO complies with the statutory criteria. The CEO is obligated to review the application, publish a notice in the Gazette, and invite submissions from interested parties, as outlined in subsection 269K(1). Upon satisfying the core criteria, the CEO must make a written TCO, as stated in subsection 269P(3). In the case of CMI Forge Pty Ltd's application for a TCO on high alloy steel bars or rods, the CEO determined that no substitutable goods were produced in Australia, and thus issued TCO No. 0840864, effective from 21 November 2008.
Should a party fail to comply with the Act's provisions, there are potential consequences. Although the explanatory statement does not specify criminal or civil penalties for non-compliance, the Act does allow for enforcement actions against those who breach its terms. For example, if the CEO finds that a TCO was wrongly applied for or granted, they may revoke the order, and the person who applied for the TCO may face legal repercussions. The TCO itself, once issued, ensures that the general duty rate of 5% for the specified high alloy steel bars or rods is reduced to free, and it does not impose any liabilities on any person, including importers who can apply for a refund of duty on goods imported since the TCO came into force.