EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0842023
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.
Mitsubishi Australia applied for a TCO in respect of certain cold rolled steel on 01 December 2008.
Instrument
TCO No 0842023 was made on 27 February 2009. It declares that those certain cold rolled steel 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. 0842023 is taken to have come into force on 01 December 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 to provide a comprehensive framework for the administration of customs and excise duties in Australia. The Act allows for the creation of Tariff Concession Orders (TCOs) under section 269F, which enable the Chief Executive Officer of Customs to apply a lower rate of customs duty to specified goods, provided certain criteria are met. The problem or gap addressed by this legislative framework is the need for flexibility in customs duty rates to accommodate particular economic circumstances or market conditions that may justify a tariff concession. This Act was enacted by the Australian Parliament with the policy objective of facilitating economic efficiency and providing relief to industries that may be adversely affected by higher customs duties. The Tariff Concession Instrument No. 0842023, made under the authority of the Customs Act 1901, exemplifies this flexibility by providing a concession on customs duty for certain cold rolled steel products, recognising that these goods were not produced in Australia and thus warrant a reduced tariff rate to support industry competitiveness.
Scope and Application
The Customs Act 1901, as amended by Tariff Concession Instrument No. 0842023, provides for the application of tariff concessions to specific goods, reducing or eliminating customs duty for these items. The instrument applies to any person or entity seeking a tariff concession order (TCO) for goods, provided the application meets the core criteria outlined in the Act, such as the absence of substitutable goods produced in Australia. The scope of the Act is national, as it operates under the Commonwealth's authority, affecting all importers and exporters across Australia. Notably, this instrument does not disadvantage any person other than the Commonwealth and does not impose liabilities on persons for actions taken before the TCO's effective date. Exemptions and exclusions are determined by the conditions specified in the Act, particularly section 269SJ, which lists goods ineligible for TCOs. The Act allows for the extension or restriction of its application through subordinate instruments, which may provide additional criteria or specify particular goods or industries affected.
Key Provisions
The main operative sections of this legislation are sections 269C, 269P(3), and 269SJ of the Customs Act 1901 (the Act). Section 269C stipulates the core criteria that must be met for a Tariff Concession Order (TCO) to be considered by the Chief Executive Officer of Customs (the CEO). Section 269P(3) mandates that if the CEO is satisfied the application meets these core criteria, a written order must be made declaring that the goods in question are subject to the prescribed rate in Schedule 4 to the Customs Tariff Act 1995. Section 269SJ details the goods that cannot be the subject of a TCO. The legislation also includes provisions for the publication of TCO applications in the Gazette, inviting public submissions on the proposed order, and the effective date of a TCO.
Under the Customs Act 1901, the CEO has specific obligations when processing a TCO application. Firstly, the CEO must determine whether the application is for goods that are excluded from TCO eligibility under section 269SJ. If the goods are not excluded, the CEO must then assess if the application meets the core criteria outlined in section 269C. This involves verifying that, on the date of the application, no substitutable goods were being produced in Australia in the ordinary course of business. If the core criteria are satisfied, the CEO must make a written TCO, specifying the applicable rate of duty from Schedule 4 to the Customs Tariff Act 1995. 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, although no submissions were received in this case.
The legislation includes provisions for the imposition of penalties for breaches. However, the explanatory statement does not detail specific offences or penalties. Generally, under Australian law, breaches of customs regulations can result in both civil and criminal penalties, including fines and imprisonment, depending on the severity and intent of the breach. The maximum penalties for customs-related offences can vary significantly, but they may include substantial fines and imprisonment terms that reflect the seriousness of the violation.
The TCO itself does not disadvantage any person other than the Commonwealth nor does it impose liabilities on any person in relation to actions taken before the TCO's effective date. It ensures that the rights of importers are beneficially affected, allowing them to apply for a refund of duty on goods imported since the TCO's effective date. This legislative provision is designed to provide clarity and certainty to importers, ensuring that they can benefit from the tariff concession without incurring any retroactive liabilities.