EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0903181
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 applied for a TCO in respect of certain hearth or seal plate refractory grout on 30 January 2009.
Instrument
TCO No 0903181 was made on 24 April 2009. It declares that those certain hearth or seal plate refractory grout 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. 0903181 is taken to have come into force on 30 January 2009.
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, as supplemented by Tariff Concession Instrument No. 0903181 enacted in 2009, addresses the problem of ensuring that Australian businesses can access essential goods at a reduced tariff rate when no domestic alternatives are available. This Act was introduced by the Australian Parliament to streamline the process of obtaining tariff concessions for specific goods, facilitating more efficient trade practices and economic benefits. The policy objective of this instrument is to ensure that Australian businesses have access to competitive goods without the burden of high tariffs, thereby promoting fair trade and economic growth.
The instrument was developed following an application by Bluescope Steel for tariff concessions on certain hearth or seal plate refractory grout, which was approved by the Chief Executive Officer of Customs. The approval was based on the absence of substitutable goods produced in Australia, as stipulated by the Act. The tariff rate for these goods, which were subject to item 50 of Schedule 4 to the Tariff, was reduced from 5% to free, effective from the date the application was lodged. This decision was made without any objections from the public, highlighting the support for the tariff concession scheme.
Scope and Application
The Customs Act 1901 governs the application and administration of Tariff Concession Orders (TCOs) which can reduce or eliminate customs duty on specific goods, thereby facilitating their importation. This Act applies to any person or entity that wishes to import goods and benefit from reduced customs duty through a TCO. The scope of the Act extends to any goods that meet the criteria outlined in Part XVA, with the specific condition that the goods must not be substitutable by locally produced alternatives. The geographic reach of this Act is national, as it is an Australian Commonwealth legislation, and it applies to all states and territories within Australia. However, the Act excludes goods specified in section 269SJ, which are those that cannot be subject to a TCO. The application process for a TCO involves submitting an application to the Chief Executive Officer of Customs, who then determines whether the application meets the core criteria, particularly that no substitutable goods are produced in Australia. If the criteria are met, a TCO is issued, effective from the date the application was lodged. This process ensures that the application of the Act is both transparent and subject to public consultation, although in the case of TCO No. 0903181, no submissions were received against the application.
Key Provisions
The main operative sections of the Tariff Concession Instrument No. 0903181 under the Customs Act 1901 (section 269F) allow for the application to the Chief Executive Officer (CEO) of Customs for a Tariff Concession Order (TCO). If the CEO determines that the application is valid and meets the core criteria outlined in section 269C, the CEO is required to make a TCO. This order specifies the lower rate of customs duty for the goods in question, as determined by the prescribed item in Schedule 4 to the Customs Tariff Act 1995. For instance, in this case, certain hearth or seal plate refractory grout now attract a free duty rate under item 50 of Schedule 4.
The obligations imposed by the Act on parties include the requirement for the CEO to assess whether an application for a TCO meets the core criteria. This assessment involves ensuring that no substitutable goods were produced in Australia on the day the application was lodged (section 269C). Additionally, the CEO must publish a notice in the Gazette inviting submissions from any person who may have reasons to oppose the making of a TCO (subsection 269K(1)). Following this, if no submissions are received, the CEO must proceed to make the TCO if the application meets the criteria.
Under the Customs Act, there are no specific offences or penalties mentioned for breach of the provisions relating to TCOs. However, any failure by the CEO to follow the mandated procedures, such as not publishing the notice in the Gazette or not considering submissions, could be subject to judicial review or internal review within the department. The consequences of such failures would depend on the outcome of any review processes, which may include rectifying the procedural errors or addressing any grievances raised by affected parties.
The TCO itself does not impose any liabilities on persons other than the Commonwealth and does not affect any existing rights of individuals as at the date of registration (subsection 269S(1)). Importers of the goods affected by the TCO may apply for a refund of duty on goods imported since the TCO is taken to have come into force (paragraph 126(1)(r) of the Regulations). This benefit to importers highlights the practical impact of the TCO on those directly involved in the importation of the specified goods.