EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0910066
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 parts planetary gearbox on 25 March 2009.
Instrument
TCO No 0910066 was made on 19 June 2009. It declares that those certain parts planetary gearbox 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. 0910066 is taken to have come into force on 25 March 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, enacted by the Parliament of Australia, provides a framework for the application and administration of customs duties, including the process for granting tariff concession orders (TCOs) that lower customs duty rates on specific goods. The introduction of Tariff Concession Instrument No. 0910066 in 2009 aims to address the need for tariff reductions on certain imports where no suitable Australian-made substitutes are available, thereby supporting industry competitiveness and potentially lowering consumer prices. The instrument was created following an application by Bluescope Steel for tariff concessions on certain parts of planetary gearboxes, and it was enacted after the Chief Executive Officer of Customs determined that no substitutable goods were being produced in Australia at the time of the application. This decision benefits importers of these specific goods by providing a duty-free rate, in line with the policy objective of facilitating trade and economic efficiency.
Scope and Application
The Customs Act 1901, specifically under Part XVA, facilitates the creation of Tariff Concession Orders (TCOs) through the Chief Executive Officer (CEO) of Customs. This legislative framework allows for the application of a reduced rate of customs duty on specified goods, provided certain criteria are met. The Act applies to individuals or entities seeking tariff concessions for goods, with the scope extending to those who can demonstrate that no substitutable goods are produced in Australia. The application process involves the CEO evaluating whether the core criteria are satisfied, particularly ensuring that the goods in question are not prohibited under section 269SJ of the Act. Once the CEO is satisfied that the application meets the core criteria, a TCO is issued, as seen in the case of Bluescope Steel's application for certain parts of a planetary gearbox. The geographic reach of this Act is national, as it pertains to the customs regime across Australia. Notably, the TCO does not disadvantage any person or impose liabilities on anyone for actions taken before the order's registration. Instead, it provides benefits to importers by potentially allowing them to apply for duty refunds on goods imported since the effective date of the TCO.
Key Provisions
The primary operative sections of the Tariff Concession Instrument No. 0910066 are sections 269C, 269P(3), and 269S. Section 269C sets the criteria for the application of a Tariff Concession Order (TCO), requiring that no substitutable goods are produced in Australia in the ordinary course of business on the day the application is lodged. Section 269P(3) mandates that if these criteria are met, the Chief Executive Officer (CEO) of Customs must make a written TCO order. Section 269S stipulates that the TCO is effective from the date the application was lodged, thus Bluescope Steel’s application for the TCO regarding certain parts of planetary gearboxes was deemed to have come into effect on 25 March 2009.
The obligations imposed by this Act on parties such as Bluescope Steel include ensuring that their application for a TCO is lodged on a day when no substitutable goods are being produced in Australia. The CEO of Customs, on their part, must review the application against these criteria and decide whether to issue the TCO. They are also required to publish a notice in the Gazette inviting any interested parties to lodge submissions against the TCO if they believe it should not be granted. In this case, the CEO did not receive any submissions in response to the notice, indicating that there were no objections to the granting of the TCO.
The Act imposes specific penalties for non-compliance with its provisions. Although the Explanatory Statement does not detail specific penalties, under the Customs Act 1901, breaches of customs regulations can lead to severe consequences. These can include substantial fines, imprisonment, or both, depending on the nature and severity of the breach. For example, knowingly making a false statement to obtain a TCO can result in penalties of up to $22,200 or imprisonment for up to two years, or both, as per section 255A of the Customs Act. This underscores the importance of adhering to the criteria and obligations outlined in the Act.