EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0922202
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 Pty Ltd applied for a TCO in respect of certain hot dip zinc steel on 29 June 2009.
Instrument
TCO No 0922202 was made on 18 September 2009. It declares that those certain hot dip zinc 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. 0922202 is taken to have come into force on 29 June 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 administration of customs duties and the regulation of imports and exports. Part XVA of the Act establishes a scheme under which Tariff Concession Orders (TCOs) can be made by the Chief Executive Officer of Customs, allowing for lower rates of customs duty on certain goods. The Tariff Concession Instrument No. 0922202, made under this scheme, was introduced to address a specific application from Bluescope Steel Pty Ltd concerning certain hot dip zinc steel products. The policy objective of this legislation is to ensure that Australian industry is not disadvantaged by higher customs duties on goods for which there are no substitutable Australian-produced alternatives. In this instance, the CEO of Customs determined that no such alternatives existed, leading to the concession of free duty on these particular goods, which otherwise would have been subject to a 5% duty rate.
Scope and Application
The Customs Act 1901, specifically under Part XVA, establishes a framework for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs. This legislation applies to any person or entity that seeks a reduction in customs duty on imported goods by applying for a TCO, provided the goods are not listed in section 269SJ of the Act, which excludes certain goods from tariff concession eligibility. The Act's application is national in scope, operating under the Commonwealth jurisdiction. The TCO process mandates that an application must meet the core criteria, which includes the condition that no substitutable goods were produced in Australia on the day the application was lodged. Once a TCO is issued, it reduces the customs duty rate for the specified goods, as evidenced in TCO No. 0922202, where the duty for certain hot dip zinc steel was reduced from 5% to free. The application of TCOs is further regulated through subordinate instruments, which can extend or restrict the application of the Act as necessary.
Key Provisions
Section 269C and 269P of the Customs Act 1901 are central to the operation of Tariff Concession Orders (TCOs). Section 269C sets out the core criteria for a TCO application to be approved, which includes ensuring that no substitutable goods are produced in Australia in the ordinary course of business on the day the application is lodged. If these criteria are met, section 269P(3) mandates the Chief Executive Officer of Customs (CEO) to make a written order, known as a TCO, specifying the goods and the applicable tariff concession.
The obligations imposed by the Customs Act 1901 on applicants and the CEO are significant. Applicants must ensure their submissions meet the core criteria, particularly focusing on the absence of substitutable goods in Australia. The CEO, on the other hand, is required to assess the application against these criteria, consult relevant stakeholders, and make a decision based on the evidence presented. If the CEO decides to proceed, a TCO is issued, and the applicant is informed accordingly. The CEO must also publish a notice in the Gazette inviting submissions from any person who believes the TCO should not proceed, as stipulated in subsection 269K(1).
Failure to comply with the provisions of the Customs Act 1901 may result in various penalties. The Act does not specify particular criminal or civil penalties for breaches of TCO provisions, but general penalties for non-compliance with customs regulations may apply. These can include fines and imprisonment for serious breaches, as outlined in other sections of the Customs Act 1901. The consequences of breaching the terms of a TCO could potentially include financial penalties and the revocation of tariff concessions.
The explanatory statement notes that TCO No. 0922202, concerning certain hot dip zinc steel, was issued after Bluescope Steel Pty Ltd successfully applied for it. The CEO was satisfied that no substitutable goods were being produced in Australia, meeting the core criteria. As a result, the TCO declared that these goods are subject to a 5% duty rate, down from the general rate of duty. Importantly, this TCO does not retroactively affect any rights or impose liabilities on anyone except the Commonwealth, safeguarding the rights of importers who can apply for duty refunds from the date the TCO came into force, which is the date the application was lodged.