EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0937812
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.
Yeomans Plow Co Sales applied for a TCO in respect of certain square or round steel on 6 October 2009.
Instrument
TCO No 0937812 was made on 19 February 2010. It declares that those certain square or round 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. 0937812 is taken to have come into force on 6 October 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 Australian Parliament, established the legal framework for the management of customs duties and tariffs. To address specific economic and trade policy needs, the Act introduced the mechanism for Tariff Concession Orders (TCOs) under Part XVA, allowing the Chief Executive Officer of Customs to grant tariff concessions on certain goods. This legislative tool was introduced to alleviate the financial burden on businesses by providing lower customs duty rates for goods that are not domestically produced or are not readily substitutable with locally manufactured alternatives. The Tariff Concession Instrument No. 0937812, made in 2010, exemplifies the application of this provision, providing a zero-rate duty on certain square or round steel products upon the determination that no substitutable goods were produced in Australia. This instrument aims to benefit importers by potentially allowing them to claim refunds on duties paid on these goods since the effective date of the concession.
Scope and Application
The Customs Act 1901, through Part XVA, facilitates the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs, aimed at reducing customs duties on specific goods. The application process under section 269F mandates that the goods in question must not fall under the exclusions listed in section 269SJ, and the CEO must determine if the application meets the core criteria outlined in sections 269C, 269D, and 269E. This involves assessing whether substitutable goods are produced in Australia in the ordinary course of business. Upon meeting these criteria, the CEO issues a written order specifying the lower duty rate applicable to the goods, as per section 269P(3). The TCO, in this case Instrument No. 0937812, pertains to certain square or round steel, which is subject to item 50 of Schedule 4 of the Customs Tariff Act 1995, effectively setting the duty rate at free instead of the general 5% rate. The TCO applies from the date the application was lodged, providing relief to importers who may apply for duty refunds on goods imported since then, without imposing new liabilities on any person.
Key Provisions
The main operative sections of this legislation are sections 269C, 269F, and 269P. Section 269F of the Customs Act 1901 allows a person to apply to the Chief Executive Officer (CEO) of Customs for a Tariff Concession Order (TCO). If the CEO determines that the application meets the core criteria (section 269C), they must make a written order declaring that the goods in question are eligible for the tariff concession specified in the order (section 269P). Section 269C stipulates that an application meets the core criteria if, on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business. Section 269E further defines 'ordinary course of business', and section 269D defines 'goods produced in Australia'.
The obligations imposed by the Act on the parties involved include the requirement for the CEO to assess whether an application meets the core criteria as outlined in section 269C. The CEO must also ensure that the application does not pertain to goods specified in section 269SJ, which are ineligible for a TCO. Additionally, the CEO is mandated to publish a notice in the Gazette once a TCO application is accepted as valid, inviting any interested parties to submit objections or reasons why the TCO should not be made (subsection 269K(1)). The CEO must also consider any submissions received in response to this notice.
In terms of offences, penalties, and consequences for breach, the Customs Act 1901 does not explicitly outline specific penalties for non-compliance with the provisions related to TCOs. However, general provisions of the Act could apply to breaches of its requirements. For instance, section 212 of the Act imposes penalties for false statements or misleading information provided to the CEO in the context of customs duties. The maximum penalties for these offences are typically significant, reflecting the seriousness of non-compliance with customs regulations. For example, section 212 can impose a fine of up to 10,000 penalty units or imprisonment for up to five years, or both, for serious offences.