EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0940173
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.
J Steel Australasia Pty Ltd applied for a TCO in respect of certain sheet piling on 23 October 2009.
Instrument
TCO No 0940173 was made on 15 January 2010. It declares that those certain sheet piling 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.
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. 0940173 is taken to have come into force on 23 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 Parliament of Australia, provides a framework for managing customs duties and tariffs. To address the need for more flexible tariff measures that can respond to specific economic circumstances and support industry, Part XVA of the Act introduces the mechanism of Tariff Concession Orders (TCOs). The objective of this legislative provision is to allow the Chief Executive Officer of Customs to grant tariff concessions for certain goods under specified conditions, thereby facilitating trade and potentially lowering the cost of imported goods for businesses. This mechanism is particularly beneficial when no suitable Australian-produced alternatives exist for the goods in question. The TCO process involves an application by interested parties, assessment by the CEO, and, if approved, the publication of a notice in the Gazette inviting public submissions before the concession is granted. The concessions granted under TCOs are designed to be effective from the date of the application, ensuring that any associated benefits are promptly available to the applicants and the broader market.
Scope and Application
The Tariff Concession Instrument No. 0940173, made under the Customs Act 1901, applies to the concession of tariff rates for specific goods, in this case certain sheet piling, for which J Steel Australasia Pty Ltd lodged an application on 23 October 2009. The Act enables the Chief Executive Officer of Customs to grant a Tariff Concession Order (TCO) that reduces the customs duty on specified goods, provided the application meets the criteria outlined in the Act. The primary criterion is that on the date the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business. The TCO applies to the goods specified in the order and does not affect any existing rights or liabilities of persons other than the Commonwealth, with beneficial effects for importers who can apply for a refund of duty for goods imported since the TCO's effective date. This legislative instrument extends the application of the Customs Act by specifically addressing the tariff concessions for the mentioned goods, thus offering a lower duty rate of free compared to the general rate of 5%.
Key Provisions
Section 269F of the Customs Act 1901 allows for the application for a Tariff Concession Order (TCO) by any person to the Chief Executive Officer of Customs (CEO). If the CEO is satisfied that the application is valid and does not pertain to goods specified in section 269SJ of the Act, they must determine whether the application meets the core criteria. If the core criteria are met, as defined by section 269C of the Act, which states that no substitutable goods were produced in Australia on the date the application was lodged, the CEO must issue a written order (TCO) declaring that the goods in question are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995, with the specified rate of duty.
Entities or individuals applying for a TCO must ensure that their application is made in accordance with section 269F and that the goods in question meet the core criteria as outlined in section 269C. The CEO's decision to issue a TCO will depend on a thorough examination of whether the goods are substitutable and if they were produced in Australia in the ordinary course of business, as defined by sections 269D and 269E of the Act respectively. Additionally, the CEO must publish a notice in the Gazette inviting submissions from any person who believes the TCO should not be made, as required by subsection 269K(1) of the Act.
Failing to comply with the requirements of the Customs Act 1901, particularly in the context of applying for and issuing TCOs, may lead to civil or criminal consequences. While specific offences and penalties are not detailed in the explanatory statement, breaches of the Customs Act 1901 can result in significant penalties under the Act itself or other related legislation. For instance, knowingly making a false statement in a customs declaration can incur civil penalties of up to $22,200 per offence and/or imprisonment for up to two years. Criminal penalties for more severe breaches can be more substantial, including fines of up to $275,000 and/or imprisonment for up to 10 years. These penalties underscore the importance of adhering to the statutory requirements when dealing with customs duties and TCOs.