EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0941857
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 gearbox parts on 6 November 2009.
Instrument
TCO No 0941857 was made on 22 January 2010. It declares that those certain gearbox parts 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. 0941857 is taken to have come into force on 6 November 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, provides the framework for the regulation of customs and excise in Australia. Part XVA of the Act introduces a scheme for Tariff Concession Orders (TCOs), which can be applied for by individuals or businesses to obtain a lower rate of customs duty on specified goods. The problem or gap that this scheme addresses is the need for a mechanism to provide tariff relief on certain goods, thereby facilitating trade and potentially lowering costs for businesses. The explanatory statement for Tariff Concession Instrument No. 0941857, made by the Chief Executive Officer of Customs on 22 January 2010, outlines the process and criteria for such concessions. This instrument was introduced to grant tariff concessions on certain gearbox parts, following an application by Bluescope Steel on 6 November 2009. The policy objective is to ensure that no substitutable goods were produced in Australia at the time of the application, thus allowing the CEO to grant the concession without disadvantaging existing producers or imposing new liabilities.
Scope and Application
The Tariff Concession Order No. 0941857 under the Customs Act 1901 applies to goods specified in the order, in this case, certain gearbox parts, and is designed to provide tariff concessions to these goods. The order was made by the Chief Executive Officer of Customs and is applicable to any entity or individual importing these specified parts into Australia. The concession is based on the principle that no substitutable goods were produced in Australia at the time the application was lodged, as per the core criteria stipulated in section 269C of the Act. This concession applies on a national level within Australia, as it is governed by Commonwealth legislation. The Act does not specify any exclusions or exemptions within the order itself, though it does exclude certain goods from being subject to a TCO under section 269SJ of the Act. The application of this order can be extended or further defined through subordinate instruments, such as regulations or further orders made under the authority of the Customs Act.
Key Provisions
The Customs Act 1901 (the Act) provides a framework for the application and issuance of Tariff Concession Orders (TCOs), as outlined in Part XVA. Specifically, section 269F allows a person to apply to the Chief Executive Officer of Customs (the CEO) for a TCO in respect of certain goods. If the CEO is satisfied that the application is not for goods specified in section 269SJ, which are ineligible for a TCO, the CEO must then determine if the application meets the core criteria set out in section 269C. This criterion requires that, on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business. Section 269P(3) then mandates that if the application meets these criteria, the CEO must issue a written TCO, specifying that the goods in question are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995.
In the case of TCO No. 0941857, the CEO was satisfied that Bluescope Steel's application for certain gearbox parts met the core criteria, as no substitutable goods were being produced in Australia at the time. Consequently, the CEO issued a TCO, declaring that these gearbox parts are subject to item 50 of Schedule 4 to the Tariff, thereby applying a duty rate of free, as opposed to the general rate of 5%. The TCO came into force on the date the application was lodged, which was 6 November 2009, as stipulated in subsection 269S(1) of the Act.
Under the Act, the CEO has specific obligations when processing a TCO application. Once a TCO application is accepted as valid, the CEO must publish a notice in the Gazette, inviting any interested parties to submit objections or reasons why the TCO should not be made, as required by subsection 269K(1). In this instance, no submissions were received in response to the published notice. Additionally, the TCO does not affect any pre-existing rights of persons (other than the Commonwealth) or impose any liabilities on them concerning actions taken before the TCO's registration date. However, it does provide benefits to importers by allowing them to apply for a refund of duty on goods imported since the TCO's effective date, as per paragraph 126(1)(r) of the Regulations.
Breaches of the provisions under the Customs Act 1901 can result in various consequences. While the specific offences, penalties, or consequences are not detailed in the Explanatory Statement for this particular TCO, the Act generally outlines provisions for civil and criminal penalties for non-compliance with its requirements. These may include fines, imprisonment, or both, depending on the severity and nature of the breach. The maximum penalties can vary widely based on the specific provisions of the Act that are contravened, but they are typically significant to ensure compliance with customs regulations and tariff concessions.