EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0944862
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.
BHP Billiton Olympic Dam Corporation Pty Ltd applied for a TCO in respect of certain copper flash furnace elements on 25 November 2009.
Instrument
TCO No 0944862 was made on 26 February 2010. It declares that those certain copper flash furnace elements 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. 0944862 is taken to have come into force on 25 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, amended through Tariff Concession Instrument No. 0944862, was enacted to address the need for tariff concessions on specific imported goods where no substitutable domestic production exists. This legislation empowers the Chief Executive Officer of Customs to grant Tariff Concession Orders (TCOs), which lower the rate of customs duty on certain goods. The primary objective of this instrument is to provide tariff relief for goods that are not produced domestically, thus supporting economic efficiency and competitiveness by reducing costs for importers. Enacted by the Australian Parliament, the Tariff Concession Instrument facilitates the process whereby businesses can apply for tariff reductions, provided that the goods in question are not produced in Australia and no suitable substitutes are available domestically.
The process outlined in the Customs Act ensures that applications for tariff concessions are thoroughly reviewed to ascertain the absence of domestic production and suitable substitutes. Instrument TCO No. 0944862, for instance, was granted to BHP Billiton Olympic Dam Corporation Pty Ltd for certain copper flash furnace elements, resulting in a reduction of the customs duty rate from 5% to free. This specific case exemplifies the instrument's role in lowering import costs, thereby benefiting importers and potentially encouraging investment in industries that rely on such critical components.
Scope and Application
The Customs Act 1901, through its Tariff Concession Orders (TCOs) mechanism, provides a pathway for the Chief Executive Officer of Customs to reduce the customs duty on specific imported goods, thereby benefiting businesses and consumers. This particular legislation applies to entities that apply for a tariff concession in respect of certain goods, provided that no substitutable goods are produced in Australia in the ordinary course of business. The geographic reach of the Act is national, as it pertains to the Commonwealth of Australia. The Act excludes certain goods as specified in section 269SJ and requires adherence to the core criteria outlined in section 269C. The scope of the Act is further defined by subordinate instruments that specify the types of goods eligible for tariff concessions, the criteria for assessing applications, and the process for making orders. In the case of TCO No. 0944862, the CEO was satisfied that the application for tariff concession on certain copper flash furnace elements met the criteria, leading to the issuance of the order on 26 February 2010, effective from 25 November 2009.
Key Provisions
The main operative sections of this legislation (Tariff Concession Instrument No. 0944862) pertain to the process and requirements for the making of Tariff Concession Orders (TCOs) under section 269F of the Customs Act 1901. According to section 269C, a TCO application meets the core criteria if no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged (section 269C). The Chief Executive Officer of Customs (CEO) must then 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 applies (section 269P(3)). This particular instrument, TCO No. 0944862, declares that certain copper flash furnace elements are goods to which item 50 of Schedule 4 applies, resulting in a duty rate of free, as opposed to the general rate of 5% (section 269P(3)).
The Customs Act 1901 imposes various obligations and requirements on the parties and entities it governs. Firstly, it requires the CEO to decide whether a TCO application meets the core criteria, which involves ensuring that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged (section 269C). The CEO must also publish a notice in the Gazette inviting submissions from any person who believes there are reasons why the TCO should not be made (subsection 269K(1)). Additionally, the Act requires the CEO to make a written order if the application meets the core criteria (section 269P(3)). Lastly, the Act stipulates that 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 (subsection 269S(1)).
Under the Customs Act 1901, there are no explicit offences, penalties, or civil/criminal consequences mentioned for breach of the Act's provisions. However, the CEO must adhere to the requirements and obligations imposed by the Act, such as deciding whether a TCO application meets the core criteria and publishing a notice in the Gazette inviting submissions from any person who believes there are reasons why the TCO should not be made. If the CEO fails to meet these requirements or obligations, there may be potential consequences for non-compliance, though the Act does not explicitly state the maximum penalties for such breaches. It is important to note that the Act ensures that the TCO does not impose any liabilities on any person and does not affect the rights of a person (other than the Commonwealth) as at the date of registration so as to disadvantage that person.