EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1005214
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.
One Steel applied for a TCO in respect of certain pipes on 29 January 2010.
Instrument
TCO No 1005214 was made on 16 April 2010. It declares that those certain pipes 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. 1005214 is taken to have come into force on 29 January 2010.
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 was enacted to regulate the importation and exportation of goods in Australia, providing a framework for the imposition and collection of customs duties. The Act was introduced to address the need for a structured approach to managing trade and ensuring that customs duties are applied fairly and efficiently. One Steel applied for a Tariff Concession Order (TCO) under Part XVA of the Customs Act 1901, seeking to have a lower rate of customs duty applied to certain pipes. Pursuant to section 269C of the Act, the Chief Executive Officer of Customs (CEO) determined that the application met the core criteria, as no substitutable goods were produced in Australia. Consequently, TCO No. 1005214 was issued on 16 April 2010, declaring that the pipes in question were subject to a free rate of duty instead of the general rate of 5%. The policy objective in this case was to facilitate trade by reducing the duty burden on specific goods, thereby encouraging importation and potentially benefiting consumers.
Scope and Application
The Tariff Concession Instrument No. 1005214 under the Customs Act 1901 applies to the specific goods identified in the instrument, namely certain pipes, and it is applicable to the entity that applied for the concession, One Steel. The instrument is concerned with the application of a lower rate of customs duty on these goods, effectively providing a tariff concession. The geographic reach of this legislation is national, as it pertains to the application and enforcement of customs duties across Australia. The application is subject to the core criteria outlined in the Customs Act 1901, including the absence of substitutable goods produced in Australia, and it is further governed by the conditions specified in the Customs Tariff Act 1995. The instrument does not impose any liabilities on individuals or entities other than the Commonwealth and does not affect pre-existing rights or impose liabilities for actions taken prior to its registration. The instrument came into force on the date the application was lodged, which is 29 January 2010. The application process requires consultation as per the Customs Act, which in this instance included an invitation for submissions in the Gazette, though none were received.
Key Provisions
The main operative sections of this legislation (F2012L00210) include section 269C, which outlines the core criteria that an application for a Tariff Concession Order (TCO) must meet. This is particularly relevant in cases where the applicant claims that no substitutable goods are produced in Australia in the ordinary course of business (section 269D). Section 269P(3) mandates that if the Chief Executive Officer (CEO) of Customs is satisfied that the application meets these criteria, a written TCO must be issued. This TCO specifies the prescribed item in Schedule 4 of the Customs Tariff Act 1995 that applies to the goods in question. For instance, in the case of TCO No. 1005214, certain pipes are declared to be subject to item 50 of Schedule 4, resulting in a duty-free rate for these goods.
The obligations imposed by this Act on parties or entities it governs include the requirement for applicants to provide comprehensive information that satisfies the core criteria specified in section 269C. The CEO must also undertake a rigorous assessment to ensure that the application aligns with these criteria. Additionally, the CEO is obligated to publish a notice in the Gazette as soon as practicable after accepting a TCO application as valid, inviting any interested parties to submit submissions if they believe the TCO should not be made (subsection 269K(1)). This transparency measure ensures that all relevant concerns are considered before a TCO is issued.
Under this Act, failure to comply with the specified obligations or any breach of the conditions set out in a TCO can lead to various consequences. While specific offences and penalties are not detailed in the explanatory statement, breaches of customs regulations generally attract penalties under the Customs Act 1901. These can include substantial fines and, in severe cases, criminal charges. The exact penalties may vary depending on the nature and severity of the breach, but they are intended to enforce compliance and maintain the integrity of the customs duty system.
The TCO itself, while beneficial in reducing the duty on specified goods, does not affect the rights of any person other than the Commonwealth in a manner that would disadvantage them or impose liabilities for actions taken prior to the TCO's effective date. This ensures that existing rights and obligations are preserved, and any retroactive liabilities are avoided. The Act also provides for the possibility of duty refunds for importers of goods subject to a TCO, further clarifying the rights and benefits accruing to importers as a result of the concession.