EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1006377
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 applied for a TCO in respect of certain semi autogenous grinding mill motor parts on 04 February 2010.
Instrument
TCO No 1006377 was made on 23 April 2010. It declares that those certain semi autogenous grinding mill motor 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. 1006377 is taken to have come into force on 04 February 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, enacted by the Australian Parliament, provides a framework for the administration of customs duties and other import charges, and includes provisions for the establishment of Tariff Concession Orders (TCOs). These orders, managed by the Chief Executive Officer of Customs, aim to provide relief from customs duty for certain imported goods under specific conditions, primarily when no substitutable goods are produced in Australia. The Tariff Concession Instrument No. 1006377, issued in 2010, is an example of such an order. In this instance, Bhp Billiton Olympic Dam Corporation applied for and received a concession on certain semi-autogenous grinding mill motor parts, reducing the duty rate from 5% to free, effective from the date of the application, 4 February 2010. The instrument was published in the Gazette with no objections received, aligning with the Act's requirement for public consultation on such matters.
Scope and Application
The Customs Act 1901, through its Part XVA, facilitates the issuance of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs, aimed at reducing customs duty rates on specified goods. This legislative framework applies to any person or entity that meets the criteria for a TCO, particularly those who can demonstrate that no substitutable goods are produced in Australia, thus qualifying for a tariff reduction. The application of the Act is national, covering the entire Commonwealth of Australia, and extends to any industry or goods that may benefit from reduced customs duties if the core criteria are satisfied. Notably, the Act excludes goods listed in section 269SJ from being subject to a TCO, thereby limiting its application to certain goods only. The scope of the Act can also be extended or modified through subordinate instruments, such as the Customs Tariff Act 1995, which further defines terms and specifies duty rates. In this context, TCO No 1006377 exemplifies the application of the Act, as it provides a tariff concession for specific semi-autogenous grinding mill motor parts, effective from the date the application was lodged.
Key Provisions
The Customs Act 1901, specifically under Part XVA, outlines a framework for the issuance of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO). Section 269F(1) allows a person to apply to the CEO for a TCO concerning specific goods, provided those goods are not excluded under section 269SJ. If the application is deemed valid, the CEO must assess whether it meets the core criteria outlined in section 269C. This assessment hinges on whether, at the time of application, substitutable goods were not being produced in Australia in the ordinary course of business. Definitions for "goods produced in Australia," "ordinary course of business," and "substitutable goods" are provided in sections 269D, 269E, and 269F respectively. Should the application meet these criteria, the CEO must issue a written TCO, as stipulated in section 269P(3), indicating the specific item in Schedule 4 of the Customs Tariff Act 1995 that applies to the goods in question.
The obligations imposed by the Act on the CEO include the mandatory publication of a notice in the Gazette inviting submissions from any interested parties who may object to the TCO, as per subsection 269K(1). The CEO must consider these submissions before deciding on the TCO. Additionally, the CEO is required to ensure that the TCO does not adversely affect the rights of any person, other than the Commonwealth, concerning actions taken prior to the TCO's registration. For instance, in the case of Bhp Billiton Olympic Dam Corporation's application for a TCO on semi autogenous grinding mill motor parts, the CEO assessed and confirmed that no substitutable goods were being produced in Australia, resulting in the issuance of TCO No. 1006377. This TCO specified that the mentioned motor parts would be subject to a duty rate of free, as opposed to the general rate of 5%.
The Act also delineates consequences for non-compliance with its provisions. However, the explanatory statement does not explicitly detail these penalties, suggesting that the primary focus is on the procedural correctness and administrative obligations rather than punitive measures. The issuance of TCOs and the associated tariff concessions are intended to benefit importers by potentially reducing the duty payable on imported goods, as long as the application meets the statutory criteria and the process is followed correctly.