EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1009368
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 electrical directional control pressure regulating valves on 22 February 2010.
Instrument
TCO No 1009368 was made on 07 May 2010. It declares that those certain electrical directional control pressure regulating valves 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. 1009368 is taken to have come into force on 22 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, establishes a framework for tariff concessions which are applied to goods imported into Australia. The Act allows for the application of lower rates of customs duty on certain goods through the issuance of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs. This legislative measure was introduced to address the gap in providing tariff concessions that encourage trade and economic efficiency by reducing the cost of imported goods. The policy objective is to facilitate the import of goods that are not produced domestically or for which there are no suitable domestic substitutes, thereby supporting industries that rely on imported components or materials.
Tariff Concession Instrument No. 1009368 was introduced on 7 May 2010, following an application by Bluescope Steel for a TCO on certain electrical directional control pressure regulating valves. The Chief Executive Officer of Customs determined that no substitutable goods were produced in Australia, meeting the core criteria under section 269C of the Act. This TCO resulted in these specific valves being subject to a duty rate of free, down from the general rate of 5%. The instrument does not affect the rights of any person other than the Commonwealth and does not impose any new liabilities. It is designed to benefit importers by potentially allowing them to claim a refund of duty on goods imported since the TCO's effective date of 22 February 2010.
Scope and Application
The Customs Act 1901, through Tariff Concession Orders (TCOs) under Part XVA, provides a mechanism for the Chief Executive Officer of Customs (CEO) to grant tariff concessions on specific goods. This process applies to entities or individuals who seek to import goods that qualify under the TCO criteria. The CEO must be satisfied that the goods in question are not substitutable by any goods produced in Australia in the ordinary course of business, as defined in the Act. Once a TCO application meets the core criteria, the CEO is mandated to issue a written order that effectively lowers the customs duty on the specified goods. For example, Instrument TCO No. 1009368, issued on 7 May 2010, reduced the duty on certain electrical directional control pressure regulating valves from 5% to free, following an application by Bluescope Steel on 22 February 2010. The Act extends to the Commonwealth and its application is not limited by geographic boundaries but is subject to the terms and conditions set out within the legislation and any subordinate instruments. Notably, the TCO does not affect the rights of any person adversely if applied to actions taken before the TCO’s effective date, and importers can seek refunds for duties paid on eligible goods post the TCO’s commencement.
Key Provisions
The main operative sections of the Customs Act 1901, as applied in Tariff Concession Instrument No. 1009368, concern the ability of the Chief Executive Officer (CEO) of Customs to make Tariff Concession Orders (TCOs) under section 269F. A TCO can be applied for by any person in respect of goods and, if certain criteria are met, the CEO must make the order (sections 269C and 269P). Section 269C outlines the core criteria for the CEO to consider, including the requirement that no substitutable goods are produced in Australia on the day the application is lodged (section 269D). Once a TCO is made, the goods specified are subject to a lower rate of customs duty than the general rate, in this case reducing from 5% to free (section 269P(3)).
The obligations imposed by the Act on the parties or entities it governs include the requirement for Bluescope Steel, the applicant, to meet the core criteria for the TCO application, including demonstrating that no substitutable goods are produced in Australia. The CEO of Customs is required to publish a notice in the Gazette inviting submissions from any interested parties once an application is accepted as valid (subsection 269K(1)). Additionally, the CEO must ensure that the TCO is made in compliance with the provisions of the Customs Act 1901 and the Customs Tariff Act 1995.
Breach of the conditions set out in the Customs Act 1901 and the associated regulations can lead to significant consequences. If a party fails to comply with the requirements for a TCO or if there is an incorrect application of the concession, the party may face civil or criminal penalties. The precise nature and severity of these penalties can vary depending on the specific breach and the relevant provisions of the Act. For instance, incorrect declarations or fraudulent applications may result in penalties including fines and, in severe cases, imprisonment. The maximum penalties are stipulated within the broader framework of the Customs Act 1901 and may be subject to the discretion of the court in the case of criminal offences. The Act ensures that the rights of importers are protected and that any liabilities incurred by third parties are strictly limited to those that arise post the effective date of the TCO.