EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1011781
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 Ltd applied for a TCO in respect of certain hot strip mill coiler gearboxes on 09 March 2010.
Instrument
TCO No 1011781 was made on 28 May 2010. It declares that those certain hot strip mill coiler gearboxes 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. 1011781 is taken to have come into force on 09 March 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 Tariff Concession Instrument No. 1011781 under the Customs Act 1901 was enacted in 2010 to address the specific issue of providing tariff concessions for certain goods not produced in Australia, thereby ensuring competitive pricing and market access. This instrument was created in response to an application from Bluescope Steel Ltd for tariff concessions on certain hot strip mill coiler gearboxes. The policy objective behind this legislation is to support industries that rely on imported components by reducing customs duty, thus promoting economic efficiency and competitiveness. The instrument was developed by the Chief Executive Officer of Customs, who evaluated the application against the criteria set out in the Customs Act, including the non-existence of substitutable goods produced in Australia. The tariff concession effectively grants a zero-duty rate on the specified gearboxes, a significant reduction from the standard 5% duty, and was implemented from the date the application was lodged, without retroactive impact on any pre-existing rights or liabilities.
Scope and Application
The Tariff Concession Instrument No. 1011781 under the Customs Act 1901 applies to specific goods, in this instance certain hot strip mill coiler gearboxes, by granting a concession on the rate of customs duty. The instrument was enacted in response to an application by Bluescope Steel Ltd, and it applies to the entities that import or otherwise deal with these particular goods. The scope of the Act is national, as it operates within the framework of the Commonwealth’s customs laws. The instrument effectively lowers the duty rate from the general rate of 5% to free, provided the application meets the core criteria outlined in section 269C of the Act, which requires that no substitutable goods are produced in Australia. The Act does not specify any exclusions or exemptions beyond those outlined in section 269SJ, which precludes certain goods from being subject to a TCO. The instrument can be further detailed and modified through subordinate instruments, such as regulations or further orders, which may specify additional conditions or criteria for its application.
Key Provisions
The key operative sections of this legislation pertain to the process and criteria for making a Tariff Concession Order (TCO) under the Customs Act 1901 (section 269F). An application for a TCO can be made by any person to the Chief Executive Officer (CEO) of Customs (section 269F). If the CEO determines that the application does not relate to goods specified in section 269SJ, which are ineligible for a TCO, the application must be assessed against the core criteria outlined in section 269C. This assessment requires that, on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business (section 269C). Definitions of key terms such as ‘goods produced in Australia’, ‘ordinary course of business’, and ‘substitutable goods’ are provided in sections 269D, 269E, and 269P(3) respectively. If the CEO is satisfied that the application meets these criteria, a written TCO must be issued (section 269P(3)).
The obligations imposed by the Act on the CEO include publishing a notice in the Gazette as soon as practicable after accepting a TCO application as valid, inviting any interested party to submit reasons why the TCO should not be made (subsection 269K(1)). This ensures transparency and allows for public input. Once a TCO is issued, it comes into force on the date the application was lodged (subsection 269S(1)). For example, in this case, TCO No. 1011781 came into force on 9 March 2010, the date the application was lodged. The TCO does not affect any person's rights or impose liabilities in respect of actions taken before the registration date (subsection 269S(3)).
Any breach of the obligations under this legislation could result in civil or criminal consequences. However, this particular Explanatory Statement does not explicitly outline specific offences, penalties, or consequences for breach. The absence of penalties or specific enforcement mechanisms suggests that compliance is largely reliant on the administrative process and the discretion of the CEO in issuing or declining TCOs. It is important for parties to adhere to the stipulated criteria and procedures to avoid any potential repercussions arising from non-compliance with the core criteria for issuing TCOs.