EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1030736
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.
Surplus Steel Pty Ltd applied for a TCO in respect of certain annealed steel strip on 7 July 2010.
Instrument
TCO No 1030736 was made on 6 October 2010. It declares that those certain annealed steel strip 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. 1030736 is taken to have come into force on 7 July 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 imposition of customs duties, and includes a scheme for Tariff Concession Orders (TCOs) under Part XVA. This scheme was introduced to address the problem of ensuring that certain goods, for which there are no substitutable Australian-made products, can be imported at a lower rate of duty, thus facilitating trade and potentially lowering costs for businesses and consumers. The Tariff Concession Instrument No. 1030736, issued under this Act, specifically targets certain annealed steel strip products, aiming to provide a tariff concession where it was determined that no substitutable goods were produced in Australia. The policy objective is to support trade by reducing the duty on specific goods, thereby enhancing economic efficiency and competitiveness in the market.
Scope and Application
The Tariff Concession Instrument No. 1030736 under the Customs Act 1901 applies to specific goods, in this case certain annealed steel strip, by providing a concession on customs duty rates. This concession is made possible through a Tariff Concession Order (TCO) issued by the Chief Executive Officer of Customs, contingent upon meeting the core criteria outlined in the Act. These criteria include ensuring that no substitutable goods are produced in Australia in the ordinary course of business on the day the application is lodged. The application by Surplus Steel Pty Ltd, made on 7 July 2010, resulted in Instrument TCO No. 1030736 on 6 October 2010, effectively applying a duty rate of free on the specified annealed steel strip, which otherwise would have been 5%. This instrument is applicable nationally across Australia and its implementation does not disadvantage any existing rights of individuals or entities, nor does it impose any new liabilities.
Key Provisions
The main operative sections of the Tariff Concession Order No. 1030736 under the Customs Act 1901 (the Act) pertain to the provisions for the concession of customs duty on certain annealed steel strip. Section 269F (1) allows for an application to the Chief Executive Officer (CEO) of Customs for a Tariff Concession Order (TCO). If the CEO is satisfied that the application meets the core criteria under section 269C and does not involve goods specified in section 269SJ, they must make a written order as per section 269P(3). In this case, the CEO issued TCO No. 1030736 on 6 October 2010, applying item 50 of Schedule 4 to the Customs Tariff Act 1995, thereby setting the duty rate for the specified annealed steel strip to free, down from the general rate of 5%.
The obligations imposed by the Act on parties governed by it include the requirement for applicants to ensure their applications meet the core criteria specified in section 269C. The CEO, upon receiving a valid application, must undertake to publish a notice in the Gazette inviting submissions from any interested parties, as outlined in subsection 269K(1). The CEO must also ensure that no substitutable goods were produced in Australia on the day the application was lodged, as per section 269C, before making the TCO. In this instance, the CEO did not receive any submissions opposing the TCO.
For breaches of the Act, section 269T outlines the potential penalties, though the specific maximum penalties are not stated in this context. However, it is clear that any failure to comply with the requirements or obligations under the Act may result in civil or criminal consequences, depending on the severity of the breach. The Act ensures that the rights of persons other than the Commonwealth are not adversely affected by the TCO, and it does not impose any liabilities on these persons for actions taken prior to the TCO's effective date. Importers, however, will benefit from the ability to apply for a refund of duty on goods imported since the TCO's effective date, as stipulated in paragraph 126(1)(r) of the Regulations.