EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1032533
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 axial flow valves on 16 July 2010.
Instrument
TCO No 1032533 was made on 06 October 2010. It declares that those certain axial flow 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. 1032533 is taken to have come into force on 16 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 was enacted to provide for the administration of customs and excise duties, and for related purposes. The Tariff Concession Instrument No. 1032533, introduced in 2010, addresses the gap in the customs duty application process for specific goods that are not produced in Australia and for which a lower rate of customs duty could be beneficial. The instrument was developed by the Commonwealth Parliament to streamline the process of applying for tariff concessions and ensure that such applications are handled efficiently and fairly. The policy objective of this instrument is to facilitate trade by reducing the customs duty on certain goods, thereby making them more competitive in the Australian market. This is achieved by allowing the Chief Executive Officer of Customs to make Tariff Concession Orders for goods that meet the specified criteria, such as not having substitutable goods produced in Australia. The instrument ensures that the application process is transparent, with an opportunity for public consultation, and that the rights of importers are protected.
Scope and Application
The Customs Act 1901, as augmented by Tariff Concession Order (TCO) No. 1032533, applies to entities or individuals involved in the importation of specific goods, namely certain axial flow valves, for which Bluescope Steel applied for a tariff concession. The Act, through its provisions under Part XVA, allows the Chief Executive Officer of Customs to issue TCOs that provide for a lower rate of customs duty on goods that are not produced in Australia in the ordinary course of business. The scope of the Act encompasses any person or entity seeking to import goods that meet the criteria for a tariff concession. The geographic reach of the Act is national, as it pertains to the importation of goods into Australia, governed by the Commonwealth. Exclusions to the application of this Act include goods specified in section 269SJ of the Customs Act, which cannot be subject to a TCO. The application of the Act can be further extended or restricted through subordinate instruments, which may provide additional detail on the specific types of goods or industries affected. The TCO No. 1032533 specifically came into effect on the date the application was lodged, which was 16 July 2010, and it exempts the subject goods from the usual customs duty of 5%, instead applying a duty-free rate.
Key Provisions
The Tariff Concession Order No. 1032533 under the Customs Act 1901, provides for a reduction in customs duty for certain axial flow valves. Section 269P(3) stipulates that if the Chief Executive Officer (CEO) of Customs is satisfied that an application for a Tariff Concession Order (TCO) meets the core criteria, they must make a written order. Section 269C outlines that the core criteria are met if, on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business. The TCO, once made, declares that the specified goods are subject to a lower rate of duty as set out in the Customs Tariff Act 1995.
Entities or individuals who wish to benefit from the lower customs duty must ensure their application meets the criteria set out in section 269C of the Customs Act 1901. 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. If the CEO accepts the application, they must publish a notice in the Gazette inviting submissions from any interested parties. If no submissions are received, the CEO will proceed to make the TCO. The TCO will come into effect on the day the application was lodged, as per subsection 269S(1) of the Act.
The obligations imposed by the Customs Act 1901 on parties applying for a TCO include ensuring that their application is made in accordance with section 269F and that it does not pertain to goods excluded under section 269SJ. The CEO has an obligation to assess the application against the core criteria and to make a decision in accordance with section 269P(3). They must also publish a notice in the Gazette as per subsection 269K(1), allowing for public consultation. The CEO's failure to comply with these obligations could potentially result in legal challenges or disputes regarding the validity of the TCO.
The Customs Act 1901 imposes certain consequences for non-compliance with its provisions. While specific offences, penalties, or consequences for breach are not detailed in the explanatory statement, it is reasonable to infer that any failure to comply with the Act's requirements could lead to civil or criminal penalties. The Act, in general, provides for significant penalties for breaches, including fines and imprisonment. For instance, section 269 of the Act could be relevant where there is an unauthorised importation or exportation of goods, with penalties that could include substantial fines or imprisonment.