EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1037705
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 flare stack parts on 16 August 2010.
Instrument
TCO No 1037705 was made on 08 November 2010. It declares that those certain flare stack 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. 1037705 is taken to have come into force on 16 August 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. 1037705 was enacted in 2010 under the Customs Act 1901 to address the need for tariff concessions on specific goods that are not produced domestically. This instrument was introduced to provide a mechanism through which businesses could apply for reduced customs duties on certain imported goods, provided these goods are not being produced in Australia and there are no suitable substitutes available domestically. The enacting body responsible for this instrument is the Chief Executive Officer of Customs, who has the authority to make Tariff Concession Orders based on applications from interested parties. The policy objective behind this legislation is to facilitate the import of goods that are essential for various industries but cannot be manufactured locally, thereby promoting economic efficiency and supporting business operations. The instrument ensures that such tariff concessions do not disadvantage existing rights holders or impose new liabilities, while also allowing importers to seek refunds for duties paid on eligible goods prior to the concession's effective date.
Scope and Application
The Tariff Concession Order No. 1037705, issued under Part XVA of the Customs Act 1901, pertains to specific flare stack parts and applies to those who import these goods into Australia. The order was made by the Chief Executive Officer of Customs, following an application by Bluescope Steel on 16 August 2010, and it came into effect on the same day. This order is significant as it reduces the customs duty rate from 5% to free for the specified goods, provided that no substitutable goods are produced in Australia at the time of the application. The application of this order is limited to the goods defined and does not affect any pre-existing rights or impose liabilities on persons other than the Commonwealth. The process includes a mandatory publication in the Gazette to invite submissions, though in this instance, no objections were received. The concession is further clarified by the Customs Tariff Act 1995, which outlines the applicable duty rates.
Key Provisions
The main operative sections of this legislation (sections 269C, 269B, 269P(3), and 269SJ) establish the framework under which Tariff Concession Orders (TCOs) can be made by the Chief Executive Officer of Customs (CEO). Specifically, section 269C requires that a TCO application meets the core criteria if, on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business. Section 269B provides definitions for key terms such as 'goods produced in Australia', 'ordinary course of business', and'substitutable goods'. If the CEO is satisfied that the application meets these criteria, as outlined in section 269P(3), a TCO must be made, specifying the lower rate of customs duty applicable to the goods in question.
The obligations imposed by the Act on the parties it governs are primarily on the CEO, who must ensure that any TCO application is assessed against the core criteria. The CEO must also publish a notice in the Gazette inviting submissions from any person who may have reasons to oppose the making of a TCO. Once the CEO is satisfied that the application meets the criteria and no valid submissions are received, a TCO must be made. Additionally, section 269K(1) mandates that the CEO must consult with relevant stakeholders by publishing a notice in the Gazette. The Act ensures that the rights of persons other than the Commonwealth are not adversely affected by the TCO, as outlined in section 269S.
The legislation does not explicitly outline offences or penalties for breaches, but it does describe the consequences of failing to comply with the requirements. If the CEO does not properly assess an application against the core criteria or fails to consult appropriately, the TCO may be subject to legal challenge. There are no direct penalties specified in the Act for such failures, but the consequences could include the invalidity of the TCO or other legal remedies available under Australian administrative law. Importers, however, can benefit by applying for a refund of duty on goods imported since the TCO is taken to have come into force, as stipulated under paragraph 126(1)(r) of the Regulations.