EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1039349
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.
Simcoa Operations applied for a TCO in respect of certain electric arc furnace parts on 25 August 2010.
Instrument
TCO No 1039349 was made on 08 November 2010. It declares that those certain electric arc furnace 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. 1039349 is taken to have come into force on 25 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 Customs Act 1901, enacted by the Parliament of Australia, introduced a scheme under which Tariff Concession Orders (TCOs) may be made by the Chief Executive Officer of Customs (the CEO). The Act addresses the problem of ensuring that Australian businesses can access necessary goods at a reduced customs duty rate when no suitable Australian-produced alternatives exist. This legislative framework allows for the consideration of applications from entities like Simcoa Operations, who applied for a TCO concerning certain electric arc furnace parts. The policy objective is to support Australian industries by allowing the importation of specific goods without incurring the usual customs duty, provided no substitutable goods are produced domestically. Tariff Concession Instrument No. 1039349, made on 8 November 2010, exemplifies this process, declaring that the specified electric arc furnace parts are subject to a zero duty rate under the Customs Tariff Act 1995. This instrument came into effect on the date the application was lodged, 25 August 2010, without affecting the rights of any person prior to its registration.
Scope and Application
The Customs Act 1901, specifically through Part XVA, governs the application process for Tariff Concession Orders (TCO) that can be applied for by any person seeking to import goods under a lower customs duty rate. The Chief Executive Officer of Customs (CEO) is responsible for determining the eligibility of a TCO application, which hinges on whether substitutable goods are produced in Australia in the ordinary course of business. If the CEO finds that no such substitutable goods are produced, the application is considered to meet the core criteria, enabling the CEO to issue a TCO. This legislation applies to any individual or entity seeking to import goods that qualify for tariff concessions, impacting the import process for those specific goods by potentially reducing duty rates. The application of TCOs is limited by section 269SJ of the Act, which excludes certain goods from being subject to a TCO. The geographic scope of this Act is national, as it operates under the federal Customs Act 1901, influencing customs duties across Australia. The commencement of a TCO is effective from the date of the application, ensuring that the tariff concessions apply retroactively from that date without affecting any existing rights or imposing new liabilities on persons other than the Commonwealth.
Key Provisions
The main operative sections of Tariff Concession Instrument No. 1039349 are sections 269C, 269P(3), and 269SJ of the Customs Act 1901. Section 269C specifies the core criteria that must be met for a Tariff Concession Order (TCO) application to be considered valid, which requires that no substitutable goods were produced in Australia on the day the application was lodged. If the Chief Executive Officer (CEO) of Customs is satisfied that the application meets these criteria, as per section 269P(3), they must make a written order (a TCO) that declares the goods to which the prescribed item of Schedule 4 to the Customs Tariff Act 1995 applies. Section 269SJ lists goods that cannot be subject to a TCO, ensuring that only eligible goods are considered for tariff concessions.
The Customs Act 1901 imposes several obligations on the CEO when processing a TCO application. Once a TCO application is accepted as valid, the CEO must publish a notice in the Gazette inviting any person who believes the TCO should not be made to submit their reasons to the CEO, as per subsection 269K(1). The CEO is also required to decide whether the application meets the core criteria specified in section 269C. Furthermore, the CEO must ensure that the rights of persons other than the Commonwealth are not adversely affected by the TCO, as per subsection 269S(1). This means that the TCO cannot impose any liabilities or disadvantage anyone in respect of actions taken before the TCO comes into force.
Under the Customs Act 1901, breaches of the provisions related to TCOs can lead to both civil and criminal consequences. The Act does not specify particular offences or penalties for failing to comply with TCO regulations, but general provisions of the Customs Act may apply. For instance, subsection 237(1) of the Act outlines that any person who knowingly makes a false statement or representation in relation to any matter affecting the payment of duty or tax can face a penalty of up to 10,000 penalty units or imprisonment for up to five years, or both. Similarly, subsection 238(1) provides that any person who attempts to evade payment of duty or tax can be fined up to 22,200 penalty units or imprisoned for up to ten years, or both. These penalties underscore the seriousness of non-compliance with customs regulations, including those pertaining to TCOs.