EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1046698
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 carbon ring mechanical seals on 18 October 2010.
Instrument
TCO No 1046698 was made on 10 January 2011. It declares that those certain carbon ring mechanical seals 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. 1046698 is taken to have come into force on 18 Otcober 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 administration of customs and excise through the imposition and collection of tariffs on imported goods. This Act facilitates the implementation of tariff concession orders (TCOs) to provide relief from customs duty for certain goods, addressing the gap in the tariff system where locally produced goods do not exist or are not suitable substitutes for imported items. This legislative instrument, specifically Tariff Concession Instrument No. 1046698, was introduced to provide tariff relief for certain carbon ring mechanical seals applied for by Bluescope Steel. The instrument was made on 10 January 2011, declaring that these seals are subject to a duty rate of free, down from the general rate of 5%, effective from the date the application was lodged on 18 October 2010. The policy objective is to ensure that the application of tariffs does not unduly burden businesses that rely on importing specific goods that are not produced domestically, thereby fostering a competitive market environment.
Scope and Application
The Tariff Concession Instrument No. 1046698, made under the Customs Act 1901, applies to specific carbon ring mechanical seals, as requested by Bluescope Steel, and pertains to those who import such goods into Australia. The instrument is part of a scheme within the Customs Act that allows the Chief Executive Officer of Customs to make Tariff Concession Orders (TCOs) to reduce the rate of customs duty on particular goods. The instrument is designed to benefit importers by providing a lower rate of duty, specifically making the duty on these seals free, as opposed to the general rate of 5%. The instrument's scope extends to the national level, impacting all importers of these goods across Australia. However, it excludes any goods specified in section 269SJ of the Act, which are ineligible for a TCO. The instrument came into effect on the day the application was lodged, 18 October 2010, and does not retroactively affect any rights or impose liabilities on persons other than the Commonwealth in respect of actions taken before its registration.
Key Provisions
The primary operative sections of the Tariff Concession Instrument No. 1046698 are sections 269F, 269C, and 269P of the Customs Act 1901, which outline the process for applying for and making a Tariff Concession Order (TCO). Section 269F allows a person to apply to the Chief Executive Officer (CEO) of Customs for a TCO in respect of goods. If the CEO determines that the application meets the core criteria, primarily that no substitutable goods are produced in Australia (as defined in sections 269D and 269E), they must then issue a written order, a TCO, as specified in section 269P(3). This order effectively declares the goods to which a prescribed item of Schedule 4 to the Customs Tariff Act 1995 applies, effectively reducing or eliminating the duty on these goods.
The obligations and requirements imposed by the Act on the parties involved are primarily administrative. The CEO of Customs must assess the validity of a TCO application against the core criteria, which includes ensuring that no substitutable goods are being produced in Australia. The CEO must also publish a notice in the Gazette inviting any interested party to lodge a submission if they believe the TCO should not proceed, as mandated by subsection 269K(1). Bluescope Steel, the applicant, must ensure their application meets the criteria and provides all necessary information to substantiate the claim that no substitutable goods are produced domestically. The CEO, in turn, must make a timely and informed decision based on the application and any submissions received.
Failure to comply with the requirements of the Customs Act 1901 or any fraudulent misrepresentation in a TCO application can lead to various civil and criminal consequences. While the specific penalties for breaches are not detailed in the explanatory statement, under the general provisions of the Customs Act, penalties can include fines and imprisonment. For example, providing false or misleading information in a TCO application could be subject to penalties under section 245 of the Customs Act, which can include fines up to 10,000 penalty units or imprisonment for up to five years, or both, for serious offences. The Act also includes provisions for the seizure and forfeiture of goods involved in any contravention.
The TCO itself does not impose any new liabilities on individuals or entities, and it does not affect the rights of any person except to the benefit of importers who can apply for a refund of duties paid on goods imported since the effective date of the TCO, as outlined in the Customs (Tariff) Regulations 1998. This ensures that the TCO operates within the legal framework to provide tariff relief without causing undue hardship or legal complications to any party.