EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1054740
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 Pty Ltd applied for a TCO in respect of certain tilt drive blast furnace gearboxes on 15 December 2010.
Instrument
TCO No 1054740 was made on 16 March 2011. It declares that those certain tilt drive blast furnace gearboxes 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. 1054740 is taken to have come into force on 15 December 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. 1054740, made under the Customs Act 1901, aims to address the specific need for reduced customs duty rates for certain imported goods, ensuring they are not subject to substitutable domestic production. This instrument was enacted to facilitate tariff concessions for particular tilt drive blast furnace gearboxes, responding to an application by Bluescope Steel Pty Ltd. The Australian Parliament established this mechanism to provide relief from customs duties where no equivalent goods are produced domestically, thereby encouraging imports and potentially benefiting the economy by ensuring access to necessary goods at lower costs. The Tariff Concession Order No. 1054740, effective from 15 December 2010, exemplifies this policy objective by setting the duty rate at zero for the specified imported goods, which otherwise would have been subject to a 5% duty rate.
Scope and Application
The Customs Act 1901, specifically Part XVA, outlines a framework within which Tariff Concession Orders (TCOs) can be made by the Chief Executive Officer of Customs. These orders apply to goods specified in the order and reduce the rate of customs duty applicable to those goods. An application for a TCO can be made by any person, provided the goods in question are not specified in section 269SJ of the Act, which lists those goods that cannot be subject to a TCO. The CEO is mandated to decide if the application meets the core criteria, which includes the condition that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged. If these criteria are met, a written order is issued, declaring that the specified goods will be subject to a prescribed item in Schedule 4 to the Customs Tariff Act 1995.
The application of a TCO extends to the geographic jurisdiction of the Commonwealth and affects the rights of importers in a beneficial manner, allowing them to apply for a refund of duty on goods imported since the day the TCO is taken to have come into force. Importantly, the TCO does not disadvantage any person or impose any liabilities on any person in respect of anything done or omitted to be done before the date of registration. The TCO is also effective from the day the application was lodged, as per subsection 269S(1) of the Act. The scope and application of the TCO are further refined and potentially expanded through subordinate instruments, which can provide additional details or clarifications on the implementation and enforcement of the TCO.
Key Provisions
Section 269F of the Customs Act 1901 provides the mechanism for a person to apply to the Chief Executive Officer of Customs (the CEO) for a Tariff Concession Order (TCO) in respect of specific goods. When an application is made under this section, it must be assessed against the core criteria outlined in section 269C of the Act. If the application does not pertain to goods specified in section 269SJ, which are ineligible for TCOs, the CEO must determine if the application satisfies the core criteria, specifically whether no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged. This is further clarified by sections 269B, 269D, and 269E, which define key terms such as "goods produced in Australia," "ordinary course of business," and "substitutable goods." If the application meets the criteria, the CEO must issue a written TCO.
The obligations imposed by the Act on the CEO and applicants are straightforward yet significant. Upon receiving a valid TCO application, the CEO must publish a notice in the Gazette inviting submissions from any interested parties who might have reasons why the TCO should not be made. This is a critical step to ensure transparency and fairness in the process, as outlined in subsection 269K(1) of the Act. Once the CEO is satisfied that the application meets the core criteria, they must issue a TCO as per subsection 269P(3). The TCO specifies the prescribed item of Schedule 4 to the Customs Tariff Act 1995 that applies to the goods in question, thereby altering the customs duty rate for those goods. In this case, TCO No 1054740 was issued for certain tilt drive blast furnace gearboxes, reducing their customs duty rate from 5% to free.
Breaching the provisions of the Customs Act 1901, including the requirements for issuing a TCO, can result in various penalties. Section 276 of the Act stipulates that any person who contravenes the Act or the Regulations may be liable to a penalty of up to 10,000 penalty units for individuals and 50,000 penalty units for bodies corporate, depending on the nature and severity of the offence. Additionally, section 277 of the Act allows for prosecution of offences, which can lead to criminal convictions. The Act also includes provisions for civil remedies, such as the ability to seek damages for any loss or damage caused by an unlawful act under section 279. Therefore, adherence to the Act's requirements is crucial to avoid these legal repercussions.