EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1104808
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 Pty Ltd applied for a TCO in respect of certain smoke hood submerged arc furnace parts on 02 February 2011.
Instrument
TCO No 1104808 was made on 28 April 2011. It declares that those certain smoke hood submerged 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. 1104808 is taken to have come into force on 02 February 2011.
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. 1104808, enacted in 2011, is a legislative instrument made under the Customs Act 1901. This instrument addresses the need for tariff concessions for specific imported goods by allowing the Chief Executive Officer of Customs to grant tariff concessions when certain conditions are met. The primary objective of this legislation is to provide relief to businesses by reducing the customs duty on specific goods, thereby making them more competitively priced and accessible in the Australian market. This instrument came into effect on the date the application was lodged, ensuring that the rights of importers are protected and that no retroactive liabilities are imposed on them. The enacting body, in this case, is the Chief Executive Officer of Customs, who has the authority to make such decisions based on the criteria set out in the Customs Act 1901.
Scope and Application
The Customs Act 1901, as supplemented by the Tariff Concession Instrument No. 1104808, establishes a framework through which Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs. This Act applies to entities seeking to import specific goods and benefits those who can demonstrate that the goods in question are not substitutable by any goods produced in Australia. The instrument specifically applies to Simcoa Operations Pty Ltd's application for a TCO regarding certain smoke hood submerged arc furnace parts, which are now subject to a zero rate of customs duty under item 50 of Schedule 4 to the Customs Tariff Act 1995, down from the general rate of 5%. The geographic and jurisdictional reach of this Act is national, as it operates under the auspices of the Commonwealth of Australia. The Act does not impose any new liabilities on individuals or entities and does not retroactively disadvantage any person other than the Commonwealth. The TCO’s effective date aligns with the date the application was lodged, ensuring that any importers who have imported the goods since this date may apply for a duty refund.
Key Provisions
The Tariff Concession Instrument No. 1104808, made under section 269F of the Customs Act 1901, specifies the conditions under which tariff concessions are granted for certain smoke hood submerged arc furnace parts (section 269P(3)). The instrument was made following an application by Simcoa Operations Pty Ltd on 02 February 2011, and it was published on 28 April 2011. The primary operative section, section 269C, stipulates that a tariff concession order (TCO) can be made if no substitutable goods were produced in Australia on the date the application was lodged. Additionally, the instrument clarifies that substitutable goods are defined under section 269D as goods produced in Australia that could serve a similar purpose to the goods in question.
Under the Customs Act 1901, the Chief Executive Officer of Customs (CEO) has specific obligations when considering an application for a TCO. The CEO must first determine if the application is for goods that are exempt under section 269SJ of the Act. If not, the CEO must assess whether the application meets the core criteria set out in section 269C, which requires that no substitutable goods were produced in Australia in the ordinary course of business on the date of the application. If these criteria are satisfied, the CEO must make a written order declaring that the goods are subject to a prescribed tariff item, in this case, item 50 of Schedule 4 to the Customs Tariff Act 1995, resulting in a duty rate of free instead of the general 5% (subsection 269P(3)).
The Act imposes several requirements on parties involved in the TCO process. Firstly, applicants must ensure their applications meet the core criteria, particularly that no substitutable goods were produced in Australia. The CEO is mandated to publish a notice in the Gazette inviting submissions from interested parties (subsection 269K(1)), although no submissions were received for this TCO. Additionally, the CEO must decide on the application within the stipulated timeframe and ensure the TCO does not disadvantage any person or impose liabilities on anyone for actions taken prior to the TCO’s effective date. The TCO does not affect the rights of any person other than the Commonwealth, and it allows importers to apply for a refund of duty on goods imported since the TCO was taken to have come into force (paragraph 126(1)(r) of the Regulations).
The Customs Act 1901 provides for both civil and criminal penalties for breaches of its provisions, although specific penalties for non-compliance with TCO requirements are not detailed in the explanatory statement. Generally, breaches of the Act can result in substantial fines and, in severe cases, imprisonment. For instance, knowingly making a false statement or document in relation to customs matters can attract a penalty of up to 10,000 penalty units or imprisonment for five years, or both (section 272 of the Act). The instrument itself does not specify penalties but operates within the broader legal framework that imposes stringent consequences for non-compliance with customs regulations.