EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1104915
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 submerged arc furnace parts on 03 February 2011.
Instrument
TCO No 1104915 was made on 28 April 2011. It declares that those certain 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. 1104915 is taken to have come into force on 03 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 Customs Act 1901, enacted by the Parliament of Australia, provides a framework for the administration of customs and excise in Australia. It allows the Chief Executive Officer of Customs to make Tariff Concession Orders (TCOs) that apply lower rates of customs duty to specified goods. The Tariff Concession Instrument No. 1104915, issued under the authority of the Customs Act 1901, addresses the need for tariff concessions on certain submerged arc furnace parts by granting a concession that reduces the duty rate from 5% to free for these goods. This was introduced following an application by Simcoa Operations Pty Ltd, and the CEO determined that no substitutable goods were being produced in Australia, thereby meeting the core criteria for such a concession. The instrument was made effective from the date the application was lodged, 03 February 2011, and no submissions opposing the concession were received. The objective of this instrument is to facilitate the import of these specific parts without incurring customs duty, thereby potentially lowering costs for importers and supporting related industries.
Scope and Application
The Customs Act 1901, as supplemented by the Tariff Concession Instrument No. 1104915, provides a framework for granting tariff concessions on specific goods, allowing for reduced customs duties. This legislation applies to any person or entity seeking to import goods that are not produced in Australia and for which a Tariff Concession Order (TCO) can be issued. The instrument, which came into effect on the date of the application on 03 February 2011, specifies that certain submerged arc furnace parts are subject to a reduced customs duty rate of free, down from the general rate of 5%. The scope of this Act extends nationally across Australia, administered by the Chief Executive Officer of Customs, who must ensure that the application for a TCO meets the specified criteria before issuing the order. Notably, the TCO does not disadvantage any person or impose liabilities for actions taken before its registration, and importers can apply for duty refunds on eligible goods imported since the effective date of the TCO. The legislation does not specify exclusions, but it implicitly excludes goods that are produced in Australia or those specified under section 269SJ of the Customs Act 1901 that cannot be subject to a TCO.
Key Provisions
The main sections of the Tariff Concession Instrument No. 1104915 under the Customs Act 1901 (section 269F) allow for the application of Tariff Concession Orders (TCO) to certain goods, which in turn can lead to a reduction or exemption from customs duty for these goods. The instrument specifically addresses submerged arc furnace parts, applying a zero rate of duty to them (section 269P(3)). The CEO of Customs must determine if the application meets the core criteria, particularly focusing on whether substitutable goods are produced in Australia (sections 269C and 269D).
Under this legislation, the obligations for entities and parties primarily revolve around ensuring that the goods in question do not have Australian substitutes. For instance, Simcoa Operations Pty Ltd, the applicant, had to demonstrate that no substitutable goods were being produced in Australia for the submerged arc furnace parts they sought to import under the TCO. The CEO of Customs is responsible for making this determination and, if satisfied, issuing a written TCO that specifies the applicable tariff item (section 269P(3)).
In terms of breaches and penalties, the Customs Act 1901 does not explicitly detail offences or penalties related to incorrect or fraudulent TCO applications within this specific instrument. However, general provisions under the Customs Act may apply, which could include fines or imprisonment for breaches related to customs duty evasion or false statements. The precise penalties would depend on the nature and severity of the breach, as interpreted under the broader scope of the Customs Act.
Additionally, while the explanatory statement does not mention specific civil or criminal consequences for breaching the conditions of a TCO, it is reasonable to infer that any breach could result in the revocation of the TCO, thereby reinstating the original customs duty rates. Furthermore, there could be administrative penalties or legal actions taken against the defaulting party, depending on the circumstances and the impact of the breach.
Finally, the TCO itself is designed to be effective from the date the application is lodged, ensuring that any rights or duties accrued prior to the official registration date are not adversely affected (subsection 269S(1)). This means that while the rights of importers are positively impacted, allowing them to apply for duty refunds, no liabilities are imposed on any party for actions taken before the TCO's effective date.