EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1108447
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 slab casting plant cooling tower gearboxes on 08 March 2011.
Instrument
TCO No 1108447 was made on 31 May 2011. It declares that those certain slab casting plant cooling tower 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. 1108447 is taken to have come into force on 08 March 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, as supplemented by Tariff Concession Instrument No. 1108447 enacted in 2011, introduces a mechanism for the Chief Executive Officer of Customs to issue Tariff Concession Orders (TCOs) for specific goods. The instrument was introduced to address the issue of applying lower rates of customs duty to goods that meet certain criteria, thereby promoting efficiency and reducing costs for importers. This instrument was enacted by the relevant legislature to streamline the customs process and to provide relief to importers by lowering the duty rates on specific goods, provided they are not substitutable by Australian-produced goods. The policy objective is to facilitate trade by making certain imports more cost-effective without disadvantaging existing rights or imposing new liabilities on importers.
Scope and Application
The Customs Act 1901, specifically Part XVA, governs the making of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO). These orders allow for a lower rate of customs duty on goods specified in the TCO. The Act applies to individuals or entities that apply for a TCO, and its geographic reach is nationwide, applying to all states and territories within Australia. The Act sets criteria for the eligibility of goods for a TCO, including the requirement that no substitutable goods be produced in Australia on the date the application is lodged. The Act excludes certain goods, as specified in section 269SJ, from the TCO scheme. The application process includes a mandatory public notice in the Gazette to allow for submissions from interested parties, although in this instance, no submissions were received. The TCO does not retroactively affect the rights of any person other than the Commonwealth and does not impose new liabilities on individuals or entities. The application of the TCO is further defined through subordinate instruments such as the Customs Tariff Act 1995.
Key Provisions
The main operative sections of Tariff Concession Instrument No. 1108447 under the Customs Act 1901 (section 269P(3)) detail the process for making Tariff Concession Orders (TCOs). When a TCO application is submitted under section 269F, and the Chief Executive Officer (CEO) of Customs is satisfied that the application meets the core criteria set out in section 269C, they must make a written order that specifies the goods and the applicable duty rate. For the slab casting plant cooling tower gearboxes, section 269P(3) mandates that the CEO must issue a TCO if no substitutable goods were produced in Australia, as per section 269D. This TCO specifies that these particular gearboxes are to be treated under item 50 of Schedule 4 to the Customs Tariff Act 1995, thus applying a duty rate of free, down from the general rate of 5%.
The obligations and requirements imposed by this Act on the parties involved are primarily centred around the application and assessment process for a TCO. The applicant, in this case Bluescope Steel, must ensure their application is valid and meets the criteria stipulated in section 269C. The CEO has the obligation to assess the application and determine if it meets the core criteria, including verifying the absence of substitutable goods produced in Australia. Additionally, the CEO must publish a notice in the Gazette inviting submissions from any interested parties, as per subsection 269K(1). Once a TCO is issued, it is deemed to have come into force on the date the application was lodged, in accordance with subsection 269S(1).
In terms of offences, penalties, or consequences for breach, the Act does not explicitly outline penalties for failing to comply with the TCO provisions. However, non-compliance with the terms of a TCO could potentially result in the applicant being liable for the applicable duty on the goods. This could include paying the general rate of duty if the TCO conditions are not met or if the goods are incorrectly classified. Additionally, any misrepresentation or fraud in the application process could lead to further civil or criminal consequences under other provisions of the Customs Act 1901 or associated regulations. While the explanatory statement does not specify maximum penalties, it is clear that adherence to the TCO terms is critical to avoid financial liabilities or legal repercussions.