EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1108450
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 limit switches on 08 March 2011.
Instrument
TCO No 1108450 was made on 31 May 2011. It declares that those certain limit switches 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. 1108450 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 was enacted to provide a framework for the regulation of customs and excise in Australia. The Tariff Concession Instrument No. 1108450, made in 2011, addresses the problem of providing tariff concessions to specific goods, in this case certain limit switches, to encourage their import and use in Australia. This instrument was introduced to facilitate the importation of these goods at a reduced rate of duty, thereby potentially lowering costs and increasing availability for Australian businesses and consumers. The instrument was enacted by the Chief Executive Officer of Customs under the authority granted by the Customs Act 1901, with the policy objective of ensuring that the application of tariff concessions aligns with broader economic and industrial policy goals, particularly by supporting industries that may not have local production capabilities.
Scope and Application
The Customs Act 1901, through Part XVA, governs the process for Tariff Concession Orders (TCOs), which are applied to goods that qualify for a lower rate of customs duty. The legislation applies to any person who applies to the Chief Executive Officer of Customs for a TCO in respect of goods, provided these goods are not those specified in section 269SJ of the Act, which are ineligible for TCOs. The scope of the Act extends across Australia, as it is a Commonwealth law, and applies to all entities and individuals involved in the importation of goods that may be subject to a TCO. The application process is contingent upon meeting the core criteria set out in sections 269C, 269D, and 269E of the Act, ensuring that no substitutable goods are produced in Australia at the time of application. The Act also provides for the possibility of subordinate instruments extending or further defining the application of the TCOs, thereby allowing for flexibility in addressing various import scenarios. Notably, the Act does not disadvantage any person other than the Commonwealth and does not impose any liabilities on any person in relation to actions taken before the TCO comes into force.
Key Provisions
The Customs Act 1901, through its Part XVA, establishes a scheme for the creation of Tariff Concession Orders (TCOs) that allows for lower rates of customs duty on specified goods. An application for a TCO can be made under section 269F of the Act by any person. The Chief Executive Officer (CEO) of Customs must then determine whether the application meets the core criteria set out in sections 269C and 269SJ. Specifically, section 269C requires that on the day the application is lodged, no substitutable goods were produced in Australia in the ordinary course of business. The CEO must also ensure that the goods in question are not those specified in section 269SJ, which are ineligible for TCOs. If these conditions are satisfied, the CEO is required to issue a written TCO under section 269P(3), declaring that the specified goods will attract a prescribed tariff item as outlined in Schedule 4 to the Customs Tariff Act 1995.
Under this legislative framework, the CEO of Customs is tasked with several obligations. Firstly, the CEO must accept and evaluate applications for TCOs, ensuring they meet the stipulated criteria and do not pertain to goods listed in section 269SJ. This involves determining whether substitutable goods were produced in Australia on the day the application was lodged, as defined in sections 269D and 269E. Secondly, the CEO must publish a notice in the Gazette inviting submissions from any person who believes the TCO should not be granted, as per subsection 269K(1). Although no submissions were received in response to the notice for TCO No. 1108450, this process ensures transparency and provides an opportunity for public input. Finally, once the core criteria are satisfied, the CEO must issue a formal TCO, as mandated by section 269P(3).
The Act does not explicitly outline offences or penalties for non-compliance with the TCO provisions. However, breaches of the broader Customs Act 1901 can lead to significant legal consequences. For instance, section 247 of the Act provides for penalties, including fines and imprisonment, for contravening the Act's provisions. The severity of these penalties depends on the nature and extent of the offence, with maximum penalties varying accordingly. Additionally, civil penalties may be imposed for breaches related to customs duty, as outlined in the Customs (Prohibited Imports) Regulations 1994. These provisions underscore the importance of adhering to the legislative requirements surrounding TCOs and the broader customs framework.