EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1109648
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.
Cumi Australia Pty Ltd applied for a TCO in respect of certain mild steel or stainless steel pipes on 21 March 2011.
Instrument
TCO No 1109648 was made on 15 June 2011. It declares that those certain mild steel or stainless steel pipes 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. 1109648 is taken to have come into force on 21 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, enacted by the Australian Parliament, establishes a framework under which Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs. This legislation addresses the gap in providing tariff relief for specific goods that are not produced in Australia. The act allows for reduced customs duty rates on eligible goods, promoting trade efficiency and supporting industries that rely on imported materials. The Tariff Concession Instrument No. 1109648, introduced on 15 June 2011, exemplifies the application of this scheme. This instrument was made in response to an application from Cumi Australia Pty Ltd for tariff concessions on certain mild steel or stainless steel pipes. The instrument declared that these pipes qualify for a tariff rate of free, down from the general rate of 5%, as no substitutable goods were produced in Australia at the time of application. The policy objective here is to facilitate trade by reducing duty burdens on imported goods where local production does not exist.
Scope and Application
The Tariff Concession Instrument No. 1109648 under the Customs Act 1901 applies specifically to certain mild steel or stainless steel pipes, as determined by the Chief Executive Officer of Customs (CEO). This instrument was implemented following an application by Cumi Australia Pty Ltd on 21 March 2011, which sought a tariff concession order (TCO) for these goods. The CEO assessed the application against the core criteria set out in section 269C of the Act, concluding that no substitutable goods were produced in Australia on the date the application was lodged, thus satisfying the conditions for a TCO. Consequently, the CEO issued TCO No. 1109648 on 15 June 2011, which declares that the specified mild steel or stainless steel pipes are subject to a free rate of duty, as per item 50 of Schedule 4 to the Customs Tariff Act 1995, rather than the general rate of 5%. This order is effective as of the date of application, 21 March 2011, and it does not disadvantage any existing rights of parties other than the Commonwealth or impose new liabilities. Importers of these goods may also benefit by applying for a refund of duty paid on imports since the effective date of the TCO.
Key Provisions
The main operative sections of the legislation, specifically section 269C, establish the core criteria for a Tariff Concession Order (TCO) application. If a person applies for a TCO in respect of goods under section 269F and the CEO is satisfied that the application is not for goods specified in section 269SJ, they must determine if the application meets the core criteria as outlined in section 269C. This involves verifying that, on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business, with definitions for terms like "goods produced in Australia," "ordinary course of business," and "substitutable goods" provided in sections 269D, 269E, and 269F respectively. If these criteria are met, the CEO must issue a written TCO under section 269P(3), specifying the prescribed item of Schedule 4 to the Customs Tariff Act 1995 that applies to the goods.
The Act imposes specific obligations on the CEO in relation to TCOs. Upon receiving a TCO application, the CEO must ensure it is not for goods specified in section 269SJ and then assess whether it meets the core criteria in section 269C. If satisfied, they must issue a written TCO. Additionally, the CEO must publish a notice in the Gazette under subsection 269K(1) inviting submissions from any person who believes the TCO should not be made. They are also required to ensure that the TCO does not disadvantage any person or impose liabilities on them in relation to actions taken before the TCO comes into force, as stipulated in subsection 269S(1). This notice and consultation process helps ensure transparency and fairness in the application and issuance of TCOs.
Breaches of the conditions or obligations under the Customs Act 1901 may lead to various civil or criminal consequences. While the specific penalties for breaches are not detailed in this legislation, general provisions within the Customs Act and related Acts, such as the Crimes Act 1914, provide for penalties that may include fines and imprisonment. The maximum penalties for breaches can vary widely depending on the nature and severity of the offence, as outlined in other relevant sections of the Act and subsidiary legislation. Therefore, adherence to the obligations and provisions of the Act is critical to avoid potential legal repercussions.