EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1110717
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 steel ladle injection station ladle cover parts on 29 March 2011.
Instrument
TCO No 1110717 was made on 20 June 2011. It declares that those certain steel ladle injection station ladle cover 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. 1110717 is taken to have come into force on 29 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 Commonwealth Parliament, provides for the imposition of tariffs on imported goods. Part XVA of the Act establishes a scheme for Tariff Concession Orders (TCOs) which can be applied for by individuals or entities to reduce or eliminate customs duty on specific goods, provided certain criteria are met. The problem this legislative framework aims to address is the facilitation of fair and efficient trade by allowing for tariff reductions under specific conditions, thereby potentially reducing costs for businesses and consumers. In line with the policy objective of encouraging economic efficiency and competitiveness, the Act allows the Chief Executive Officer of Customs to make TCOs if they are satisfied that the application meets the core criteria, which includes the absence of substitutable goods produced in Australia. The Explanatory Statement for Tariff Concession Instrument No. 1110717, issued on 20 June 2011, exemplifies this process by detailing the concession granted to Bluescope Steel for certain steel ladle cover parts, effectively setting their duty rate to zero. This was done after determining that no substitutable goods were being produced domestically, thus meeting the requirements under the Act.
Scope and Application
The Customs Act 1901, specifically under Part XVA, facilitates the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO) to provide reduced customs duties on certain goods. An application for a TCO can be submitted by any person, provided the goods in question are not specified in section 269SJ of the Act, which lists goods ineligible for TCOs. The CEO is required to assess whether the application meets the core criteria, primarily whether there are no substitutable goods produced in Australia on the day the application was lodged. If these criteria are met, the CEO must issue a TCO, specifying a lower rate of duty applicable to the goods in question. The TCO mechanism is national in scope, applying across all states and territories within Australia. However, certain goods, as outlined in section 269SJ, are explicitly excluded from the benefits of a TCO. Additionally, any rights or liabilities of parties other than the Commonwealth are not adversely affected by the TCO, and importers can seek duty refunds for goods imported since the effective date of the TCO. The commencement date of a TCO is aligned with the date the application was lodged, ensuring that the concessions are retroactively applied from that date.
Key Provisions
The main operative sections of the Customs Act 1901, as referenced in Tariff Concession Instrument No. 1110717, establish a framework for the Chief Executive Officer (CEO) of Customs to grant Tariff Concession Orders (TCO) on certain goods. Section 269F of the Act allows for an application to be made by a person to the CEO for a TCO on goods. The CEO must then determine if 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 day the application was lodged (section 269C). If the CEO is satisfied that the application meets these criteria, they must issue a written TCO (section 269P(3)). In this case, TCO No. 1110717 was issued for certain steel ladle injection station ladle cover parts, applying item 50 of Schedule 4 to the Customs Tariff Act 1995, which reduced the duty from 5% to free.
The obligations and requirements imposed by the Act on the parties it governs are primarily centred around the application process for a TCO. The CEO must ensure that the application is not in respect of goods specified in section 269SJ, which are ineligible for a TCO. Upon receiving a valid application, the CEO must publish a notice in the Gazette inviting submissions from any interested parties (subsection 269K(1)). The CEO must then decide whether to issue a TCO based on the core criteria and any submissions received. Additionally, the CEO is required to make the TCO if the criteria are satisfied. In this instance, the CEO assessed that the application for steel ladle cover parts met the core criteria, as no substitutable goods were produced in Australia, and issued TCO No. 1110717.
Any breach of the provisions under the Customs Act 1901, including the issuance of a TCO, could result in civil or criminal penalties. The specific penalties for non-compliance are not detailed in the explanatory statement, but generally, breaches of customs regulations can lead to fines and imprisonment, depending on the severity of the breach. The TCO itself does not impose any liabilities on any person, but it does benefit importers by allowing them to apply for a refund of duty on goods imported since the TCO came into force under paragraph 126(1)(r) of the Regulations. This process ensures that the rights of importers are protected and that they are not disadvantaged by the terms of the TCO.