EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1112267
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 shut off valves on 12 April 2011.
Instrument
TCO No 1112267 was made on 04 July 2011. It declares that those certain shut off valves 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. 1112267 is taken to have come into force on 12 April 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, establishes a framework for the regulation of customs and excise through the application of tariffs, duties, and other measures. One significant aspect of this legislation is the ability to grant tariff concession orders (TCOs) to reduce or eliminate customs duties on certain goods, fostering trade and economic efficiency. This is particularly relevant for goods where no substitutable products are produced domestically, ensuring that local industries are not unfairly disadvantaged. The Tariff Concession Instrument No. 1112267, issued on 4 July 2011, exemplifies this mechanism by providing a tariff concession for specific shut off valves, reducing their duty from 5% to free, thereby benefiting importers and potentially stimulating market demand for these goods. The process involves an application by interested parties, review by the Chief Executive Officer of Customs, and public consultation to ensure transparency and fairness in the decision-making process.
Scope and Application
The Customs Act 1901, through Part XVA, establishes a framework under which Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs (CEO). This Act applies to individuals or entities seeking to import specific goods into Australia and provides for reduced rates of customs duty on those goods that are the subject of a TCO. The Act specifies that a TCO can be applied for by any person who is not seeking a concession for goods outlined in section 269SJ, which are ineligible for such concessions. The CEO’s decision to issue a TCO is contingent on the application meeting the core criteria outlined in section 269C, namely that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged. The scope of the Act extends nationally, affecting all persons and entities involved in the importation of the specified goods. The application of the Act is not limited by state or territory boundaries, encompassing the entire Commonwealth of Australia. The Act allows for the extension or restriction of its application through subordinate instruments, which could further define terms such as "substitutable goods" or "ordinary course of business."
Key Provisions
The Customs Act 1901, specifically under Part XVA, governs the process of making Tariff Concession Orders (TCOs) through section 269F. This section allows a person to apply to the Chief Executive Officer (CEO) of Customs for a TCO in respect of goods. If the CEO is satisfied that the application pertains to goods that are not excluded under section 269SJ, they must determine whether the application meets the core criteria set out in section 269C. The application meets these criteria if, on the day it was lodged, no substitutable goods were produced in Australia in the ordinary course of business. Definitions of key terms such as 'goods produced in Australia', 'ordinary course of business', and'substitutable goods' are provided in sections 269D, 269E, and 269P(3) of the Act respectively. If the CEO determines that the application meets the criteria, they must issue a written order declaring the goods to which the TCO applies, as per section 269P(3).
Entities governed by the Customs Act 1901 have specific obligations when applying for a TCO. They must ensure their application is not for goods specified in section 269SJ and must provide sufficient evidence that no substitutable goods were produced in Australia on the day the application was lodged. The CEO has a duty to publish a notice in the Gazette inviting submissions from any person who believes the TCO should not be made, as stipulated in subsection 269K(1). The TCO itself takes effect on the day the application was lodged, as per subsection 269S(1). Importantly, the TCO does not affect the rights of any person as at the date of registration and does not impose any new liabilities on persons other than the Commonwealth.
Failure to comply with the provisions of the Customs Act 1901 in relation to TCOs could result in various consequences. While specific offences and penalties are not detailed in the explanatory statement, breaches of the Act generally could lead to civil or criminal penalties. The severity of these penalties would depend on the nature and extent of the breach, but they could include fines or other sanctions as prescribed under relevant sections of the Act. The explanatory statement does not provide maximum penalties but indicates that the rights of importers will be beneficially affected, allowing them to apply for a refund of duty on goods imported since the effective date of the TCO.