EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1112633
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.
OneSteel Ltd applied for a TCO in respect of certain blast furnace material charger gate valve parts on 15 April 2011.
Instrument
TCO No 1112633 was made on 11 July 2011. It declares that those certain blast furnace material charger gate valve 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. 1112633 is taken to have come into force on 15 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 Parliament of Australia, introduced a framework for Tariff Concession Orders (TCOs) to provide relief from customs duty on certain goods. This was aimed at addressing the issue of supporting Australian industries by reducing costs for imported materials that are not produced domestically, thus encouraging competitiveness. The Customs Act 1901 allows the Chief Executive Officer of Customs to make a TCO if they are satisfied that the application meets specific criteria, such as the absence of substitutable goods produced in Australia. In this context, TCO No. 1112633, made on 11 July 2011, pertains to blast furnace material charger gate valve parts, setting a free rate of duty as opposed to the general 5% rate. The instrument was designed to benefit importers by potentially allowing them to claim refunds for duties paid on these goods since the effective date of the TCO, 15 April 2011, without imposing any new liabilities.
Scope and Application
The Customs Act 1901, through its Part XVA, facilitates the creation of Tariff Concession Orders (TCOs) which apply a lower rate of customs duty to specified goods. The Act applies to any person or entity wishing to apply for a TCO, with the decision-making authority vested in the Chief Executive Officer of Customs. These TCOs are primarily concerned with goods that do not have Australian-produced substitutes and are not restricted by section 269SJ, which lists goods ineligible for tariff concessions. The Act operates on a national level, with the geographic scope encompassing all of Australia, thereby affecting industries reliant on imported goods. The application of a TCO, such as TCO No. 1112633 for blast furnace material charger gate valve parts, commences on the date of application lodging, with the concession backdated to that date. This means that importers can claim refunds for duties paid on these goods from the effective date. The Act ensures that the implementation of a TCO does not negatively impact the rights of any person other than the Commonwealth, nor does it impose new liabilities on anyone.
Key Provisions
The Customs Act 1901, specifically Part XVA, introduces a scheme for Tariff Concession Orders (TCOs) which can be issued by the Chief Executive Officer of Customs (CEO). This legislation allows for a reduced rate of customs duty on goods specified in a TCO. Any person can apply to the CEO for a TCO for goods under section 269F, provided the goods are not those specified in section 269SJ, which are ineligible for TCOs. The CEO must assess whether the application meets the core criteria outlined in section 269C, which requires that no substitutable goods were produced in Australia in the ordinary course of business on the date the application was lodged.
The Act defines various terms pertinent to TCOs. "Goods produced in Australia" is defined in section 269D, "ordinary course of business" in section 269E, and "substitutable goods" in section 269D, in relation to goods the subject of a TCO application, means goods produced in Australia that can be used in a manner corresponding to the use of the goods in the application. If the CEO is satisfied that the application meets the core criteria, they are mandated under subsection 269P(3) to issue a written TCO, specifying the prescribed item of Schedule 4 to the Customs Tariff Act 1995 that applies to the goods in question.
OneSteel Ltd applied for a TCO on 15 April 2011 for certain blast furnace material charger gate valve parts. On 11 July 2011, TCO No. 1112633 was issued, declaring that these parts are subject to item 50 of Schedule 4 of the Tariff, as no substitutable goods were being produced in Australia. The general rate of duty for these goods is 5%, but the TCO grants a duty-free status. Pursuant to subsection 269K(1), the CEO published a notice in the Gazette inviting submissions from any person who might object to the TCO. However, no submissions were received.
The TCO No. 1112633 is effective as of 15 April 2011, the date the application was lodged, according to subsection 269S(1). Importantly, this TCO does not adversely affect the rights of any person other than the Commonwealth or impose liabilities for actions taken before its registration. Importers, however, will benefit from this TCO as they can apply for a refund of duty on goods imported since the effective date. The TCO does not impose any new liabilities on any person.