EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1113321
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 Limited applied for a TCO in respect of certain motors on 21 April 2011.
Instrument
TCO No 1113321 was made on 11 July 2011. It declares that those certain motors 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. 1113321 is taken to have come into force on 21 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 was enacted by the Parliament of Australia and provides the legislative framework for managing customs and excise in Australia. This Act allows for the creation of Tariff Concession Orders (TCOs) which can lower the customs duty rate on certain imported goods. TCO No. 1113321, introduced under Part XVA of the Customs Act, was created in response to an application by Bluescope Steel Limited on 21 April 2011 for tariff concessions on specific motors. The Chief Executive Officer of Customs determined that no substitutable goods were produced in Australia on the date the application was lodged, thus satisfying the core criteria under section 269C of the Act. Consequently, the TCO was issued on 11 July 2011, providing a zero rate of duty on these motors, which otherwise would have been subject to a general duty rate of 5%. The policy objective behind this concession is to support the import of goods where domestic production does not exist, thereby facilitating trade and potentially benefiting consumers by reducing the cost of imported goods.
Scope and Application
The Customs Act 1901 applies to any person or entity seeking to import goods into Australia and thereby subject to customs duties as prescribed by the Customs Tariff Act 1995. This Act specifically governs the process by which Tariff Concession Orders (TCOs) can be made to provide concessions on customs duties for certain imported goods. The Act applies to the Chief Executive Officer of Customs who has the authority to make TCOs and to those who apply for such concessions. The TCOs apply to specific goods that meet the criteria of not having substitutable goods produced in Australia and not being specified in section 269SJ of the Act. The application and approval process for TCOs is conducted nationally under Commonwealth law. There are no exclusions or exemptions detailed in this specific TCO, but the Act generally excludes goods specified in section 269SJ. The scope of the Act can be extended or restricted through subordinate instruments, which may provide further details on the types of goods and circumstances under which concessions can be granted.
Key Provisions
The Tariff Concession Instrument No. 1113321, pursuant to section 269F of the Customs Act 1901 (the Act), allows for a lower rate of customs duty on certain goods, in this case, certain motors, subject to a Tariff Concession Order (TCO) made by the Chief Executive Officer of Customs (the CEO). This concession applies if the CEO determines that no substitutable goods were produced in Australia on the day the application was lodged (section 269C). In this instance, the CEO was satisfied that no substitutable goods were produced domestically, leading to the issuance of TCO No. 1113321 on 11 July 2011, which specifies that these motors are subject to item 50 of Schedule 4 of the Customs Tariff Act 1995 (the Tariff), thereby exempting them from the general duty rate of 5% and applying a duty rate of free.
The obligations under the Act require the CEO to ensure that the application for a TCO complies with the criteria set out in section 269C, and that the goods in question are not specified in section 269SJ, which details the goods that cannot be subject to a TCO. Additionally, the CEO must publish a notice in the Gazette inviting submissions from any person who believes there are reasons why the TCO should not be made, as stipulated in subsection 269K(1). In the case of TCO No. 1113321, the CEO did not receive any submissions in response to the published notice. The TCO is deemed to have come into force on the day the application was lodged, which in this instance is 21 April 2011, in accordance with subsection 269S(1). It is also important to note that the TCO does not affect the rights of any person other than the Commonwealth and does not impose any liabilities on any person in respect of actions taken prior to the registration date.
Breaching the provisions of the Customs Act 1901, including the provisions for Tariff Concession Orders, may lead to civil or criminal consequences. While the specific offences, penalties, or consequences for breach of the TCO provisions are not detailed in the explanatory statement, the general penalties for contraventions of the Customs Act can be severe. Under section 241 of the Act, a person who contravenes any provision of the Act or the Regulations is liable to a penalty of up to 10,000 penalty units or imprisonment for up to five years, or both, for each offence. Given the potential for significant penalties, it is crucial for all parties to comply with the requirements and obligations set out in the Act and any related instruments such as TCO No. 1113321.