EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1113870
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.
Simcoa Operations applied for a TCO in respect of certain submerged arc furnace parts on 28 April 2011.
Instrument
TCO No 1113870 was made on 18 July 2011. It declares that those certain submerged arc furnace 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. 1113870 is taken to have come into force on 28 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 amended to include provisions for Tariff Concession Orders (TCOs) through Part XVA. This addition was enacted to address the need for a mechanism to reduce customs duties on specific goods, provided certain criteria are met. This legislative change allows the Chief Executive Officer of Customs to apply lower rates of customs duty on goods that are the subject of a TCO, subject to the condition that no substitutable goods are produced in Australia. The policy objective behind this legislation is to foster economic benefits by facilitating the importation of goods that cannot be produced domestically, thereby supporting industry needs and potentially lowering costs for businesses. The instrument in question, Tariff Concession Instrument No. 1113870, was introduced to provide tariff concessions for certain submerged arc furnace parts, reducing their duty rate from the general 5% to free, effective from the date of the application on 28 April 2011.
Scope and Application
The Customs Act 1901, specifically Part XVA, authorises the Chief Executive Officer of Customs to issue Tariff Concession Orders (TCOs) which provide a reduced rate of customs duty for certain goods, contingent upon meeting the core criteria stipulated in the Act. This instrument applies to entities or individuals who import goods that qualify under the Act's criteria for tariff concessions, ensuring that such goods are not substitutable by any produced in Australia. The Act extends its jurisdiction across the Commonwealth of Australia, with the TCO being effective from the date the application is lodged. TCO No. 1113870, issued on 18 July 2011, pertains to certain submerged arc furnace parts, granting them a duty-free status from 28 April 2011. The Act provides for the exclusion of certain goods from TCOs, as outlined in section 269SJ, and exempts the TCO from affecting any pre-existing rights or liabilities of non-Commonwealth persons. The CEO must also consult by publishing notices in the Gazette, inviting submissions on the TCO application, though in this case, no submissions were received.
Key Provisions
The Customs Act 1901 outlines the framework for Tariff Concession Orders (TCOs) in Part XVA, allowing the Chief Executive Officer of Customs (CEO) to grant lower customs duty rates on specified goods. Section 269F enables individuals or entities to apply for a TCO. If the CEO determines that the application does not pertain to goods listed in section 269SJ, which are ineligible for a TCO, they must evaluate whether the application meets the core criteria under section 269C. This provision stipulates that an application will meet the criteria if, on the application's lodgement date, no substitutable goods were produced in Australia in the ordinary course of business.
The CEO's obligations under this Act include publishing a notice in the Gazette inviting submissions if the application is deemed valid, as per section 269K(1). If no objections are raised, the CEO must decide on the application, and if satisfied, issue a written TCO. This order, detailed in section 269P(3), specifies the prescribed tariff item applying to the goods in question. The TCO for submerged arc furnace parts, for example, declares that these goods are subject to item 50 of Schedule 4 of the Customs Tariff Act 1995, resulting in a duty rate of free, down from the general rate of 5%.
Entities or individuals who breach the provisions of the Customs Act may face civil or criminal penalties. While the explanatory statement does not explicitly outline penalties, the Act generally allows for fines and imprisonment for breaches related to customs duties and regulations. The severity of the penalties depends on the nature and extent of the breach, with potential maximum penalties varying according to the specific offence.
The TCO No. 1113870, which became effective on 28 April 2011, does not affect the rights of any person other than the Commonwealth, nor does it impose any liabilities on any person for actions taken before the TCO's effective date. Importers, however, benefit from this TCO by being eligible to apply for a refund of duty on goods imported since the TCO's effective date, as per paragraph 126(1)(r) of the Regulations.