EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1114137
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.
Boyne Smelters applied for a TCO in respect of certain explosion panels on 04 May 2011.
Instrument
TCO No 1114137 was made on 25 July 2011. It declares that those certain explosion panels 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. 1114137 is taken to have come into force on 04 May 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 Tariff Concession Instrument No. 1114137, enacted in 2011 under the Customs Act 1901, addresses the need to provide tariff concessions on certain goods to ensure that Australian industries remain competitive and can access essential materials without excessive duty burdens. This instrument was introduced to facilitate a more streamlined process for businesses seeking to import specific goods under concessional terms, ensuring that they can operate efficiently within the regulatory framework. The instrument was created by the Chief Executive Officer of Customs following an application by Boyne Smelters for tariff concessions on certain explosion panels, which was approved as no substitutable goods were produced in Australia at the time. The policy objective underpinning this legislation is to support Australian industries by reducing the cost of importing certain goods, thereby fostering economic growth and ensuring that businesses have access to necessary materials.
Scope and Application
The Customs Act 1901, as detailed in Tariff Concession Instrument No. 1114137, applies to goods that are the subject of a Tariff Concession Order (TCO) made by the Chief Executive Officer of Customs. The application process for a TCO is initiated by a person, typically an importer or producer, who applies under section 269F of the Act. The CEO must ensure the application pertains to goods that are not excluded as per section 269SJ of the Act and that it meets the core criteria stipulated in section 269C, which involves verifying that no substitutable goods are produced in Australia in the ordinary course of business. The TCO mechanism is designed to benefit importers by potentially reducing or eliminating customs duties on specified goods, provided the CEO is satisfied with the application and no objections are raised during the consultation period.
Geographically, the Act operates under the Commonwealth jurisdiction, extending its application across Australia. The instrument itself, TCO No. 1114137, was specifically applied to certain explosion panels, granting them a free rate of duty as opposed to the general rate of 5%. The TCO's commencement date aligns with the application date, ensuring that rights and liabilities are protected under the Act for any actions taken before the TCO was registered. Importantly, the TCO does not disadvantage any person or impose liabilities on anyone in relation to actions taken prior to the registration date.
Key Provisions
The main operative sections of the Customs Act 1901, as modified by Tariff Concession Instrument No. 1114137, pertain to the process and criteria for making Tariff Concession Orders (TCOs). Section 269F allows a person to apply to the Chief Executive Officer (CEO) of Customs for a TCO in respect of certain goods. Section 269C requires the CEO to determine whether the application meets core criteria, particularly whether no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged (Section 269C). If these criteria are met, the CEO must issue a written order, a TCO, specifying the reduced rate of customs duty on the goods (Section 269P(3)). In this specific case, Instrument TCO No. 1114137 was issued on 25 July 2011, declaring that certain explosion panels are subject to a free rate of duty instead of the general 5% rate (Schedule 4, item 50 of the Customs Tariff Act 1995).
The Act imposes specific obligations on both the CEO and applicants for a TCO. The CEO must, upon receiving an application, determine whether it meets the core criteria and, if satisfied, issue a TCO. Furthermore, the CEO is required to publish a notice in the Gazette, inviting submissions from any interested parties who may have reasons why the TCO should not be made (Section 269K(1)). In this instance, the CEO did not receive any submissions in response to the published notice. The applicant, in this case Boyne Smelters, must provide sufficient evidence to demonstrate that the goods in question are not substitutable by Australian-produced goods, thereby meeting the criteria set out in Section 269C.
Failure to comply with the provisions of the Act or the terms of a TCO can result in various consequences. Although the explanatory statement does not detail specific offences or penalties, breaches of customs regulations generally can lead to both civil and criminal penalties. For civil breaches, penalties may include fines up to the maximum prescribed by law. For criminal breaches, penalties could include imprisonment, reflecting the seriousness of the offence. Additionally, any failure to adhere to the terms of a TCO might result in the revocation of the concession, leading to the imposition of the standard duty rates on the goods.