EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1115678
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 Pty Ltd applied for a TCO in respect of certain heat exchangers on 18 May 2011.
Instrument
TCO No 1115678 was made on 01 August 2011. It declares that those certain heat exchangers 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. 1115678 is taken to have come into force on 18 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 Customs Act 1901 was enacted by the Parliament of Australia to facilitate and regulate the importation and exportation of goods within Australia. One of the mechanisms introduced by the Act to address tariff concessions is through the creation of Tariff Concession Orders (TCOs), which allow for reduced customs duty rates on certain goods. Tariff Concession Instrument No. 1115678 was introduced to address the specific issue of providing tariff concessions on certain heat exchangers. This instrument was developed in response to an application from Bluescope Steel Pty Ltd, which sought to lower the customs duty on these goods from the general rate of 5% to a free rate, on the basis that no substitutable goods were being produced in Australia at the time of the application. The instrument was made by the Chief Executive Officer of Customs and was published in the Gazette, inviting any objections which did not eventuate. The Tariff Concession Order came into force on the date the application was lodged, ensuring that the rights of importers were positively affected and that no existing liabilities or rights were adversely impacted.
Scope and Application
The Customs Act 1901 provides a mechanism for the granting of tariff concessions through Tariff Concession Orders (TCOs), which are issued by the Chief Executive Officer of Customs (CEO). The application of a TCO results in a lower rate of customs duty for the specified goods, provided that the application meets certain core criteria. These criteria include the absence of substitutable goods being produced in Australia at the time the application is made, which is assessed against the definitions provided in the Act. The geographic scope of the Act applies nationally across Australia, as it is a Commonwealth Act, and it extends to all industries and entities importing goods subject to a TCO. The application of the Act is not restricted by specific exclusions or thresholds but excludes certain goods as specified in section 269SJ. Subordinate instruments may further define the application of the TCOs, but the primary legislation establishes the foundational principles and criteria for tariff concessions.
Key Provisions
The primary operative sections of this legislation, specifically the Customs Act 1901 as amended by Tariff Concession Instrument No. 1115678, revolve around the making of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO). Section 269F (2) allows any person to apply to the CEO for a TCO concerning certain goods. If the CEO is satisfied that the application does not pertain to goods specified in section 269SJ, which lists goods that cannot be subject to a TCO, the CEO must assess whether the application meets the core criteria outlined in section 269C. If the CEO determines that the application satisfies these criteria, they must issue a written order (section 269P(3)) declaring the goods to which the TCO applies. For instance, in this case, the CEO declared that certain heat exchangers are subject to a TCO, resulting in a duty-free status for these goods under item 50 of Schedule 4 to the Customs Tariff Act 1995.
The Customs Act 1901 imposes several obligations on the CEO and other parties involved in the TCO process. The CEO must publish a notice in the Gazette (subsection 269K(1)) as soon as practicable after accepting a TCO application, inviting any person who believes there are reasons why the TCO should not be made to submit their views. Additionally, the CEO must ensure that the application meets the core criteria, specifically that no substitutable goods were produced in Australia on the day the application was lodged (section 269C). For the purposes of this Act, "substitutable goods" means goods produced in Australia that serve a similar function or design use as the goods in question (section 269D and 269E).
Breaches of the provisions within the Customs Act 1901, including improper applications or misuse of TCOs, can result in various penalties. Although the specific offences and penalties are not detailed in the provided text, it is implied that failure to comply with the stipulated requirements or misuse of the TCO process could lead to civil or criminal consequences. These may include fines, imprisonment, or other penalties as prescribed by the relevant laws. The text does clarify that the TCO does not affect the rights of any person as of the date of registration in a way that would disadvantage them or impose new liabilities for actions taken prior to the registration date.
In summary, the Tariff Concession Instrument No. 1115678 under the Customs Act 1901 allows for the creation of TCOs to provide tariff concessions on certain goods, provided they meet specific criteria. The CEO is tasked with evaluating applications, making orders, and ensuring compliance with the Act’s provisions. The legislative framework also includes measures to protect existing rights and liabilities, ensuring that the introduction of TCOs does not adversely affect any party.