EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1118046
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 Ltd applied for a TCO in respect of certain vane motors on 06 June 2011.
Instrument
TCO No 1118046 was made on 22 August 2011. It declares that those certain vane 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. 1118046 is taken to have come into force on 06 June 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, addresses the need for a structured scheme to grant tariff concessions on specific goods, thereby reducing customs duty rates. This Act allows the Chief Executive Officer of Customs to issue Tariff Concession Orders (TCOs) that apply reduced customs duty rates to goods specified in these orders, provided certain conditions are met. The introduction of this scheme, particularly the process outlined in Part XVA, aims to facilitate economic efficiency by potentially lowering the cost of importing certain goods and encouraging trade. The explanatory statement regarding Tariff Concession Instrument No. 1118046, issued on 22 August 2011, details the application and approval of a TCO for certain vane motors, reflecting the Act's objective to ensure that tariff concessions are granted judiciously, with consideration given to the potential economic impact and without imposing any disadvantages on non-Commonwealth entities.
Scope and Application
The Tariff Concession Instrument No. 1118046, made under Part XVA of the Customs Act 1901, applies to the goods specified in the instrument, namely certain vane motors, and is intended to benefit BlueScope Steel Ltd by reducing the customs duty rate from 5% to free. This instrument is applicable to the goods of the applicant only and does not affect the rights of any other person as at the date of registration. The scope of the Act extends to any person who may apply for a Tariff Concession Order (TCO) in respect of goods, subject to the core criteria set out in the Act. The CEO of Customs is responsible for deciding whether an application meets these criteria. The instrument is effective as of the date the application was lodged, in this case, 06 June 2011, and does not impose any liabilities on any person, including the Commonwealth. The CEO is required to publish a notice in the Gazette inviting submissions from interested parties, although no submissions were received for this particular TCO. Any exclusions or exemptions are determined by the specific terms of the TCO and the Customs Act 1901 itself, with certain goods explicitly excluded from TCO consideration under section 269SJ of the Act.
Key Provisions
The Tariff Concession Instrument No. 1118046 under the Customs Act 1901 (section 269F) applies to goods specified in the instrument and outlines that a reduced rate of customs duty will apply to these goods. Specifically, section 269P(3) mandates that if the Chief Executive Officer (CEO) of Customs is satisfied that a Tariff Concession Order (TCO) application meets the core criteria, the CEO must issue a written order declaring that the goods in question are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995, thus attracting a preferential duty rate. For instance, in the case of certain vane motors, the general duty rate is 5%, but under this TCO, the duty rate is free.
The obligations imposed by the Act on parties involve ensuring that the application for a TCO is valid and meets the core criteria as stipulated by section 269C. The CEO must verify that no substitutable goods are produced in Australia at the time the application is lodged. Section 269D to 269E further define key terms such as 'goods produced in Australia', 'ordinary course of business', and'substitutable goods'. Additionally, the CEO must publish a notice in the Gazette (section 269K(1)) inviting submissions from any interested parties who might oppose the granting of a TCO. In this case, no submissions were received.
Should a party fail to comply with the requirements set forth by the Customs Act 1901, there are potential legal consequences. The Act does not explicitly state the penalties for non-compliance with the TCO provisions. However, general breaches of customs regulations can result in significant penalties. For instance, section 242 of the Customs Act 1901 imposes a penalty of up to 10,000 penalty units, which as of 2023, equates to approximately AUD 1.8 million for serious breaches. This includes not only the failure to adhere to tariff concessions but also any misrepresentation or fraudulent activity in relation to customs duties. Therefore, entities must ensure strict compliance to avoid such severe penalties.