EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1124116
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.
Milltech Martin Bright applied for a TCO in respect of certain steel bars on 20 July 2011.
Instrument
TCO No 1124116 was made on 19 October 2011. It declares that those certain steel bars 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. 1124116 is taken to have come into force on 20 July 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 to provide a comprehensive framework for the regulation of customs and excise in Australia. The introduction of Tariff Concession Orders (TCO) under Part XVA of the Act addresses the need for tariff reductions on certain imported goods, thereby supporting trade and industry competitiveness. The Tariff Concession Instrument No. 1124116, made in 2011, exemplifies this process by providing tariff concessions for specific steel bars, reducing the duty rate from 5% to free. The instrument was developed following an application by Milltech Martin Bright, and after the Chief Executive Officer of Customs confirmed that no substitutable goods were produced in Australia, satisfying the core criteria. The instrument became effective on the date of the application, 20 July 2011, and no objections were raised during the consultation period, ensuring the rights of importers were preserved and potentially benefiting them with duty refunds for past imports.
Scope and Application
The Customs Act 1901, as amended, facilitates the application of tariff concession orders (TCOs) through which certain goods can benefit from reduced or waived customs duties. Specifically, the Act allows for the CEO of Customs to make a TCO if an application is made and the core criteria are met, which primarily involves the absence of substitutable goods produced in Australia. The scope of this legislation applies to any entity or person seeking tariff concessions for specific goods, thereby directly impacting industries reliant on imported materials. The geographic reach of this Act is national, with its provisions extending across the Commonwealth of Australia. Notably, certain goods specified in section 269SJ of the Act are excluded from the concessions, such as those that may affect national security or public health. The Act allows for further application and specification through subordinate instruments, ensuring flexibility and responsiveness to changing economic conditions or trade policies. The Tariff Concession Instrument No. 1124116 exemplifies this process, applying a zero-rate duty on certain steel bars following an application by Milltech Martin Bright, and demonstrating the Act's practical application in reducing import costs for specific goods.
Key Provisions
The main operative sections of Tariff Concession Instrument No. 1124116 under the Customs Act 1901 are sections 269C, 269F, and 269P. Section 269F (1) allows for the application to the Chief Executive Officer of Customs (CEO) for a Tariff Concession Order (TCO) regarding certain goods. If the application is deemed not to involve goods specified in section 269SJ, which are ineligible for TCOs, the CEO must assess whether it meets the core criteria set out in section 269C. This core criterion is fulfilled if, on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business, as defined in sections 269D and 269E. If the CEO is satisfied with the application, they must make a written order (TCO) under section 269P(3), specifying the lower rate of customs duty applicable to the goods.
The obligations and requirements imposed by the Act on the parties involved are primarily on the CEO. They must ensure that any application for a TCO is assessed against the criteria stipulated in section 269C. Additionally, under section 269K(1), the CEO is required to publish a notice in the Gazette as soon as practicable after accepting a TCO application as valid, inviting any person who believes the TCO should not be made to submit their reasons. This transparency step is crucial to allow for any objections to be raised before the TCO is finalised. For applicants, such as Milltech Martin Bright, the requirement is to provide sufficient evidence and information to satisfy the CEO that the core criteria for the TCO are met.
In terms of potential offences, penalties, or consequences for breach, the Customs Act 1901 does not specify particular penalties for failing to comply with the provisions of a TCO or the process of applying for one. However, non-compliance with the customs regulations generally could lead to civil or criminal penalties. Civil penalties may include financial penalties for underpayment of duty or interest, while criminal penalties might involve fines and imprisonment for more serious breaches such as fraud or smuggling. The maximum penalties for customs offences can vary, but they can include significant fines and imprisonment terms, depending on the severity of the offence.
It is important to note that the TCO itself does not impose any liabilities on any person other than the Commonwealth and does not affect the rights of a person as at the date of registration to disadvantage them or impose liabilities in respect of anything done or omitted to be done before the registration date. This means that while the TCO provides benefits such as reduced duty rates for the importer of specified goods, it does not retroactively affect any transactions or impose penalties on those who were compliant with previous regulations.