EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1125658
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 pipeline expansion joints on 01 August 2011.
Instrument
TCO No 1125658 was made on 17 October 2011. It declares that those certain pipeline expansion joints 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. 1125658 is taken to have come into force on 01 August 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 introduce a scheme under which Tariff Concession Orders (TCOs) could be made by the Chief Executive Officer of Customs. This scheme, set out in Part XVA of the Act, allows for a lower rate of customs duty on certain goods that are the subject of a TCO. The problem this legislation aimed to address was the potential for imported goods to undercut local production when no suitable domestic substitutes were available, thereby ensuring fair competition and supporting local industries. Enacted by the Parliament of Australia, the objective of this particular instrument, Tariff Concession Instrument No. 1125658, was to provide relief from customs duty on certain pipeline expansion joints, which were not being produced domestically, thus allowing for a free rate of duty on these specific goods. This initiative supports the broader policy objective of protecting Australian industries from unfair competition while facilitating the import of necessary goods.
Scope and Application
The Tariff Concession Instrument No. 1125658 under the Customs Act 1901 applies to specific pipeline expansion joints, which have been designated by the Chief Executive Officer of Customs as eligible for tariff concessions. This legislation operates on a Commonwealth level, and its scope is limited to the particular goods identified in the instrument, which are subject to a lower rate of customs duty than the standard rate. The act specifically excludes goods that are already being produced in Australia in the ordinary course of business, as outlined in the Customs Act 1901, ensuring that local industries are not disadvantaged. The instrument was created following an application by Bluescope Steel Ltd and was effective from the date of the application, 01 August 2011. Any party wishing to contest the issuance of a Tariff Concession Order must lodge a submission with the CEO within the stipulated timeframe, although no submissions were received for this particular instrument. The TCO does not impose any liabilities on any person and does not affect the rights of any person other than the Commonwealth, providing a beneficial impact on the rights of importers who can apply for a refund of duty on goods imported since the commencement date of the TCO.
Key Provisions
The Tariff Concession Instrument No. 1125658 under the Customs Act 1901 (section 269F) establishes a concession that lowers the customs duty for certain pipeline expansion joints to zero, whereas the general rate is 5%. This concession is contingent upon the Chief Executive Officer of Customs (CEO) determining that no substitutable goods were produced in Australia on the day the application was lodged (section 269C). The CEO made this decision based on the fact that no such goods were produced in Australia (section 269SJ). The instrument was published in the Gazette on 17 October 2011, inviting submissions against the TCO, although none were received (subsection 269K(1)). The concession applies retroactively from the date the application was lodged, 01 August 2011 (subsection 269S(1)).
The Act imposes several obligations on the parties involved. Firstly, the CEO is required to assess whether the application for a TCO meets the core criteria outlined in the Act. This involves determining whether any substitutable goods were produced in Australia on the application date. Secondly, the CEO must make a written order if the application meets these criteria, as specified in the Customs Tariff Act 1995. Additionally, the CEO is obligated to publish a notice in the Gazette as soon as practicable after accepting the application, inviting submissions from interested parties. Importers who have already paid customs duty on the goods since the TCO's effective date can apply for a refund (paragraph 126(1)(r) of the Regulations).
Failure to comply with the requirements set out in the Customs Act 1901 may result in legal consequences. If an entity does not adhere to the provisions concerning the application process for a TCO, it could face civil or criminal penalties. For instance, inaccurately applying for a TCO when substitutable goods are produced in Australia might lead to fines or other civil penalties. While the specific penalties are not detailed in the explanatory statement, they can include significant financial penalties or imprisonment depending on the severity of the breach. These consequences are intended to ensure compliance with the legislative framework governing tariff concessions.