EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1129981
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 cut off valve parts on 02 September 2011.
Instrument
TCO No 1129981 was made on 28 November 2011. It declares that those certain cut off valve parts 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. 1129981 is taken to have come into force on 02 September 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 streamlined process to provide tariff concessions on specific goods, thereby facilitating trade and economic efficiency. Specifically, Part XVA of the Act enables the Chief Executive Officer of Customs to issue Tariff Concession Orders (TCOs) which apply a lower rate of customs duty to designated goods. This legislative framework was introduced to address the issue of ensuring that imported goods that do not have Australian-made alternatives are not subject to higher customs duties, thus promoting competitive imports and potentially lowering consumer prices. The policy objective is to encourage trade by reducing the duty on certain goods, provided that no substitutable goods are produced domestically, thereby supporting the efficient allocation of resources in the Australian market.
The instrument in question, Tariff Concession Instrument No. 1129981, was made on 28 November 2011, following an application by Bluescope Steel Ltd for certain cut-off valve parts. The instrument declares that these goods are subject to a zero rate of duty as no substitutable goods were produced in Australia at the time of the application. This concession is effective from 2 September 2011, the date the application was lodged. The process included a public consultation period where no objections were raised, ensuring that the order aligns with the legislative intent to provide tariff relief where appropriate.
Scope and Application
The Tariff Concession Instrument No. 1129981 under the Customs Act 1901 applies specifically to Bluescope Steel Ltd's application for tariff concessions on certain cut off valve parts, which are categorised under item 50 of Schedule 4 to the Customs Tariff Act 1995. The instrument is relevant to the import of these particular goods and aims to provide tariff concessions, thereby reducing the duty rate from the general rate of 5% to free. The application and subsequent concession apply to the conduct of importing these goods and the transactions associated with them. The instrument is part of the broader framework under Part XVA of the Customs Act 1901, and its geographic reach is effectively national, given the Commonwealth's jurisdiction over customs duties. The application of the instrument is limited to goods specified in the instrument and does not extend to other goods, including those listed in section 269SJ of the Act, which are ineligible for tariff concessions. The instrument does not disadvantage any existing rights or impose new liabilities on persons other than the Commonwealth. Additionally, the instrument’s application can be extended or clarified through subordinate instruments, as authorised by the Customs Act 1901.
Key Provisions
The Customs Act 1901 (the Act) facilitates the creation of Tariff Concession Orders (TCOs) which provide for lower rates of customs duty on specific goods. Section 269F allows an individual or entity to apply to the Chief Executive Officer of Customs (CEO) for a TCO. The CEO is required to assess whether the application complies with the core criteria outlined in section 269C. This involves determining if, on the day the application was made, no substitutable goods were produced in Australia in the ordinary course of business (section 269C(1)(a)). If the CEO is satisfied that these criteria are met, they must issue a TCO, declaring that the specified goods are subject to a prescribed item in Schedule 4 to the Customs Tariff Act 1995 (the Tariff) (section 269P(3)).
Entities and individuals who apply for a TCO must ensure that their application is made in good faith and is supported by relevant evidence that no substitutable goods were produced in Australia. The CEO must also publish a notice in the Gazette inviting submissions from any interested parties who may have reasons why the TCO should not be granted (subsection 269K(1)). This process ensures that the TCO is made transparently and that all stakeholders have an opportunity to be heard. The obligation to publish and consider submissions is a crucial part of the process, providing an avenue for interested parties to voice their concerns and potentially influence the decision.
Under the Act, the failure to comply with the requirements for a TCO, including the provision of false information in the application, may result in the CEO refusing the application. Moreover, if the TCO is found to have been incorrectly granted and results in a financial loss to the Commonwealth, the CEO may be required to make a refund of any duty paid under the concession (subsection 271D(4)). There are no specific criminal offences or penalties detailed in the explanatory statement for the breach of the TCO provisions, but the consequences could involve civil penalties and the requirement to repay any duties improperly claimed.