EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1131308
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 metal slitting knives on 14 September 2011.
Instrument
TCO No 1131308 was made on 12 December 2011. It declares that those certain metal slitting knives 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. 1131308 is taken to have come into force on 14 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 was enacted to provide for the regulation of customs and excise duties, among other things. The Act was introduced to address the need for a structured and efficient process to manage the importation and exportation of goods, ensuring that duties and tariffs are appropriately applied and enforced. One aspect of this is the scheme under which Tariff Concession Orders (TCOs) can be made by the Chief Executive Officer of Customs, which allows for lower rates of customs duty on certain goods. In 2011, Tariff Concession Instrument No. 1131308 was enacted by the relevant legislature to facilitate the concession of tariff duties on specific metal slitting knives. This was achieved by applying the provisions of the Customs Act 1901, which allow for the exemption of certain goods from standard customs duty rates, provided certain criteria are met. The policy objective here is to ensure that the importation of these goods is facilitated without imposing undue financial burden on the importers, thereby encouraging trade and economic activity.
Scope and Application
The Customs Act 1901, specifically under Part XVA, provides the framework for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs. This legislation allows for the application of lower customs duty rates to specific goods, provided that the application meets certain core criteria. Notably, the Act applies to both individuals and entities seeking to import goods that are not currently being produced in Australia in the ordinary course of business and are not listed in section 269SJ as ineligible for tariff concessions. The application process involves determining if substitutable goods are being produced domestically, as defined by sections 269D, 269E, and 269F of the Act. Once the CEO is satisfied that the application complies with these criteria, a TCO is issued, granting a tariff concession as specified in the Customs Tariff Act 1995. The scope of the Act is federal, applying across the Commonwealth of Australia, and it does not affect existing rights or impose liabilities on individuals or entities prior to the issuance of the TCO. However, importers stand to benefit from this legislation as they may apply for duty refunds on goods imported since the TCO came into effect.
Key Provisions
The key operative sections of the Tariff Concession Instrument No. 1131308 under the Customs Act 1901 include section 269F (2), which allows a person to apply to the Chief Executive Officer of Customs (CEO) for a Tariff Concession Order (TCO) in respect of goods, and section 269C, which sets out the core criteria that the application must meet (section 269C). Section 269P(3) of the Act requires that if the CEO is satisfied that the application meets the core criteria, they must make a written order (a TCO) declaring that the goods in question are subject to a specified item of Schedule 4 to the Customs Tariff Act 1995 (section 269P(3)). This instrument, TCO No 1131308, was made on 12 December 2011 and declares that certain metal slitting knives are subject to a zero rate of duty, as opposed to the general rate of 5% (section 269P(3)).
The Customs Act 1901 imposes specific obligations on parties applying for a TCO, including ensuring that the goods in question are not specified in section 269SJ, which lists goods that cannot be subject to a TCO. The applicant must also demonstrate that, on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business (section 269C). The CEO must publish a notice in the Gazette, inviting submissions from any interested parties who may object to the making of the TCO (subsection 269K(1)). Additionally, the CEO must ensure that the TCO does not affect the rights of any person, other than the Commonwealth, as at the date of registration (subsection 269S(1)).
There are no specific offences outlined in the Customs Act 1901 in relation to the making of a TCO, but any breaches of the conditions or misrepresentations made in an application could potentially lead to civil or criminal consequences. For example, providing false information in an application could be considered fraud, which under section 288 of the Customs Act 1901, carries a maximum penalty of 10 years imprisonment or a fine of up to 120,000 penalty units, or both (subsection 288(2)). Additionally, failure to comply with the conditions of a TCO could result in financial penalties, such as the imposition of duty or the requirement to pay interest on unpaid duty.