EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1131325
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 (AIS) Pty Ltd applied for a TCO in respect of certain blast furnace valve repaired parts on 14 September 2011.
Instrument
TCO No 1131325 was made on 12 December 2011. It declares that those certain blast furnace valve repaired 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. 1131325 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, enacted by the Parliament of Australia, establishes a framework for the administration of customs duties and the regulation of imports and exports. Within this framework, Part XVA of the Act provides for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO). This mechanism allows for the reduction or exemption of customs duty on certain goods, provided specific criteria are met. The problem or gap addressed by this legislation is the facilitation of trade and economic efficiency by allowing for reduced customs duties on goods that are not produced domestically or are not readily substitutable by Australian-made alternatives. The policy objective is to encourage the import of certain goods by making them more competitively priced relative to local substitutes. The explanatory statement details the process and conditions under which TCOs are granted, including public consultation requirements and the effective date of the concession.
Scope and Application
The Tariff Concession Instrument No. 1131325, made under the Customs Act 1901, applies specifically to certain blast furnace valve repaired parts, providing a lower rate of customs duty for these goods. The Act facilitates applications for Tariff Concession Orders (TCOs) by private entities, such as Bluescope Steel (AIS) Pty Ltd in this instance, for goods not produced in Australia in the ordinary course of business. This instrument extends to the Commonwealth jurisdiction, impacting the customs duty rates for the specified goods. Exclusions are noted in section 269SJ of the Act, which outlines goods that cannot be subject to a TCO. The TCO process involves the Chief Executive Officer of Customs making a written order if the application meets the core criteria, as defined under sections 269C and 269F of the Act, and there are no substitutable goods produced domestically. The TCO came into effect on 14 September 2011, the date the application was lodged, and does not retroactively disadvantage or impose liabilities on any person except the Commonwealth.
Key Provisions
The Tariff Concession Instrument No. 1131325, made under the Customs Act 1901, pertains specifically to Tariff Concession Orders (TCOs) (s 269C, s 269F). This instrument establishes that certain blast furnace valve repaired parts will benefit from a lower rate of customs duty as a result of the TCO, with the general rate of duty being 5% and the rate under the TCO being free (s 269P(3)). This means that importers of these specific parts will not need to pay the standard customs duty, thereby reducing their overall costs. The instrument was published in the Gazette, providing an opportunity for objections, although none were received (s 269K(1)).
The obligations imposed by this Act on the parties involved are primarily procedural. For instance, the Chief Executive Officer of Customs (CEO) must ensure that the application for a TCO does not pertain to goods that are explicitly excluded under section 269SJ of the Act (s 269F). Once an application is deemed valid, the CEO must make a written order if satisfied that no substitutable goods are produced in Australia (s 269C). This entails a rigorous evaluation to confirm that no local alternatives exist that could serve the same purpose as the imported goods.
Should any party fail to adhere to the provisions of the Customs Act 1901 or the associated regulations, there may be significant consequences. Breaches of the Act can lead to both civil and criminal penalties. For example, failure to comply with the duty requirements could result in fines or imprisonment. While the specific penalties for breaches are not detailed in the explanatory statement, they are typically severe under Australian law, reflecting the importance of adhering to customs regulations.
Additionally, while the TCO does not impose new liabilities on individuals or entities other than the Commonwealth, it does alter the duty rates applicable to certain imported goods. Importers stand to benefit from this change, as they may now import these goods without incurring the standard customs duty, provided they comply with all other relevant regulations and procedures under the Act.