EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1131357
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) Ltd applied for a TCO in respect of certain journal oil film compressor repaired bearings on 14 September 2011.
Instrument
TCO No 1131357 was made on 12 December 2011. It declares that those certain journal oil film compressor repaired bearings 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. 1131357 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 Tariff Concession Instrument No. 1131357, enacted in 2011, amends the Customs Act 1901 by providing a concession on customs duty for certain journal oil film compressor repaired bearings, as applied by Bluescope Steel (AIS) Ltd. This legislative instrument was introduced to address the need for tariff concessions where no substitutable goods are produced in Australia, thus promoting fair trade and economic efficiency. The Customs Act 1901, enacted by the Parliament of Australia, aims to regulate the importation and exportation of goods, and under this framework, the Chief Executive Officer of Customs (CEO) has the authority to issue Tariff Concession Orders (TCOs). The policy objective behind this specific TCO is to reduce the customs duty on the specified goods to zero, thereby benefiting importers and potentially encouraging the importation of these goods into Australia. The CEO's decision to grant the concession was based on the absence of substitutable goods produced domestically, as outlined in the Act.
Scope and Application
The Customs Act 1901, through Part XVA, facilitates the issuance of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO), which provide for reduced customs duty on specified goods. An entity or individual may apply for a TCO if the goods in question are not prohibited by section 269SJ of the Act and meet the core criteria outlined in section 269C, which requires that no substitutable goods are produced in Australia at the time of application. The CEO must then determine whether the application meets these criteria and, if so, issue a TCO. TCO No 1131357, made on 12 December 2011, pertains to certain journal oil film compressor repaired bearings, reducing the general duty rate of 5% to free duty under item 50 of Schedule 4 to the Customs Tariff Act 1995. This concession applies from the date the application was lodged, 14 September 2011, and does not affect the rights of any person as at the registration date nor impose liabilities for actions taken prior to registration. The application process mandates the CEO to publish a notice in the Gazette inviting submissions from interested parties, although no submissions were received for this particular TCO.
Key Provisions
The Tariff Concession Order No. 1131357, made under section 269P of the Customs Act 1901 (the Act), pertains to certain journal oil film compressor repaired bearings, specifying that these goods are subject to a zero rate of customs duty under item 50 of Schedule 4 to the Customs Tariff Act 1995 (the Tariff). This concession is applicable from the date the application was lodged, 14 September 2011 (section 269S(1)). The general rate of duty for these goods, if not subject to the TCO, is 5%. The order was made following an application by Bluescope Steel (AIS) Ltd and the Chief Executive Officer of Customs’ determination that no substitutable goods were produced in Australia on the application date (sections 269C and 269P(3)).
The Act imposes certain obligations on both the applicant and the Chief Executive Officer of Customs (CEO). For the applicant, the obligation is to ensure that the application for a Tariff Concession Order (TCO) is made in accordance with the provisions of the Act, specifically detailing the goods and the reasons why the concession should apply (section 269F). For the CEO, the obligation is to review the application, verify that it meets the core criteria, and, if satisfied, make a written TCO (section 269P(3)). Additionally, the CEO must publish a notice in the Gazette inviting submissions from interested parties regarding the application, although no submissions were received in this case (subsection 269K(1)).
The Act does not specify penalties for failure to comply with the provisions relating to TCOs. However, non-compliance with the customs duty provisions generally could result in civil or criminal penalties. For instance, incorrect declarations or fraudulent statements related to customs duties can lead to substantial fines and, in severe cases, imprisonment. The specific penalties would depend on the nature and extent of the breach, with the maximum penalties for serious offences potentially reaching up to 10 years imprisonment under the Crimes Act 1914, depending on the severity of the offence.