EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1135188
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 applied for a TCO in respect of certain clean in place skid machines on 12 October 2011.
Instrument
TCO No 1135188 was made on 04 January 2012. It declares that those certain clean in place skid machines 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. 1135188 is taken to have come into force on 12 October 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. 1135188 was enacted in 2012 under the Customs Act 1901 to address the need for tariff concessions for specific goods. The Customs Act 1901 allows for the establishment of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs, which provide for a lower rate of customs duty on certain goods. The problem this legislation aims to address is the facilitation of imports for goods where no substitutable Australian-made alternatives exist, thereby supporting industry and economic activity. The instrument was developed by the Chief Executive Officer of Customs, following an application by Bluescope Steel for tariff concessions on certain clean-in-place skid machines. The instrument was published in the Gazette with no objections, and it came into effect on the date of the application, 12 October 2011. The policy objective is to ensure that Australian importers of these goods are not disadvantaged and can benefit from reduced customs duty rates.
Scope and Application
The Tariff Concession Instrument No. 1135188 under the Customs Act 1901 applies to the concession of customs duty rates on specific goods, in this case certain clean in place skid machines, which are granted a lower rate of duty or even duty-free status upon the application and approval by the Chief Executive Officer of Customs. The Act enables an application process where individuals or entities can seek tariff concessions for goods that are not being produced domestically in the ordinary course of business and for which there are no substitutable goods. The instrument directly affects importers of these specified goods, providing them with potential duty refunds for imports made from the date the TCO was lodged. The scope of this legislation is confined to the Commonwealth level and extends its reach to any entity or individual engaged in the import of the specified goods. The application of the TCO does not disadvantage any person by affecting their rights as of the date of registration, nor does it impose any liabilities on any person, ensuring that the benefits of the concession are confined to the importers of the specified goods. The instrument also adheres to the requirement of publishing a notice in the Gazette to invite submissions from interested parties, although in this instance, no submissions were received.
Key Provisions
The Customs Act 1901, specifically Part XVA, establishes a framework through which Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs (CEO) (section 269F). An application for a TCO can be submitted by any person for goods, provided these goods are not those specified in section 269SJ, which are ineligible for tariff concessions. The CEO must then determine if the application meets the core criteria, as outlined in section 269C, which stipulates that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged. Definitions for key terms, such as "goods produced in Australia," "ordinary course of business," and "substitutable goods," are provided in sections 269D, 269E, and 269F respectively. If the CEO is satisfied that the application meets these criteria, a written order, or TCO, is issued under section 269P(3), specifying the reduced rate of customs duty applicable to the goods in question.
The obligations imposed by the Customs Act 1901 on the parties involved are primarily centred around the application and approval processes for TCOs. The applicant must ensure that their submission meets all specified criteria and that the goods in question do not fall under the ineligible category outlined in section 269SJ. The CEO, on the other hand, has the duty to review applications promptly, consult with relevant stakeholders, and publish notices in the Gazette to invite any objections to the proposed TCO. If the CEO determines that an application meets the core criteria, they must issue the TCO as required by section 269P(3). Additionally, any person who believes a TCO should not be granted has the opportunity to lodge a submission with the CEO.
The Customs Act 1901 does not explicitly outline specific offences, penalties, or civil/criminal consequences for breach of its provisions regarding TCOs. However, general provisions of the Act and related legislation may apply in cases of non-compliance or misuse of tariff concessions. Any person found to be in breach of customs laws, including fraudulent applications for TCOs or incorrect claims for duty refunds, could face penalties under the Customs Act 1901 or the Crimes Act 1914. These penalties may include fines and imprisonment, with the exact penalties depending on the nature and severity of the offence. The Act also provides for the recovery of any overpaid duties and interest.