EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1135314
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 walking beam furnace parts on 21 October 2011.
Instrument
TCO No 1135314 was made on 12 January 2012. It declares that those certain walking beam furnace 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. 1135314 is taken to have come into force on 21 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 Customs Act 1901, enacted by the Parliament of Australia, introduced a scheme for Tariff Concession Orders (TCOs) to address the problem of providing tariff relief on specific goods that are not produced domestically. This scheme allows the Chief Executive Officer of Customs to reduce customs duty on certain goods if it is determined that no substitutable goods are produced in Australia. The policy objective is to encourage the importation of goods that are not domestically manufactured, thereby supporting industries that rely on imported components. Tariff Concession Instrument No. 1135314, issued on 12 January 2012, exemplifies this legislative framework by granting a tariff concession to Bluescope Steel (AIS) Pty Ltd for certain walking beam furnace parts, effectively reducing the duty rate from 5% to free. This measure was implemented without any submissions against it, ensuring that the interests of importers are protected and that no new liabilities are imposed on any person.
Scope and Application
The Tariff Concession Instrument No. 1135314 pertains to the application of a lower rate of customs duty for certain walking beam furnace parts, as specified by the Customs Act 1901. This Act applies to any person or entity seeking to import these specific goods into Australia. The scope of the legislation is focused on the tariff concessions for goods that are not substitutable by Australian-produced items, thereby ensuring that the local manufacturing industry is not unfairly disadvantaged. The application of the Act extends across the Commonwealth, with the tariff concession being a national measure. The Act does not apply to goods specified in section 269SJ, which excludes certain items from tariff concessions. The concessions are determined by the Chief Executive Officer of Customs, who must assess whether an application meets the core criteria, specifically that no substitutable goods are produced in Australia at the time of the application. The commencement of this Tariff Concession Order is deemed to occur on the day the application was lodged, retroactively affecting the rights of importers who can now claim refunds for duties paid on these goods since the effective date. The Act ensures that no existing rights or liabilities of any person are adversely affected by the introduction of this concession.
Key Provisions
The Customs Act 1901, under Part XVA, enables the Chief Executive Officer (CEO) of Customs to create Tariff Concession Orders (TCOs), which reduce the customs duty on specified goods (s 269F). An applicant may submit a TCO application if the goods are not specified in section 269SJ of the Act. The CEO must then determine if the application meets the core criteria outlined in section 269C, which includes ensuring that no substitutable goods are produced in Australia on the day the application was lodged (s 269P(3)). If the CEO is satisfied that the application meets these criteria, a TCO is made, as seen with Tariff Concession Order No. 1135314 concerning certain walking beam furnace parts, which were declared to be subject to a zero percent duty rate under item 50 of Schedule 4 to the Customs Tariff Act 1995.
The CEO must publish a notice in the Gazette after accepting a TCO application, inviting any person who believes the TCO should not be made to submit their reasons (s 269K(1)). The CEO is then required to consider these submissions before deciding whether to make the TCO. In the case of TCO No. 1135314, no submissions were received, leading to the issuance of the TCO. The TCO applies retroactively from the date the application was lodged, which for TCO No. 1135314 was 21 October 2011 (s 269S(1)). Importantly, the TCO does not disadvantage any person other than the Commonwealth or impose any liabilities on such persons for actions taken before the registration date. Instead, it benefits importers by allowing them to apply for a refund of duty paid on the goods imported since the TCO's effective date (Reg 126(1)(r)).
The Customs Act 1901 imposes several obligations on parties involved with TCOs. The CEO is responsible for determining whether an application meets the core criteria for a TCO and for making the TCO if the criteria are met. The applicant must ensure that their application is valid and that they meet all the conditions outlined in the Act, including that no substitutable goods are produced in Australia on the application date. Importers who benefit from a TCO must comply with any conditions set out in the order and can apply for a refund of duty paid on the goods since the TCO's effective date. Additionally, any person who believes a TCO should not be made must lodge a submission with the CEO within the specified timeframe.
Failure to comply with the provisions of the Customs Act 1901 and the associated regulations can result in various consequences. For example, making a false statement in an application for a TCO may lead to a civil penalty of up to 10,000 penalty units (s 283A). Additionally, failing to comply with a TCO or providing false information in an application for a refund of duty can result in penalties under the Crimes Act 1914, including fines and imprisonment. The maximum penalties for these offences vary depending on the specific offence and the circumstances of the case. It is important for all parties to understand and comply with their obligations under the Act to avoid these potential consequences.