EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1138153
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 cooling units on 15 November 2011.
Instrument
TCO No 1138153 was made on 08 February 2012. It declares that those certain cooling units 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. 1138153 is taken to have come into force on 15 November 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 Australian Parliament, provides a framework for the administration of customs and excise duties, including the ability for the Chief Executive Officer of Customs (CEO) to make Tariff Concession Orders (TCOs) which allow for reduced customs duty rates on certain goods. This legislation was designed to address the problem of ensuring that Australian industries can access necessary goods at a reduced cost, thereby promoting economic efficiency and competitiveness. TCO No. 1138153, made under this Act, specifically addresses an application by Bluescope Steel for tariff concessions on certain cooling units, reflecting the policy objective of providing tariff relief where Australian production of substitutable goods is not feasible. The instrument was introduced without any submissions opposing it, and it came into effect on the date the application was lodged, 15 November 2011. The concessions granted under this TCO benefit importers by allowing them to apply for refunds of duty paid on the specified goods imported since the effective date, without imposing any new liabilities on any person.
Scope and Application
The Customs Act 1901, through its Tariff Concession Orders (TCO) scheme, applies to individuals or entities seeking tariff concessions on goods imported into Australia. Specifically, under this scheme, the Chief Executive Officer of Customs (CEO) can grant lower customs duty rates on goods if certain criteria are met. The primary criterion, as outlined in section 269C, requires that the goods subject to the TCO application are not substitutable by goods produced in Australia in the ordinary course of business. This scheme is triggered when an applicant, such as Bluescope Steel in this case, submits an application for a TCO, which the CEO evaluates against the core criteria stipulated in the Act. If satisfied, the CEO issues a written order that specifies the goods and the reduced customs duty rate. The application process includes a public notice period in the Gazette for any interested parties to object to the TCO, although no objections were raised in this instance. The TCO's effect is retrospective to the date of the application, meaning that importers can seek refunds for duties paid on the specified goods from that date. Importantly, the TCO does not alter any pre-existing rights or liabilities of individuals or entities, except for the beneficial adjustment of import duties for those importing the specified goods.
Key Provisions
The main operative sections of Tariff Concession Instrument No. 1138153 under the Customs Act 1901 include sections 269C, 269B, 269D, 269E, 269F, 269P(3), and 269K(1). Section 269F allows a person to apply to the Chief Executive Officer of Customs (CEO) for a Tariff Concession Order (TCO) in respect of goods, provided the goods are not specified in section 269SJ. If the CEO determines that the application meets the core criteria, as outlined in section 269C, which require that no substitutable goods were produced in Australia on the day the application was lodged, the CEO must make a written TCO. This TCO declares that the goods are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995, effectively reducing the customs duty rate for those goods.
The obligations imposed by the Act on the parties or entities it governs primarily involve the application process for a TCO. An applicant must ensure their goods are not specified in section 269SJ and must provide sufficient evidence that no substitutable goods were produced in Australia at the time of application. The CEO is obligated to review the application, make a decision based on the core criteria, and publish a notice in the Gazette inviting submissions from any interested parties. Once the TCO is made, the CEO must ensure that the rights of non-Commonwealth parties are not adversely affected, and importers of the affected goods are allowed to apply for a refund of duties paid before the TCO's effective date.
Offences and penalties for breaches under the Customs Act 1901 may include both civil and criminal consequences. For instance, if a party knowingly provides false information in an application for a TCO, this could be considered a criminal offence. The maximum penalties for such offences are not specified within the explanatory statement but generally, they can include substantial fines and, in severe cases, imprisonment. Additionally, civil penalties may apply for non-compliance with the Act’s provisions, such as failing to report duties correctly or misusing the tariff concessions, which could result in financial penalties and legal actions to recover unpaid duties.