EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1139716
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 assemblies on 29 November 2011.
Instrument
TCO No 1139716 was made on 15 February 2012. It declares that those certain assemblies 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. 1139716 is taken to have come into force on 29 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 was enacted by the Parliament of Australia to regulate the importation and exportation of goods and to collect customs duty. To address the need for flexible tariff arrangements, Part XVA of the Act was introduced, allowing for Tariff Concession Orders (TCOs) to be made by the Chief Executive Officer of Customs. This mechanism provides for a lower rate of customs duty on goods specified in a TCO, provided certain criteria are met. Specifically, a TCO may be granted if no substitutable goods are produced in Australia at the time of the application. The objective of this legislation is to promote economic efficiency by allowing for reduced tariffs where appropriate, thereby encouraging trade and industry development. This was exemplified by Tariff Concession Instrument No. 1139716, which was made on 15 February 2012, following an application by Bluescope Steel for a TCO on certain assemblies, resulting in a reduction of the duty rate from 5% to free.
Scope and Application
The Tariff Concession Instrument No. 1139716 under the Customs Act 1901 applies specifically to the application process for Tariff Concession Orders (TCOs), which are intended to lower the rate of customs duty on certain goods. The Act applies to entities and individuals who wish to apply for a TCO for specific goods not produced in Australia, thereby ensuring no domestic industry is unfairly disadvantaged. This instrument is part of a broader scheme established under Part XVA of the Customs Act 1901, which allows the Chief Executive Officer of Customs to make TCOs upon receiving an application from a person or entity, provided that the application meets the criteria outlined in the Act and does not pertain to goods excluded under section 269SJ. The application process mandates that no substitutable goods should be produced in Australia at the time the application is made, as per section 269C. The geographic reach of this legislation is Commonwealth-wide, as it pertains to the Customs Act 1901, which applies across Australia. The Act extends its application through subordinate instruments, such as the Customs Tariff Act 1995, which provides the prescribed tariff items that can be applied to the goods in question. The commencement of TCO No. 1139716 is effective from 29 November 2011, the date the application was lodged, and it does not disadvantage any person or impose liabilities for actions taken before its effective date.
Key Provisions
The main operative sections of the Tariff Concession Instrument No. 1139716, as referenced in the Customs Act 1901, include sections 269C, 269F, 269P, and 269S. Section 269F allows for an application to be made to the Chief Executive Officer (CEO) of Customs for a Tariff Concession Order (TCO) in respect of goods. If the CEO is satisfied that the application meets the core criteria, which are outlined in section 269C, they must then make a written order, as stipulated in section 269P(3). Section 269S provides the effective date of the TCO, which is the same as the date the application was lodged.
The Act imposes specific obligations and requirements on both the applicant and the CEO. The applicant must ensure that the goods for which the TCO is sought are not specified in section 269SJ of the Act, which lists goods that cannot be subject to a TCO. The applicant must also satisfy the CEO that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged. The CEO, on their part, is required to make a decision on whether the application meets the core criteria and must publish a notice in the Gazette inviting submissions from any interested parties. If no submissions are received, the CEO proceeds to make the TCO.
Breaching the requirements of the Act or the terms of a TCO can lead to both civil and criminal consequences. While specific offences and penalties are not detailed in the explanatory statement, it is known that failure to comply with the provisions of the Customs Act 1901 can result in substantial penalties. Typically, under the Customs Act, the maximum penalties for contravening the Act can include fines up to $22,200 and/or imprisonment for up to five years. For civil consequences, breaches may result in financial liabilities, including the payment of duties and charges that would have applied had the TCO not been granted.
In summary, the Tariff Concession Instrument No. 1139716 establishes the conditions under which a TCO can be applied for and granted, outlines the responsibilities of both the applicant and the CEO, and implies the potential for significant penalties for non-compliance with the Act’s provisions.