EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0411587
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.
Woodside Energy Ltd applied for a TCO in respect of certain seamless line pipes on 4 November 2004.
Instrument
TCO No 0411587 was made on 1 February 2005. It declares that those certain seamless line pipes 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 3%.
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. 0411587 is taken to have come into force on 4 November 2004.
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 Australian Parliament to regulate the import and export of goods in Australia, including the collection of customs duties and the administration of tariff concessions. The Act establishes a framework for the imposition of tariffs on imported goods and provides mechanisms for the reduction or exemption of these tariffs under certain conditions. One of these mechanisms is the creation of Tariff Concession Orders (TCOs), which can be applied for by individuals or entities to reduce the duty on specific goods. The problem or gap addressed by the introduction of TCOs is to provide a means for the relief of customs duties on goods that are not produced domestically or for which there are no substitutable goods produced in Australia, thereby promoting economic efficiency and competitiveness. The policy objective of TCOs is to encourage the importation of goods that are not readily available in the Australian market, supporting industries that rely on such imports and potentially lowering costs for consumers.
Scope and Application
The Customs Act 1901, specifically under Part XVA, establishes a framework through which Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs. This Act applies to individuals or entities that seek to reduce the customs duty on imported goods by applying for a TCO, provided the goods are not specified in section 269SJ of the Act as ineligible. The application process involves satisfying the core criteria outlined in section 269C, which necessitates that no substitutable goods were produced in Australia at the time of application. The TCOs are applicable nationally and their issuance follows the principles defined in the Customs Tariff Act 1995. For example, TCO No. 0411587 pertains to certain seamless line pipes, reducing the duty rate from 5% to 3%. The application of such concessions does not retroactively affect the rights or liabilities of any party other than the Commonwealth, ensuring that only future transactions benefit from the reduced duty rates.
Key Provisions
The primary operative sections of the Customs Act 1901, specifically under Part XVA, provide the framework for the creation and application of Tariff Concession Orders (TCOs). Section 269F allows an individual to apply to the Chief Executive Officer of Customs (CEO) for a TCO in respect of goods. If the application does not pertain to goods specified in section 269SJ, which lists those goods ineligible for a TCO, the CEO must then evaluate the application against the core criteria outlined in section 269C. For the CEO to deem an application successful, it must be established that, on the date the application was submitted, no substitutable goods were produced in Australia in the ordinary course of business, as defined by sections 269D, 269E, and 269F.
The obligations imposed by the Act on the CEO and applicants are significant. Once a TCO application is deemed valid, the CEO is mandated to publish a notice in the Gazette, inviting any interested parties to submit reasons why the TCO should not proceed, as per subsection 269K(1). This ensures transparency and public participation in the process. The CEO must also ensure that any TCO made applies to goods that meet the criteria specified in section 269C, thereby preventing the concession from being applied to goods that could be domestically produced.
In terms of penalties and consequences, the Act does not explicitly detail specific offences related to the misuse or fraudulent application for a TCO. However, any breaches of the customs regulations or fraudulent activities associated with the importation or declaration of goods can lead to severe civil or criminal penalties under other sections of the Customs Act. The Act generally allows for significant fines and imprisonment for serious breaches, reflecting the importance of compliance with customs regulations.
The Tariff Concession Instrument No. 0411587, which was applied for by Woodside Energy Ltd on 4 November 2004, is a practical example of these provisions in action. The CEO issued the TCO on 1 February 2005, recognising that no substitutable goods were being produced in Australia. This TCO reduced the duty rate on certain seamless line pipes from 5% to 3%. The TCO came into effect on the date of application, 4 November 2004, and did not retroactively disadvantage any parties or impose liabilities on them. This concession beneficially affected importers, who could apply for duty refunds on goods imported since the TCO's effective date.