EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0510514
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 Subsea Well Christmas Trees on 9 August 2005.
Instrument
TCO No 0510514 was made on 21 October 2005. It declares that those certain Subsea Well Christmas Trees 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 0%.
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. 0510514 is taken to have come into force on 9 August 2005.
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 to regulate and manage customs duties, providing a structured framework for the collection and administration of these duties. The Act allows for the creation of Tariff Concession Orders (TCOs) under its Part XVA, aimed at facilitating trade by offering reduced customs duty rates on specific goods. The problem this legislation addresses is the potential for high tariffs to impede trade and economic growth by increasing the cost of imported goods. The policy objective is to promote economic efficiency by reducing duties on certain goods where no suitable Australian-made alternatives exist, thus encouraging trade and investment. The Customs Act 1901 was enacted by the Australian Parliament, and the specific TCO No. 0510514 was issued under the authority of the Chief Executive Officer of Customs, in response to an application by Woodside Energy Ltd for tariff concessions on Subsea Well Christmas Trees. This instrument effectively reduced the duty on these goods from 5% to 0%, effective from 9 August 2005, the date the application was lodged.
Scope and Application
The Customs Act 1901, specifically Part XVA, facilitates the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs, which apply reduced rates of customs duty on specified goods. An applicant, such as a company like Woodside Energy Ltd, may seek a TCO if the goods in question are not listed in section 269SJ of the Act, which excludes certain goods from eligibility. For a TCO to be granted, the Act mandates that no substitutable goods are being produced in Australia in the ordinary course of business as of the date the application is lodged. This requirement is defined in sections 269C, 269D, 269E, and 269F of the Act. Once the CEO is satisfied that the application meets these criteria, they must issue a written TCO. For instance, TCO No. 0510514 was issued for certain Subsea Well Christmas Trees, reducing their duty rate from 5% to 0%. This order came into effect on 9 August 2005, the date the application was lodged, and benefits importers by allowing them to apply for duty refunds on goods imported since that date. Notably, the TCO does not disadvantage or impose liabilities on any person for actions taken before its registration.
Key Provisions
The main operative sections of the Tariff Concession Instrument No. 0510514 are sections 269C, 269P, and 269S. Section 269C defines the core criteria for making a Tariff Concession Order (TCO) which requires, among other things, that no substitutable goods are produced in Australia on the day the application was lodged. Section 269P(3) mandates that if the Chief Executive Officer (CEO) of Customs is satisfied that the application meets these core criteria, they must make a written order (a TCO) declaring that the goods are subject to a specified concession in the Customs Tariff Act 1995. Section 269S(1) provides that a TCO is taken to have come into force on the day on which the application for the TCO was lodged.
The Act imposes specific obligations on the CEO of Customs. Upon receiving an application for a TCO, the CEO must determine whether it meets the core criteria outlined in section 269C. If the application meets these criteria, the CEO is required to make a written order, as stipulated in section 269P(3). Additionally, under section 269K(1), the CEO must publish a notice in the Gazette inviting submissions from any person who believes there are reasons why the TCO should not be made. The CEO must also ensure that the rights of any person are not adversely affected by the TCO, as per section 269S(2).
Breaching the requirements of the Customs Act 1901 can result in civil and criminal penalties. For example, knowingly or recklessly making a false statement in an application for a TCO could lead to criminal charges. Under section 269Q of the Act, an individual who commits such an offence is liable to a penalty of up to 10,000 penalty units or imprisonment for up to five years, or both. Furthermore, any person who intentionally contravenes a provision of the Customs Act 1901 could face penalties as prescribed in the Act, which may include fines or imprisonment. It is essential for all parties involved to adhere to the provisions of the Act to avoid these legal consequences.