EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0514334
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 heave and/or motion compensators on 14 October 2005.
Instrument
TCO No 0514334 was made on 06 February 2006. It declares that those certain heave and/or motion compensators 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. 0514334 is taken to have come into force on 14 October 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, specifically through the introduction of Tariff Concession Orders (TCOs) under Part XVA, was enacted to provide a mechanism for the Chief Executive Officer of Customs to grant tariff concessions on certain goods, thereby addressing a gap in the customs duty regime. The Customs Act 1901 was amended to allow for these concessions where no substitutable goods are produced in Australia, thus facilitating trade by reducing the customs duty on specific imported goods. The objective of this legislative framework is to encourage the import of goods that are not domestically produced and to promote economic efficiency by ensuring that Australian consumers and businesses have access to a wider range of goods at a lower cost. The policy objective is to enhance the competitiveness of Australian industries by mitigating the impact of customs duties on imported goods that do not have Australian alternatives.
Scope and Application
The Customs Act 1901, as amended, provides a framework for the application of tariff concession orders (TCOs) under Part XVA, which specifically applies to individuals and entities seeking lower rates of customs duty on goods. The Act empowers the Chief Executive Officer of Customs to make these orders, provided certain criteria are met, including that the goods in question are not already produced in Australia and do not have substitutable goods available domestically. The scope of the Act is national, applying across all jurisdictions in Australia, and it extends to any individual or entity that meets the eligibility requirements for applying for a TCO. There are specific exclusions, such as goods listed in section 269SJ of the Act, which cannot be subject to a TCO. The Act allows for further regulation and specification through subordinate instruments, which can include additional criteria or conditions for TCOs. The process involves public consultation, where interested parties can submit objections to the proposed concession before it is finalised. The application of the TCO is backdated to the date of the application, ensuring that no party is disadvantaged by the concession.
Key Provisions
The main operative sections of the Tariff Concession Instrument No. 0514334 (referred to as the Instrument) under the Customs Act 1901 (the Act) focus on the establishment of Tariff Concession Orders (TCOs) for specific goods, thereby reducing their customs duty rate. Section 269F allows for an application to the Chief Executive Officer of Customs (CEO) for a TCO in respect of goods, provided the goods are not specified in section 269SJ, which outlines goods ineligible for a TCO (Section 269F). The CEO must then assess whether the application meets the core criteria outlined in section 269C, which requires that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged (Section 269C). If these criteria are satisfied, the CEO must make a written order (a TCO) specifying that the goods are subject to a prescribed item in Schedule 4 to the Customs Tariff Act 1995 (Section 269P(3)).
The Instrument imposes several obligations and requirements on the parties it governs. The CEO must ensure that the TCO application does not pertain to goods that are ineligible for tariff concessions as specified in section 269SJ. Additionally, the CEO must verify that no substitutable goods were produced in Australia on the day the application was lodged. The CEO must also publish a notice in the Gazette inviting any person who considers that there are reasons why the TCO should not be made to lodge a submission (Section 269K(1)). If the CEO is satisfied that the application meets the core criteria, they must make a written order declaring that the goods are subject to the specified tariff item.
Breaching the provisions of the Customs Act 1901 can lead to various civil and criminal consequences. While the specific penalties for breaches are not detailed in the explanatory statement, the Act generally allows for penalties, including fines and imprisonment, for non-compliance with its requirements. The severity of the penalty can depend on the nature and extent of the breach. For instance, under section 269 of the Customs Act, any person who makes a false statement in an application for a TCO may be subject to criminal penalties, including fines and imprisonment. It is important for applicants and the CEO to adhere strictly to the provisions of the Act to avoid such consequences.
The Instrument, by declaring certain heave and/or motion compensators as goods to which item 50 of Schedule 4 to the Tariff applies, effectively reduces the customs duty on these goods from 5% to free, benefiting importers. The rights of importers will be beneficially affected, as they can apply for a refund of duty on goods imported since the day the TCO is taken to have come into force (Regulation 126(1)(r)). Importantly, the TCO does not impose any liabilities on any person and 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 in respect of anything done or omitted to be done before the date of registration.