EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0516331
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 applied for a TCO in respect of certain flowline connection remote operated tools on 22 December 2005.
Instrument
TCO No 0516331 was made on 17 March 2006. It declares that those certain flowline connection remote operated tools 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. 0516331 is taken to have come into force on 22 December 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, enacted by the Parliament of Australia, was amended to include the scheme for Tariff Concession Orders (TCOs) to address the issue of applying lower rates of customs duty to specific goods. The 2006 Tariff Concession Instrument No. 0516331 under this Act pertains specifically to the application by Woodside Energy for a TCO concerning certain flowline connection remote operated tools. The Chief Executive Officer of Customs, having satisfied the core criteria set out in section 269C of the Act, declared that no substitutable goods were produced in Australia for these tools. Consequently, the Instrument No. 0516331 was issued, effective from the date of application, 22 December 2005, granting a free rate of duty for these goods as opposed to the general rate of 5%. The policy objective here is to facilitate easier access to certain goods by reducing their customs duty, thereby potentially boosting trade and economic activity related to these specific tools.
Scope and Application
The Customs Act 1901, specifically under Part XVA, provides the framework for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs. This legislation applies to individuals or entities seeking a reduction in customs duty on specific goods, provided these goods are not explicitly excluded under section 269SJ of the Act. The Act mandates that an application for a TCO will only be considered if, on the date of the application, there are no goods produced in Australia that could substitute the goods in question. This application process is contingent on satisfying the core criteria as outlined in section 269C, which includes the absence of substitutable goods produced in Australia in the ordinary course of business. The geographic and jurisdictional reach of this Act is national, operating within the Commonwealth of Australia, and it applies to any entity or individual that imports goods eligible under the TCO scheme. While the Act itself delineates the main principles and criteria, the specific details and further clarifications may be elaborated through subordinate instruments, thereby extending or restricting its application as necessary. Notably, the Act ensures that the implementation of a TCO does not retroactively disadvantage any person or impose liabilities for actions taken prior to the TCO's effective date.
Key Provisions
The primary operative sections of this legislation are sections 269F, 269C, 269B, 269E, 269D, 269P(3), and 269SJ of the Customs Act 1901. Section 269F allows a person to apply to the Chief Executive Officer of Customs (CEO) for a Tariff Concession Order (TCO). If the application does not pertain to goods specified in section 269SJ, the CEO must assess whether the application meets the core criteria set out in sections 269C and 269B. Specifically, these sections require that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged. If the CEO is satisfied that the application meets these criteria, they must issue a TCO, as specified in section 269P(3). This order declares that the goods in question are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995, resulting in a concessional rate of duty.
The Act imposes specific obligations on both the applicant and the CEO. The applicant must ensure that the goods they are applying for a TCO are not listed in section 269SJ, and they must provide sufficient evidence that no substitutable goods were produced in Australia in the ordinary course of business on the application date. The CEO is obligated to assess the application against the core criteria, and if satisfied, to make a written TCO. Additionally, under subsection 269K(1), the CEO must publish a notice in the Gazette inviting any interested parties to submit objections to the TCO.
Failure to comply with the provisions of the Act may result in legal consequences. While the explanatory statement does not detail specific offences or penalties, breaches of customs regulations generally can lead to civil and criminal penalties. For instance, non-compliance with customs duty obligations can result in financial penalties and, in severe cases, criminal charges. The maximum penalties for breaches of the Customs Act can include substantial fines and imprisonment, depending on the severity and intent behind the breach.
In summary, the legislation outlines a clear process for applying for and issuing a TCO, with specific criteria and obligations for both the applicant and the CEO. The consequences for failing to adhere to these provisions can be significant, both in terms of financial penalties and potential criminal charges.