EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0516807
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.
Santos Pty Ltd applied for a TCO in respect of a certain drilling rig on 14 December 2005.
Instrument
TCO No 0516807 was made on 10 March 2006. It declares that the certain drilling rig is a 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. 0516807 is taken to have come into force on 14 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 Tariff Concession Instrument No. 0516807, enacted in 2006 under the Customs Act 1901, was introduced to address the need for tariff concessions on specific imported goods. The Act, enacted by the Australian Parliament, allows the Chief Executive Officer of Customs to issue Tariff Concession Orders (TCOs) that reduce customs duty rates on certain goods, provided these goods are not produced in Australia in the ordinary course of business and no substitutable goods are available domestically. The policy objective is to support industries by making imported goods more competitively priced against locally produced alternatives, thereby potentially benefiting importers who can claim refunds for duties paid on these goods since the instrument's effective date. The instrument came into force on the date of application, 14 December 2005, and does not disadvantage any person or impose new liabilities.
Scope and Application
The Tariff Concession Instrument No. 0516807 pertains to the Customs Act 1901, which governs the administration of customs and excise duties in Australia. This specific instrument, made by the Chief Executive Officer of Customs under section 269F, applies to the concession of customs duties for goods specified in the instrument. The instrument was created in response to an application from Santos Pty Ltd for tariff concessions on a certain drilling rig, and it applies to the goods identified in the instrument, provided that no substitutable goods are produced in Australia. The geographic reach of this Act is national, as it applies across the Commonwealth of Australia. The Act does not impose any liabilities or disadvantage any person except the Commonwealth and is designed to benefit importers by potentially allowing them to apply for a refund of duty on the specified goods since the effective date of the concession. The instrument also includes provisions for public consultation, although in this case, no submissions were received. The instrument came into force on 14 December 2005, the date the application was lodged, as stipulated in the Customs Act 1901.
Key Provisions
The primary operative sections of this legislation (section 269F) allow a person to apply to the Chief Executive Officer (CEO) of Customs for a Tariff Concession Order (TCO) in respect of goods. If the CEO determines that the application is valid and meets the core criteria, they must make a written order that declares the goods in question are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995. For the purposes of this legislation, a TCO application meets the core criteria if, on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business (section 269C). The CEO must also satisfy themselves that the goods are not specified in section 269SJ of the Customs Act 1901, which sets out goods that cannot be the subject of a TCO. If these conditions are met, the CEO must make a TCO and declare the goods to which a prescribed item of Schedule 4 to the Tariff applies (subsection 269P(3)).
The obligations imposed by this Act on the parties or entities it governs are primarily those of the CEO of Customs. If a valid TCO application is lodged, the CEO must determine whether the application meets the core criteria and, if so, make a written order (section 269F). The CEO must also publish a notice in the Gazette inviting any interested party to lodge a submission as to why the TCO should not be made (subsection 269K(1)). If no submissions are received, the CEO is required to make the TCO. The CEO is also required to ensure that 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 in respect of anything done or omitted to be done before the date of registration.
There are no specific offences, penalties, or civil/criminal consequences mentioned for breach of this Act. However, if a TCO is made in error, it could potentially lead to financial losses for the Commonwealth due to the reduced rate of customs duty applied to the goods. The Act does not specify any particular maximum penalties for breach, but any legal action or recourse would likely be pursued through the general provisions of the Customs Act 1901 or other relevant legislation.