EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0613542
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.
Weatherford Australia Ltd applied for a TCO in respect of certain assemblers and joiners and separators and unscrewers on 15 August 2006.
Instrument
TCO No 0613542 was made on 10 November 2006. It declares that those certain assemblers and joiners and separators and unscrewers 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. 0613542 is taken to have come into force on 15 August 2006.
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. 0613542, enacted in 2006 under the Customs Act 1901, was introduced to provide a concession on customs duty for specific goods, thereby addressing the gap where certain imported goods could benefit from reduced tariff rates if no substitutable goods were being produced in Australia. This instrument was developed to facilitate trade by lowering the cost of importing specific items, such as assemblers, joiners, and separators, which were not domestically produced. The Chief Executive Officer of Customs made this decision based on an application from Weatherford Australia Ltd, following a review that confirmed the absence of Australian-made alternatives. The legislation was designed to ensure that the rights of importers are positively impacted, allowing them to seek refunds for duties paid on these goods since the effective date of the tariff concession. This initiative aligns with the broader policy objective of fostering a competitive trade environment by reducing the cost of imported goods when domestic production is not feasible.
Scope and Application
The Tariff Concession Instrument No. 0613542, made under the Customs Act 1901, pertains specifically to the application of Tariff Concession Orders (TCOs) for certain assemblers and joiners and separators and unscrewers. This Act applies to any person or entity that imports the specified goods into Australia and seeks a reduction in the customs duty from the general rate of 5% to 0%. The scope of the Act extends to the industries that rely on these goods, including manufacturing and engineering sectors that utilise these components in their operations. The Act’s jurisdiction is national, given that it operates under the Commonwealth legislation, thus it applies across all states and territories of Australia. The Act does not impose any exclusions or exemptions for these specific goods, provided the application meets the core criteria as outlined in section 269C of the Act, which requires that no substitutable goods are produced in Australia in the ordinary course of business. The application of the Act may be further extended or restricted through subordinate instruments, though none are mentioned in the explanatory statement.
Key Provisions
The key operative sections of the Tariff Concession Instrument No. 0613542 (TCO) under the Customs Act 1901 (sections 269C, 269P, and 269S) outline the process for granting tariff concessions on certain goods. Specifically, section 269F allows for applications to the Chief Executive Officer of Customs (CEO) for tariff concessions. Section 269C stipulates that for an application to meet the core criteria, no substitutable goods should be produced in Australia on the date the application was lodged. Section 269P(3) mandates that if the application meets these criteria, the CEO must issue a written order, or TCO, declaring the specified goods as eligible for the tariff concession. In this instance, the CEO issued TCO No. 0613542, which applies a 0% duty rate to certain assemblers and joiners and separators and unscrewers, effective from the date the application was lodged, 15 August 2006.
The Act imposes several obligations on the parties involved. The CEO must ensure that applications for TCOs are reviewed according to the specified criteria, and if satisfied, issue a written order as mandated by section 269P(3). Additionally, the CEO must publish a notice in the Gazette, inviting submissions from any interested parties who might oppose the concession, as per section 269K(1). The CEO must also ensure that the TCO does not retroactively disadvantage any person or impose new liabilities on anyone for actions taken before the concession came into effect, as outlined in section 269S.
Any breach of the provisions in the Customs Act 1901 or the regulations could result in various penalties. For instance, making false or misleading statements in an application for a tariff concession may constitute an offence under section 238 of the Customs Act. The maximum penalty for this offence is 10,000 penalty units or imprisonment for five years, or both, reflecting the seriousness with which the law treats such breaches. Additionally, failing to comply with the requirements set out in the TCO or the Act could lead to civil consequences, such as the imposition of fines or the requirement to pay back any unlawfully obtained tariff concessions. The precise penalties and consequences would depend on the nature and severity of the breach, as well as any relevant provisions within the Customs Act and related legislation.