EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0618419
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.
Shell (Development) Australia Pty Ltd applied for a TCO in respect of certain riserless drilling mud recovery systems on 10 November 2006.
Instrument
TCO No 0618419 was made on 02 February 2007. It declares that those certain riserless drilling mud recovery systems 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. 0618419 is taken to have come into force on 10 November 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 Customs Act 1901, enacted by the Australian Parliament, establishes a framework for the administration of customs and excise duties and includes provisions for tariff concession orders (TCOs). The Customs Act 1901 was introduced to address the need for a structured system of tariff concessions that could be applied to specific goods, thereby reducing the duty payable on those goods. Instrument No. 0618419, made under the Customs Act 1901, grants a tariff concession to Shell (Development) Australia Pty Ltd for certain riserless drilling mud recovery systems, reducing the duty on these goods from 5% to free. This was achieved after the Chief Executive Officer of Customs determined that no substitutable goods were produced in Australia, meeting the core criteria specified in the Act. The policy objective underpinning this tariff concession is to facilitate the import of goods that are not domestically produced, thus supporting the availability of specialised equipment and technology in Australia.
Scope and Application
The Tariff Concession Instrument No. 0618419 under the Customs Act 1901 applies to Shell (Development) Australia Pty Ltd and specifically to certain riserless drilling mud recovery systems. The application of this instrument is overseen by the Chief Executive Officer of Customs, who must determine whether the conditions outlined in the Act are met before granting a Tariff Concession Order (TCO). The geographic reach of this legislation is national, as it pertains to the Commonwealth of Australia and its customs regulations. Notably, the application does not disadvantage any person other than the Commonwealth and does not impose any liabilities on individuals or entities other than the Commonwealth for actions taken before the order's registration. The TCO grants tariff concessions, reducing the customs duty on the specified goods from the general rate of 5% to free. The Act does not extend its application through subordinate instruments but rather relies on the core criteria stipulated in sections 269C and 269SJ of the Customs Act 1901.
Key Provisions
The Customs Act 1901, particularly Part XVA, outlines the procedure for making Tariff Concession Orders (TCOs) (section 269F). These orders are issued by the Chief Executive Officer of Customs (CEO) and apply to goods for which an application has been submitted and approved, resulting in a lower rate of customs duty (section 269P(3)). The core criteria for a TCO application to be approved are outlined in section 269C. This section requires that on the day the application is lodged, no substitutable goods were produced in Australia in the ordinary course of business. The definitions of key terms such as ‘goods produced in Australia’, ‘ordinary course of business’, and ‘substitutable goods’ are provided in sections 269D, 269E, and 269B respectively. Once the CEO determines that the application meets these core criteria, they must issue a written order (section 269P(3)).
Entities and individuals who apply for a TCO under the Customs Act 1901 must ensure their applications meet the criteria specified in section 269C. They need to demonstrate that the goods in question are not substitutable by any goods produced in Australia in the ordinary course of business. Additionally, the CEO must publish a notice in the Gazette inviting submissions from any person who believes the TCO should not be made, as stipulated in subsection 269K(1). This ensures a level of transparency and opportunity for interested parties to voice their concerns. The obligation to make a TCO rests with the CEO once they are satisfied that the application meets the core criteria.
Failure to comply with the provisions of the Customs Act 1901 in relation to TCOs can result in civil or criminal consequences. While the explanatory statement does not detail specific penalties, breaches of the Act generally attract penalties under the relevant sections of the Act. These can include fines and, in more serious cases, imprisonment. The exact penalties would depend on the nature and severity of the breach, as outlined in other sections of the Customs Act 1901 and related regulations.