EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0619950
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.
Bournedrill Pty Ltd applied for a TCO in respect of certain friction welded drill rods on 18 December 2006.
Instrument
TCO No 0619950 was made on 09 March 2007. It declares that those certain friction welded drill rods 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. 0619950 is taken to have come into force on 18 December 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 Commonwealth Parliament, established a framework for the imposition of customs duties on imported goods. The Act was amended to include Part XVA, which introduced the scheme for Tariff Concession Orders (TCOs) to provide relief from customs duties on certain goods under specific conditions. This initiative aimed to support Australian industries by reducing the duty on imported goods where no substitutable domestic product exists, thereby promoting fair competition and economic efficiency. The Tariff Concession Instrument No. 0619950, made under this legislative framework, granted a concession to Bournedrill Pty Ltd for certain friction welded drill rods, setting the duty rate at free, effective from the date the application was lodged, 18 December 2006. This instrument exemplifies the policy objective of ensuring that Australian industries are not unduly disadvantaged by the import of similar goods.
Scope and Application
The Tariff Concession Instrument No. 0619950 under the Customs Act 1901 applies specifically to the reduction of customs duties on certain friction welded drill rods. The instrument is issued by the Chief Executive Officer of Customs and is applicable to those goods specified in the instrument, namely those that meet the core criteria outlined in the Act. These criteria include the condition that no substitutable goods, meaning those that can be produced in Australia and serve a similar purpose, were produced in the ordinary course of business at the time of the application. The instrument is effective from the date the application was lodged, which in this case is 18 December 2006, and no submissions were received by the CEO in opposition to the application. The application of this instrument benefits importers by allowing them to apply for a refund of duty on goods imported since the effective date. The application of this instrument is limited to the Commonwealth and does not affect or impose any liabilities on any person other than the Commonwealth.
The scope of this legislation is national, aligning with the overarching provisions of the Customs Act 1901, which operates across Australia. The instrument extends the application of the Act through subordinate legislation by specifically detailing the tariff concessions for the specified goods, thereby providing a clear pathway for import relief on these goods. The exclusions and limitations are clearly defined within the Act and the Tariff Concession Instrument itself, ensuring that the application is precise and does not inadvertently affect other goods or entities.
Key Provisions
The primary operative sections of the Customs Act 1901, as related to Tariff Concession Orders (TCO), are sections 269C, 269F, and 269P. Section 269F (1) allows an individual to apply to the Chief Executive Officer of Customs (CEO) for a TCO in respect of goods. Section 269C sets out the core criteria that an application must meet for the CEO to consider making a TCO, which primarily includes the absence of substitutable goods produced in Australia on the day the application was lodged. Section 269P (3) mandates that if the CEO is satisfied that the application meets the core criteria, they must issue a written order that effectively grants the tariff concession on the specified goods.
The Act imposes several obligations and requirements on the parties involved. The CEO has the duty to determine whether an application for a TCO meets the core criteria as outlined in section 269C. If the CEO decides that the application meets these criteria, they must issue a written TCO as per section 269P (3). Furthermore, the CEO is required to publish a notice in the Gazette inviting any interested party to submit any objections to the TCO, as stipulated in section 269K (1). Bournedrill Pty Ltd, the applicant in this case, must ensure that their application is complete and meets the core criteria to successfully obtain a TCO.
Breach of the obligations and requirements set out in the Customs Act 1901 can result in various penalties. While the Act does not specify a particular penalty for non-compliance with the TCO process, general penalties for breaches of customs laws can be severe. For example, section 234 of the Customs Act 1901 provides for criminal penalties including fines and imprisonment for offences such as smuggling or making false statements. Additionally, civil penalties can be imposed for breaches of the Act, including fines of up to $22,200 per offence for individuals and $111,000 for corporations, as per section 236 of the Act. The consequences for failure to comply with the TCO process can thus range from financial penalties to criminal charges, depending on the severity and nature of the breach.