EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0702044
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 Ltd applied for a TCO in respect of certain electrical umbilical cables on 12 February 2007.
Instrument
TCO No 0702044 was made on 14 June 2007. It declares that those certain electrical umbilical cables 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. One submission objecting to the TCO application was received from Olex Australia Pty Ltd.
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. 0702044 is taken to have come into force on 12 February 2007.
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 was enacted to regulate the importation of goods into Australia, including the imposition and collection of customs duty. In addressing the issue of tariff concessions for certain goods, the Customs Act 1901 was amended to include Part XVA, which establishes a scheme under which Tariff Concession Orders (TCOs) can be made by the Chief Executive Officer of Customs. This legislative change was introduced to allow for the concession of customs duty on specified goods where no substitutable goods are produced in Australia, thereby encouraging the importation of such goods and potentially fostering economic benefits. The policy objective is to provide relief from customs duty for goods that are not domestically produced, thereby making them more competitively priced and accessible for consumers and businesses within Australia. The introduction of TCOs seeks to balance the need for tariff relief with the protection of local industries.
Scope and Application
The Tariff Concession Instrument No. 0702044, made under the Customs Act 1901, applies to goods for which a Tariff Concession Order (TCO) is issued, thereby reducing the customs duty rate from the general rate to 0%. This instrument specifically concerns the electrical umbilical cables for which Woodside Energy Ltd applied, and it was effective from 12 February 2007, the date the application was lodged. The Act permits the Chief Executive Officer of Customs to issue such orders if certain criteria are met, particularly if no substitutable goods are produced in Australia. The scope of this legislation is limited to the entities directly involved in the importation of these specific goods and the Customs authority overseeing the application and issuance of TCOs. While the Act extends nationally, the impact of this particular TCO is confined to the specified goods and their importation. Any exclusions or exemptions would be defined within the core criteria outlined in the Act, and there are no liabilities imposed on individuals or entities other than the Commonwealth. The Act also allows for subordinate instruments to further define or expand the application of the TCOs as necessary.
Key Provisions
The main operative sections of the Tariff Concession Instrument No. 0702044, which amends the Customs Act 1901, are sections 269C, 269F, 269P, and 269SJ (subsection 269K(1) is also relevant for consultation purposes). These sections establish the framework for Tariff Concession Orders (TCOs) and the conditions under which they can be applied for and granted. Section 269F allows an application to be made to the Chief Executive Officer of Customs (CEO) for a TCO in respect of goods. If the CEO is satisfied that the application is valid and meets the core criteria, as outlined in section 269C, the CEO must make a written order granting the concession. Section 269P(3) specifies that the CEO must publish a notice in the Gazette, inviting submissions from any interested parties, and section 269SJ lists goods that are not eligible for TCOs.
The obligations imposed by this legislation on parties applying for a TCO include ensuring that the application is made in accordance with section 269F and that it meets the core criteria set out in section 269C. For the CEO, the obligations include reviewing the application, determining whether it meets the criteria, and publishing a notice in the Gazette to invite submissions from interested parties. The CEO must also consider any submissions received and make a decision on whether to grant the TCO. The Act ensures that the rights of importers are beneficially affected by a TCO and that it does not disadvantage any person or impose liabilities on any person in respect of anything done or omitted to be done before the date of registration of the TCO.
There are no specific offences or penalties outlined in the Act for breaches related to the TCO process. However, any failure by the CEO to comply with the requirements to publish a notice in the Gazette or consider submissions could potentially lead to legal challenges or administrative reviews. Additionally, if a TCO is granted inappropriately, it could result in financial losses for the Commonwealth due to reduced customs duty revenue. While the Act does not specify maximum penalties for breaches, any legal consequences would likely be determined in the context of the broader administrative and judicial processes applicable to the Customs Act 1901 and related regulations.