EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0704964
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 seamless line pipe on 4 April 2007.
Instrument
TCO No 0704964 was made on 22 June 2007. It declares that those certain seamless line pipe 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. 0704964 is taken to have come into force on 4 April 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, enacted by the Parliament of Australia, provides a framework for the administration of customs and excise duties and the regulation of imports and exports. In particular, Part XVA of the Act enables the Chief Executive Officer of Customs to make Tariff Concession Orders (TCOs), which apply a lower rate of customs duty to certain goods, provided specific criteria are met. This legislative mechanism was introduced to address the gap in providing tariff concessions to support industries that rely on the importation of specific goods that are not produced domestically. In the case of Tariff Concession Instrument No. 0704964, Woodside Energy Ltd successfully applied for a TCO concerning certain seamless line pipe, resulting in a reduction of customs duty from 5% to 0% on these goods. The instrument was published in the Gazette, with no objections received, and it came into effect on the date of the application, 4 April 2007.
Scope and Application
The Customs Act 1901, through its Part XVA, facilitates the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs, which can reduce the customs duty on certain goods. This scheme applies to any person who can demonstrate that the goods in question are not substitutable by any goods produced in Australia in the ordinary course of business, as per the criteria outlined in sections 269C and 269D of the Act. The application process involves a review by the CEO to ensure compliance with the core criteria, after which a TCO can be issued, as demonstrated by the case of Woodside Energy Ltd for certain seamless line pipes. The TCO scheme operates nationally, affecting all entities involved in the importation of the specified goods, with the geographic reach extending to all jurisdictions within Australia. The application of the TCO does not retroactively disadvantage any person or impose new liabilities on anyone, although it does entitle eligible importers to claim refunds on duties paid on the specified goods from the date the TCO was deemed to come into effect. Any subordinate instruments or regulations that may further define or refine the application of the TCOs are not explicitly detailed in this particular explanatory statement but are likely to be found in related legislative instruments or administrative guidelines.
Key Provisions
The main operative sections of this legislation revolve around the establishment and application of Tariff Concession Orders (TCOs) under the Customs Act 1901 (sections 269C, 269F, and 269P(3)). Specifically, section 269F allows a person to apply to the Chief Executive Officer of Customs (CEO) for a TCO in respect of goods, provided these goods are not specified in section 269SJ, which details goods that cannot be subject to a TCO. If the CEO is satisfied that the application meets the core criteria set out in section 269C, they must make a written order declaring that the goods in question are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995. For example, TCO No. 0704964, made on 22 June 2007, declared that certain seamless line pipe are subject to item 50 of Schedule 4, with a reduced rate of duty from 5% to 0%.
The Act imposes several obligations on the parties involved. The CEO must decide whether a TCO application meets the core criteria by ensuring that no substitutable goods were produced in Australia on the day the application was lodged (section 269C). The CEO must also publish a notice in the Gazette inviting any person to lodge a submission if they believe there are reasons why the TCO should not be made (subsection 269K(1)). In this instance, no submissions were received, indicating that the CEO proceeded with the TCO. Additionally, the CEO must ensure that the TCO does not disadvantage any person or impose liabilities on any person in respect of actions taken before the date of registration (subsection 269S(1)).
Any breach of the provisions outlined in the Customs Act 1901 could result in both civil and criminal consequences. For example, under section 273, penalties for non-compliance with customs laws can include fines of up to 10,000 penalty units or imprisonment for up to five years, or both, for individuals. For corporations, the penalties can be even higher, up to 50,000 penalty units. The specific penalties for breach of TCO provisions, however, are not detailed in the provided explanatory statement, but they would likely follow similar patterns and severity as outlined in section 273.