EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0705329
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.
Fortescue Metals Group Ltd applied for a TCO in respect of certain desanding plant on 11 April 2007.
Instrument
TCO No 0705329 was made on 29 June 2007. It declares that those certain desanding plant 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. 0705329 is taken to have come into force on 11 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 was amended by Tariff Concession Instrument No. 0705329 to introduce a tariff concession that reduces the customs duty on certain desanding plant from 5% to 0%. This change was enacted to address the gap where the standard duty rates were not adequately aligned with the economic realities of importing specialised industrial equipment. The instrument was created by the Chief Executive Officer of Customs, following the application of Fortescue Metals Group Ltd on 11 April 2007, and was published in the Gazette with no objections received. The instrument aims to ensure that Australian industries can access necessary equipment at a reduced cost, thereby promoting competitive and efficient business operations within the country. This measure is intended to support the broader policy objective of facilitating trade and economic development in Australia by making essential industrial goods more affordable.
Scope and Application
The Customs Act 1901 provides a framework under which Tariff Concession Orders (TCOs) can be made by the Chief Executive Officer of Customs, thereby allowing for a lower rate of customs duty to apply to certain goods. This legislation specifically applies to entities or individuals who apply for a TCO in relation to goods that are not specified as ineligible under section 269SJ of the Act. The primary scope of this Act pertains to the process of applying for and obtaining a TCO, ensuring that such concessions are granted only when the core criteria are met, specifically when no substitutable goods are produced in Australia in the ordinary course of business. The geographic reach of this Act is national, impacting all customs-related activities across Australia. The application of this Act can be extended or restricted through subordinate instruments, although the primary legislation itself sets out the fundamental conditions and criteria for the issuance of TCOs. Importantly, the Act does not disadvantage any person other than the Commonwealth nor impose liabilities on any person in respect of actions taken prior to the registration of a TCO.
Key Provisions
The main operative sections of the Customs Act 1901 as it pertains to Tariff Concession Orders (TCOs) are primarily found in Part XVA. Section 269F allows a person to apply to the Chief Executive Officer (CEO) of Customs for a TCO, provided the goods in question are not specified in section 269SJ, which lists goods that cannot be subject to a TCO. Section 269C outlines the core criteria that a TCO application must meet, specifically that no substitutable goods were produced in Australia on the day the application was lodged. If the CEO is satisfied that the application meets these criteria, they must make a TCO under section 269P(3).
The obligations and requirements imposed by the Act on the parties involved are relatively straightforward. The CEO of Customs is mandated to decide whether an application meets the core criteria specified in section 269C. This involves ensuring that no substitutable goods were produced in Australia on the day the application was lodged. The CEO must also publish a notice in the Gazette, inviting any person who considers there are reasons why the TCO should not be made to lodge a submission. The Act further stipulates that the TCO will be taken to have come into force on the day the application was lodged, as outlined in section 269S(1).
Under the Customs Act 1901, breaches of the conditions set forth for TCOs may not directly result in criminal offences but can lead to significant civil consequences. For instance, if a TCO is made erroneously and subsequently found to not meet the criteria in section 269C, the CEO may be required to revoke the TCO. Additionally, while the Act does not explicitly state penalties for non-compliance, incorrect applications or misuse of TCOs could result in the imposition of duties retroactively and potential refunds being denied. The Act does, however, ensure that the rights of persons other than the Commonwealth will not be adversely affected by the TCO, nor will they be imposed with new liabilities for actions taken prior to the TCO's registration.
In summary, the Act provides a structured process for applying for and issuing TCOs, with a focus on ensuring that the goods subject to these orders do not have substitutable Australian-produced alternatives. The CEO of Customs holds the primary responsibility for assessing applications and making orders, while the Act safeguards the rights of non-Commonwealth entities. Although specific penalties for breaches are not detailed within the text, the Act ensures that any misuse of the TCO system is addressed to maintain the integrity of the customs duty scheme.