EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0711702
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.
Apache Energy Ltd applied for a TCO in respect of certain cuttings removal tools on 20 July 2007.
Instrument
TCO No 0711702 was made on 9 October 2007. It declares that those certain cuttings removal tools 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. 0711702 is taken to have come into force on 20 July 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, introduced a framework for the establishment of Tariff Concession Orders (TCOs) to address the problem of ensuring that Australian businesses are not unfairly disadvantaged when importing goods that are not produced domestically. The Act allows for the application of reduced customs duties on certain goods under specific circumstances, promoting economic efficiency and competitiveness. The policy objective is to provide relief to businesses that rely on the importation of goods that are not locally produced, thereby supporting their operational costs and enabling them to remain competitive. In line with this objective, Tariff Concession Instrument No. 0711702 was made on 9 October 2007, providing a zero percent duty rate for certain cuttings removal tools, which was reduced from the general rate of five percent, based on the determination that no substitutable goods were produced in Australia.
Scope and Application
The Customs Act 1901, specifically under Part XVA, governs the process for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs. This act applies to any person or entity seeking to import goods that qualify for a lower rate of customs duty through a TCO. The application process requires that the goods in question are not specified in section 269SJ of the Act, which lists goods that cannot be subject to a TCO. If the CEO determines that no substitutable goods are produced in Australia in the ordinary course of business, a TCO is issued. The scope of the legislation is national, applying across Australia as a Commonwealth Act. The TCO in question, No. 0711702, was issued to Apache Energy Ltd for certain cuttings removal tools, resulting in a reduction of the duty rate from 5% to 0%. The application of the TCO does not retroactively affect any rights or liabilities of persons other than the Commonwealth and is effective from the date the TCO application was lodged.
Key Provisions
The main operative sections of Tariff Concession Instrument No. 0711702 are sections 269C, 269F, and 269P of the Customs Act 1901. Section 269F allows a person to apply to the Chief Executive Officer of Customs (CEO) for a Tariff Concession Order (TCO) in respect of certain goods. Section 269C specifies that a TCO application meets the core criteria if no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged. Section 269P(3) mandates that if the CEO is satisfied that the application meets the core criteria, the CEO must make a written order, which is the TCO, declaring that the goods in question are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995.
The obligations imposed by the Act on the parties it governs are primarily on the CEO, who must decide whether the application for a TCO meets the core criteria as specified in section 269C. If satisfied, the CEO must make a TCO as outlined in section 269P(3). Additionally, subsection 269K(1) requires the CEO to publish a notice in the Gazette inviting submissions from any person who believes there are reasons why the TCO should not be made. The CEO did not receive any submissions in response to the notice published for TCO No. 0711702.
The Act imposes no direct obligations on the applicant, Apache Energy Ltd, other than the requirement to submit an application that meets the core criteria. The obligations for the Commonwealth, represented by the CEO, include making a decision on the application, publishing a notice inviting submissions, and, if no submissions are received, proceeding to make the TCO. Furthermore, the Act does not impose any liabilities on any person, including the Commonwealth, in respect of anything done or omitted before the date of registration of the TCO.
Regarding offences, penalties, or civil/criminal consequences for breach, the Act does not specify any particular offences related to the making of a TCO. However, the consequences of non-compliance with the terms of the TCO or other related provisions of the Customs Act 1901 could potentially result in legal actions. The maximum penalties for breaches of the Customs Act 1901 can be substantial, including fines and imprisonment, depending on the nature and severity of the offence. For specific breaches under the Customs Act, the penalties can range from fines up to several thousand dollars to imprisonment for terms extending up to several years, depending on the specific section and the context of the breach.