EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0713418
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.
Mid Continent Pty Ltd applied for a TCO in respect of certain steel casing pipes on 23 August 2007.
Instrument
TCO No 0713418 was made on 2 November 2007. It declares that those certain steel casing pipes 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. 0713418 is taken to have come into force on 23 August 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 Australian Parliament, establishes a framework for the regulation of customs duties and other border measures. One of the mechanisms within this framework is the Tariff Concession Order (TCO), which allows for a reduction in customs duty on specific goods under certain conditions. This legislative provision was introduced to address the need for flexibility in tariff regulations, ensuring that Australia can respond to economic and trade policy objectives by providing tariff relief where appropriate. The explanatory statement for Tariff Concession Instrument No. 0713418, made on 2 November 2007, outlines the application process and the decision-making criteria set out in the Customs Act 1901. The instrument, in this case, relates to certain steel casing pipes, where the Chief Executive Officer of Customs determined that no substitutable goods were produced in Australia, thus meeting the core criteria for a concession. The policy objective behind this particular concession was to facilitate the importation of these goods at a reduced duty rate, thereby supporting economic activity and potentially enhancing competitive advantages in relevant markets.
Scope and Application
The Customs Act 1901, through its Tariff Concession Instrument No. 0713418, applies to the concession of customs duties for certain imported goods, specifically steel casing pipes in this instance. This Act allows for the Chief Executive Officer of Customs to create Tariff Concession Orders (TCOs) for goods where no substitutable goods are produced in Australia in the ordinary course of business. The application of this legislation extends to any person or entity seeking to import the specified goods and is enforced at the national level across Australia. The process involves an application to the CEO, followed by an assessment to determine if the core criteria are met, which includes verifying the absence of substitutable goods produced domestically. If the criteria are satisfied, a TCO is issued, effectively reducing the customs duty rate from the general rate of 5% to 0% for the specified goods. The commencement of the TCO is effective from the date the application was lodged, in this case, 23 August 2007. The legislation ensures that no existing rights or liabilities of non-Commonwealth persons are adversely affected by the issuance of the TCO.
Key Provisions
The main operative sections of the Customs Act 1901, as implemented by Tariff Concession Instrument No. 0713418, concern the process for making Tariff Concession Orders (TCOs) and the specific application to steel casing pipes. Section 269F allows for the application of a TCO for certain goods, subject to the CEO's approval (section 269C). The CEO must determine whether the application meets the core criteria, which include ensuring no substitutable goods are produced in Australia (section 269P(3)). If satisfied, the CEO issues a TCO, as seen in the case of the steel casing pipes (item 50 of Schedule 4 to the Tariff).
The Act imposes obligations on both the applicant and the CEO. The applicant must ensure their application is valid and meets the criteria outlined in sections 269C and 269SJ. The CEO must rigorously assess the application against these criteria and decide whether to issue a TCO. Additionally, the CEO is required to publish a notice in the Gazette to invite any submissions against the TCO application (subsection 269K(1)). Once a TCO is made, it must be registered, and its terms enforced accordingly.
Breaching the terms of a TCO or failing to comply with the statutory obligations can lead to legal consequences. For instance, if a party imports goods without the appropriate concessions or fails to adhere to the terms of a TCO, they could be subject to penalties. The maximum penalties for non-compliance with customs laws can include substantial fines and imprisonment. Specifically, under the Customs Act 1901, penalties for serious breaches can reach up to $22,000 or imprisonment for up to five years, or both, reflecting the seriousness of non-compliance with customs regulations.