EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0801762
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.
M-I Australia Pty Ltd applied for a TCO in respect of certain mud cleaners on 04 February 2008.
Instrument
TCO No 0801762 was made on 11 April 2008. It declares that those certain mud cleaners 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 free.
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. 0801762 is taken to have come into force on 04 February 2008.
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 provide for the regulation of customs and excise duties and to establish the framework for administering customs and excise laws. The problem it was introduced to address included the need for a structured approach to customs duty, facilitating international trade while ensuring revenue for the government. This legislation allows for the establishment of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs, providing a lower rate of customs duty on specified goods, provided certain criteria are met. The explanatory statement for Tariff Concession Instrument No. 0801762, enacted in 2008, outlines the process by which M-I Australia Pty Ltd applied for and was granted a TCO for certain mud cleaners, effective from 4 February 2008. The instrument was made following a determination by the CEO that no substitutable goods were produced in Australia, thereby satisfying the core criteria for the concession. The policy objective is to support specific industries by reducing the duty burden on imported goods, thereby encouraging trade and economic growth without imposing any liabilities on persons other than the Commonwealth.
Scope and Application
The Tariff Concession Instrument No. 0801762, made under the Customs Act 1901, applies to the application of a Tariff Concession Order (TCO) for certain mud cleaners by M-I Australia Pty Ltd. The Act provides a mechanism for the Chief Executive Officer of Customs to grant TCOs which reduce or eliminate customs duty on specified goods, provided no substitutable goods are produced in Australia in the ordinary course of business. The application for a TCO was made on 4 February 2008 and was accepted by the CEO, who determined that the core criteria were met and subsequently issued Instrument TCO No. 0801762 on 11 April 2008. The instrument declares that the specified mud cleaners are to be subject to a free rate of duty, as opposed to the general rate of 5%. The geographic reach of the Act is national, applying across all states and territories of Australia. The instrument does not impose any liabilities on any person and does not affect the rights of a person as at the date of registration. The rights of importers are beneficially affected, as they can apply for a refund of duty on goods imported since the TCO is taken to have come into force on 4 February 2008.
Key Provisions
The primary operative sections of the Customs Act 1901, in relation to Tariff Concession Orders (TCOs), include sections 269C, 269B, 269D, 269E, 269F, 269P, 269S, and 269SJ (269C, 269B, 269D, 269E, 269F, 269P, 269S, 269SJ). Section 269F allows a person to apply to the Chief Executive Officer of Customs (CEO) for a TCO. Section 269C stipulates 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 the application meets the core criteria, they must issue a written order, the TCO, which specifies the goods and the prescribed item of Schedule 4 to the Customs Tariff Act 1995 applicable to these goods. The TCO also sets out the commencement date, which is the date the application was lodged, as per section 269S(1).
The Act imposes several obligations and requirements on the parties involved. The CEO must decide whether a TCO application meets the core criteria, as defined by section 269C, and must publish a notice in the Gazette, inviting any interested parties to lodge submissions if they believe the TCO should not be made, as per subsection 269K(1). In the case of TCO No 0801762, the CEO did not receive any submissions. Additionally, the CEO must ensure that no substitutable goods were produced in Australia on the day the application was lodged, as outlined in section 269C. The Act also requires that a TCO does not affect the rights of any person as at the date of registration in a way that disadvantages them or imposes liabilities for actions taken before the registration date, as stated in the explanatory statement.
The Customs Act 1901 does not explicitly outline offences, penalties, or civil/criminal consequences for breach in the context of TCOs. However, general provisions of the Act may apply where breaches occur. For example, section 268 of the Customs Act 1901, which pertains to fraudulent conduct related to customs and excise, carries a maximum penalty of 10 years imprisonment or a fine of up to $110,000, or both. Furthermore, section 269T of the Act provides that a TCO is void if the CEO decides to cancel it, and such a decision is subject to the Judicial Review Act 1990. The lack of specific penalties for TCO-related breaches suggests that general customs and trade laws may be enforced in such cases.