EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0802156
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.
Smith International Australia Pty Ltd applied for a TCO in respect of certain hydraulic turbine drills parts on 07 February 2008.
Instrument
TCO No 0802156 was made on 02 May 2008. It declares that those certain hydraulic turbine drills parts 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. 0802156 is taken to have come into force on 07 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, enacted by the Australian Parliament, establishes a framework through which the Chief Executive Officer of Customs can issue Tariff Concession Orders (TCOs). These orders provide for a lower rate of customs duty on specified goods, provided they meet the criteria outlined in the Act. The Tariff Concession Instrument No. 0802156, enacted on 2 May 2008, was introduced to address the application by Smith International Australia Pty Ltd for a TCO on certain hydraulic turbine drill parts. The instrument declares these parts to be subject to a duty-free rate, as no substitutable goods were produced in Australia, thus satisfying the core criteria for a TCO. The instrument aims to ensure that importers of these goods can apply for a refund of duty paid on imports since the TCO was deemed to come into force on 7 February 2008, without any imposition of liabilities on parties other than the Commonwealth.
Scope and Application
The Customs Act 1901, specifically under Part XVA, authorises the Chief Executive Officer of Customs to create Tariff Concession Orders (TCOs) that apply a lower rate of customs duty on specified goods. This mechanism allows for the consideration of applications from individuals or entities seeking reduced tariff rates on certain goods, provided these goods are not excluded under section 269SJ and meet the criteria outlined in sections 269C, 269B, and 269D. The application process requires that no substitutable goods are produced in Australia in the ordinary course of business, as defined by sections 269E and 269F. This legislation thus applies to importers and potentially any Australian businesses that may be impacted by the concession. The geographic scope is national, as the Act operates across Australia, but it specifically interacts with international trade by modifying customs duties on imported goods. The Act does not impose any new liabilities or disadvantage existing rights of persons other than the Commonwealth, and it extends its application through subordinate instruments as detailed in the Customs Tariff Act 1995.
Key Provisions
Section 269C of the Customs Act 1901 outlines the criteria for making a Tariff Concession Order (TCO), specifying that an application will be considered if no substitutable goods are produced in Australia in the ordinary course of business on the day the application is lodged. This provision is crucial for businesses seeking tariff concessions for specific goods, as it ensures that the concession will not undermine local production. Section 269B defines terms such as "goods produced in Australia," "ordinary course of business," and "substitutable goods," providing clarity on what constitutes a suitable case for a TCO. If the Chief Executive Officer (CEO) of Customs is satisfied that the application meets these criteria, they must make a written order declaring the goods eligible for the concession, as per section 269P(3).
The obligations imposed by the Act on parties applying for a TCO are primarily outlined in sections 269F and 269SJ. An applicant must submit a valid application to the CEO, ensuring that the goods in question are not specified in section 269SJ, which lists goods ineligible for TCOs. The CEO, in turn, has the duty to assess whether the application meets the core criteria, as defined by section 269C, and to publish a notice in the Gazette inviting submissions from interested parties. The CEO must also consider any submissions received and make a decision on the application in a timely manner.
Non-compliance with the Act’s provisions can lead to significant legal consequences. While the explanatory statement does not explicitly detail specific offences or penalties for breaching the Act, it is reasonable to infer that violations of the tariff concession provisions could result in penalties under the broader Customs Act. For instance, engaging in deceptive practices to obtain a TCO could potentially lead to civil or criminal penalties, as outlined in other sections of the Act. The maximum penalties for breaches of the Customs Act can vary widely, depending on the nature and severity of the offence, but may include substantial fines and, in severe cases, imprisonment.