EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0803283
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.
Caledus Australia Pty Ltd applied for a TCO in respect of certain drill pipe swivel on 28 February 2008.
Instrument
TCO No 0803283 was made on 16 May 2008. It declares that those certain drill pipe swivels 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. 0803283 is taken to have come into force on 28 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 the framework within which Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs (CEO). This Act was designed to address the need for reducing the duty on certain goods, fostering trade and economic growth by allowing concessions that provide competitive advantages for Australian businesses in the international market. Under this scheme, the CEO can grant lower rates of customs duty on specified goods if the application meets core criteria, ensuring that the goods are not substitutable by any products manufactured in Australia. The policy objective is to enhance the competitiveness of Australian industries by reducing import costs on specific goods. Caledus Australia Pty Ltd's application for a tariff concession on certain drill pipe swivels exemplifies this process, resulting in a zero duty rate for these goods, effective from the date the application was lodged.
Scope and Application
The Customs Act 1901, specifically under Part XVA, governs the process through which Tariff Concession Orders (TCO) may be issued by the Chief Executive Officer of Customs. This Act applies to any individual or entity that seeks to import goods that may be eligible for tariff concessions, thereby benefiting from reduced customs duty rates. The Act extends across the Commonwealth of Australia, impacting various industries by providing a mechanism for the reduction of duty on specific imported goods. The eligibility for a TCO hinges on the non-production of substitutable goods in Australia and adherence to the criteria outlined in the Act. Notably, certain goods specified in section 269SJ are ineligible for tariff concessions. The Act's application can be further refined through subordinate instruments, thereby extending or restricting its scope. For instance, TCO No. 0803283 pertains to specific drill pipe swivels, which, under the order, attract no customs duty, thereby directly benefiting importers of these goods.
Key Provisions
The Customs Act 1901, specifically under Part XVA, outlines the process for creating Tariff Concession Orders (TCOs) through section 269F. This section allows for a person to apply to the Chief Executive Officer (CEO) of Customs for a TCO concerning specific goods. If the CEO determines that the application is not in respect of prohibited goods as outlined in section 269SJ, they must then assess whether the application meets the core criteria, as stipulated in section 269C. This criterion requires that on the day the application was submitted, no substitutable goods were produced in Australia in the ordinary course of business. Definitions for terms such as "goods produced in Australia," "ordinary course of business," and "substitutable goods" are provided in sections 269D, 269E, and 269F respectively. If the CEO is satisfied that the application meets the core criteria, they must issue a written TCO under section 269P(3), declaring that the goods in question are subject to a specified item in Schedule 4 of the Customs Tariff Act 1995.
The obligations imposed by the Customs Act 1901 on parties applying for a TCO include submitting a valid application that is not in respect of prohibited goods, ensuring the application meets the core criteria, and adhering to any additional requirements set by the CEO. Additionally, the CEO has the obligation to assess the application's validity, determine whether it meets the core criteria, and make a written TCO if the criteria are met. For the TCO to be effective, the CEO must also publish a notice in the Gazette, inviting any interested parties to lodge submissions if they believe the TCO should not be granted. This process ensures transparency and allows for potential objections to be considered before the TCO is finalised.
The Customs Act 1901 provides for specific consequences in the event of a breach of its provisions. Although the Act does not explicitly detail offences or penalties for non-compliance with TCO applications, it is inferred that any misuse or fraudulent application for a TCO could result in legal action. The penalties for such actions might include fines or other civil and criminal consequences as determined by relevant laws. Additionally, the Act ensures that the TCO does not affect the rights of any person as at the date of registration and does not impose any liabilities on any person in respect of actions taken before the registration date. This protects both applicants and other stakeholders from undue disadvantage or liability as a result of the TCO.