EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0804353
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.
Santos Limited applied for a TCO in respect of certain subsea control workover systems on 17 April 2008.
Instrument
TCO No 0804353 was made on 11 July 2008. It declares that those certain subsea control workover systems 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. 0804353 is taken to have come into force on 17 April 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 Tariff Concession Instrument No. 0804353 was enacted in 2008 under the Customs Act 1901 to address a specific need for tariff concessions on certain goods, in this case, subsea control workover systems. The Customs Act 1901 allows for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs, who may apply a lower rate of customs duty on goods specified in such orders if certain criteria are met. The primary objective of this particular instrument was to facilitate Santos Limited’s application for tariff concessions on these systems, ensuring that the rate of duty applicable to these goods was reduced from the general 5% to free. The process followed legislative requirements, including public consultation and the publication of the application in the Gazette, though no submissions were received in opposition. The TCO was designed to benefit importers by allowing them to apply for duty refunds on imports of these goods since the effective date of the concession.
Scope and Application
The Tariff Concession Instrument No. 0804353, made under the Customs Act 1901, applies to certain subsea control workover systems and is intended to provide tariff concessions to Santos Limited, a corporate entity involved in the oil and gas industry. The geographic reach of this instrument is national, as it pertains to the Commonwealth of Australia. The Act applies to goods that are not produced in Australia and for which a tariff concession order (TCO) has been approved by the Chief Executive Officer of Customs (CEO). According to the Act, 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. In this instance, the CEO determined that no such substitutable goods existed for the specified subsea control workover systems, leading to the issuance of TCO No. 0804353. This TCO declares that the specified goods are subject to item 5% of Schedule 4 to the Customs Tariff Act 1995, with the rate of duty set at free. The instrument does not disadvantage any person other than the Commonwealth and does not impose any liabilities on any person. Importers of these goods can apply for a refund of duty on goods imported since the TCO came into force on 17 April 2008.
Key Provisions
The main sections of the Customs Act 1901 pertinent to the creation of a Tariff Concession Order (TCO) include section 269F, which outlines the application process, and section 269C, which specifies the core criteria for approval of a TCO. Section 269F allows any person to apply to the Chief Executive Officer of Customs (CEO) for a TCO in respect of goods, provided that the goods are not specified in section 269SJ of the Act as ineligible for a concession. Section 269C details that a TCO application will meet the core criteria if, on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business. If the CEO is satisfied that these criteria are met, they must make a written order (a TCO) as per section 269P(3).
The obligations imposed by the Act on the parties involved are primarily on the applicant and the CEO. The applicant must ensure their application complies with the criteria set out in section 269C and must provide all necessary information to substantiate that the goods do not have substitutable goods produced in Australia. The CEO has the duty to assess whether the application meets the core criteria and, if satisfied, must proceed to make a TCO. Additionally, under section 269K(1), the CEO is required to publish a notice in the Gazette inviting any interested parties to lodge submissions if they believe the TCO should not be made. This ensures transparency and allows for public input into the decision-making process.
Failure to comply with the provisions of the Customs Act 1901 or the terms of a TCO can lead to various penalties and consequences. Although the explanatory statement does not detail specific offences or penalties for breaches of a TCO, breaches of other sections of the Customs Act 1901 can result in both civil and criminal penalties. For example, section 246 of the Act provides for penalties for fraudulent conduct, which can include fines and imprisonment. Similarly, section 248 of the Act outlines penalties for breaches that can result in fines up to $22,200 for individuals and $111,000 for bodies corporate, depending on the severity and nature of the offence. The exact penalties for breach of a TCO would need to be examined in the context of the broader Customs Act 1901 and any associated regulations.