EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0805148
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 universal running and retrieval tool on 03 April 2008.
Instrument
TCO No 0805148 was made on 13 June 2008. It declares that those certain universal running and retrieval tools 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. 0805148 is taken to have come into force on 03 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. 0805148 was introduced in 2008 under the Customs Act 1901 to provide a mechanism for the reduction of customs duty on specific goods. This legislation was enacted to address the need for tariff concessions on certain imports to support Australian businesses and consumers by reducing the cost of imported goods. The instrument was made by the Chief Executive Officer of Customs following an application by Santos Limited for a tariff concession order (TCO) on certain universal running and retrieval tools. The objective of the policy is to facilitate access to affordable goods by ensuring that no substitutable goods were produced in Australia at the time of the application.
The process involves the CEO of Customs reviewing the application and making a decision based on the criteria set out in the Customs Act 1901. Once satisfied that the application meets the necessary criteria, the CEO issues a TCO, which reduces the duty rate on the specified goods. In this case, the TCO resulted in a reduction of the duty rate from the general rate of 5% to a zero rate for the specified universal running and retrieval tools. The instrument does not adversely affect any existing rights of persons other than the Commonwealth and does not impose any new liabilities.
Scope and Application
The Customs Act 1901, specifically under Part XVA, facilitates the issuance of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs. This legislation applies to entities or individuals seeking tariff concessions on specific goods that are not being produced in Australia in the ordinary course of business. The scope of the Act is national, as it operates under the Commonwealth, but its application is specific to those who meet the core criteria for a TCO, as outlined in sections 269C and 269SJ of the Act. The Act explicitly excludes certain goods from being subject to a TCO, such as those listed in section 269SJ. The application process involves a submission to the CEO, followed by a decision based on whether the goods in question are substitutable by Australian-produced goods. TCO No. 0805148, for example, was made for certain universal running and retrieval tools, effectively granting them a free rate of duty as of the date the application was lodged, which is a procedural detail specified under section 269S(1) of the Act. This instrument does not retroactively affect any rights or impose liabilities on persons other than the Commonwealth, ensuring that only future transactions are subject to the new tariff rates.
Key Provisions
The primary sections of the Tariff Concession Instrument No. 0805148 (Instrument) include sections 269C, 269P, and 269S of the Customs Act 1901. Section 269C outlines the core criteria that must be met for a Tariff Concession Order (TCO) application to be successful, specifically that no substitutable goods are produced in Australia in the ordinary course of business on the date the application was lodged. Section 269P(3) stipulates that if the Chief Executive Officer (CEO) of Customs is satisfied that the application meets these core criteria, they must issue a written order (TCO) specifying that the goods in question are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995. Finally, section 269S(1) clarifies that a TCO is deemed to come into effect on the date the application was lodged.
The Customs Act 1901 imposes several obligations on the CEO when processing a TCO application. The CEO must first accept the application as valid, which involves ensuring it complies with the provisions of the Act and does not relate to goods specified in section 269SJ of the Act. Once accepted, the CEO must publish a notice in the Gazette, inviting any interested parties to submit reasons why the TCO should not be granted. The CEO must then evaluate the application against the core criteria specified in section 269C. If satisfied, the CEO must issue a written TCO, as outlined in section 269P(3). The CEO must also ensure that the rights of persons other than the Commonwealth are not adversely affected by the TCO, as stipulated in section 269S.
The Customs Act 1901 includes provisions for penalties and consequences for non-compliance with the Act’s requirements. While the explanatory statement does not detail specific offences or penalties for breaching the Act, it is known that breaches can result in civil or criminal penalties under Australian law. These penalties may include fines and imprisonment, depending on the severity and nature of the breach. However, the maximum penalties are not specified in the explanatory statement.
Overall, the Tariff Concession Instrument No. 0805148 is a mechanism through which the CEO of Customs can grant tariff concessions on certain goods, provided specific criteria are met. This process ensures that the concession is only granted when it is in the public interest and does not unfairly impact any party other than the Commonwealth. The rights of importers are beneficially affected, allowing them to apply for refunds of duty on goods imported since the TCO came into effect.