EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0805374
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.
Schlumberger Oilfield Australia Pty Limited applied for a TCO in respect of certain valve latches on 24 April 2008.
Instrument
TCO No 0805374 was made on 11 July 2008. It declares that those certain valve latches 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. 0805374 is taken to have come into force on 24 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. 0805374, enacted in 2008, amends the Customs Act 1901 to provide tariff concessions for specific goods. This legislation was introduced to address the gap in duty concessions for goods that are not produced domestically and for which no suitable substitute is manufactured in Australia. The instrument was developed by the Chief Executive Officer of Customs following an application by Schlumberger Oilfield Australia Pty Limited for a Tariff Concession Order (TCO) concerning certain valve latches. The objective, as outlined in the explanatory statement, was to ensure that no substitutable goods were produced in Australia, thereby meeting the core criteria for tariff concessions. The instrument was published in the Gazette with an invitation for submissions, none of which were received. The concession came into force on the date the application was lodged, ensuring that importers of the affected goods are eligible for a refund of duty and are not disadvantaged by the implementation of the TCO.
Scope and Application
The Customs Act 1901, through its Part XVA, facilitates the application of Tariff Concession Orders (TCOs) to lower the rate of customs duty on specific goods. The Act applies to any individual or entity seeking to import goods that are not specified in section 269SJ of the Act, which includes certain goods that cannot be subject to a TCO. The process begins with an application to the Chief Executive Officer of Customs (CEO), who evaluates whether the application meets the core criteria, specifically if no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged. The CEO's decision to grant or refuse a TCO is pivotal, and once a TCO is made, it effectively reduces the duty on specified goods from the general rate to free. The legislation's geographic reach is national, as it pertains to the importation of goods into Australia, and it is administered at the Commonwealth level. The application of the TCO does not disadvantage existing parties or impose new liabilities on them, although it does confer benefits to importers who can now apply for refunds of duties on goods imported since the TCO's effective date. Any further extension or restriction of the application of the Act is managed through subordinate instruments, ensuring the scheme remains adaptable to changing economic and trade conditions.
Key Provisions
The Customs Act 1901, specifically under Part XVA, governs the creation and application of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO) (section 269F). A person can apply to the CEO for a TCO in respect of goods, which, if granted, allows for a lower rate of customs duty for the goods specified in the order (section 269C). Schlumberger Oilfield Australia Pty Limited applied for a TCO on 24 April 2008, concerning certain valve latches, which was subsequently approved by the CEO on 11 July 2008. The CEO was satisfied that no substitutable goods were produced in Australia, meeting the core criteria for a TCO (section 269C). As a result, TCO No. 0805374 declared that these valve latches would be subject to item 50 of Schedule 4 of the Customs Tariff Act 1995, effectively granting them a free rate of duty, which contrasts with the general 5% rate (section 269P(3)).
The Act imposes several obligations and requirements on the parties involved. Firstly, an applicant must ensure that their TCO application is not in respect of goods specified in section 269SJ of the Act, which lists goods that cannot be subject to a TCO (section 269F). The CEO, on receiving an application, must promptly publish a notice in the Gazette inviting submissions from any person who believes there are reasons why the TCO should not be made (subsection 269K(1)). Additionally, the CEO must determine if the application meets the core criteria, particularly whether no substitutable goods were produced in Australia in the ordinary course of business (section 269C). Upon satisfying these conditions, the CEO is obligated to make a written order (section 269P(3)).
The Customs Act 1901 does not specify particular offences related to the making or application of a TCO, but breaches of related customs regulations may result in penalties. For example, knowingly providing false or misleading information in a TCO application could result in civil or criminal penalties, depending on the severity and intent behind the breach. The maximum penalties for such offences can include substantial fines and, in some cases, imprisonment. Importers benefiting from a TCO can also face penalties if they fail to comply with other customs requirements, such as accurate declaration of goods or payment of duties where applicable.
Overall, the TCO process under the Customs Act 1901 is designed to provide tariff relief for specific goods while ensuring that the benefits are only extended to those that genuinely meet the criteria. The Act places a responsibility on the applicant to ensure their application is valid and on the CEO to carefully consider each application to maintain the integrity of the tariff concession scheme. The potential consequences of non-compliance highlight the importance of adhering to the provisions and requirements set forth in the Act.