EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0818938
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.
Diamond Offshore General Company applied for a TCO in respect of certain annular blowout preventer on 15 July 2008.
Instrument
TCO No 0818938 was made on 10 October 2008. It declares that those certain annular blowout preventer 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. 0818938 is taken to have come into force on 15 July 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 Commonwealth Parliament, establishes a framework for the regulation of customs duties and related matters. Specifically, Part XVA of the Act allows for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs, which can provide for lower rates of customs duty on certain goods. This mechanism was introduced to address the need for flexibility in tariff regulation to support economic and trade policy objectives, particularly in circumstances where substitutable goods are not produced in Australia. TCO No. 0818938, made on 10 October 2008, is an example of this process, granting a tariff concession to Diamond Offshore General Company for certain annular blowout preventers, reducing the duty rate from the general rate of 5% to free. The process requires public consultation, although in this case, no submissions were received. The TCO came into force on the date the application was lodged, 15 July 2008, and does not retroactively affect the rights of any person.
Scope and Application
The Tariff Concession Instrument No. 0818938, made under Part XVA of the Customs Act 1901, applies to the concession of customs duty on certain annular blowout preventers. This Act facilitates the application process for Tariff Concession Orders (TCOs) by allowing the Chief Executive Officer of Customs to grant reduced or free customs duty rates on specific goods if certain criteria are met. The application of this legislation is limited to goods that do not have substitutable alternatives produced in Australia and are not listed in section 269SJ of the Act, which excludes certain goods from tariff concessions. The TCO in question, concerning Diamond Offshore General Company's application for certain annular blowout preventers, was made on 10 October 2008, and it came into effect on 15 July 2008, the date the application was lodged. The instrument provides a tariff concession reducing the duty rate from the general 5% to free, benefiting importers of these goods by potentially allowing them to apply for refunds of duty paid on imports since the effective date of the TCO. The legislation does not disadvantage any person other than the Commonwealth nor impose any new liabilities on any person.
Key Provisions
The Tariff Concession Instrument No. 0818938, under section 269P(3) of the Customs Act 1901, mandates that if the Chief Executive Officer (CEO) of Customs is satisfied that an application for a Tariff Concession Order (TCO) meets the core criteria, they must issue a written order declaring the goods to which the order applies. This particular instrument, made on 10 October 2008, pertains to certain annular blowout preventers, specifying that these are goods to which item 50 of Schedule 4 to the Customs Tariff Act 1995 applies, resulting in a duty-free rate for these goods. The core criteria, as outlined in sections 269C, 269D, and 269E, necessitate that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged.
The obligations imposed by the Act on the parties include the requirement for applicants to ensure that their applications for TCOs are valid and meet the core criteria specified in the Act. The CEO, on receiving a valid application, must then proceed to make a TCO if the criteria are met. Furthermore, as per subsection 269K(1), the CEO is obligated to publish a notice in the Gazette inviting any interested party to lodge submissions if they believe there are reasons why the TCO should not be made. This ensures transparency and allows for public input before the TCO is issued. In the case of Instrument No. 0818938, no submissions were received in response to the published notice.
Should any party breach the provisions of the Customs Act 1901 or the terms of the TCO, they may face legal consequences. While the explanatory statement does not detail specific offences or penalties, breaches of customs legislation generally attract significant penalties under the Act. For example, knowingly or recklessly making a false statement in a customs document can result in a civil penalty of up to 10,000 penalty units or a criminal penalty of up to five times the value of the goods involved, whichever is greater. Additionally, failure to comply with the Act’s provisions could result in financial penalties, confiscation of goods, or other legal actions as deemed appropriate by the court.