EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0819863
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.
Origin Energy Power applied for a TCO in respect of certain electric resistance welded pipe dn 500 on 17 July 2008.
Instrument
TCO No 0819863 was made on 10 October 2008. It declares that those certain electric resistance welded pipe dn 500 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. 0819863 is taken to have come into force on 17 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 Australian Parliament, provides a framework for the regulation of customs and excise duties. The Act allows for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs, which can apply reduced customs duty rates to certain goods. This mechanism was introduced to address the need for flexibility in tariff regulations, enabling the government to respond to specific economic or industry needs by providing tariff concessions where appropriate. The policy objective is to promote economic efficiency and competitiveness by reducing the cost of imported goods that are not produced domestically or for which suitable domestic substitutes are not available. In the case of Tariff Concession Instrument No. 0819863, the Australian Government granted a tariff concession to Origin Energy Power for certain electric resistance welded pipes, effective from 17 July 2008, following a successful application that met the core criteria stipulated in the Act.
Scope and Application
The Customs Act 1901, through its Part XVA, provides a framework for the Chief Executive Officer of Customs to issue Tariff Concession Orders (TCOs) that grant lower customs duty rates on certain goods. Specifically, this Act applies to applications made by any person for tariff concessions on goods that are not specified in section 269SJ of the Act, which lists goods that cannot be subject to a TCO. The Act's application is national in scope, administered at the Commonwealth level. The CEO must ensure that the goods in question are not substitutable by any products manufactured in Australia before granting a TCO. This is determined under sections 269C, 269D, and 269E, which define the criteria for substitutable goods and ordinary course of business. The Act also allows for the CEO to make orders under section 269P(3) if certain conditions are met. In the case of TCO No. 0819863, the CEO was satisfied that no substitutable goods were produced in Australia for certain electric resistance welded pipes, thus granting a tariff concession that reduced the duty rate from 5% to free. The TCO does not affect the rights of any person in a manner that would disadvantage them or impose liabilities on them for actions taken before the TCO's registration.
Key Provisions
The primary operative sections of the Tariff Concession Instrument No. 0819863 include sections 269C, 269F, 269P(3), and 269S(1) of the Customs Act 1901. Section 269F allows a person to apply to the Chief Executive Officer (CEO) of Customs for a Tariff Concession Order (TCO). If the CEO is satisfied that the application meets the core criteria, as outlined in section 269C, a TCO is made under section 269P(3), which specifies a lower rate of customs duty for the goods. The commencement of the TCO, as detailed in section 269S(1), is effective from the day the application is lodged.
The obligations imposed by this Act on the parties and entities it governs include the requirement for the CEO to assess whether an application for a TCO meets the core criteria, specifically that no substitutable goods were produced in Australia on the day the application was lodged. The CEO must also publish a notice in the Gazette inviting submissions from any interested parties, although in this case, no submissions were received. Once a TCO is made, the CEO must ensure that the rights of importers are not adversely affected, and they are given the opportunity to apply for a refund of any duty paid on the goods since the TCO's effective date.
Failure to comply with the provisions of the Customs Act 1901 and the associated regulations can result in significant legal consequences. Offences under the Act can lead to both civil and criminal penalties. For example, knowingly making a false statement in an application for a TCO can result in a civil penalty of up to 10,000 penalty units, as well as potential criminal charges which can lead to imprisonment. Additionally, any person who contravenes the provisions of the Act may be subject to fines and penalties as stipulated in the relevant sections of the Act and the accompanying regulations. The maximum penalties for such breaches are clearly defined within the legislative framework to ensure compliance and deter non-compliance.