EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0835794
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.
Smith International Pty Ltd applied for a TCO in respect of certain hydraulic or mechanical drilling jars parts on 16 October 2008.
Instrument
TCO No 0835794 was made on 14 January 2009. It declares that those certain hydraulic or mechanical drilling jars parts 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. 0835794 is taken to have come into force on 16 October 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. 0835794, enacted under the Customs Act 1901, was introduced to address the need for tariff concessions on specific goods, thereby facilitating trade and economic activities. The Customs Act 1901 allows for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs, which apply reduced rates of customs duty to the specified goods. In this instance, Smith International Pty Ltd applied for a TCO for certain hydraulic or mechanical drilling jars parts, which was granted by the CEO after satisfying the core criteria that no substitutable goods were produced in Australia. This instrument effectively lowers the duty on these goods from 5% to free, effective from the date of the application, 16 October 2008. The policy objective is to support Australian businesses by reducing import costs for specific goods, thereby potentially increasing their competitiveness and facilitating economic growth.
Scope and Application
The Customs Act 1901, specifically through Part XVA, establishes the framework under which Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs (CEO). This legislation applies to any person who can apply for a TCO in respect of goods, provided that these goods are not specified in section 269SJ of the Act, which lists those goods ineligible for TCOs. The application process requires the CEO to determine if the core criteria are met, primarily assessing whether substitutable goods are produced in Australia in the ordinary course of business. If the CEO finds that no such goods exist, they are obligated to issue a TCO, as exemplified by TCO No. 0835794 concerning hydraulic or mechanical drilling jars parts, where the duty rate was reduced to free from 5%. The CEO must also publish a notice in the Gazette inviting submissions from interested parties, although in this case, no submissions were received. The TCO's effective date aligns with the application date, offering benefits to importers who can apply for duty refunds on goods imported from that date. This legislation's application is national, extending across Australia under the Commonwealth's purview.
Key Provisions
The main operative sections of the Tariff Concession Instrument No. 0835794, which is made under Part XVA of the Customs Act 1901, include sections 269C, 269P, and 269S(1). Section 269C sets out the core criteria for a Tariff Concession Order (TCO) to be made, specifically that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged. Section 269P(3) mandates that if the Chief Executive Officer of Customs (CEO) is satisfied that the application meets the core criteria, they must make a written order, declaring that the goods subject to the TCO application are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995. Section 269S(1) specifies that the TCO is taken to have come into force on the day on which the application for the TCO was lodged. This means that for TCO No. 0835794, the concessional tariff treatment for the specified hydraulic or mechanical drilling jars parts commenced on 16 October 2008.
The Act imposes several obligations and requirements on the parties involved. Firstly, any person may apply to the CEO for a TCO in respect of goods, as provided under section 269F. The CEO must ensure that the application is not in respect of goods specified in section 269SJ, which lists those goods that cannot be subject to a TCO. If the CEO is satisfied that the application meets the core criteria outlined in section 269C, they must make the TCO. Additionally, under section 269K(1), the CEO must publish a notice in the Gazette inviting any person who considers there are reasons why the TCO should not be made to lodge a submission with the CEO. This transparency measure ensures that all interested parties have the opportunity to voice their concerns. In this instance, no submissions were received in response to the published notice.
Under the Customs Act 1901, failure to comply with the requirements or breaching the provisions of the Act may result in various penalties and consequences. However, the Explanatory Statement for TCO No. 0835794 does not detail specific offences, penalties, or consequences for breach. Generally, under the Customs Act 1901, breaches of the Act can lead to both civil and criminal penalties, including fines and imprisonment, depending on the severity of the breach. For example, knowingly making a false statement or representation in an application for a TCO could potentially lead to criminal charges. The maximum penalties would depend on the specific nature of the breach and the provisions of the Customs Act 1901 and any other relevant legislation.