EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0836342
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 Australia Pty Ltd applied for a TCO in respect of certain oil and gas well drilling jar on 21 October 2008.
Instrument
TCO No 0836342 was made on 16 January 2009. It declares that those certain oil and gas well drilling jar 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. 0836342 is taken to have come into force on 21 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 Customs Act 1901, enacted by the Australian Parliament, established a framework for the imposition of customs duties on goods imported into Australia. Among its provisions, Part XVA introduced a scheme for Tariff Concession Orders (TCOs) which allows the Chief Executive Officer of Customs to grant tariff concessions on certain goods under specific conditions. The Act was designed to address the gap in providing relief to importers of goods that could not be produced domestically or where domestic alternatives were not economically viable. This initiative aims to foster fair competition and support industries that rely on imported goods for their operations. The Tariff Concession Instrument No. 0836342 was subsequently introduced to facilitate this process by allowing the application for tariff concessions on particular oil and gas well drilling jars, effectively reducing the duty on these goods from 5% to free, provided no substitutable goods were produced in Australia at the time of application.
Scope and Application
The Tariff Concession Instrument No. 0836342 under the Customs Act 1901 applies to the specific category of goods, namely certain oil and gas well drilling jars, as declared by the Chief Executive Officer of Customs. The Act pertains to the procedure for applying for and granting tariff concessions, specifically reducing the duty rate on particular imported goods. This instrument is designed to benefit importers by eliminating customs duty on these goods if certain criteria are met, such as the absence of substitutable goods produced in Australia. The application process is governed by sections 269C, 269D, and 269E of the Act, which define the conditions for assessing the eligibility of goods for a tariff concession order. The geographic and jurisdictional reach of this Act is national, as it applies throughout Australia and is administered under Commonwealth law. Notably, the Act does not impose any new liabilities on persons other than the Commonwealth and does not disadvantage existing rights as of the date of registration. The TCO does not extend to goods specified in section 269SJ of the Act, which includes those that cannot be subject to a tariff concession order. The commencement of the TCO is effective from the date the application was lodged, providing immediate benefit to importers who can apply for refunds on duties paid before the concession was registered.
Key Provisions
The Tariff Concession Instrument No. 0836342, made under section 269F of the Customs Act 1901, pertains to the application process for Tariff Concession Orders (TCOs). This instrument allows the Chief Executive Officer of Customs (CEO) to issue an order that grants a lower rate of customs duty on specific goods, in this case, certain oil and gas well drilling jars. The TCO is issued if the CEO is satisfied that the application meets the core criteria, namely that no substitutable goods were produced in Australia on the day the application was lodged (section 269C). Once the CEO makes a written TCO, it declares that the specified goods are subject to a prescribed rate of duty, in this instance, a rate of duty of free, as opposed to the general rate of 5% (subsection 269P(3)).
The obligations imposed by the Customs Act 1901 on the parties involved include the requirement for applicants to submit an application to the CEO for a TCO (section 269F). The CEO must then assess whether the application meets the core criteria, specifically ensuring that no substitutable goods were produced in Australia (section 269C). Additionally, the CEO is obligated to publish a notice in the Gazette inviting any interested parties to submit objections if they believe the TCO should not be made (subsection 269K(1)). The Act also mandates that the TCO does not affect any rights or impose any liabilities on persons other than the Commonwealth as of the date of registration (subsection 269S(1)).
Failure to comply with the provisions of the Customs Act 1901 and the associated regulations could result in civil or criminal consequences. While the explanatory statement does not explicitly outline penalties for non-compliance with the TCO provisions, breaches of other sections of the Customs Act may incur penalties under sections such as 240-1 of the Criminal Code Act 1995, which can include fines and imprisonment depending on the severity of the breach. For example, offences involving fraudulent behaviour under the Customs Act can result in penalties of up to 10 years imprisonment and substantial fines, reflecting the seriousness with which such breaches are treated.