EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0836343
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 fishing jar on 21 October 2008.
Instrument
TCO No 0836343 was made on 16 January 2009. It declares that those certain oil and gas well fishing 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. 0836343 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, establishes a framework through which Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs (CEO). These orders provide for a lower rate of customs duty on specific goods, which is intended to encourage certain industries and practices by reducing the cost of importing necessary materials. The Customs Tariff Concession Instrument No. 0836343, made on 16 January 2009, addresses the specific application by Smith International Australia Pty Ltd for tariff concessions on certain oil and gas well fishing jars. The policy objective here is to facilitate the importation of these goods at a reduced duty rate, thereby potentially stimulating economic activity in the oil and gas sector. The instrument was introduced to ensure that no substitutable goods were produced in Australia, allowing the application to meet the core criteria as stipulated in the Act.
Scope and Application
The Customs Act 1901 applies to any person or entity involved in the importation of goods into Australia, encompassing a wide range of industries and transactions that involve the import of goods subject to customs duties. The Act operates on a Commonwealth level, with its provisions applying across Australia. The specific instrument, Tariff Concession Order No. 0836343, pertains to certain oil and gas well fishing jars and is an application of the scheme under Part XVA of the Act, which allows for the reduction or exemption of customs duty on specified goods through Tariff Concession Orders made by the Chief Executive Officer of Customs. The order is effective from the date of the application, in this case, 21 October 2008. There are specific exclusions under section 269SJ of the Act, which details the goods that cannot be subject to a Tariff Concession Order. The CEO must ensure that the goods in question are not substitutable by goods produced in Australia before making an order. The order does not affect the rights of any person as at the date of registration and does not impose any new liabilities on persons other than the Commonwealth.
Key Provisions
The main operative sections of Tariff Concession Instrument No. 0836343 under the Customs Act 1901 (section 269P(3)) establish the process for making a Tariff Concession Order (TCO) for certain oil and gas well fishing jars, and section 269C sets out the criteria for making such an order. If the Chief Executive Officer (CEO) of Customs is satisfied that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged, the CEO must make a written order declaring that the goods in question are subject to a lower rate of customs duty (section 269P(3)). This particular TCO (section 269P(3)) declares that the oil and gas well fishing jars are subject to item 50 of Schedule 4 to the Customs Tariff Act 1995, with the general rate of duty on these goods being 5% and the concessional rate being free.
The Act imposes several obligations and requirements on the parties involved. Firstly, section 269F allows any person to apply to the CEO for a TCO in respect of goods, provided the goods are not specified in section 269SJ of the Act. Once an application is received, the CEO must ensure that it meets the core criteria outlined in section 269C, which involves confirming that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged. Additionally, under section 269K(1), the CEO must publish a notice in the Gazette as soon as practicable after accepting the application as valid, inviting any interested parties to lodge submissions if they believe the TCO should not be made. The CEO did not receive any submissions for this particular TCO.
Failure to comply with the requirements of the Customs Act 1901 may result in civil and criminal penalties. Under section 335 of the Act, any person who contravenes the Act or the Regulations may be liable for a penalty of up to 10,000 penalty units for an individual and up to 50,000 penalty units for a body corporate. Additionally, section 336 states that any person who contravenes a direction or an order made under the Act may be liable for a penalty of up to 1,000 penalty units for an individual and up to 5,000 penalty units for a body corporate. However, there are no specific offences or penalties mentioned in relation to the TCO itself, and the consequences of breaching the TCO would depend on the broader provisions of the Customs Act 1901.