EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0837057
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 jar intensifier on 27 October 2008.
Instrument
TCO No 0837057 was made on 16 January 2009. It declares that those certain oil and gas well jar intensifier 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. 0837057 is taken to have come into force on 27 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. 0837057 was enacted in 2009 under the Customs Act 1901. This legislation addresses the need for tariff concessions for specific goods that are not produced in Australia, thereby ensuring that Australian industries remain competitive and that consumers benefit from lower prices. The instrument was introduced to facilitate applications for Tariff Concession Orders (TCOs) that reduce customs duties for goods not manufactured locally, provided they meet certain criteria such as the absence of substitutable goods produced in Australia. This legislative measure was enacted by the Australian Parliament to streamline the process for tariff reductions, enhancing economic efficiency and supporting local industries.
The primary objective of this instrument, as outlined in the explanatory statement, is to allow the Chief Executive Officer of Customs to make TCOs for goods where no substitutable products are manufactured in Australia. By doing so, the government aims to protect local industries from foreign competition while ensuring that consumers have access to competitively priced goods. The process requires public consultation to allow interested parties to voice any objections to the concession. In the case of TCO No. 0837057, no submissions were received, leading to the effective reduction of duty on certain oil and gas well jar intensifiers to zero.
Scope and Application
The Customs Act 1901, through its Tariff Concession Orders (TCO), applies to individuals and entities that are involved in the importation of specified goods into Australia. The Act allows the Chief Executive Officer of Customs to reduce or eliminate customs duty on certain goods if it is determined that these goods are not substitutable by any goods produced domestically. This applies to industries and businesses that rely on importing specific goods for their operations, provided that the goods in question are not listed under section 269SJ of the Act, which excludes certain goods from tariff concessions. The application of a TCO is contingent upon the core criteria being met, specifically, that no substitutable goods are produced in Australia on the date the application was lodged. The geographical scope of the Act is national, as it pertains to the importation into any part of Australia. While the Act itself sets out the primary provisions and criteria, the specific application and interpretation of these provisions can be extended or restricted through subordinate instruments, such as the Customs Tariff Act 1995, which defines the rates of duty applicable to various goods.
Key Provisions
The main operative sections of this legislation are section 269F, which allows for the application of Tariff Concession Orders (TCOs) by individuals or entities, and section 269P, which outlines the criteria the Chief Executive Officer (CEO) of Customs must consider when deciding whether to grant a TCO. Specifically, section 269C stipulates that a TCO application meets the core criteria if no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged. This provision is critical as it determines the eligibility of the goods for a tariff concession. Section 269S(1) then dictates that a TCO comes into force on the date the application is lodged, which in this case was 27 October 2008.
The Act imposes several obligations on parties involved with TCOs. For instance, the CEO must decide whether an application meets the core criteria as outlined in section 269C. Additionally, the CEO is required under section 269K(1) to publish a notice in the Gazette inviting submissions from any interested parties who believe the TCO should not be made. The CEO must also ensure that the TCO does not affect the rights of any person, other than the Commonwealth, in a manner that disadvantages them or imposes liabilities in respect of actions taken prior to the registration of the TCO. These obligations are essential for maintaining transparency and fairness in the process of tariff concessions.
Breaches of the provisions outlined in the Customs Act 1901 can lead to various consequences. If an individual or entity fails to comply with the requirements set forth by the Act, they may face civil or criminal penalties. For example, section 177 of the Act allows for civil penalties for non-compliance, which can include fines up to a significant amount as prescribed by law. Additionally, section 179 of the Act provides for criminal penalties, including fines and imprisonment, for more serious breaches. These penalties serve as deterrents to ensure adherence to the legal framework governing tariff concessions.