EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0838643
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 spear on 06 November 2008.
Instrument
TCO No 0838643 was made on 30 January 2009. It declares that those certain oil and gas well spear 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. 0838643 is taken to have come into force on 06 November 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 Parliament of Australia, addresses the need for tariff concessions on certain imported goods by allowing the Chief Executive Officer of Customs to make Tariff Concession Orders (TCOs) that lower the customs duty on specified goods. This legislative mechanism was introduced to ensure that Australian industries can access necessary goods at reduced costs, thereby fostering economic efficiency and competitiveness. The 2009 Tariff Concession Instrument No. 0838643, which is an application of this scheme, was made to address a specific case where Smith International Australia Pty Ltd sought a concession on oil and gas well spears. The CEO determined that no substitutable goods were produced in Australia, thereby satisfying the core criteria for the concession, and subsequently issued the TCO which set the duty rate for these goods at free, down from the general rate of 5%. This legislative framework aims to support Australian businesses by facilitating the importation of essential goods without the burden of high customs duties.
Scope and Application
The Customs Act 1901, specifically under Part XVA, establishes a framework for the creation of Tariff Concession Orders (TCOs) through which the Chief Executive Officer of Customs (CEO) can apply lower rates of customs duty on certain goods. The scope of this legislation applies to individuals and entities that seek to import goods eligible for tariff concessions, provided the goods do not fall under the categories specified in section 269SJ of the Act. These categories include goods that are either prohibited, restricted, or otherwise not eligible for tariff concessions. The Act's jurisdictional reach is national, as it pertains to the Commonwealth of Australia and its customs regulations. The CEO's decision to issue a TCO is contingent on satisfying core criteria, notably ensuring that no substitutable goods are produced in Australia on the date the application is lodged. The instrument in question, TCO No. 0838643, pertains specifically to certain oil and gas well spears and was made effective from the date the application was lodged, 6 November 2008. The application of this TCO does not affect pre-existing rights or impose liabilities on persons other than the Commonwealth. Furthermore, it does not extend to disadvantage any individual or entity except as beneficially affecting the rights of importers who can seek refunds of duty for the goods in question since the effective date of the TCO.
Key Provisions
The key operative sections of this legislation (Tariff Concession Instrument No. 0838643) include sections 269C, 269F, 269P and 269K of the Customs Act 1901, which together provide the framework for the application and approval process of a Tariff Concession Order (TCO). Section 269F allows a person to apply to the Chief Executive Officer (CEO) of Customs for a TCO in respect of goods. If the CEO is satisfied that the application meets the core criteria outlined in section 269C, they are required to make a written order (section 269P(3)). Once the CEO is satisfied that the application meets the core criteria, section 269K requires them to publish a notice in the Gazette, inviting submissions from any person who considers the TCO should not be made.
The Act imposes several obligations and requirements on the parties it governs. Firstly, any person wishing to apply for a TCO must ensure their application is lodged in accordance with the requirements of the Customs Act. The CEO is obligated to assess whether the application meets the core criteria, particularly focusing on whether substitutable goods are produced in Australia, as per section 269C. If the CEO decides to approve the application, they must publish a notice in the Gazette inviting submissions from interested parties and consider any submissions received before making the TCO. The CEO must also ensure that the TCO does not disadvantage any person other than the Commonwealth and does not impose any liabilities on any person.
The Customs Act provides for various offences and penalties for breaches of its provisions. However, the specific penalties for non-compliance with the Tariff Concession Instrument No. 0838643 are not explicitly detailed in the provided text. Generally, under the Customs Act, penalties for offences can include substantial fines and, in some cases, imprisonment. For instance, under section 254A of the Customs Act, a person can be fined up to 10,000 penalty units or imprisoned for five years, or both, for fraudulent conduct related to customs matters. Additionally, civil penalties may also apply for breaches, with the exact nature and extent of these penalties depending on the specific breach and the provisions of the Act.
Overall, Tariff Concession Instrument No. 0838643 provides a clear process for applying for and obtaining tariff concessions on certain goods, subject to the conditions and criteria set out in the Customs Act 1901. The obligations and requirements placed on applicants and the CEO ensure that the process is fair and transparent, while the potential penalties for non-compliance serve as a deterrent against breaches of the Act.