EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0838646
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 mill tool on 06 November 2008.
Instrument
TCO No 0838646 was made on 30 January 2009. It declares that those certain oil and gas mill tool 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. 0838646 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 Australian Parliament, provides for the regulation of customs duties and includes provisions for Tariff Concession Orders (TCOs) to reduce customs duty on certain goods. The Tariff Concession Instrument No. 0838646, issued in 2009, was introduced to address the need for tariff concessions on specific goods, in this case, certain oil and gas mill tools, to ensure they are competitive in the market without incurring high customs duty costs. The Chief Executive Officer of Customs was satisfied that these goods met the core criteria, specifically that no substitutable goods were produced in Australia at the time of application. Consequently, the TCO granted a zero-rate duty on these goods, benefitting importers who could claim refunds for duties paid before the concession was effective. This instrument aimed to support industry competitiveness while adhering to the legislative framework set out in the Customs Act 1901.
Scope and Application
The Customs Act 1901, through its Part XVA, facilitates the application of Tariff Concession Orders (TCOs) for specific goods, thereby granting lower rates of customs duty. These orders are issued by the Chief Executive Officer of Customs upon application, provided the goods in question are not prohibited under section 269SJ and meet the core criteria outlined in section 269C. This requires that no substitutable goods are produced in Australia in the ordinary course of business as per sections 269D and 269E. Once the CEO determines that an application satisfies these conditions, a TCO is issued, which applies to the specified goods under the Customs Tariff Act 1995. For instance, TCO No. 0838646, made in respect of certain oil and gas mill tools, reduced the duty from 5% to free, effective from the date the application was lodged. The application process requires public consultation, although in this case, no submissions were received. Importantly, the TCO does not disadvantage any person by affecting their rights or imposing liabilities for actions taken before the order's registration, and it benefits importers by allowing them to apply for duty refunds from the effective date.
Key Provisions
The Tariff Concession Instrument No. 0838646, made under the Customs Act 1901, establishes a tariff concession order (TCO) for specific oil and gas mill tools. The main operative sections involved are sections 269C, 269F, 269P, and 269SJ of the Customs Act 1901. Section 269F allows a person to apply to the Chief Executive Officer (CEO) of Customs for a TCO in respect of goods, provided that the goods are not 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, such as no substitutable goods being produced in Australia in the ordinary course of business (section 269C), the CEO must make a written order declaring that the goods in question are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995, resulting in a reduced or free duty rate.
The obligations imposed by the Act on the parties governed by it include the requirement for applicants to ensure that the goods they apply for are not specified in section 269SJ of the Customs Act 1901. The CEO of Customs has the responsibility to assess whether the application meets the core criteria as outlined in section 269C and, if satisfied, to make the TCO. Additionally, the CEO is mandated to publish a notice in the Gazette inviting submissions from any person who believes there are reasons why the TCO should not be made (subsection 269K(1)).
Failure to comply with the provisions of the Customs Act 1901 may result in civil or criminal consequences. For instance, if an entity or individual submits a false application for a TCO, they could face penalties under the relevant sections of the Customs Act 1901. The penalties for breaches can include fines and, in serious cases, imprisonment. The specific penalties are not outlined in the provided text, but under Australian law, the severity of the penalty often correlates with the severity of the breach, the intent behind it, and any previous history of non-compliance. For precise details on maximum penalties, one would need to refer to the relevant sections of the Customs Act 1901 and associated regulations.