EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0841677
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 applied for a TCO in respect of certain synthetic diamond enhanced inserts on 28 November 2008.
Instrument
TCO No 0841677 was made on 27 February 2009. It declares that those certain synthetic diamond enhanced inserts 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. 0841677 is taken to have come into force on 28 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, established a framework under which Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs. The 2009 Tariff Concession Instrument No. 0841677 was introduced to address the specific needs of businesses importing goods that are not produced domestically and for which a tariff concession is appropriate. The primary objective of this instrument was to provide a tariff concession for certain synthetic diamond enhanced inserts, reducing the customs duty rate from the general 5% to free. The instrument was created following an application by Smith International, and after the CEO confirmed that no substitutable goods were produced in Australia, thereby meeting the core criteria stipulated under the Act. The commencement of this order on 28 November 2008, the date the application was lodged, ensures that the rights of importers are protected and potentially beneficial, with the ability to apply for a refund of duties paid on imports of these goods since the effective date of the order.
Scope and Application
The Tariff Concession Instrument No. 0841677, made under the Customs Act 1901, applies to the specific synthetic diamond enhanced inserts that Smith International applied for, aiming to provide a concession on customs duty rates. This instrument is designed to benefit importers of these goods by reducing the duty from the general rate of 5% to free, provided the application for the Tariff Concession Order (TCO) meets the core criteria outlined in the Act. The primary beneficiaries of this legislation are importers of the specified goods, who stand to gain from the reduction in duty rates. The scope of the legislation is narrowly focused on the particular goods identified in the TCO, and it does not affect any existing rights of individuals or entities, except to the extent of favourably adjusting the duty rates for future transactions. The instrument comes into effect from the date the application was lodged, ensuring immediate applicability from 28 November 2008, without retroactively imposing any liabilities on persons other than the Commonwealth.
Key Provisions
The main operative sections of this legislation include section 269F, which allows a person to apply to the CEO for a Tariff Concession Order (TCO) in respect of goods, and section 269C, which sets out the core criteria that the CEO must consider in deciding whether to grant a TCO. If the CEO is satisfied that the application meets the core criteria, they must make a written order (a TCO) declaring that the goods are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995 (section 269P(3)).
The obligations and requirements imposed by the Act on parties and entities it governs are primarily on the CEO, who must decide whether to grant a TCO based on the core criteria set out in section 269C. The CEO must also publish a notice in the Gazette inviting any interested parties to submit objections to the TCO (subsection 269K(1)). The CEO must also consider whether the goods the subject of the TCO are substitutable goods, which 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 (section 269D, 269E and 269B).
The Act also imposes certain consequences for breach of its provisions. Subsection 269S(1) provides that a TCO is taken to have come into force on the day on which the application for the TCO was lodged. 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.
There are no specific offences, penalties, or civil/criminal consequences for breach of the Act stated in the explanatory statement. However, it is possible that there may be other provisions of the Customs Act 1901 or related legislation that impose penalties or consequences for breach of their provisions. It is also worth noting that failure to comply with the requirements of the Act, such as failing to publish a notice in the Gazette inviting objections to a TCO, may result in legal action being taken against the CEO or other relevant parties.