EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0843073
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.
Halliburton Pty Ltd applied for a TCO in respect of certain Proppants on 08 December 2008.
Instrument
TCO No 0843073 was made on 27 February 2009. It declares that those certain Proppants 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. 0843073 is taken to have come into force on 08 December 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 was enacted to provide a regulatory framework for the collection of customs duty and the control of imported and exported goods. The Act introduced the Tariff Concession Orders (TCOs) scheme, under which the Chief Executive Officer of Customs may grant concessions on customs duties for certain goods, provided that they meet specific criteria. The 2009 Tariff Concession Instrument No. 0843073, which was developed to address the specific needs of businesses like Halliburton Pty Ltd, is an example of this scheme in action. This instrument was introduced to provide a concession on the duty for certain Proppants, setting the rate of duty at free, which is lower than the general rate of 5%. This instrument was developed following an application from Halliburton Pty Ltd and after consultation processes as outlined in the Act, and it came into force on the date the application was lodged, 8 December 2008. Importantly, it does not disadvantage any person other than the Commonwealth and does not impose any liabilities on any person.
Scope and Application
The Tariff Concession Instrument No. 0843073 under the Customs Act 1901 applies to goods that are the subject of a Tariff Concession Order (TCO). Specifically, it applies to Proppants for which Halliburton Pty Ltd made an application on 08 December 2008. The instrument is applicable to entities that import these goods, and it affects the rate of customs duty applicable to them. The scope of the Act encompasses the geographic reach of Australia and its territories, governed by the Commonwealth. The application of this TCO is contingent upon the core criteria set out in the Act, particularly under sections 269C and 269SJ, which determine whether substitutable goods are produced in Australia. The CEO of Customs must ensure that the goods in question do not have substitutable alternatives produced domestically before granting a TCO. The instrument does not disadvantage any person by affecting their rights as at the date of registration and does not impose any liabilities on any person.
Key Provisions
The key provisions of Tariff Concession Instrument No. 0843073 under the Customs Act 1901 (the Act) establish the criteria and procedures for making Tariff Concession Orders (TCOs). Section 269F of the Act allows for an application to the Chief Executive Officer of Customs (the CEO) to be made for a TCO concerning specific goods, provided the goods are not those listed in section 269SJ, which are ineligible for a TCO. To meet the core criteria, as outlined in section 269C, the CEO must determine that no substitutable goods are produced in Australia in the ordinary course of business on the day the application is lodged. The definitions of "goods produced in Australia," "ordinary course of business," and "substitutable goods" are provided in sections 269D, 269E, and 269P respectively. If the CEO is satisfied that the application meets these criteria, a written order (TCO) is issued, as stipulated in subsection 269P(3), declaring that the specified goods are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995.
The obligations imposed on the parties or entities governed by this legislation include the requirement for applicants to ensure that their applications for TCOs are complete and meet the core criteria as defined in the Act. The CEO must then review the application and, if satisfied, issue a TCO. Additionally, the CEO is obligated to publish a notice in the Gazette, inviting any interested parties to submit objections or submissions against the proposed TCO, as required by subsection 269K(1). The CEO must consider these submissions before making a final decision. In this specific case, no submissions were received, and the TCO was issued accordingly.
Breaches of the provisions outlined in the Customs Act 1901 and its associated regulations may result in civil or criminal consequences. While the explanatory statement does not detail specific offences or penalties related to TCOs, the Act generally provides for various penalties for breaches, which could include fines or imprisonment. The maximum penalties for breaches of customs laws can be severe, depending on the nature and seriousness of the offence. It is important for all parties involved to adhere strictly to the provisions and requirements set out in the Act to avoid any potential legal ramifications.