EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0903026
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.
Fortescue Metals applied for a TCO in respect of certain drilling rig parts on 30 January 2009.
Instrument
TCO No 0903026 was made on 24 April 2009. It declares that those certain drilling rig parts 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. 0903026 is taken to have come into force on 30 January 2009.
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, as amended, includes provisions for Tariff Concession Orders (TCOs), which were introduced to provide relief on customs duties for specific goods. Enacted by the Parliament of Australia, this legislation allows the Chief Executive Officer of Customs to grant concessions on customs duties for goods that meet certain criteria, such as the absence of substitutable goods produced in Australia. The primary objective of this mechanism is to support industries by reducing costs associated with customs duties, thereby potentially enhancing competitiveness without imposing new liabilities on individuals or entities. This instrument was introduced to address the need for specific tariff reductions in certain sectors to facilitate economic growth and efficiency. Instrument No. 0903026, issued on 24 April 2009, exemplifies this by granting a tariff concession to Fortescue Metals for certain drilling rig parts, reducing the duty from the general rate of 5% to free.
Scope and Application
The Customs Act 1901, through its Part XVA, establishes a framework for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO). This legislation applies to any person or entity seeking a concession on customs duties for specific goods not produced in Australia, ensuring no substitutable goods are manufactured domestically. The application process involves meeting the core criteria set out in section 269C of the Act, which mandates that the goods in question must not have any substitutable counterparts produced in Australia. The TCO scheme is operational across the Commonwealth of Australia, extending its application to all entities involved in the importation of goods. Notably, certain goods specified in section 269SJ of the Act are excluded from the TCO scheme, and no submissions were received by the CEO in response to the public notice regarding the application by Fortescue Metals for the drilling rig parts. The Tariff Concession Order No. 0903026, which came into effect on 30 January 2009, specifically applies to those drilling rig parts, reducing their duty rate from 5% to free, and does not impose any liabilities on any person under its purview.
Key Provisions
The key provisions of the Tariff Concession Order No. 0903026, as referenced in the Customs Act 1901 (the Act), focus primarily on the establishment of tariff concession orders (TCOs) (sections 269C, 269F, 269P). These sections outline the process by which an application for a TCO can be made and the conditions under which it can be granted. Specifically, section 269F of the Act allows an individual or entity to apply to the Chief Executive Officer (CEO) of Customs for a TCO. If the CEO determines that the application complies with the core criteria set out in section 269C, which include the absence of substitutable goods produced in Australia at the time the application is lodged, a TCO can be issued. The CEO is mandated to make a written order (a TCO) declaring that the goods specified in the application are subject to a prescribed tariff item (section 269P(3)). This instrument, TCO No. 0903026, specifically applies to certain drilling rig parts and declares them to be subject to item 50 of Schedule 4 to the Customs Tariff Act 1995, with the tariff rate set at free, as opposed to the general rate of 5%.
The Act imposes several obligations on the parties involved. The CEO must ensure that any application for a TCO meets the core criteria before issuing the order (section 269C). Additionally, the CEO is required to publish a notice in the Gazette inviting submissions from interested parties if they believe the TCO should not be made (subsection 269K(1)). In this instance, no submissions were received. The Act also stipulates that a TCO is deemed to have come into effect on the date the application was lodged (subsection 269S(1)), meaning TCO No. 0903026 is effective from 30 January 2009. Importantly, the TCO does not affect the rights of any person other than the Commonwealth and does not impose any liabilities on any person for actions taken before the TCO's effective date (subsection 269S(1)).
Under the Act, there are specific consequences for non-compliance or misuse of the TCO provisions. While the Act does not explicitly detail penalties for breaches of TCO provisions, general provisions under the Customs Act 1901 apply. Offences related to customs duties, including fraudulent or negligent breaches, can lead to substantial penalties. For example, under section 235 of the Customs Act 1901, an individual can face imprisonment for up to five years or a fine of up to 10,000 penalty units, or both, for knowingly making a false statement in a customs document. Additionally, any failure to comply with the terms of the TCO, such as attempting to evade duty through misdeclaration of goods, could result in further penalties under the Customs Act and associated regulations.