EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0907738
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 applied for a TCO in respect of certain winch skid on 05 March 2009.
Instrument
TCO No 0907738 was made on 22 May 2009. It declares that those certain winch skid 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. 0907738 is taken to have come into force on 05 March 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, enacted by the Australian Parliament, provides a framework for the regulation of customs and excise through the administration of duties, taxes, and restrictions on goods. It was introduced to address the need for a comprehensive system to regulate the import and export of goods, ensuring compliance with national policies and international obligations. One particular aspect of the Customs Act 1901 is the ability to make Tariff Concession Orders (TCOs) through which the Chief Executive Officer of Customs may apply lower rates of customs duty on certain goods, provided specific criteria are met. This mechanism aims to support Australian industries by reducing the cost of imported goods that have no Australian-made equivalents, thus fostering economic growth and competitiveness. The explanatory statement for Tariff Concession Instrument No. 0907738 illustrates the application of this provision, where a TCO was granted for certain winch skids, reducing their customs duty rate from 5% to free.
Scope and Application
The Customs Act 1901, through its Part XVA, facilitates the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs. This legislative framework allows for a lower rate of customs duty to be applied to specific goods, subject to certain conditions. An application for a TCO can be lodged by any person, provided the goods in question are not specified in section 269SJ of the Act, which lists goods ineligible for tariff concessions. For a TCO to be granted, the CEO must be satisfied that the application meets the core criteria, primarily that no substitutable goods are produced in Australia at the time of application, as outlined in section 269C. The application process includes a requirement for the CEO to publish a notice in the Gazette, inviting any interested parties to submit objections; however, in the case of TCO No. 0907738, no such objections were received. The TCO applies nationally across Australia, with no specific exclusions beyond those set out in the Act, and it came into force on the date the application was lodged, 5 March 2009. Importantly, the TCO does not disadvantage any person other than the Commonwealth nor impose any liabilities on such persons for actions taken prior to the TCO's registration.
Key Provisions
The primary operative sections of this legislation, particularly under the Customs Act 1901 (the Act), pertain to Tariff Concession Orders (TCOs). Section 269F allows for an application to be made to the Chief Executive Officer of Customs (the CEO) for a TCO concerning specific goods, while Section 269SJ outlines the types of goods that cannot be subject to a TCO. The CEO must ensure that the application meets the core criteria, as defined in Section 269C, which requires that no substitutable goods were produced in Australia on the day the application was lodged. This criterion is further explained in Sections 269D, 269E, and 269F, which define "goods produced in Australia," "ordinary course of business," and "substitutable goods," respectively.
The Act imposes several obligations on the parties involved. The CEO must accept a TCO application as valid and publish a notice in the Gazette, inviting any interested party to lodge a submission if they believe the TCO should not be made. Once the CEO is satisfied that the application meets the core criteria, they must make a written order (the TCO) specifying that the goods in question are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995. Additionally, the TCO must be published in the Gazette, ensuring transparency and providing an opportunity for public input.
In terms of consequences for breach, the Act does not explicitly detail offences or penalties for failing to comply with the provisions related to TCOs. However, non-compliance with customs regulations generally can lead to severe civil and criminal penalties under the Customs Act 1901. For example, knowingly or recklessly making a false statement or representation in connection with customs matters can result in substantial fines and imprisonment. The specific penalties can vary widely depending on the severity of the offence and the provisions breached.
The TCO, once made, has the effect of reducing the customs duty on the specified goods to zero, thereby benefiting importers who can apply for a refund of any duty paid on these goods since the TCO came into effect. Importantly, the TCO does not affect the rights of any person other than the Commonwealth in relation to actions taken before the TCO was registered, and it does not impose any liabilities on any person. This ensures that the rights and interests of third parties are protected, while still providing the intended tariff concessions to the applicants.