EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0911694
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 oil and gas well tubing on 07 April 2009.
Instrument
TCO No 0911694 was made on 03 July 2009. It declares that those certain oil and gas well tubing 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. 0911694 is taken to have come into force on 07 April 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 was enacted to provide for the administration of customs and excise duties, and to regulate the importation and exportation of goods. This Act includes provisions for Tariff Concession Orders (TCOs) that allow for reduced customs duty rates on certain goods under specific circumstances. Enacted by the Australian Parliament, the Act aims to facilitate trade by providing tariff concessions that can lower the duty burden on specific goods, provided they meet certain criteria. The Tariff Concession Instrument No. 0911694, which was introduced on 03 July 2009, is a specific instance of such concessions. This instrument was made to address the application by Smith International for reduced duty rates on certain oil and gas well tubing, effectively applying a zero duty rate on these goods as no substitutable goods were being produced in Australia at the time of application. The policy objective here is to encourage the importation of goods that are not locally produced, thereby promoting trade and potentially enhancing industry competitiveness.
Scope and Application
The Customs Act 1901, under Part XVA, facilitates the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO) to apply lower rates of customs duty on specific goods, subject to certain criteria. The Act applies to individuals or entities that apply for such tariff concessions in relation to goods that are not produced in Australia in the ordinary course of business and for which no substitutable goods exist domestically. This legislation operates nationally, with its reach extending across all jurisdictions within Australia. The application process requires a formal submission to the CEO, and if the application meets the core criteria outlined in section 269C, the CEO must issue a written order. The instrument in question, TCO No. 0911694, pertains to certain oil and gas well tubing, which are subject to a zero rate of duty, reducing the general rate of 5% applicable to these goods. The Act mandates consultation with the public upon accepting an application as valid, although no submissions were received for this particular TCO. The concession comes into effect on the day the application is lodged, with no retroactive effect on pre-existing rights or liabilities.
Key Provisions
The primary operative sections of this legislation, particularly sections 269C, 269B, and 269P(3) of the Customs Act 1901, establish the criteria and process for making Tariff Concession Orders (TCOs). Section 269C specifies that a TCO application meets the core criteria if, on the date of application, no substitutable goods were produced in Australia in the ordinary course of business. Section 269B defines terms such as 'goods produced in Australia,' 'ordinary course of business,' and'substitutable goods.' Section 269P(3) mandates that if the Chief Executive Officer (CEO) of Customs is satisfied that an application meets the core criteria, they must make a written order (a TCO) declaring that the goods in question are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995.
The Act imposes specific obligations on parties involved in the TCO process. For example, section 269F allows a person to apply to the CEO for a TCO in respect of goods. The CEO must then determine whether the application meets the core criteria, as outlined in section 269C. If the application is deemed valid and meets the criteria, the CEO is required to make a written TCO under section 269P(3). Additionally, section 269K(1) requires the CEO to publish a notice in the Gazette inviting submissions from any person who believes there are reasons why the TCO should not be made. In the case of TCO No. 0911694, no submissions were received in response to this invitation.
Under the Customs Act 1901, there are potential civil and criminal consequences for breaches of the provisions related to TCOs. However, the Explanatory Statement does not specify any particular offences, penalties, or consequences for non-compliance with the TCO process itself. Generally, breaches of the Customs Act can result in civil penalties, including fines, and in more severe cases, criminal penalties such as imprisonment. For specific penalties related to breaches in the context of TCOs, further examination of the Customs Act and associated regulations would be necessary. Nonetheless, the general principle is that adherence to the statutory requirements is essential to avoid legal repercussions.