EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0915419
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.
Caledus Australia applied for a TCO in respect of certain oil and gas well tools on 07 May 2009.
Instrument
TCO No 0915419 was made on 31 July 2009. It declares that those certain oil and gas well tools 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. 0915419 is taken to have come into force on 07 May 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, established a framework for the regulation of customs duties. Specifically, it introduced the scheme for Tariff Concession Orders (TCOs), allowing for lower customs duties on certain goods. This legislative instrument was designed to address the gap in providing relief for goods where no Australian-produced substitutes exist, thereby supporting industry competitiveness and economic efficiency. Instrument No. 0915419, made under this Act, was introduced to provide tariff concessions on certain oil and gas well tools, effective from 7 May 2009, when the application was lodged. This instrument was implemented to ensure that importers of these goods could benefit from reduced duties, aligning with the policy objective of facilitating trade by reducing unnecessary barriers. The process involved the Chief Executive Officer of Customs assessing the application and, upon satisfaction that no suitable Australian-produced substitutes existed, making a written order that effectively granted the tariff concession.
Scope and Application
The Customs Act 1901, as amended, includes a provision for the creation of Tariff Concession Orders (TCOs) through Part XVA, which allows the Chief Executive Officer of Customs to lower customs duty rates on specified goods. This legislative framework applies to any individual or entity seeking a tariff concession for goods not produced in Australia and not specified as ineligible under section 269SJ of the Act. The application process necessitates a determination by the CEO that no substitutable goods are being produced domestically, as per section 269C of the Act, which hinges on the definitions provided in sections 269D and 269E. Should the CEO be satisfied that the application meets the criteria, a written TCO is issued, effectively altering the duty rate for the specified goods from the general rate to a rate prescribed in the Customs Tariff Act 1995. The TCO process ensures that any rights of third parties, other than the Commonwealth, are protected from retroactive disadvantage, while also allowing for potential duty refunds for importers under the Customs Act Regulations. The scope of the Act is thus both national and specific to the industries and goods involved in international trade, with exclusions based on domestic production and specified ineligible goods.
Key Provisions
The main operative sections of the Tariff Concession Instrument No. 0915419 under the Customs Act 1901 (the Act) primarily revolve around the establishment of Tariff Concession Orders (TCOs) as outlined in section 269F. According to this provision, an individual or entity can apply to the Chief Executive Officer of Customs (CEO) for a TCO in respect of specific goods. The CEO must then decide whether the application meets the core criteria set out in section 269C of the Act, which stipulates that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged.
Section 269P(3) of the Act mandates that if the CEO is satisfied that the application meets the core criteria, they must make a written order (the TCO) declaring the goods subject to the application as those to which a prescribed item of Schedule 4 to the Customs Tariff Act 1995 (the Tariff) applies. For instance, in TCO No. 0915419, certain oil and gas well tools are declared as goods to which item 50 of Schedule 4 to the Tariff applies, resulting in a duty rate of free instead of the general rate of 5%.
The Act imposes several obligations and requirements on the parties it governs. Firstly, the CEO must ensure that any TCO application does not pertain to goods specified in section 269SJ, which lists goods that cannot be subject to a TCO. Secondly, the CEO must assess whether the application meets the core criteria, specifically ensuring that no substitutable goods were produced in Australia in the ordinary course of business on the date of application. The CEO is also obligated to publish a notice in the Gazette as soon as practicable after accepting a TCO application as valid, inviting any person who believes there are reasons why the TCO should not be made to lodge a submission. In the case of TCO No. 0915419, no such submissions were received.
The Act also outlines potential consequences for breaches, although the specific provisions of this explanatory statement do not detail the penalties. Typically, breaches of the Customs Act 1901 can result in both civil and criminal penalties. Civil penalties may include fines, while criminal penalties can result in imprisonment, depending on the severity and nature of the breach. The exact penalties are usually specified in related sections of the Act or in subsidiary legislation. The Act ensures that 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 in respect of anything done or omitted to be done before the date of registration.