EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0916982
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 Australia Pty Ltd applied for a TCO in respect of certain manifold cementing downholes on 19 May 2009.
Instrument
TCO No 0916982 was made on 07 August 2009. It declares that those certain manifold cementing downholes 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. 0916982 is taken to have come into force on 19 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, provides a framework for the administration of customs duties and includes provisions for Tariff Concession Orders (TCOs). These orders are designed to provide relief from customs duties under specific circumstances, such as when there are no substitutable goods produced in Australia. The Tariff Concession Instrument No. 0916982, made in 2009, addresses a specific need by applying a TCO to certain manifold cementing downholes, granting them a zero duty rate. This was in response to an application by Smith International Australia Pty Ltd, who sought the concession on the basis that no substitutable goods were produced in Australia, meeting the core criteria outlined in the Customs Act 1901. The policy objective of the TCO is to facilitate trade and economic efficiency by reducing the duty burden on specific imported goods, thereby benefiting the rights of importers who can apply for duty refunds on goods imported since the TCO took effect.
Scope and Application
The Customs Act 1901, through Part XVA, establishes a framework for the Chief Executive Officer of Customs (CEO) to issue Tariff Concession Orders (TCOs) for specific goods, resulting in reduced customs duty rates. This legislation applies to any person who applies for a TCO in respect of goods that are not specified in section 269SJ of the Act, which includes those goods that cannot be subject to a TCO. The application of a TCO is contingent upon the CEO's determination that no substitutable goods are produced in Australia in the ordinary course of business. This legislative instrument has a national reach, as it is administered under the Commonwealth of Australia. Notably, the CEO must publish a notice inviting submissions if any party believes there are reasons why the TCO should not be made, although in this instance, no submissions were received. The TCO in question, Instrument TCO No. 0916982, applies to certain manifold cementing downholes, reducing their duty rate to free from the general rate of 5%. The TCO took effect on the date the application was lodged, 19 May 2009, without retroactively affecting the rights of any person other than the Commonwealth, and it does not impose any new liabilities on any individual or entity.
Key Provisions
The main operative sections of this Tariff Concession Instrument No. 0916982 under the Customs Act 1901 (section 269P(3)) declare that certain manifold cementing downholes are subject to item 50 of Schedule 4 to the Customs Tariff Act 1995, with a duty rate of free, effective from 19 May 2009 (subsection 269S(1)). This was made possible because the Chief Executive Officer (CEO) of Customs was satisfied that no substitutable goods were produced in Australia in the ordinary course of business (section 269C). The CEO was also required to publish a notice in the Gazette inviting any interested parties to submit their views on why the Tariff Concession Order (TCO) should not be made (subsection 269K(1)), though no submissions were received in this case.
The obligations imposed by this Act on the parties it governs include the requirement for any person to apply to the CEO for a TCO if they wish to have certain goods subject to a concession (section 269F). The CEO must then decide whether the application meets the core criteria, specifically that no substitutable goods were produced in Australia on the day the application was lodged (section 269C). Additionally, the CEO is obligated to publish a notice in the Gazette, inviting submissions from interested parties, as soon as practicable after accepting a TCO application as valid (subsection 269K(1)). If the CEO is satisfied that the application meets the core criteria, they must make a written order declaring the goods to which the TCO applies (section 269P(3)).
In terms of the consequences for breach, while the explanatory statement does not specify any criminal or civil penalties for non-compliance with the TCO, it does clarify that the TCO does not affect the rights of any person as at the date of registration in a manner that would disadvantage them or impose liabilities for anything done or omitted before the date of registration (subsection 269S(2)). Therefore, while there are no specific penalties mentioned, any breach of the conditions under which the TCO is granted could potentially result in legal action or other consequences under the broader provisions of the Customs Act 1901.