EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0919015
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.
Dq Holdings Pty Ltd applied for a TCO in respect of certain subsea wellhead housing on 05 June 2009.
Instrument
TCO No 0919015 was made on 28 August 2009. It declares that those certain subsea wellhead housing 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. 0919015 is taken to have come into force on 05 June 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 the regulation of imports and exports. The Act established a system under which Tariff Concession Orders (TCOs) can be made to reduce customs duties on certain goods. Enacted to address the need for a flexible and responsive mechanism to lower customs duties on specific imported goods, the Act empowers the Chief Executive Officer of Customs to issue TCOs, thereby providing relief to importers under certain conditions. This legislation seeks to ensure that the Australian market remains competitive by allowing the reduction of customs duties on goods for which no suitable Australian-made alternatives exist, thereby facilitating access to essential products and contributing to economic efficiency.
Scope and Application
The Customs Act 1901, specifically Part XVA, establishes a framework under which the Chief Executive Officer of Customs can issue Tariff Concession Orders (TCOs) to apply lower rates of customs duty to certain goods. This process is available to any person who applies for a TCO in respect of goods, provided that the goods are not listed in section 269SJ of the Act, which specifies those goods that are ineligible for a TCO. An application meets the core criteria if, on the day it was lodged, no substitutable goods were produced in Australia in the ordinary course of business. Once the CEO is satisfied that the application meets these criteria, a TCO is issued, declaring that the goods in question are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995. The application of TCO No. 0919015, concerning certain subsea wellhead housing, demonstrates this process, with the TCO coming into force on the date the application was lodged, 5 June 2009. Importantly, the TCO does not disadvantage any person other than the Commonwealth and does not impose any liabilities on any person, while it beneficially affects the rights of importers by allowing them to apply for a refund of duty on goods imported since the date of the TCO. The Act extends its application through subordinate instruments, ensuring a structured approach to tariff concessions.
Key Provisions
The main operative sections of the Tariff Concession Instrument No. 0919015 include section 269F, which allows an application to be made to the Chief Executive Officer (CEO) of Customs for a Tariff Concession Order (TCO) in respect of certain goods (section 269F). Section 269C specifies the core criteria that a TCO application must meet, which includes ensuring that no substitutable goods were produced in Australia on the day the application was lodged (section 269C). If the CEO is satisfied that the application meets these core criteria, they are required to make a written TCO order (section 269P(3)).
The obligations and requirements imposed by the Act on parties and entities are primarily directed towards the CEO of Customs. The CEO must decide whether an application for a TCO meets the core criteria and, if satisfied, issue a written TCO order (section 269P(3)). Additionally, the CEO is required to publish a notice in the Gazette, inviting any person who may have objections to the TCO to lodge a submission (subsection 269K(1)). In this instance, the CEO did not receive any submissions in response to the published notice.
Under the Customs Act 1901, there are specific consequences and penalties for breaches of the Act or its regulations. While the explanatory statement does not explicitly detail penalties for breaches related to TCOs, breaches of customs laws generally can result in both civil and criminal penalties. Civil penalties may include fines and the recovery of unpaid duty, while criminal penalties could lead to imprisonment, reflecting the severity of non-compliance with customs regulations.
In summary, the Tariff Concession Instrument No. 0919015 provides a mechanism for reducing the customs duty on certain subsea wellhead housing, contingent on the CEO’s satisfaction that no substitutable goods are produced in Australia. The CEO's role includes evaluating applications, publishing notices in the Gazette, and issuing TCOs if criteria are met. While specific penalties for TCO-related breaches are not detailed, general customs law penalties apply for non-compliance.