EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0926753
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.
Esso Australia Resources Pty Ltd applied for a TCO in respect of certain subsea wellhead processing units on 24 July 2009.
Instrument
TCO No 0926753 was made on 16 October 2009. It declares that those certain subsea wellhead processing units 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. 0926753 is taken to have come into force on 24 July 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 by the Australian Parliament to provide a framework for the regulation of customs and excise duties. One of its provisions allows for the creation of Tariff Concession Orders (TCOs) to reduce customs duties on certain imported goods under specific circumstances. The problem or gap this mechanism addresses is the need to provide relief on customs duties for goods that cannot be produced in Australia, ensuring that Australian consumers and businesses have access to these goods at a lower cost. TCO No. 0926753 was introduced to provide a tariff concession for certain subsea wellhead processing units, following an application by Esso Australia Resources Pty Ltd. The Chief Executive Officer of Customs determined that no substitutable goods were produced in Australia, thereby satisfying the core criteria for a TCO. This decision was made without any submissions against the application, and the concession took effect from the date the application was lodged. The policy objective of this instrument is to facilitate the importation of specific goods that are not domestically produced, thereby benefiting importers and, ultimately, consumers.
Scope and Application
The Customs Act 1901, specifically through Part XVA, facilitates the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO). This Act applies to individuals or entities seeking a reduction in customs duty on certain goods by applying for a TCO. The application process requires that the goods in question are not specified in section 269SJ of the Act, which lists those goods that cannot be subject to a TCO, and must meet the core criteria set out in section 269C, which essentially means that no substitutable goods are produced in Australia. The scope of this legislation is national, operating within the framework of Australian customs regulations and the Customs Tariff Act 1995. Notably, the Act does not disadvantage existing rights of persons other than the Commonwealth and does not impose new liabilities. Subordinate instruments may further detail the application and enforcement of TCOs, extending or clarifying the provisions of the primary Act.
Key Provisions
The main operative sections of the Tariff Concession Instrument No. 0926753 under the Customs Act 1901 require the Chief Executive Officer of Customs (CEO) to make a written order, known as a Tariff Concession Order (TCO), for specific goods if certain criteria are met (sections 269C, 269F, 269P). Specifically, the CEO must issue a TCO if satisfied that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged (section 269C). The instrument defines key terms such as 'substitutable goods' and 'ordinary course of business' (sections 269B, 269D, 269E). Once a TCO is made, it applies to the goods specified in the order and takes effect from the date the application was lodged (section 269S(1)).
Under the Customs Act 1901, the CEO has obligations to consider and act upon applications for TCOs. The CEO must determine whether an application meets the core criteria, which includes ensuring that no substitutable goods were produced in Australia on the day the application was lodged (section 269C). Additionally, the CEO must publish a notice in the Gazette inviting any interested party to submit any reasons why the TCO should not be made (subsection 269K(1)). The CEO must also ensure that the rights of any person (other than the Commonwealth) are not adversely affected by the TCO, and that no new liabilities are imposed (subsection 269S(2)).
Breaching the provisions of the Customs Act 1901 regarding the issuance or application of TCOs can result in various consequences. While the Act does not explicitly outline specific offences or penalties for breaches related to TCOs, general provisions of the Act could be applicable. For instance, making a false statement in an application for a TCO could lead to penalties under section 246 of the Act, which includes fines of up to $22,200 or imprisonment for up to 2 years, or both, for individuals, and higher penalties for corporations. Furthermore, failure to comply with the notice requirements under subsection 269K(1) may result in administrative penalties as prescribed by the relevant regulations.
In summary, the Tariff Concession Instrument No. 0926753 under the Customs Act 1901 provides a framework for the CEO to issue TCOs that grant tariff concessions on specified goods. The CEO has specific obligations to ensure that applications meet the core criteria and that the rights of third parties are not adversely affected. Breaches of the Act, particularly those involving false statements or failure to comply with notice requirements, can result in significant penalties.