EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0929454
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.
Schlumberger Oilfield Australia applied for a TCO in respect of certain umbilical reelers on 12 August 2009.
Instrument
TCO No 0929454 was made on 30 October 2009. It declares that those certain umbilical reelers 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. 0929454 is taken to have come into force on 12 August 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 under which Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs. These orders provide lower rates of customs duty for specified goods, addressing the need to support local industries and economic growth by making certain imported goods more competitively priced. The act enables the CEO to grant tariff concessions under specific conditions, primarily when the goods in question are not produced domestically in the ordinary course of business and have no substitutable alternatives made locally. This instrument aims to foster a balanced trade environment that encourages both domestic production and the importation of essential goods when local production is not feasible. The TCO mechanism was introduced to provide flexibility and responsiveness to the dynamic needs of various industries, ensuring they have access to necessary resources without undue financial burden.
Scope and Application
The Customs Act 1901, specifically under Part XVA, governs the scheme for Tariff Concession Orders (TCO) which are instrumental in applying a lower rate of customs duty on certain goods. This Act applies to any person or entity seeking to import goods that may benefit from a tariff concession, as determined by the Chief Executive Officer of Customs (CEO). The scope of the Act is national, affecting all entities involved in the importation of goods across Australia. Exclusions are clearly defined, such as goods specified in section 269SJ, which cannot be subject to a TCO. The CEO must ensure that no substitutable goods are produced in Australia in the ordinary course of business before granting a TCO, as outlined in section 269C of the Act. The application of TCO No. 0929454, which concerns certain umbilical reelers, exemplifies the Act's application by providing a free rate of duty for these specific goods, reducing the general duty rate from 5% as per the Customs Tariff Act 1995. The TCO process includes mandatory consultation, where the CEO invites submissions from interested parties; however, in this case, no submissions were received. The commencement of the TCO aligns with the date of the application, ensuring that no pre-existing rights or liabilities are adversely affected.
Key Provisions
The main sections of the Customs Act 1901 relevant to Tariff Concession Orders (TCOs) include sections 269C, 269F, 269P, and 269SJ (subsections 269K(1) and 269S(1) also play a role). Section 269F allows a person to apply to the Chief Executive Officer of Customs (CEO) for a TCO in respect of certain goods. If the application meets the core criteria under section 269C, meaning no substitutable goods were produced in Australia at the time of the application, the CEO must make a written order (the TCO) that specifies the goods and the applicable customs duty rate, which can be lower than the general rate. A TCO is effective from the date the application is lodged, as outlined in subsection 269S(1). Section 269K(1) requires the CEO to publish a notice in the Gazette inviting submissions from any interested parties, although no submissions were received for TCO No. 0929454.
The obligations imposed on the parties by this legislation are primarily on the CEO of Customs. Upon receiving a valid TCO application, the CEO must determine if it meets the core criteria as outlined in section 269C. If the criteria are met, the CEO must make a written TCO and publish a notice in the Gazette inviting submissions from interested parties, as required by subsection 269K(1). The CEO must also ensure that the TCO does not disadvantage any person other than the Commonwealth and does not impose any liabilities on any person for actions taken prior to the TCO's registration date. Importers of the goods subject to the TCO are given the right to apply for a refund of any customs duty paid since the TCO's effective date, under paragraph 126(1)(r) of the Regulations.
Failure to comply with the provisions of the Customs Act 1901 in relation to TCOs can result in various civil and criminal consequences. For instance, if the CEO fails to adhere to the statutory requirements when making a TCO, they could be liable for any resulting financial losses or legal actions. Similarly, if an importer or exporter knowingly makes a false statement or representation in relation to a TCO application, they could be subject to penalties under the Customs Act or other relevant legislation. Specific penalties for breaches of the Customs Act are not detailed in this explanatory statement, but they may include fines and imprisonment, depending on the nature and severity of the breach. The maximum penalties for customs-related offences are often stipulated in the relevant sections of the Act or in associated regulations.