EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0934180
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 casing cleaning tools on 14 September 2009.
Instrument
TCO No 0934180 was made on 27 November 2009. It declares that those certain oil and gas well casing cleaning 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. 0934180 is taken to have come into force on 14 September 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 facilitate the administration of customs duties and related matters. The Act provides a framework for the Chief Executive Officer of Customs to make Tariff Concession Orders (TCOs), which apply lower rates of customs duty to specified goods. This legislative instrument, Tariff Concession Instrument No. 0934180, was introduced to address the need for tariff concessions for certain oil and gas well casing cleaning tools. The objective was to ensure that these goods, which had no substitutable alternatives produced in Australia, were subject to a reduced customs duty rate, thereby promoting their accessibility and economic efficiency within the Australian market. The instrument was enacted on 27 November 2009, and it became effective from 14 September 2009, the date the application was lodged. The TCO does not affect any existing rights or impose liabilities on any person other than the Commonwealth.
Scope and Application
The Tariff Concession Instrument No. 0934180, made under the Customs Act 1901, applies to entities seeking tariff concessions on certain goods, specifically oil and gas well casing cleaning tools in this instance. The instrument was created in response to an application by Caledus Australia, and the process involves the Chief Executive Officer of Customs determining whether the application meets the core criteria, which include the absence of substitutable goods produced in Australia at the time of application. The application of the tariff concession is geographically and jurisdictionally bound by the Commonwealth's legislative powers, and it does not impose any liabilities or disadvantage any person other than the Commonwealth. The concession, effective from the date the application was lodged, allows for a zero rate of duty on the specified goods, as opposed to the general rate of 5%, and provides benefits to importers who may apply for a refund of duty on goods imported since the commencement date. The Act allows for further extension or restriction of application through subordinate instruments, though no such provisions are detailed in the specific explanatory statement provided.
Key Provisions
The main operative sections of Tariff Concession Instrument No. 0934180 under the Customs Act 1901 (section 269F) provide that an applicant may apply to the Chief Executive Officer (CEO) of Customs for a Tariff Concession Order (TCO) in respect of goods. If the application is not for goods specified in section 269SJ of the Act, the CEO must then determine whether the application meets the core criteria (section 269C). If the CEO is satisfied that the application meets the core criteria, they must make a written order (section 269P(3)).
The Act imposes specific obligations and requirements on the parties involved. An applicant must submit an application to the CEO for a TCO, ensuring that the goods in question are not those specified in section 269SJ. The CEO, upon accepting the application as valid, must publish a notice in the Gazette inviting submissions from any person who believes there are reasons why the TCO should not be made (subsection 269K(1)). The CEO must also decide whether the application meets the core criteria, which include verifying that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged (section 269C). If the core criteria are met, the CEO must make a written order declaring the goods subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995 (section 269P(3)).
Failure to comply with the requirements of the Act can result in various consequences. Under subsection 269L(1), any person who knowingly makes a false or misleading statement in an application for a TCO can face civil or criminal penalties. The maximum penalty for a civil penalty is set out in subsection 286-15(4) of the Act, which can be up to 5,000 penalty units or, if greater, three times the value of the benefit obtained. For criminal penalties, subsection 286-25(2) states that an individual can be fined up to 5,000 penalty units, while a body corporate can be fined up to 50,000 penalty units. Additionally, under subsection 286-25(4), a court may order the confiscation of any benefit obtained through the false or misleading statement.
The explanatory statement also clarifies 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 on a person in respect of anything done or omitted to be done before the date of registration. This means that the rights of importers will be beneficially affected, as they can apply for a refund of duty on goods imported since the day on which the TCO is taken to have come into force, according to paragraph 126(1)(r) of the Regulations.