EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0944896
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.
DrillTec Australia Pty Ltd applied for a TCO in respect of certain drill pipes on 25 November 2009.
Instrument
TCO No 0944896 was made on 05 February 2010. It declares that those certain drill pipes 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. 0944896 is taken to have come into force on 25 November 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 Commonwealth Parliament, provides a framework for the regulation of customs and excise in Australia. One of the key features of this Act is Part XVA, which allows for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs. This mechanism was introduced to address the need for tariff concessions on specific goods that are not produced in Australia, thereby encouraging imports and potentially reducing costs for businesses. The problem it addresses is the absence of locally produced alternatives for certain goods, which can lead to higher costs and reduced competitiveness for Australian businesses that rely on these imports. The policy objective behind TCOs is to facilitate the importation of goods that are essential for Australian industries but not manufactured domestically, thereby supporting economic efficiency and competitiveness.
Scope and Application
The Customs Act 1901 provides a framework for the regulation of customs duty, including the application of Tariff Concession Orders (TCOs) which can reduce the duty on specific goods. This instrument pertains to the application of TCOs under Part XVA of the Act, specifically focusing on the process and criteria for granting these concessions. The Act applies to any person or entity seeking a reduction in customs duty for specified goods, provided these goods are not listed in section 269SJ of the Act, which details goods ineligible for tariff concessions. The Act's jurisdiction spans across Australia, as it is a Commonwealth Act. The application process involves submitting an application to the Chief Executive Officer of Customs (CEO), who then assesses whether the application meets the core criteria, such as the absence of substitutable goods produced in Australia. The instrument also includes provisions for public consultation and the commencement date of the TCO, which generally aligns with the date of the application. Notably, the TCO does not retroactively affect existing rights or impose new liabilities on entities other than the Commonwealth, and importers may seek refunds for duties paid on eligible goods since the TCO's effective date.
Key Provisions
The Customs Act 1901, as amended by Tariff Concession Instrument No. 0944896, facilitates the reduction of customs duties on certain goods through the issuance of Tariff Concession Orders (TCOs). Under section 269F, a person can apply to the Chief Executive Officer of Customs (CEO) for a TCO if the goods in question are not specified in section 269SJ, which lists goods that cannot be subject to a TCO. The CEO must then determine if the application meets the core criteria set out in section 269C, which requires that, on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business. If these criteria are satisfied, the CEO must issue a written order, as per section 269P(3), declaring that the goods in question are subject to a specified item in Schedule 4 of the Customs Tariff Act 1995, thereby applying a lower rate of duty.
The obligations imposed by this legislation require applicants to ensure their applications meet the criteria stipulated in sections 269C and 269SJ. The CEO has the duty to review applications and verify compliance with these criteria before issuing a TCO. Additionally, under subsection 269K(1), the CEO must publish a notice in the Gazette inviting submissions from any interested parties who might oppose the granting of a TCO. The CEO is also responsible for ensuring that the TCO does not affect the rights of any person, as per subsection 269S(1), and for taking necessary steps to allow for refunds of duty paid on the goods since the effective date of the TCO, as per paragraph 126(1)(r) of the Regulations.
Failure to comply with the provisions of the Customs Act 1901 and the associated regulations can result in significant consequences. While the explanatory statement does not detail specific offences or penalties under this TCO, breaches of customs laws generally can lead to both civil and criminal penalties. Civil penalties may include fines, while criminal penalties can include imprisonment, depending on the severity and intent behind the breach. The exact penalties would be determined based on the broader context of the Customs Act 1901 and any relevant case law.