EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1009826
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.
Woodside Burrup applied for a TCO in respect of certain axial flow shut off valves on 25 February 2010.
Instrument
TCO No 1009826 was made on 14 May 2010. It declares that those certain axial flow shut off valves 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. 1009826 is taken to have come into force on 25 February 2010.
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 Tariff Concession Instrument No. 1009826 was enacted in 2010 under the Customs Act 1901. This instrument was introduced to address a specific gap in the tariff concession scheme by providing a lower rate of customs duty for certain axial flow shut-off valves, as requested by Woodside Burrup. The instrument was made by the Chief Executive Officer of Customs in accordance with the provisions of the Customs Act 1901, specifically section 269F, which allows for the application of Tariff Concession Orders (TCOs) for goods not specified in section 269SJ of the Act. The policy objective is to ensure that no substitutable goods were produced in Australia in the ordinary course of business, thereby allowing the goods in question to benefit from reduced customs duties. The instrument was published in the Gazette with an invitation for submissions, though none were received, and it came into effect on the date the application was lodged, 25 February 2010. Importantly, the TCO does not affect the rights of any person adversely nor impose any liabilities on persons other than the Commonwealth.
Scope and Application
The Tariff Concession Instrument No. 1009826, established under the Customs Act 1901, applies to the specific axial flow shut-off valves for which Woodside Burrup made an application on 25 February 2010. This instrument was made by the Chief Executive Officer of Customs (CEO) on 14 May 2010 and it effectively declares that the valves in question are subject to a lower rate of customs duty, specifically zero, rather than the general rate of 5%. This applies to the importation of these goods into Australia and the exemption from customs duty is contingent on the CEO's determination that no substitutable goods were produced in Australia in the ordinary course of business on the date the application was lodged. The instrument extends its reach to anyone importing these specified goods into Australia and it does not disadvantage any person by affecting their rights as at the date of registration, nor does it impose any new liabilities. The CEO is required to publish a notice in the Gazette inviting submissions from any person who may have reasons to object to the making of the Tariff Concession Order (TCO), although in this case, no such submissions were received.
Key Provisions
The Customs Act 1901, through Part XVA, establishes a framework for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer (CEO) of Customs. When a TCO is granted, the goods specified in the order are subject to a lower rate of customs duty (s 269F). A TCO application must be made to the CEO, who must then determine whether it meets the core criteria, which is that no substitutable goods were produced in Australia on the day the application was lodged (s 269C). If the application is approved, the CEO issues a TCO, specifying the applicable duty rate from the Customs Tariff (s 269P(3)). In this instance, TCO No. 1009826, issued on 14 May 2010, applies to certain axial flow shut off valves, allowing them to be imported duty-free (item 50, Schedule 4 to the Customs Tariff Act 1995).
The obligations under the Act require that the CEO must publish a notice in the Gazette as soon as practicable after accepting a TCO application as valid, inviting any person who may object to the TCO to submit their views (s 269K(1)). In this case, the CEO did not receive any submissions in response to the notice. Once the application for a TCO is lodged, the TCO is considered to have come into effect on that date (s 269S(1)). Consequently, TCO No. 1009826 is deemed to have come into force on 25 February 2010. The TCO does not affect the rights of any person other than the Commonwealth as at the date of registration, ensuring that no one is disadvantaged or incurs liabilities for actions taken prior to the TCO's effective date.
Any breach of the provisions under the Customs Act 1901 can result in various penalties and consequences. While the explanatory statement does not specify particular offences related to the TCO itself, general contraventions of the Customs Act can lead to both civil and criminal penalties. Civil penalties can include fines up to $22,200 for individuals and $111,000 for bodies corporate, while criminal penalties can include imprisonment for up to five years, or both a fine and imprisonment, depending on the severity of the offence. The specific penalties for a breach depend on the nature and circumstances of the contravention.