EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1010890
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 Australia Pty Ltd applied for a TCO in respect of certain sand feeding storage trailers on 03 March 2010.
Instrument
TCO No 1010890 was made on 28 May 2010. It declares that those certain sand feeding storage trailers 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. 1010890 is taken to have come into force on 03 March 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 Customs Act 1901, through the introduction of Tariff Concession Orders (TCOs), aims to facilitate tariff concessions for specific goods, thereby reducing the customs duty applicable to those goods. Enacted by the Australian Parliament, this legislation provides a mechanism whereby the Chief Executive Officer of Customs can reduce the customs duty on certain goods, provided they meet specific criteria such as the absence of substitutable goods produced in Australia. This process was introduced to address the need for economic flexibility in tariff regulations, allowing for the reduction of customs duty where appropriate, thereby potentially benefiting importers and encouraging trade. The policy objective is to provide a structured pathway for reducing tariffs on goods that do not have Australian equivalents, thus potentially lowering costs and increasing competitiveness for imported goods.
Scope and Application
The Customs Act 1901, specifically under Part XVA, outlines the framework for the creation of Tariff Concession Orders (TCOs), which are authorised by the Chief Executive Officer of Customs (CEO). This legislation applies to individuals or entities seeking to import specific goods into Australia by applying for a TCO, which can result in a lower rate of customs duty for those goods. The scope of this Act includes the assessment of applications to ensure they meet the core criteria set out in the Act, such as the absence of substitutable goods produced in Australia. The TCO scheme is applicable nationally across Australia, as it is part of the federal customs regime. However, it does not apply to goods specified in section 269SJ of the Act, which are ineligible for tariff concessions. The Act’s provisions can be further detailed through subordinate instruments, which may specify additional criteria or conditions for TCO applications. The commencement of a TCO is effective from the date the application is lodged, with the TCO not affecting pre-existing rights or imposing new liabilities on individuals or entities except the Commonwealth.
Key Provisions
The main operative sections of this legislation are sections 269C, 269F, and 269P of the Customs Act 1901 (the Act), which provide the framework for making Tariff Concession Orders (TCOs). Section 269F allows for applications to be made to the Chief Executive Officer of Customs (the CEO) for a TCO in respect of goods, while section 269C sets out the core criteria that the CEO must be satisfied with before making a TCO. Section 269P(3) mandates that if the CEO is satisfied that a TCO application meets the core criteria, a written order must be made declaring that the goods in question are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995 (the Tariff). The CEO’s decision to make TCO No. 1010890 was based on these provisions, declaring that certain sand feeding storage trailers are goods to which item 50 of Schedule 4 to the Tariff applies, with a duty rate of free instead of the general rate of 5%.
The Act imposes several obligations on the parties involved in the TCO process. Firstly, any person can apply to the CEO for a TCO under section 269F, provided 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, specifically ensuring that no substitutable goods were produced in Australia in the ordinary course of business. Additionally, under subsection 269K(1), the CEO is required to publish a notice in the Gazette inviting any interested party to lodge a submission if they believe the TCO should not be made. In this case, no submissions were received, and the CEO proceeded to make the TCO.
Failure to comply with the requirements of the Customs Act 1901 or the associated regulations may lead to various consequences. While specific offences and penalties are not detailed in the provided text, breaches of customs laws generally result in both civil and criminal penalties. Civil penalties can include fines and the confiscation of goods, while criminal penalties may include imprisonment, reflecting the seriousness of non-compliance with customs regulations. The exact penalties depend on the nature and severity of the breach, with potential maximum penalties outlined in the broader customs legislation and related statutes. The Act ensures that the rights of individuals and entities are protected, and any liabilities imposed by the TCO do not affect persons other than the Commonwealth.