EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1014886
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.
A J Lucas Operations Pty Ltd applied for a TCO in respect of certain mud desilting and desanding plants on 26 March 2010.
Instrument
TCO No 1014886 was made on 18 June 2010. It declares that those certain mud desilting and desanding plants 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. 1014886 is taken to have come into force on 26 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 Tariff Concession Instrument No. 1014886 was enacted in 2010 under the Customs Act 1901. This instrument addresses the need for tariff concessions on specific goods by enabling the Chief Executive Officer of Customs to apply a lower rate of customs duty, or in some cases, no duty at all, on goods that meet certain criteria. The Customs Act 1901, as amended, allows for the application of tariff concessions on goods if no substitutable goods are produced in Australia in the ordinary course of business. The policy objective of this legislation is to support Australian industries by making imported goods more competitive, thereby potentially stimulating economic activity and trade. The instrument was introduced following an application by A J Lucas Operations Pty Ltd for a tariff concession on certain mud desilting and desanding plants, which were granted a free rate of duty under the Customs Tariff Act 1995. The instrument became effective from the date of the application, 26 March 2010, and did not affect any pre-existing rights or liabilities of non-Commonwealth entities.
Scope and Application
The Customs Act 1901, through its Part XVA, establishes a framework for the Chief Executive Officer of Customs (CEO) to issue Tariff Concession Orders (TCO) that apply lower rates of customs duty to specified goods. An entity or individual can apply for a TCO, provided the goods are not specified in section 269SJ, which lists goods ineligible for concession. The CEO assesses applications against criteria set out in sections 269C, 269D, 269E, and 269F, ensuring that no substitutable goods are produced in Australia in the ordinary course of business. Once the core criteria are met, the CEO issues a TCO, which applies a prescribed rate from the Customs Tariff Act 1995. For instance, TCO No. 1014886, effective from 26 March 2010, granted tariff concessions on certain mud desilting and desanding plants, reducing the duty from 5% to free. The CEO is also mandated to publish notices of valid applications in the Gazette, inviting public submissions, although in this case, no submissions were received. This TCO does not retroactively affect the rights or liabilities of any party other than the Commonwealth, thereby protecting existing rights while providing benefits to importers who can seek duty refunds for imports from the effective date of the TCO.
Key Provisions
The Tariff Concession Instrument No. 1014886 under the Customs Act 1901 (section 269F) pertains to a specific application made by A J Lucas Operations Pty Ltd for tariff concession orders (TCOs) in relation to certain mud desilting and desanding plants. This application was submitted on 26 March 2010 and resulted in the issuance of TCO No. 1014886 on 18 June 2010. This order declares that the specified plants are subject to item 50 of Schedule 4 of the Customs Tariff Act 1995, with a tariff rate of free, as opposed to the general rate of 5% (section 269P(3)).
Under the Customs Act 1901, the Chief Executive Officer of Customs (CEO) is responsible for assessing whether an application for a TCO meets the core criteria as stipulated in section 269C. This entails determining whether no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged. In the case of the mud desilting and desanding plants, the CEO was satisfied that these criteria were met, as defined by sections 269B, 269D, and 269E of the Act. The CEO must also ensure that the goods in question are not specified in section 269SJ, which lists those goods that cannot be subject to a TCO. The CEO has an obligation to publish a notice in the Gazette (subsection 269K(1)) inviting any interested parties to submit their views on the proposed TCO, although in this instance, no submissions were received.
The Act imposes several obligations on the parties involved. The CEO must diligently assess each TCO application against the core criteria to ensure compliance and fairness. Additionally, the CEO must ensure that any TCO issued does not disadvantage existing rights of persons other than the Commonwealth (subsection 269S(1)) and does not impose any liabilities on any person for actions taken prior to the registration date of the TCO. Importers benefit from the ability to apply for a refund of duty on goods imported since the day the TCO is taken to have come into force (paragraph 126(1)(r) of the Regulations).
Failure to adhere to the requirements set forth in the Customs Act 1901 may result in both civil and criminal consequences. While the specific penalties are not detailed in the explanatory statement, breaches of customs legislation generally can lead to significant fines and imprisonment for individuals and corporations. The exact penalties would depend on the nature and severity of the breach, but they can be severe, reflecting the importance of compliance with customs regulations to prevent illicit trade and ensure fair market practices.