EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1015009
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.
Halliburton Pty Ltd applied for a TCO in respect of certain drilling fluid additives on 26 March 2010.
Instrument
TCO No 1015009 was made on 18 June 2010. It declares that those certain drilling fluid additives 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. 1015009 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 Customs Act 1901, enacted by the Australian Parliament, provides a framework for the administration of customs and excise in Australia. It establishes the Customs Act 1901, which includes provisions for the creation of Tariff Concession Orders (TCOs) that offer lower rates of customs duty on specified goods. This legislative instrument was introduced to address the gap in providing relief to industries or sectors that may be adversely affected by high customs duties on specific goods, thereby facilitating trade and economic growth. The Tariff Concession Instrument No. 1015009, issued under this Act, demonstrates the application of the TCO framework in practice, as it was made in response to an application by Halliburton Pty Ltd for a TCO concerning certain drilling fluid additives, which resulted in a reduction of duty from the general rate of 5% to free duty. This legislative instrument ensures that the rights of importers are beneficially affected, while not imposing any liabilities on other persons, aligning with the policy objective of promoting fair trade practices and supporting economic activities in Australia.
Scope and Application
The Customs Act 1901, specifically under Part XVA, governs the scheme for Tariff Concession Orders (TCOs) which can be made by the Chief Executive Officer of Customs (CEO). This Act applies to any person or entity seeking a TCO for goods not specified in section 269SJ, which lists those goods that are ineligible for a TCO. The Act's geographic reach is national, applying across Australia as a Commonwealth Act. The CEO must determine if the application meets core criteria, including ensuring no substitutable goods are produced in Australia in the ordinary course of business, as defined by sections 269D and 269E of the Act. If the CEO is satisfied that the application meets these criteria, they must issue a written order, which becomes effective on the day the application was lodged. The TCO benefits importers by allowing them to apply for a refund of duty on goods imported since the effective date of the TCO. Notably, the TCO does not disadvantage any person or impose new liabilities on anyone for actions taken before the TCO's registration.
Key Provisions
The main operative sections of the Customs Act 1901, particularly in the context of Tariff Concession Orders (TCOs), require that the Chief Executive Officer of Customs (CEO) assess applications for TCOs to determine if they meet core criteria (s 269C). If the CEO is satisfied that the application is valid and meets these criteria, they must make a written order declaring that the goods in question are subject to a prescribed tariff concession (s 269P(3)). The core criteria for a TCO application include the absence of substitutable goods produced in Australia in the ordinary course of business (s 269C). Specific definitions for terms such as "goods produced in Australia," "ordinary course of business," and "substitutable goods" are provided in sections 269D, 269E, and 269F respectively. Furthermore, section 269K(1) mandates that the CEO must publish a notice in the Gazette inviting submissions from any interested parties once a TCO application is accepted as valid, though no submissions were received for TCO No. 1015009.
The Customs Act 1901 imposes certain obligations on the CEO regarding the processing and assessment of TCO applications. The CEO must ensure that applications do not pertain to goods specified in section 269SJ, which lists those goods that cannot be subject to a TCO. If the CEO determines that an application meets the core criteria, they must promptly make a written TCO order. Additionally, under section 269K(1), the CEO must publish a notice in the Gazette as soon as practicable after accepting a TCO application as valid, inviting any person who believes there are reasons why the TCO should not be made to lodge a submission. In the case of TCO No. 1015009, the CEO did not receive any submissions in response to the published notice.
The Customs Act 1901 also specifies various consequences and penalties for breaches related to TCOs, though the explanatory statement does not provide explicit details on the penalties. Generally, the Act provides a framework within which the CEO operates and enforces compliance with TCOs, ensuring that the rights of importers are protected and that no liabilities are imposed on persons (other than the Commonwealth) in respect of actions taken before the TCO comes into force. The rights of importers are beneficially affected, allowing them to apply for a refund of duty on goods imported since the TCO is deemed to have come into force under paragraph 126(1)(r) of the Regulations. The TCO itself does not impose any liabilities on any person.