EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1023820
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 modular drilling rigs on 28 May 2010.
Instrument
TCO No 1023820 was made on 30 August 2010. It declares that those certain modular drilling rigs 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. 1023820 is taken to have come into force on 28 May 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 Commonwealth Parliament, outlines a framework for tariff concession orders (TCOs) that can be issued by the Chief Executive Officer of Customs (CEO). These concessions lower the rate of customs duty on specified goods, provided that no substitutable goods are produced in Australia in the ordinary course of business. This legislative scheme was introduced to facilitate trade by making certain imported goods more affordable, thus potentially stimulating economic activity and providing competitive advantages to businesses that rely on these imports. The objective is to ensure that Australian businesses have access to necessary goods at a reduced cost, fostering a more competitive market environment without disadvantaging existing rights or imposing new liabilities on persons other than the Commonwealth. The Tariff Concession Instrument No. 1023820, made on 30 August 2010, exemplifies this process by granting a tariff concession for certain modular drilling rigs, effectively reducing their duty from the general rate of 5% to free.
Scope and Application
The Tariff Concession Instrument No. 1023820 under the Customs Act 1901 applies to specific modular drilling rigs that were the subject of an application by A J Lucas Operations Pty Ltd. This legislation provides for a tariff concession order (TCO) whereby the general rate of customs duty on these goods, which is typically 5%, is reduced to free. The act applies to any individual or entity seeking a tariff concession for goods that are not substitutable by products manufactured in Australia, as defined by the core criteria outlined in the Act. The concession is confined to the goods specified in the application and does not extend to other types of goods or industries unless explicitly included in subsequent TCOs. The geographic scope of this legislation is national, aligning with the Commonwealth's jurisdiction over customs duties. There are exclusions as per section 269SJ of the Act, which lists goods that cannot be subject to a TCO. The application of the Act can be extended or modified through subordinate instruments, such as regulations, which provide further detail on the administration and enforcement of the concessions.
Key Provisions
The main operative sections of the Tariff Concession Instrument No. 1023820 are sections 269C, 269P, and 269SJ of the Customs Act 1901. Section 269C stipulates that a Tariff Concession Order (TCO) application meets the core criteria if, on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business. Section 269P mandates that if the Chief Executive Officer (CEO) of Customs is satisfied that a TCO application meets the core criteria, the CEO must make a written order declaring that the goods in question are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995. Section 269SJ outlines the goods that cannot be subject to a TCO. This instrument specifically relates to certain modular drilling rigs, which are now subject to a zero rate of duty under the TCO, as opposed to the general rate of 5%.
The obligations and requirements imposed by the Act on the parties involved are primarily centred around the application process for TCOs. For instance, section 269K(1) of the Customs Act 1901 requires the CEO to publish a notice in the Gazette as soon as practicable after accepting a TCO application as valid, inviting any person who considers there are reasons why the TCO should not be made to lodge a submission with the CEO. Additionally, section 269SJ restricts the types of goods that can be subject to a TCO. The CEO must ensure that the application meets the core criteria, which include verifying that no substitutable goods were produced in Australia at the time the application was lodged. Once these conditions are met, the CEO is obligated to issue a TCO.
The Act includes provisions for offences, penalties, and consequences for breaches. While the specific penalties for non-compliance with the Customs Act 1901 are not detailed within this particular instrument, general provisions of the Act could apply. For example, section 236 of the Customs Act 1901 outlines various offences related to customs duties, including fraudulent importation or exportation of goods. Penalties for such offences can be severe, involving substantial fines and potential imprisonment, depending on the severity of the breach. The Act also provides for civil penalties, which can include fines and other financial penalties, for breaches of its provisions. In addition, any person who suffers loss or damage due to a breach of the Act may have a right to seek compensation.