EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1031203
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.
Drilling Services International Pty Ltd applied for a TCO in respect of certain oil and gas well casing stage cementing collars on 08 July 2010.
Instrument
TCO No 1031203 was made on 29 September 2010. It declares that those certain oil and gas well casing stage cementing collars 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. 1031203 is taken to have come into force on 08 July 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 was amended to introduce the scheme for Tariff Concession Orders (TCOs), which was enacted to address the gap in tariff relief for goods that were not substitutable by Australian-made products and for which no adequate tariff concessions existed. This was done to ensure that Australian industries could remain competitive in the global market. The Tariff Concession Instrument No. 1031203, enacted on 29 September 2010, is one such example where the Chief Executive Officer of Customs made a TCO in response to an application by Drilling Services International Pty Ltd for certain oil and gas well casing stage cementing collars. The policy objective behind this legislation is to provide tariff relief where appropriate, ensuring that Australian businesses are not at a competitive disadvantage due to the cost of importing goods for which there are no suitable Australian alternatives.
Scope and Application
The Customs Act 1901 provides a framework for the application of Tariff Concession Orders (TCOs) under which the Chief Executive Officer of Customs can grant lower rates of customs duty on certain goods. Specifically, this Act applies to applications for tariff concessions and to the goods that are the subject of such applications, ensuring that these goods are not substitutable by any goods produced in Australia in the ordinary course of business. The TCOs extend to all persons and entities involved in the import of specified goods, effectively altering the duty rates applicable to these goods as per the prescribed items in Schedule 4 to the Customs Tariff Act 1995. The geographic scope of this legislation is national, applying across Australia, as it involves the administration and enforcement of customs duties under federal law. Exclusions are stipulated in section 269SJ of the Act, which details goods that cannot be subject to a TCO. The application of the Act may also be extended or restricted by subordinate instruments, such as regulations or further orders made by the CEO under section 269F of the Customs Act 1901.
Key Provisions
The main operative sections of the Customs Act 1901, as outlined in the explanatory statement, include sections 269F, 269C, 269B, 269D, 269E, 269P(3), and 269K(1). Section 269F allows a person to apply to the Chief Executive Officer of Customs (CEO) for a Tariff Concession Order (TCO) for certain goods. If the CEO determines that the application meets the core criteria set out in section 269C, a TCO can be made. The core criteria require that, on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business (sections 269B and 269E). Section 269P(3) mandates that if the CEO is satisfied the application meets the core criteria, a written order must be made declaring that the goods in question are subject to a prescribed tariff item. Additionally, section 269K(1) requires the CEO to publish a notice in the Gazette inviting submissions from any interested parties after accepting a TCO application as valid.
The Customs Act 1901 imposes several obligations on the CEO when processing a TCO application. The CEO must determine whether the application meets the core criteria specified in section 269C, which involves assessing if substitutable goods were produced in Australia on the day the application was lodged (section 269B). If the CEO is satisfied that the application meets the core criteria, they must make a written order declaring that the goods are subject to a prescribed tariff item (section 269P(3)). The CEO is also required to publish a notice in the Gazette as soon as practicable after accepting the application as valid, inviting any interested parties to submit objections or reasons why the TCO should not be made (section 269K(1)). In this case, no submissions were received in response to the notice.
Under the Customs Act 1901, breaches of the provisions related to TCOs may incur certain consequences. The Act does not specify any offences or penalties directly related to the application or processing of a TCO. However, any party adversely affected by a TCO could potentially challenge the decision through administrative review or judicial review mechanisms available under other sections of the Act or relevant administrative law. There are no specific civil or criminal penalties outlined in the explanatory statement for breaches of the TCO provisions, but general legal consequences may apply under the broader administrative and judicial review frameworks.