EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1038045
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.
Onesteel Trading applied for a TCO in respect of certain drill pipes on 16 August 2010.
Instrument
TCO No 1038045 was made on 08 November 2010. It declares that those certain drill pipes 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. 1038045 is taken to have come into force on 16 August 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 enacted by the Australian Parliament and provides the legislative framework for customs and border control in Australia. The Act was introduced to address the need for a structured approach to customs duties and regulations, ensuring the efficient management of international trade while protecting domestic industries. Part XVA of the Customs Act 1901 facilitates the establishment of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs, which can reduce or eliminate customs duty on certain goods if specific criteria are met. This mechanism allows for targeted tariff relief, promoting fair trade practices and supporting specific industries by making imported goods more competitive with locally produced alternatives. The policy objective is to balance the interests of domestic industries with the broader economic benefits of international trade.
Scope and Application
The Customs Act 1901, specifically under Part XVA, establishes a framework for Tariff Concession Orders (TCOs), which are issued by the Chief Executive Officer of Customs (CEO) to apply a lower rate of customs duty on certain goods. A TCO can be applied for by any person in relation to goods, provided that the goods do not fall under the specific exclusions listed in section 269SJ of the Act. The CEO assesses whether the application meets the core criteria outlined in section 269C of the Act, which primarily involves determining if no substitutable goods are produced in Australia at the time the application is lodged. If these criteria are met, a TCO is issued, declaring that the goods in question are subject to a prescribed item in Schedule 4 of the Customs Tariff Act 1995. The geographic reach of the Act applies nationally, as it is a Commonwealth Act. The TCO does not affect existing rights of persons other than the Commonwealth and does not impose any new liabilities on persons; instead, it provides benefits such as duty refunds to importers of the affected goods.
Key Provisions
The main operative sections of the Tariff Concession Instrument No. 1038045 (TCO No. 1038045) under the Customs Act 1901 (section 269F) outline the process for applying for tariff concessions on specific goods, in this case certain drill pipes. If the Chief Executive Officer of Customs (CEO) is satisfied that the application meets the core criteria, including that no substitutable goods were produced in Australia in the ordinary course of business (section 269C), a written order (a TCO) is issued, declaring the goods to which a prescribed tariff applies (section 269P(3)). In this particular case, the CEO determined that the drill pipes were eligible for a tariff concession, leading to the issuance of TCO No. 1038045, which applies item 50 of Schedule 4 to the Tariff, granting a free rate of duty on these goods instead of the general 5% duty rate (section 269S(1)).
The obligations imposed by the Act on parties or entities it governs include ensuring that applications for tariff concessions are made in accordance with the legislative criteria. Specifically, applicants must demonstrate that the goods in question are not substitutable by any goods produced in Australia in the ordinary course of business (section 269C). The CEO must also ensure that any TCO application is published in the Gazette to allow for public submissions, although in this instance, no submissions were received (subsection 269K(1)). Additionally, the Act requires that the rights of persons, other than the Commonwealth, are not adversely affected by the issuance of a TCO (section 269S(1)).
In terms of consequences for breaches, the Act does not explicitly outline offences or penalties for failing to comply with the provisions regarding tariff concessions. However, any actions that contravene the terms of a TCO or the Customs Act 1901 generally could potentially lead to legal consequences. For instance, if a party knowingly imports goods without the proper tariff concession or overstates the eligibility of goods for a concession, they may face penalties under other sections of the Customs Act, such as fraudulent importation or providing false information. The specific penalties for such actions would be determined based on the nature and severity of the breach, as governed by the broader Customs Act provisions.