EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1044904
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.
Ikm Testing applied for a TCO in respect of certain oil and gas well hose reels on 01 October 2010.
Instrument
TCO No 1044904 was made on 07 January 2011. It declares that those certain oil and gas well hose reels 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. 1044904 is taken to have come into force on 01 October 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 Parliament of Australia to provide a regulatory framework for customs and excise in Australia. The Act was designed to address the need for a structured approach to the regulation of imports and exports, ensuring that duties and taxes were collected efficiently and equitably. One of the mechanisms introduced under this Act is the scheme for Tariff Concession Orders (TCOs), which allow for the reduction or exemption of customs duties on certain goods under specific conditions. The problem or gap this scheme was introduced to address is the facilitation of trade by reducing the cost burden on importers of goods that are not produced domestically, thus promoting competitiveness and economic efficiency. The Customs Act 1901 empowers the Chief Executive Officer of Customs to make TCOs, subject to certain criteria being met, which includes verifying that no substitutable goods are produced in Australia. This process aims to balance the interests of domestic producers and consumers by ensuring that tariff concessions are granted judiciously.
Scope and Application
The Customs Act 1901, through its Part XVA, provides a mechanism for the Chief Executive Officer of Customs to issue Tariff Concession Orders (TCOs) that reduce the customs duty on specified goods. This Act applies to any person or entity seeking to import goods into Australia and is designed to facilitate trade by providing tariff relief on certain goods when no substitutable goods are produced in Australia. The scope of the Act is national, impacting all imports across Australia. However, it explicitly excludes certain goods, such as those listed in section 269SJ, from being subject to a TCO. The application of the Act can be extended or refined through subordinate instruments, although the primary focus remains on ensuring that tariff relief is granted in a manner that promotes trade while protecting Australian industry. The TCO process includes a requirement for public consultation, although in the case of TCO No. 1044904 for oil and gas well hose reels, no submissions were received. The TCO applies from the date the application was lodged, in this instance, from 01 October 2010, and does not retroactively affect the rights of any person, nor impose any liabilities on those importing the specified goods.
Key Provisions
The primary operative sections of the Customs Act 1901, particularly under Part XVA, establish the framework for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (section 269F). An application for a TCO can be submitted by any person, but the CEO must ensure that the goods in question are not specified in section 269SJ, which lists items ineligible for TCOs. For an application to proceed, it must meet the core criteria outlined in section 269C, which mandates that on the date of application, no substitutable goods were produced in Australia in the ordinary course of business. This definition is further clarified by sections 269B, 269D, and 269E, which define terms such as 'goods produced in Australia', 'ordinary course of business', and 'substitutable goods'. If the CEO is satisfied that these criteria are met, they are required under section 269P(3) to issue a written TCO.
The obligations imposed by the Act on the parties involved are quite clear. The CEO must rigorously evaluate each TCO application against the specified criteria and, if satisfied, issue a TCO. The applicant, in this case Ikm Testing, must provide all necessary information to substantiate their application, ensuring it complies with the Act's stipulations. Furthermore, the CEO has a duty to publish a notice in the Gazette (subsection 269K(1)) inviting any interested parties to submit objections if they believe the TCO should not be made. This notice was published for TCO No 1044904, but no objections were received. The Act also stipulates that the TCO does not retroactively affect the rights of any person, ensuring that no existing rights are adversely impacted by the concession.
The Act delineates specific consequences for breaches of its provisions, though the explanatory statement does not detail penalties for non-compliance with the TCO itself. However, under general customs law, failure to comply with the Act's requirements could result in penalties, including fines and imprisonment. For instance, knowingly making a false statement in a customs declaration could lead to penalties under section 237 of the Customs Act, with maximum penalties of up to $22,200 or imprisonment for five years, or both, for individuals, and $111,000 for corporations. The Act also provides for civil penalties for non-compliance with the regulations, including potential fines and other financial penalties.