EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1054639
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 Australia Pty Ltd applied for a TCO in respect of certain oil and gas well subsea pumps on 15 December 2010.
Instrument
TCO No 1054639 was made on 21 March 2011. It declares that those certain oil and gas well subsea pumps 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. 1054639 is taken to have come into force on 15 December 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 Parliament of Australia, establishes a framework within which Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs. The Act aims to provide tariff relief to certain goods by allowing for lower rates of customs duty when specific criteria are met. The problem this legislation addresses is the need to provide tariff concessions to goods that are not produced in Australia or have no suitable substitutes, thereby promoting the importation of such goods and supporting industries that rely on them. The objective is to facilitate trade by reducing the financial burden on importers, encouraging the availability of necessary goods in the market, and potentially aiding in the development of Australian industries that may depend on imported components or materials.
The process for obtaining a TCO under the Customs Act involves an application to the CEO, followed by a determination based on whether the goods meet the core criteria outlined in the Act. If the CEO is satisfied that the application meets these criteria, a TCO is issued, which declares the goods to which a prescribed tariff item applies, often resulting in a duty-free status for these goods. The introduction of Tariff Concession Instrument No. 1054639, for instance, was a response to an application by IKM Testing Australia Pty Ltd concerning oil and gas well subsea pumps, which were granted a tariff concession due to the absence of substitutable goods produced in Australia. This instrument ensures that the rights of importers are protected and potentially benefits them by allowing for duty refunds on imports made since the effective date of the TCO.
Scope and Application
The Customs Act 1901, as amended, provides a framework for the application of Tariff Concession Orders (TCOs) through which the Chief Executive Officer of Customs can grant lower rates of customs duty on certain goods. This Act applies to individuals and entities that seek to import goods eligible for a TCO, specifically those that meet the criteria of not having substitutable goods produced in Australia. The application of the TCO is national in scope, impacting all importers within Australia who are seeking to bring in the specified goods. The legislation does not extend to goods that are expressly excluded under section 269SJ of the Act, such as certain firearms, tobacco products, and cultural heritage items. The TCO may be further refined or expanded through subordinate instruments, allowing for a flexible application to accommodate changes in industry and economic conditions. The TCO process includes a mandatory public notification step, inviting submissions from interested parties, though in this instance, no submissions were received. The commencement of the TCO is retroactive to the date of application, providing immediate benefit to importers who have already imported the goods in question since the effective date of the TCO.
Key Provisions
The primary operative sections of the Customs Act 1901, as evidenced in this explanatory statement, involve the process and criteria for making Tariff Concession Orders (TCOs) (sections 269C, 269F, 269K, 269P). Section 269F allows a person to apply to the Chief Executive Officer of Customs (CEO) for a TCO in respect of certain goods. If the application is not in relation to goods specified in section 269SJ, the CEO must determine whether the application meets the core criteria outlined in section 269C. This section requires that, on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business. If the CEO is satisfied that the application meets these criteria, they must issue a written order (section 269P).
The obligations imposed by the Act on the parties involved include the requirement for the CEO to process applications for TCOs and to make a decision based on the core criteria specified in section 269C. The CEO is also required to publish a notice in the Gazette inviting submissions from any person who believes there are reasons why the TCO should not be made (subsection 269K(1)). Furthermore, the Act requires that the TCO does not affect the rights of any person (other than the Commonwealth) in a manner that disadvantages them or imposes liabilities for actions taken before the TCO's registration (subsection 269S(1)).
In terms of potential breaches and consequences, the explanatory statement does not explicitly mention any offences or penalties. However, failure to comply with the provisions of the Act, such as incorrectly applying for a TCO or not adhering to the publication requirements, could result in legal consequences. The maximum penalties for breaches of the Customs Act 1901 can include fines and imprisonment, as outlined in other sections of the Act, although specific penalties are not detailed in this particular explanatory statement. Civil consequences may also arise if the rights of individuals are adversely affected by non-compliance with the Act's provisions.