EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1054640
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 1054640 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. 1054640 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 was amended to introduce the scheme for Tariff Concession Orders (TCOs) under Part XVA, providing a mechanism for reducing customs duty rates on certain goods. Enacted by the Parliament of Australia, this legislation aims to address the need for tariff relief on imported goods that are not produced domestically, thereby supporting industry competitiveness and economic efficiency. The policy objective is to facilitate the importation of goods that are not substitutable by Australian-made products, thereby potentially lowering costs for businesses and consumers. In this context, Tariff Concession Instrument No. 1054640 was introduced on 21 March 2011, following an application by IKM Testing Australia Pty Ltd for oil and gas well subsea pumps. The instrument specifies that these particular goods are subject to a zero rate of duty, down from the general rate of 5%, as no substitutable goods are produced in Australia. This concession came into effect on 15 December 2010, the date the application was lodged, and does not affect any pre-existing rights or impose new liabilities on parties other than the Commonwealth.
Scope and Application
The Tariff Concession Instrument No. 1054640 under the Customs Act 1901 applies to individuals or entities seeking tariff concessions for specific goods, in this case, certain oil and gas well subsea pumps. The Act facilitates applications for Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs, who must ensure that the goods in question do not have Australian-made substitutes and meet the core criteria outlined in the Act. The geographic reach of this legislation is national, as it is administered under the Commonwealth of Australia. The application for a TCO by IKM Testing Australia Pty Ltd resulted in Instrument TCO No. 1054640, which came into effect on the date the application was lodged, 15 December 2010. The instrument specifies that these particular oil and gas well subsea pumps are subject to a duty-free rate under the Customs Tariff Act 1995. The Act does not impose any disadvantages or liabilities on persons other than the Commonwealth and does not affect existing rights as of the registration date. This legislation can be extended or modified through subordinate instruments, ensuring its adaptability to changing circumstances or requirements.
Key Provisions
The Tariff Concession Instrument No. 1054640, made under the Customs Act 1901, outlines the conditions under which a Tariff Concession Order (TCO) can be applied to certain goods, specifically oil and gas well subsea pumps, which are subject to a concessionary rate of customs duty. This TCO, numbered 1054640, was issued on 21 March 2011, following an application from IKM Testing Australia Pty Ltd on 15 December 2010. The TCO declares that the specified pumps are goods to which item 50 of Schedule 4 to the Customs Tariff Act 1995 applies, thereby granting them a free rate of duty instead of the general rate of 5%.
The Act imposes specific obligations on both the Chief Executive Officer (CEO) of Customs and the applicants for a TCO. For the CEO, section 269F requires the acceptance of an application for a TCO unless it pertains to goods listed in section 269SJ, which are ineligible for such concessions. Once an application is accepted, section 269K mandates that the CEO must publish a notice in the Gazette, inviting submissions from any interested parties. This ensures transparency and allows for public input on the proposed concession. Additionally, section 269C stipulates that the CEO must determine whether the application meets the core criteria, primarily that no substitutable goods are produced in Australia on the date the application was lodged.
Failing to adhere to the provisions of the Act can result in several consequences. Under the Customs Act 1901, any breaches related to the incorrect application or misuse of a TCO could lead to civil or criminal penalties. Specifically, offences related to fraudulent claims for tariff concessions could result in penalties as stipulated in the relevant sections of the Act, potentially including fines and imprisonment. The precise penalties would depend on the nature and severity of the breach, as defined by other relevant sections of the Act and any subsidiary legislation. The TCO itself does not impose any liabilities on any person, but ensuring compliance with the Act is crucial to avoid potential legal repercussions.