EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1103346
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.
Santos Limited applied for a TCO in respect of certain oil field pump parts on 21 January 2011.
Instrument
TCO No 1103346 was made on 18 April 2011. It declares that those certain oil field pump parts 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. 1103346 is taken to have come into force on 21 January 2011.
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 Tariff Concession Instrument No. 1103346, made under the Customs Act 1901, was introduced to provide tariff concessions for certain oil field pump parts. Enacted in 2011 by the Commonwealth of Australia, this instrument aims to address the gap in duty concessions for specific imported goods that are not produced domestically and have no substitutable goods available in Australia. The instrument was issued after Santos Limited applied for a tariff concession order on 21 January 2011, and after the Chief Executive Officer of Customs determined that no substitutable goods were produced in Australia for these particular oil field pump parts. As a result, the instrument declares that these goods are subject to a zero rate of customs duty, down from the general rate of 5%, effective from the date the application was lodged. This initiative benefits importers by potentially allowing them to claim refunds for duties paid on these goods since the commencement date.
Scope and Application
The Tariff Concession Instrument No. 1103346 under the Customs Act 1901 applies to Santos Limited and specifically to certain oil field pump parts, which are eligible for a lower rate of customs duty as a result of the Instrument. This legislation is pertinent to entities involved in the importation of these specified goods, thereby impacting the relevant industry sector. The Instrument’s jurisdiction is federal, applying across Australia as it is a Commonwealth Act. However, the Act excludes any goods specified in section 269SJ, which outlines those that cannot be subject to a Tariff Concession Order (TCO). The Act may extend its application through subordinate instruments, such as the Customs Tariff Act 1995, which defines the prescribed items of the Tariff Schedule relevant to the concession. The Instrument became effective on 21 January 2011, the date on which the TCO application was lodged, and it ensures that the rights of importers are beneficially affected, with no imposition of liabilities on any person.
Key Provisions
The key provisions of Tariff Concession Instrument No. 1103346, as outlined in the Explanatory Statement, establish a framework for the application and implementation of Tariff Concession Orders (TCOs) under the Customs Act 1901. Under section 269F of the Act, an individual or entity can apply to the Chief Executive Officer of Customs (CEO) for a TCO in relation to specific goods, provided that those goods are not specified in section 269SJ, which lists goods that cannot be subject to a TCO. The CEO must then assess whether the application meets the core criteria outlined in section 269C, which requires that no substitutable goods are produced in Australia in the ordinary course of business on the date the application was lodged. If the CEO determines that the application meets these criteria, a written TCO must be issued under subsection 269P(3) of the Act.
Section 269D of the Act defines "goods produced in Australia," section 269E defines "ordinary course of business," and section 269F defines "substitutable goods" as goods produced in Australia that can be used in the same way as the goods subject to the TCO application. For example, in the case of Santos Limited's application for a TCO on certain oil field pump parts, the CEO was satisfied that no substitutable goods were produced in Australia, leading to the issuance of TCO No. 1103346, which applied a zero duty rate to these goods instead of the general 5% rate.
The obligations and requirements imposed by this legislation on the parties involved include the CEO's duty to assess the validity of TCO applications against the core criteria and to make a written TCO if the application meets these criteria. Furthermore, as per subsection 269K(1) of the Act, the CEO must publish a notice in the Gazette as soon as practicable after accepting a TCO application as valid, inviting any person who believes the TCO should not be made to submit their reasons to the CEO. In this instance, no submissions were received, facilitating the smooth implementation of the TCO.
In terms of potential breaches and their consequences, the Customs Act 1901 does not specify particular offences or penalties related to TCO applications within this context. However, any failure by the CEO to properly assess applications or incorrectly issue a TCO could lead to legal challenges or administrative reviews. Additionally, if an entity were to falsely claim that no substitutable goods were produced in Australia, they could face legal consequences under other relevant provisions of the Act or associated regulations. While the Act does not explicitly state maximum penalties, breaches of customs regulations generally carry significant fines and potential imprisonment under the Crimes Act 1914 and other related statutes.