EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1107686
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.
PTTEP Australasia (Ashmore Cartier) Pty Ltd applied for a TCO in respect of certain floating production storage and offloading (FSPO), vessel mooring systems on 1 March 2011.
Instrument
TCO No 1107686 was made on 30 May 2011. It declares that those certain floating production storage and offloading (FSPO), vessel mooring systems 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. 1107686 is taken to have come into force on 1 March 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 Customs Act 1901, enacted by the Australian Parliament, provides a framework for the application of tariff concessions on certain goods through Tariff Concession Orders (TCOs), which can be made by the Chief Executive Officer of Customs. These concessions are intended to apply when certain goods are not produced in Australia in the ordinary course of business, thereby encouraging importation and potentially reducing costs for businesses reliant on these goods. The explanatory statement outlines Tariff Concession Instrument No. 1107686, which was made on 30 May 2011, in response to an application by PTTEP Australasia (Ashmore Cartier) Pty Ltd for a TCO concerning specific floating production storage and offloading (FSPO) vessel mooring systems. The instrument declares that these systems are subject to a free rate of duty as no substitutable goods are produced in Australia, thereby benefiting importers who can apply for duty refunds for imports made since the effective date of the TCO, 1 March 2011.
Scope and Application
The Customs Act 1901, specifically Part XVA, authorises the Chief Executive Officer of Customs to make Tariff Concession Orders (TCOs) that apply lower rates of customs duty to certain goods. This legislation applies to any person or entity that imports goods eligible for a TCO, provided the application meets the core criteria outlined in the Act. These criteria include the absence of substitutable goods produced in Australia at the time of application. The geographic reach of the Act is national, and it extends to any goods imported into Australia. However, certain goods specified in section 269SJ are excluded from TCOs. The application process involves publishing a notice in the Gazette inviting public submissions, which in this instance, resulted in no objections. The TCO becomes effective from the date the application is lodged, as per subsection 269S(1) of the Act. Any liabilities or rights of persons, other than the Commonwealth, are not affected by the TCO in respect of actions taken prior to its registration. Importers may benefit from the TCO by applying for a refund of duty on goods imported since the TCO's effective date, as stipulated in the Regulations.
Key Provisions
The primary sections of the Customs Act 1901 relevant to this Tariff Concession Order (TCO) include sections 269C, 269B, 269D, 269E, 269F, 269P, and 269S. Section 269F allows an application to be made to the Chief Executive Officer (CEO) of Customs for a TCO regarding specific goods. If the application is not for goods prohibited under section 269SJ, the CEO must determine whether it meets the core criteria specified in section 269C. This requires, among other things, that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged. Sections 269B, 269D, and 269E define key terms such as 'goods produced in Australia', 'ordinary course of business', and'substitutable goods'. If the CEO is satisfied that the application meets these criteria, they must issue a written TCO under section 269P(3), which declares that the specified goods are subject to a prescribed tariff item.
The obligations and requirements imposed by the Act on the parties involved are primarily procedural. The CEO must ensure that any TCO application is processed according to the core criteria outlined in the Act. This involves verifying that no substitutable goods were produced in Australia and publishing a notice in the Gazette inviting submissions from any interested parties. If no submissions are received, the CEO proceeds to issue the TCO. Additionally, the CEO is required to notify the applicant once a TCO has been made.
Breaching the provisions of the Customs Act 1901 can result in various penalties and consequences. If an entity fails to comply with the requirements for applying for or making a TCO, it may face administrative penalties. Additionally, any person who knowingly provides false or misleading information in an application for a TCO can be subject to fines or imprisonment under the general provisions of the Act for making false statements. The exact penalties depend on the severity of the breach and the specific section of the Act that has been contravened. For example, making a false statement in relation to a TCO application can incur penalties under section 273 of the Act, which provides for fines up to 10,000 penalty units or imprisonment for up to two years, or both.
In summary, the Tariff Concession Order No. 1107686 outlines the specific steps and criteria for issuing a TCO under the Customs Act 1901, ensuring that no substitutable goods were produced in Australia. The CEO has clear obligations to process applications and consult with interested parties. Breaches of these provisions can lead to administrative and criminal penalties, underscoring the importance of compliance with the Act's requirements.