EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1111840
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.
Halliburton Australia applied for a TCO in respect of certain oil and/or gas burner heads on 07 April 2011.
Instrument
TCO No 1111840 was made on 04 July 2011. It declares that those certain oil and/or gas burner heads 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. 1111840 is taken to have come into force on 07 April 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 Parliament of Australia, addresses the problem of imposing tariffs on imported goods that have no domestic alternatives. The Act provides a mechanism for granting tariff concessions to importers of certain goods through Tariff Concession Orders (TCOs). These orders apply a lower rate of customs duty to goods that are not produced in Australia and have no substitutable domestic goods. The Explanatory Statement for Tariff Concession Instrument No. 1111840 clarifies the process by which the Chief Executive Officer of Customs considers and grants TCOs. The policy objective is to ensure that importers of goods, such as oil and/or gas burner heads, are not disadvantaged by high tariffs if these goods are not produced domestically and no suitable alternatives exist. The TCO No. 1111840, issued on 04 July 2011, exemplifies this process by granting a tariff concession on certain burner heads, resulting in a free rate of duty instead of the general 5% rate.
Scope and Application
The Customs Act 1901 governs the application of Tariff Concession Orders (TCO) which are instrumental in reducing the rate of customs duty on specified goods. Under Part XVA of the Act, the Chief Executive Officer of Customs has the authority to issue TCOs for goods that meet certain criteria, primarily that no substitutable goods are produced in Australia in the ordinary course of business. The scope of the Act applies to individuals or entities that can demonstrate the eligibility of the goods in question for a tariff concession, with the specific application being processed by the CEO. The geographic reach of this legislation is national, operating within the framework of the Australian Commonwealth, with its application extending to all states and territories uniformly. The Act does not specify exclusions, but it does explicitly exclude certain goods as outlined in section 269SJ. The application of the Act can be extended or refined through subordinate instruments, which may include regulations or further orders that detail specific operational aspects or additional conditions. The explanatory statement for TCO No. 1111840 highlights that this specific instrument applies to certain oil and/or gas burner heads, effectively granting them duty-free status under item 50 of Schedule 4 to the Customs Tariff Act 1995.
Key Provisions
The main provisions of Tariff Concession Instrument No. 1111840 under the Customs Act 1901 are outlined in section 269P(3) (section 269F), which mandates that if the Chief Executive Officer (CEO) of Customs is satisfied that an application for a Tariff Concession Order (TCO) meets the core criteria, the CEO must issue a written order that declares the goods in question are eligible for a lower customs duty rate. The CEO must make this determination if there are no substitutable goods produced in Australia on the day the application was lodged, as per section 269C (section 269D, section 269E). In this specific case, Halliburton Australia applied for a TCO regarding certain oil and/or gas burner heads, which the CEO approved on 04 July 2011. This decision resulted in the general rate of duty on these goods being reduced to free from the previous rate of 5%, as outlined in item 50 of Schedule 4 to the Customs Tariff Act 1995.
The obligations imposed by the Act on the parties governed by it primarily involve the process of applying for and receiving a TCO. The applicant must submit a valid application to the CEO, who then assesses whether the application meets the core criteria. If the CEO is satisfied, they must issue a written TCO. The Act also requires the CEO to publish a notice in the Gazette inviting any interested parties to lodge submissions if they believe the TCO should not proceed. The Act further stipulates that the TCO does not affect the rights of any person, except the Commonwealth, in respect of actions taken before the TCO was lodged.
Should a party fail to comply with the requirements of the Customs Act 1901 or the conditions of the TCO, there could be significant consequences. However, the explanatory statement does not detail specific offences or penalties for breaches of the Act or the TCO. The potential penalties would typically depend on the nature and severity of the breach, and could include fines or other civil or criminal sanctions under the relevant legislation. The maximum penalties are not specified in this explanatory statement but would be determined according to the particular provisions of the Customs Act 1901 and any other applicable laws. The Act generally provides for stringent enforcement mechanisms to ensure compliance with its provisions.