EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1114144
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.
Weatherford Australia applied for a TCO in respect of certain drilling machine parts on 05 May 2011.
Instrument
TCO No 1114144 was made on 01 August 2011. It declares that those certain drilling machine 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. 1114144 is taken to have come into force on 05 May 11.
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 through which the Chief Executive Officer of Customs can issue Tariff Concession Orders (TCOs) to provide relief from customs duties. The Act, particularly Part XVA, facilitates this process to ensure that certain goods are subject to lower or no customs duties when there are no substitutable goods produced domestically. This legislative measure addresses the gap in providing tariff relief for specific goods that cannot be produced within Australia. The policy objective is to support industries by reducing costs and making imported goods more affordable, thereby encouraging trade and economic growth. In this context, the explanatory statement outlines how Weatherford Australia successfully applied for a TCO concerning certain drilling machine parts, which will now attract a zero rate of duty, effective from the date of application, 05 May 2011. This concession was granted as no substitutable goods were found to be produced in Australia at the time of application.
Scope and Application
The Tariff Concession Instrument No. 1114144, made under the Customs Act 1901, applies to specific drilling machine parts and the companies involved in their importation. The instrument grants tariff concessions for these goods, reducing the customs duty from the general rate of 5% to free. This concession applies to entities importing these parts and any related industry sectors, as long as the goods meet the criteria set out in the Customs Act. The legislation operates at the national level, as it falls under the Commonwealth’s authority to regulate customs duties. There are exclusions, notably the goods specified in section 269SJ of the Act, which cannot be subject to a tariff concession order. The CEO of Customs has the authority to extend or restrict the application of the TCO through subordinate instruments, ensuring flexibility in responding to changing circumstances or further applications.
Key Provisions
The primary operative sections of the Customs Act 1901, specifically addressed in this Tariff Concession Instrument (TCO), include sections 269C, 269F, and 269P. Section 269F allows for the application to the Chief Executive Officer of Customs (CEO) for a Tariff Concession Order (TCO) in respect of certain goods. Section 269C stipulates that a TCO application meets the core criteria if, on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business. Section 269P mandates that if the CEO is satisfied the application meets the core criteria, they must issue a written order (TCO) specifying that the goods in question are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995.
The obligations and requirements imposed by this Act on parties and entities include ensuring that the goods in question do not have substitutable alternatives produced in Australia. The CEO must publish a notice in the Gazette inviting any interested parties to submit objections to the TCO if they believe it should not be made. In this instance, no submissions were received, indicating that the CEO was satisfied with the application. Moreover, the CEO must consider whether the application meets the core criteria by examining if there are any substitutable goods produced domestically.
Should there be a breach of the provisions outlined in the Customs Act 1901, there are civil and potentially criminal consequences. For example, any misrepresentation or incorrect information provided in the TCO application could lead to penalties under the Customs Act. The specific penalties for breaches can vary but generally include fines or imprisonment depending on the severity of the offence. For instance, knowingly making a false statement in an application could attract a penalty of up to five years imprisonment or significant fines, as outlined in relevant sections of the Customs Act. The exact penalties are detailed in the relevant sections of the Act and can be subject to the discretion of the court.