EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1120362
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.
Cameron Australasia applied for a TCO in respect of certain subsea control modules on 22 June 2011.
Instrument
TCO No 1120362 was made on 28 September 2011. It declares that those certain subsea control modules 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. 1120362 is taken to have come into force on 22 June 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, establishes a framework for the application of customs duties and provides mechanisms for tariff concessions through Tariff Concession Orders (TCOs). This legislation was introduced to address the need for a structured process to provide tariff concessions to importers, thereby facilitating trade by reducing customs duties on specific goods. The Act empowers the Chief Executive Officer of Customs to make decisions on TCO applications, ensuring that such concessions are granted only when certain criteria are met, such as the absence of substitutable goods produced in Australia. Tariff Concession Instrument No. 1120362, made under the Customs Act, exemplifies this process by granting a tariff concession for certain subsea control modules, resulting in a reduction of duty from 5% to free, effective from the date the application was lodged. The absence of submissions against the concession indicates no objections to the tariff reduction, and the policy objective of promoting trade by easing the financial burden on importers is clearly supported.
Scope and Application
The Customs Act 1901, as augmented by Tariff Concession Order No. 1120362, applies to any individual or entity seeking tariff concessions on specified goods imported into Australia. The Act governs the process through which the Chief Executive Officer of Customs can grant concessions that reduce or eliminate customs duty on particular goods, provided the application meets the core criteria outlined in the Act. The scope of this legislation encompasses all industries and entities involved in the importation of goods that may benefit from reduced tariff rates, as long as these goods are not specified as ineligible under section 269SJ of the Act. The geographic reach of this legislation is national, as it pertains to customs duties applied across Australia. Exclusions from the Act’s application include goods listed in section 269SJ, which cannot be subject to a tariff concession order. The Act’s application can be further extended or restricted through subordinate instruments, which may specify additional criteria or conditions for granting tariff concessions.
Key Provisions
The main operative sections of the Customs Act 1901, particularly in relation to Tariff Concession Orders (TCOs), are sections 269C, 269F, 269K, 269P, and 269S. Section 269F allows an applicant to request a TCO from the Chief Executive Officer of Customs (CEO). If the application is valid and meets the core criteria outlined in section 269C, the CEO must issue a TCO (section 269P). Section 269K mandates that the CEO must publish a notice in the Gazette inviting objections to the TCO, while section 269S stipulates that a TCO comes into force on the day the application is lodged. In this specific case, TCO No. 1120362 was issued on 28 September 2011 for certain subsea control modules, making them subject to a zero rate of duty.
The Act imposes several obligations on the parties involved. The applicant must ensure that their application meets the core criteria, particularly that no substitutable goods are produced in Australia. The CEO is obligated to review the application, consider any submissions, and decide whether to issue a TCO. Once a TCO is issued, the CEO must also publish a notice in the Gazette inviting any objections. Additionally, section 269K(1) requires the CEO to consult by publishing a notice in the Gazette inviting submissions from any interested parties. In this instance, the CEO did not receive any submissions opposing the TCO.
Failure to comply with the provisions of the Customs Act 1901 may result in various consequences. While the explanatory statement does not detail specific offences or penalties for non-compliance with TCOs, breaches of customs regulations generally can lead to fines and other penalties. For example, under section 208 of the Customs Act, the maximum penalty for offences involving the importation of goods without paying the correct duty or for fraudulent claims can be significant. The exact penalties depend on the nature and severity of the breach but can include fines up to $162,000 for individuals and higher for corporations, as well as potential imprisonment.
The explanatory statement does not provide explicit details about offences, penalties, or consequences for breaching the TCO provisions. However, it is clear that the Act's provisions are designed to ensure that TCOs are only granted when appropriate and that the rights of all parties are protected. Importers benefit from the tariff concessions provided they comply with the Act's requirements, while the CEO ensures that the concessions are granted fairly and transparently. The absence of submissions against the TCO in this case suggests that the process was conducted in a manner that met the statutory requirements, with no adverse impacts on non-applicants.