EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1125312
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.
Woodside Energy Ltd applied for a TCO in respect of certain subsea christmas trees on 28 July 2011.
Instrument
TCO No 1125312 was made on 12 October 2011. It declares that those certain subsea christmas trees 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. 1125312 is taken to have come into force on 28 July 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 was enacted by the Parliament of Australia to provide for the administration of customs and excise, and it was amended to include the provision for Tariff Concession Orders (TCOs) under Part XVA. This legislative provision was introduced to address the need for targeted tariff reductions on specific goods where no substitutable goods are produced in Australia, thus promoting economic efficiency and competitiveness. The explanatory statement for Tariff Concession Instrument No. 1125312 clarifies the process through which Woodside Energy Ltd successfully applied for a TCO concerning certain subsea Christmas trees. The policy objective, as outlined in the Act, is to reduce customs duties on imported goods where such a reduction would not adversely affect the production of similar goods in Australia. This legislative measure ensures that the rights of non-Commonwealth entities are protected and that any benefits, such as duty refunds for importers, are fairly applied.
Scope and Application
The Tariff Concession Instrument No. 1125312, issued under the Customs Act 1901, pertains to the granting of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs for specific goods, in this case certain subsea christmas trees, where a lower rate of customs duty applies. The Act applies to any person who can apply for a TCO under section 269F, provided the goods are not specified in section 269SJ, which excludes certain goods from eligibility for a TCO. The application must meet the core criteria set out in sections 269C, 269D, 269E, and 269P of the Act, particularly ensuring that no substitutable goods are produced in Australia. The geographic reach of this Act is national, as it falls under the Commonwealth's purview, and its application extends to any entity or individual engaged in importing the specified goods into Australia. The Act does not disadvantage any person by affecting their rights as at the date of registration of the TCO, and it does not impose any new liabilities on individuals or entities. The commencement of the TCO is deemed to be on the day the application was lodged, which in this instance is 28 July 2011, and the TCO applies to transactions occurring from that date forward.
Key Provisions
The main operative sections of this Tariff Concession Instrument, TCO No. 1125312, involve the declaration of certain subsea christmas trees as goods to which a specified item of Schedule 4 to the Customs Tariff Act 1995 applies (sections 269C, 269F, and 269P). According to these provisions, if the Chief Executive Officer of Customs (CEO) is satisfied that no substitutable goods are produced in Australia and the application meets the core criteria, the CEO must make a written order (a TCO) that reduces the duty on these goods from the general rate of 5% to free. The instrument specifies that this TCO applies to the subsea christmas trees as of 28 July 2011, the date the application was lodged.
The obligations imposed on parties by this Act include the requirement for a person to apply to the CEO for a TCO in respect of goods (section 269F). The CEO, in turn, must ensure that the application is not in respect of goods specified in section 269SJ and must assess whether the application meets the core criteria outlined in section 269C. If the CEO is satisfied that the application meets these criteria, they must make a written order as specified in section 269P. Additionally, the CEO is required to publish a notice in the Gazette inviting submissions from any person who considers there are reasons why the TCO should not be made (subsection 269K(1)). Importers of the goods can apply for a refund of duty on goods imported since the TCO is taken to have come into force (paragraph 126(1)(r) of the Regulations).
The Act stipulates certain consequences for non-compliance with its provisions. While specific offences and penalties are not detailed in this explanatory statement, the Act generally provides for both civil and criminal penalties for breaches of its provisions. These can include fines and imprisonment, depending on the severity of the breach. The maximum penalties can vary significantly based on the specific breach but are outlined in the respective sections of the Customs Act 1901. The TCO itself does not impose any liabilities on any person, and it does not affect the rights of a person, other than the Commonwealth, as at the date of registration so as to disadvantage that person.