EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1126550
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.
Supreme Drill Pipe applied for a TCO in respect of certain drill rods on 05 August 2011.
Instrument
TCO No 1126550 was made on 19 December 2011. It declares that those certain drill rods 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. 1126550 is taken to have come into force on 05 August 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 to provide for the regulation of imports and exports through the collection of customs duty and the enforcement of import and export controls. The Tariff Concession Instrument No. 1126550, introduced in 2011, addresses the gap by allowing for tariff concessions on specific goods where no substitutable goods are produced in Australia. This instrument was made under the authority of the Chief Executive Officer of Customs, who is required to ensure applications for tariff concessions meet the core criteria outlined in the Act. The policy objective is to facilitate trade by reducing customs duty on certain imported goods, thereby benefiting importers by potentially allowing them to claim refunds for duties paid on goods imported since the concession was effective. The instrument was made following consultation as per the Act and came into force on the date the application was lodged, ensuring that no person is disadvantaged by its implementation.
Scope and Application
The Tariff Concession Instrument No. 1126550, which is issued under the Customs Act 1901, applies to goods for which a Tariff Concession Order (TCO) has been sought and granted by the Chief Executive Officer of Customs. The Act applies to entities or individuals who seek to import specific goods that are subject to a lower rate of customs duty under the scheme. The instrument specifically refers to Supreme Drill Pipe's application for certain drill rods, where the CEO determined that no substitutable goods were produced in Australia on the date of application, thus fulfilling the core criteria outlined in the Act. The geographic reach of this legislation is national, as it operates under the Commonwealth's customs regime. However, the Act excludes goods specified in section 269SJ from being subject to a TCO. The application of the Act may be extended or restricted through subordinate instruments, which are subject to the detailed provisions of the Customs Act 1901 and the Customs Tariff Act 1995.
Key Provisions
The Customs Act 1901, particularly under Part XVA, establishes a framework where Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs (CEO) (section 269F). Section 269C specifies that a TCO application is eligible if, at the time of application, there are no substitutable goods produced in Australia in the ordinary course of business. This is defined further by sections 269D (goods produced in Australia), 269E (ordinary course of business), and 269D (substitutable goods). If the CEO determines that the application meets the core criteria, they must issue a written order, which is a TCO, specifying the prescribed item of Schedule 4 to the Customs Tariff Act 1995 that applies to the goods in question (section 269P(3)).
Under this Act, the CEO has specific obligations when considering a TCO application. Firstly, they must ensure that the application is not in respect of goods listed in section 269SJ of the Act, which are ineligible for TCOs. Secondly, the CEO must verify whether the application meets the core criteria outlined in section 269C by checking for the absence of substitutable goods produced in Australia. If the CEO is satisfied with the application, they must then issue a written TCO declaring the prescribed tariff item applicable to the goods (section 269P(3)).
The legislation imposes certain obligations on the parties involved. The applicant, such as Supreme Drill Pipe in this instance, must ensure their application is compliant with the core criteria outlined in section 269C and avoid any ineligible goods as per section 269SJ. The CEO, on the other hand, is obligated to evaluate the application against these criteria and, if satisfied, issue a TCO. Additionally, under section 269K(1), the CEO must publish a notice in the Gazette inviting any interested parties to submit reasons why the TCO should not be made. The CEO must then consider these submissions before making a final decision.
The Customs Act 1901 does not explicitly outline specific penalties for breaches of the provisions related to TCOs. However, any failure to comply with the requirements of the Act or the regulations could potentially lead to legal consequences. For instance, if an application for a TCO is found to be fraudulent or misleading, it could result in penalties under other relevant sections of the Customs Act or other applicable laws. Additionally, if a TCO is issued improperly, it could be subject to judicial review, and any resulting liability would be addressed according to the prevailing legal principles.