EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1131441
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.
Santos Ltd applied for a TCO in respect of certain pipeline cleaning or inspection machine housings on 15 September 2011.
Instrument
TCO No 1131441 was made on 05 December 2011. It declares that those certain pipeline cleaning or inspection machine housings 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. 1131441 is taken to have come into force on 15 September 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, establishes a framework within which the Chief Executive Officer (CEO) of Customs can issue Tariff Concession Orders (TCOs) to provide a lower rate of customs duty on specified goods. This was introduced to address the problem of ensuring that Australian industries remain competitive and can access necessary imported goods without prohibitive tariffs, particularly where no suitable domestic alternatives exist. The instrument in question, Tariff Concession Instrument No. 1131441, was issued in response to an application by Santos Ltd for a TCO on certain pipeline cleaning or inspection machine housings. The CEO found that no substitutable goods were produced in Australia, thereby meeting the core criteria under section 269C of the Act. This decision ensures that the specified goods are subject to a zero rate of duty, as opposed to the general 5% rate, effective from the date of the application, 15 September 2011.
Scope and Application
The Customs Act 1901, as supplemented by the Tariff Concession Instrument No. 1131441, applies to individuals or entities seeking tariff concessions for specific goods entering Australia. This Act specifically governs the process through which a Tariff Concession Order (TCO) can be applied for and granted by the Chief Executive Officer of Customs. The application of this legislation is national in scope, covering all jurisdictions within Australia, as it falls under the Commonwealth's authority. The act applies to goods that are not produced in Australia and for which no substitutable goods are produced domestically, ensuring that Australian industries are not unfairly disadvantaged by the import of cheaper foreign alternatives. The act excludes goods specified under section 269SJ from being subject to a TCO. The commencement of a TCO is effective from the date the application is lodged, and it does not retroactively affect any duties or liabilities incurred before its registration. This legislative framework thus provides a clear and efficient process for granting tariff concessions while protecting domestic industries.
Key Provisions
The Customs Act 1901, specifically under Part XVA, establishes a framework for Tariff Concession Orders (TCOs) that can be issued by the Chief Executive Officer of Customs (CEO). Section 269F allows any person to apply to the CEO for a TCO concerning specific goods. If the CEO is satisfied that the application pertains to goods that do not fall under the prohibited category outlined in section 269SJ, the application must be assessed against the core criteria specified in section 269C. To meet these criteria, it must be confirmed that no substitutable goods were produced in Australia on the date the application was submitted. Definitions for key terms such as "goods produced in Australia," "ordinary course of business," and "substitutable goods" are provided in sections 269D, 269E, and 269F respectively.
The Act imposes certain obligations on both the applicant and the CEO. For the applicant, the primary obligation is to submit a valid application, ensuring it pertains to goods not specified in section 269SJ. The CEO, on the other hand, is required to assess the application against the core criteria and make a decision based on the evidence provided. If the CEO is satisfied that the application meets the core criteria, they must issue a written TCO. Additionally, as per subsection 269K(1), the CEO must publish a notice in the Gazette inviting any interested parties to submit any reasons why the TCO should not be made. In the case of TCO No. 1131441, the CEO did not receive any submissions.
The Customs Act 1901 does not specify offences, penalties, or consequences for breaching the terms of a TCO. However, the Act ensures that a TCO does not affect the rights of any person, other than the Commonwealth, as at the date of registration in a way that would disadvantage them or impose liabilities for actions taken before the registration date. It also ensures that the rights of importers will be beneficially affected, allowing them to apply for a refund of duty on goods imported since the TCO came into force, as per paragraph 126(1)(r) of the Regulations. The TCO itself does not impose any liabilities on any person.