EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1138712
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.
Halliburton Australia Pty Ltd applied for a TCO in respect of certain cement mixers on 21 November 2011.
Instrument
TCO No 1138712 was made on 06 February 2012. It declares that those certain cement mixers 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. 1138712 is taken to have come into force on 21 November 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 Tariff Concession Instrument No. 1138712, enacted under the Customs Act 1901, aims to address the need for tariff concessions on specific goods by providing a streamlined process for reducing customs duty rates. This instrument was introduced to facilitate lower customs duties on goods, such as certain cement mixers, that meet specific criteria, thereby encouraging trade and reducing costs for businesses. The instrument was developed by the Chief Executive Officer of Customs in response to an application by Halliburton Australia Pty Ltd, which sought a tariff concession for certain cement mixers. The instrument was effective from the date the application was lodged, 21 November 2011, and no submissions opposing the concession were received, indicating broad acceptance of the tariff reduction. The policy objective is to enhance economic efficiency by lowering the cost of importing goods that do not have substitutable Australian-produced alternatives.
Scope and Application
The Customs Act 1901, specifically Part XVA, outlines a framework under which the Chief Executive Officer (CEO) of Customs can issue Tariff Concession Orders (TCOs) to apply a lower rate of customs duty to specified goods. This process applies to any person who lodges an application under section 269F of the Act, provided that the goods in question are not those listed in section 269SJ, which are ineligible for TCOs. A TCO is only granted if the CEO determines, pursuant to section 269C, that no substitutable goods were produced in Australia on the date the application was made, with "substitutable goods" defined in section 269D. Once the core criteria are met, the CEO is mandated to issue a written TCO, as stipulated in section 269P(3). For instance, TCO No. 1138712, issued on 6 February 2012, concerns certain cement mixers that now attract a duty rate of free under item 50 of Schedule 4 to the Customs Tariff Act 1995, down from the general rate of 5%, after the CEO confirmed the absence of substitutable goods in Australia. The TCO does not retroactively affect the rights of any person, nor does it impose liabilities on anyone for actions taken prior to its issuance.
Key Provisions
The Customs Act 1901 (the Act) includes a provision for Tariff Concession Orders (TCOs) which are designed to provide lower customs duty rates on certain goods (s 269F). When a party such as Halliburton Australia Pty Ltd applies for a TCO, the Chief Executive Officer of Customs (CEO) must assess whether the application meets the core criteria set out in section 269C. These criteria require that, on the date the application is lodged, no substitutable goods are being produced in Australia in the ordinary course of business (s 269C). If satisfied, the CEO issues a TCO which specifies the reduced duty rates applicable to the goods, as exemplified in TCO No. 1138712 for certain cement mixers (s 269P(3)).
The Act mandates certain obligations on the parties involved. For instance, when a TCO application is accepted as valid, the CEO must promptly publish a notice in the Gazette inviting any interested parties to submit reasons against the TCO (s 269K(1)). In the case of TCO No. 1138712, no submissions were received. Additionally, the Act requires that TCOs come into force on the date the application is lodged, thereby ensuring timely effect for applicants (s 269S(1)).
Failure to comply with the requirements of the Customs Act or the conditions of a TCO can result in various consequences. While the specific offences and penalties are not detailed in the explanatory statement, breaches of the Act generally attract civil and/or criminal penalties. These could include fines or imprisonment, depending on the nature and severity of the breach. The maximum penalties are stipulated in other sections of the Act or associated regulations, but they are not specified in this particular explanatory statement.
In summary, the Customs Act 1901 facilitates the application and issuance of TCOs to provide tariff concessions on certain goods, subject to specific criteria and obligations. The Act also sets the stage for publication and consultation processes, ensuring transparency and fairness. Non-compliance with the Act or the terms of a TCO can lead to significant civil and criminal repercussions, although the exact penalties are not detailed in this explanatory statement.