EXPLANATORY STATEMENT
By-law No. 0440002
Customs Act 1901
Section 271 of the Customs Act 1901 (the Act) provides, in part, that where an item of a Customs Tariff is expressed to apply to goods, or to a class or kind of goods, as prescribed by a by-law, the Chief Executive Officer of Customs may make by-laws for the purposes of that item. A Customs Tariff is defined in section 4 of the Act to mean an Act imposing duties of customs, that is the Customs Tariff Act 1995 (the Customs Tariff Act).
Background
Item 22 in Part II of Schedule 4 to the Customs Tariff Act sets out a duty rate of ‘Free’ for goods, as prescribed by by-law, that are used in the exploration for oil or natural gas, or in the development of oil or natural gas wells.
For item 22 in Part II of Schedule 4, By-law No. 0440002, which was signed by a delegate of the Chief Executive Officer of Customs on 15 January 2004, prescribed goods that were the subject of a current Tariff Concession Order and were for the use directly in the exploration for oil or natural gas or in the development of oil or natural gas wells from the reservoir up to and including the christmas tree cap.
On 1 October 2006 By-law No. 0440002 (as signed by the delegate of the Chief Executive Officer of Customs on 15 January 2004) ceased to be enforceable and was taken to have been repealed by the operation of section 32 of the Legislative Instruments Act 2003.
To preserve the duty rate of ‘Free’ for goods that were covered by the repealed by-law, a new By-law 0440002 prescribing the same goods as the repealed by-law has been made.
Instrument
New By-law No. 0440002, which has effect on and from 1 October 2006, prescribes for item 22 in Part II of Schedule 4 to the Customs Tariff Act, goods that are subject of a current Tariff Concession Order and are for use directly in the exploration for oil or natural gas or in the development of oil or natural gas wells from the reservoir up to and including the christmas tree cap.
Consultation
No consultation was undertaken in relation to new By-law No. 0440002 as it is of a minor and machinery nature and does not alter existing arrangements.
Commencement
New By-law No. 0440002 takes effect on and from 1 October 2006. Paragraph 273B(1)(b)(i) of the Act provides that a by-law shall take effect, or be deemed to have taken effect, from the date of publication, or from a date (whether before or after the date of publication) specified by or under the by-law. As the by-law does not increase duty, section 273C of the Act does not prohibit the by-law taking effect from 1 October 2006.
Overview
The Customs Act 1901, enacted by the Australian Parliament, provides the legal framework for the regulation of customs duties and associated activities in Australia. Among its provisions, Section 271 allows the Chief Executive Officer of Customs to issue by-laws that prescribe the application of specific items in the Customs Tariff, thereby ensuring that duties and regulations are accurately applied to relevant goods. The Customs Tariff Act 1995, which defines the Customs Tariff, includes an item specifying a 'Free' duty rate for goods used in the exploration and development of oil or natural gas. To address a gap resulting from the repeal of an earlier by-law that had prescribed such goods, a new By-law No. 0440002 was enacted on 1 October 2006, maintaining the 'Free' duty rate for the specified goods and ensuring continuity in the regulation of these activities.
Scope and Application
The Customs Act 1901 applies to the regulation and administration of customs duties in Australia, and by extension, to all entities and individuals involved in the import and export of goods. Specifically, By-law No. 0440002 under Section 271 of the Customs Act pertains to goods used in the exploration for oil or natural gas, or in the development of oil or natural gas wells. This by-law applies to entities and individuals engaged in these activities, ensuring that certain goods are classified under a tariff concession, thereby receiving a duty rate of 'Free'. The by-law’s jurisdictional reach is nationwide, as it operates under the authority of the Commonwealth of Australia. The by-law itself was updated and reissued to maintain its enforceability following the cessation of its predecessor, ensuring continuity in the duty exemption for specified goods. Any exclusions or exemptions would need to be detailed within the Customs Tariff Act and related instruments, and any subordinate instruments would further refine the application of this by-law.
Key Provisions
The main operative sections of By-law No. 0440002 are found in section 271 of the Customs Act 1901, which allows the Chief Executive Officer of Customs to make by-laws for the purposes of items in the Customs Tariff, as defined in section 4 of the Act. Specifically, item 22 in Part II of Schedule 4 of the Customs Tariff Act provides for a duty rate of ‘Free’ for goods used in the exploration for oil or natural gas or in the development of oil or natural gas wells, as prescribed by a by-law. By-law No. 0440002, signed on 15 January 2004, prescribed the goods that qualify for this duty rate, specifically those that are subject to a current Tariff Concession Order and are used in the exploration and development of oil or natural gas wells from the reservoir up to and including the christmas tree cap.
The obligations imposed by By-law No. 0440002 on the parties it governs are centred around the identification and classification of goods used in oil or natural gas exploration and development. The by-law requires that any goods intended for such use and that are subject to a current Tariff Concession Order be accurately identified and classified under item 22 in Part II of Schedule 4 of the Customs Tariff Act. This classification ensures that these goods are eligible for the duty rate of ‘Free’, thereby exempting them from customs duties. The by-law also requires that these goods meet the specific criteria outlined, which include being used directly in the exploration for oil or natural gas or in the development of oil or natural gas wells from the reservoir up to and including the christmas tree cap.
Any breaches of By-law No. 0440002 may result in civil or criminal consequences, depending on the nature and severity of the breach. The Act does not specify maximum penalties in the explanatory statement; however, breaches of customs regulations generally carry significant penalties. These can include fines, prosecution, and other civil remedies. The consequences can be severe, particularly for entities involved in the oil and gas industry, where non-compliance can lead to financial penalties, delays in operations, and reputational damage. The seriousness of the penalties reflects the importance of adhering to the by-law to ensure that eligible goods are correctly classified and exempt from customs duties as intended.