EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0602196
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.
Baker Hughes Pty Ltd applied for a TCO in respect of certain oil and gas well logging and perforating vehicles on 12 January 2006.
Instrument
TCO No 0602196 was made on 24 March 2006. It declares that those certain oil and gas well logging perforating vehicles and 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 0%.
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. 0602196 is taken to have come into force on 12 January 2006.
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 regulate and facilitate the administration of customs duties in Australia. Among its provisions, Part XVA introduced a scheme allowing for Tariff Concession Orders (TCOs), which can be applied for by individuals or entities to secure a lower rate of customs duty on specified goods. Enacted by the Commonwealth Parliament, this legislative instrument aims to provide economic benefits by reducing the cost of importing certain goods, thereby fostering trade and industry growth. Specifically, the Tariff Concession Instrument No. 0602196 was introduced to address the need for tariff concessions on certain oil and gas well logging and perforating vehicles. This instrument was made on 24 March 2006, following an application by Baker Hughes Pty Ltd, and declares that these specific vehicles are subject to a 0% duty rate under item 50 of Schedule 4 to the Customs Tariff Act 1995, provided that no substitutable goods are produced in Australia. This measure is intended to enhance competitiveness and support the oil and gas industry by lowering the importation costs of these specialised vehicles.
Scope and Application
The Customs Act 1901, as amended, provides a framework through which Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs (CEO). The legislation applies to individuals or entities that seek to import goods for which a lower rate of customs duty may be applicable. These concessions are available for goods that are not produced in Australia in the ordinary course of business and for which no substitutable goods are available domestically. The scope of the Act is national, as it operates under the authority of the Commonwealth of Australia, impacting importers across all states and territories. The legislation explicitly excludes certain goods from being subject to a TCO, as outlined in section 269SJ of the Act. The application of the Act can be extended or further specified through subordinate instruments, such as the Tariff Concession Instrument No. 0602196, which was made in relation to oil and gas well logging and perforating vehicles, effectively granting a zero-rate duty on these goods. This particular TCO came into force on 12 January 2006 and does not impose any new liabilities or disadvantage existing rights of any person except the Commonwealth.
Key Provisions
The primary operative sections of the Tariff Concession Instrument No. 0602196 are section 269C and 269P(3) of the Customs Act 1901. Section 269C outlines the core criteria that must be met for a Tariff Concession Order (TCO) to be made, namely that on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business (section 269C). Section 269P(3) mandates that if the Chief Executive Officer (CEO) of Customs is satisfied that a TCO application meets the core criteria, the CEO must make a written order (a TCO) specifying the applicable prescribed item of Schedule 4 to the Customs Tariff Act 1995 (section 269P(3)). In this instance, the TCO declares that certain oil and gas well logging and perforating vehicles are subject to a 0% duty rate, as no substitutable goods were produced in Australia at the time of the application.
The Act imposes several obligations and requirements on the parties involved. Firstly, section 269F allows any person to apply to the CEO for a TCO in respect of goods. The CEO must then determine if the application meets the core criteria set out in section 269C. Should the application meet these criteria and not pertain to goods specified in section 269SJ, which lists those goods that cannot be subject to a TCO, the CEO is required to make the TCO. Additionally, under subsection 269K(1), the CEO must publish a notice in the Gazette inviting submissions from any person who believes there are reasons why the TCO should not be made. In this case, the CEO did not receive any submissions in response to the published notice.
The Customs Act 1901 also outlines the potential consequences for breach or non-compliance with the legislation. While the explanatory statement does not explicitly mention specific offences, penalties, or consequences for breach, it is generally understood that failure to comply with the provisions of the Customs Act, including the making of a TCO, could result in legal action under the general provisions of the Act or other relevant legislation. This may include civil or criminal penalties depending on the nature and severity of the breach. However, the maximum penalties are not specified within the text provided.
In summary, the Tariff Concession Instrument No. 0602196 allows for a 0% duty rate on certain oil and gas well logging and perforating vehicles, provided the core criteria under section 269C are met. The CEO of Customs is responsible for assessing applications and making the TCO. Failure to comply with the provisions of the Customs Act could lead to legal consequences, though specific penalties are not detailed in the explanatory statement.