EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0615049
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.
Schlumberger Oilfield Australia applied for a TCO in respect of certain electric and telemetric downhole cables on 22 September 2006.
Instrument
TCO No 0615049 was made on 15 December 2006. It declares that those certain electric and telemetric downhole cables 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. 0615049 is taken to have come into force on 22 September 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, enacted by the Commonwealth Parliament, establishes a framework for the administration of customs duties and the regulation of imports and exports within Australia. One significant aspect of this Act is the provision for Tariff Concession Orders (TCOs) under Part XVA, which allow the Chief Executive Officer of Customs to reduce or eliminate customs duties on certain goods under specific conditions. The primary problem or gap addressed by this legislation is the potential economic disadvantage faced by Australian businesses when importing goods that could be substituted by domestically produced alternatives. By providing tariff concessions, the Act aims to level the playing field for imported goods, thereby encouraging fair competition and supporting Australian industries by ensuring that imported goods are not unfairly penalised compared to local products. The Explanatory Statement for Tariff Concession Instrument No. 0615049, made under the Customs Act 1901, illustrates this process by detailing how Schlumberger Oilfield Australia successfully applied for a tariff concession on certain electric and telemetric downhole cables, leading to a reduction in customs duty from 5% to free.
Scope and Application
The Customs Act 1901, through its Part XVA, facilitates the granting of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs, allowing for reduced rates of customs duty on specified goods. This Act applies to any person or entity seeking to import goods that could benefit from a reduced customs duty, provided the goods are not specified in section 269SJ as ineligible for such concessions. The application process requires the applicant to demonstrate that no substitutable goods are produced in Australia, as defined by the Act, thereby meeting the core criteria outlined in section 269C. This legislative framework extends across the Commonwealth of Australia, with the application of TCOs being subject to the definitions and stipulations laid out in the Customs Act and the Customs Tariff Act 1995. Notably, the application and effectiveness of TCOs do not retroactively disadvantage any person or impose new liabilities, ensuring that the rights of importers are protected and may even be enhanced through potential duty refunds for imports made post the effective date of the TCO.
Key Provisions
The main operative sections of this legislation revolve around the ability of the Chief Executive Officer of Customs (CEO) to make Tariff Concession Orders (TCOs) under section 269F of the Customs Act 1901. If the CEO is satisfied that an application for a TCO is valid and meets the core criteria set out in section 269C, they must make a written order specifying the goods subject to the concession. Section 269B further defines key terms such as "goods produced in Australia" and "substitutable goods" to clarify the scope of the concession. Upon satisfaction that no substitutable goods are produced in Australia, the CEO must declare the goods subject to the TCO under subsection 269P(3).
The Act imposes specific obligations and requirements on the parties involved. The CEO must ensure that any TCO application not pertaining to goods specified in section 269SJ of the Act is evaluated against the core criteria. This includes verifying that no substitutable goods are produced in Australia at the time of the application. Additionally, as per subsection 269K(1), the CEO must publish a notice in the Gazette inviting any interested parties to submit objections or reasons why the TCO should not be granted. In this case, no submissions were received, facilitating the issuance of TCO No. 0615049.
There are no specific offences or penalties outlined in the legislation for breach of the TCO provisions. However, the Act ensures that the TCO does not affect the rights of any person adversely, nor does it impose any liabilities on any person other than the Commonwealth. Instead, the TCO aims to benefit importers by allowing them to apply for a refund of duty on goods imported since the date the TCO is taken to have come into force, as stipulated under paragraph 126(1)(r) of the Regulations. The TCO No. 0615049, which came into force on 22 September 2006, provides a duty-free rate for certain electric and telemetric downhole cables, reducing the general rate of duty from 5% to free.