EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0721689
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 Pty Limited applied for a TCO in respect of certain parts assemblies interconnecting directional drilling tools on 13 December 2007.
Instrument
TCO No 0721689 was made on 29 February 2008. It declares that those certain parts assemblies interconnecting directional drilling tools 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. 0721689 is taken to have come into force on 13 December 2007.
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 by the Australian Parliament and is a fundamental piece of legislation governing the regulation of customs and excise duties. The Act establishes a framework for the administration of customs and excise, including the imposition of duties, the regulation of imports and exports, and the facilitation of international trade. In 2008, Tariff Concession Instrument No. 0721689 was introduced to address a specific gap in the tariff concessions available for certain goods. The problem it aimed to resolve was the lack of tariff concessions for certain parts assemblies interconnecting directional drilling tools, which are critical in the oil and gas industry. The policy objective of this instrument was to provide relief to businesses by reducing the customs duty on these specific goods, thereby enhancing competitiveness and facilitating smoother international trade operations. The instrument was made under the authority of the Chief Executive Officer of Customs, who assessed and approved the tariff concession application based on the criteria outlined in the Customs Act 1901.
Scope and Application
The Customs Act 1901, specifically through Part XVA, provides the framework for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs. These orders can lower the customs duty on certain goods, provided an application is made and the core criteria are met, which involves ensuring that no substitutable goods are produced in Australia in the ordinary course of business. This process is particularly relevant for companies such as Schlumberger Oilfield Australia Pty Limited, who may apply for such concessions to benefit from reduced tariffs on their specific goods. The application for a TCO must be lodged with the CEO, and if the application is deemed valid, the CEO must make a written order, which then comes into force on the date the application was lodged. The TCO allows for the goods specified in the order to be subject to a lower rate of duty, as seen in Instrument TCO No 0721689, where the general duty rate of 5% is reduced to free for certain parts assemblies interconnecting directional drilling tools. The application process includes a requirement for the CEO to publish a notice in the Gazette, inviting any interested parties to provide submissions; however, in this instance, no submissions were received. The TCO does not disadvantage any person or impose new liabilities on them, and it benefits importers by allowing them to apply for refunds of duty on goods imported after the TCO's effective date.
Key Provisions
The Customs Act 1901, as amended, includes provisions that allow for the establishment of Tariff Concession Orders (TCOs) to facilitate the reduction or exemption of customs duties on certain goods. Under section 269F, an application can be made to the Chief Executive Officer of Customs (CEO) for a TCO in respect of specified goods, provided they do not fall under the categories outlined in section 269SJ. The CEO is obligated to assess whether the application meets the core criteria, as described in section 269C. Specifically, the CEO must determine if no substitutable goods were produced in Australia on the day the application was lodged. Definitions for key terms such as 'substitutable goods', 'goods produced in Australia', and 'ordinary course of business' are provided in sections 269D, 269E, and 269B respectively. If the CEO is satisfied that the application meets the criteria, a written order is issued under section 269P(3), declaring the goods eligible for the tariff concession as specified in the order.
The obligations imposed on the parties by the Act require applicants to ensure their applications are valid and that the goods in question do not contravene any exclusions under section 269SJ. The CEO, on the other hand, has the responsibility to assess applications for compliance with the core criteria and to make decisions in a timely manner. Additionally, the CEO must facilitate public consultation as per section 269K(1), by publishing notices in the Gazette inviting submissions on applications for TCOs. In the case of TCO No. 0721689, no submissions were received in response to the published notice.
The Act also outlines potential consequences for non-compliance or breach of its provisions. While the explanatory statement does not detail specific offences under the Customs Act 1901, it is understood that breaches could lead to civil or criminal penalties. The severity of these penalties could vary depending on the nature and extent of the breach, but they might include fines or imprisonment as stipulated under the general provisions of the Customs Act. The specific penalties would be determined in the context of the broader legislative framework and any applicable regulations.