EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0802941
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 oil and gas downlink modulators on 20 February 2008.
Instrument
TCO No 0802941 was made on 28 April 2008. It declares that those certain oil and gas downlink modulators 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. 0802941 is taken to have come into force on 20 February 2008.
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 Australian Parliament, facilitates the implementation of Tariff Concession Orders (TCOs) to provide preferential rates of customs duty for specific goods, addressing the need for economic incentives to promote the import of goods that are not domestically produced. This legislation enables the Chief Executive Officer of Customs to issue TCOs, which apply a lower rate of customs duty to the specified goods, provided that no substitutable goods are produced in Australia. This scheme was introduced to support industries where local production does not occur or is insufficient to meet market demand, thereby encouraging the import of essential goods without the burden of high customs duties. The explanatory statement for Tariff Concession Instrument No. 0802941, made under this Act, clarifies that the application for concessional tariffs for certain oil and gas downlink modulators was approved as no domestic alternatives existed, thus aligning with the policy objective of fostering economic efficiency by reducing costs for importers of these critical goods.
Scope and Application
The Tariff Concession Instrument No. 0802941, under the Customs Act 1901, applies to specific goods, namely certain oil and gas downlink modulators, and is aimed at facilitating their importation by providing a tariff concession. This concession, granted by the Chief Executive Officer of Customs, applies to goods for which an application is made and approved, ensuring that no substitutable goods are produced in Australia. The scope of this Act is primarily focused on the reduction of customs duty for these particular goods, with the aim of benefiting importers by potentially reducing their costs associated with importing these items. The application of the Act is not limited by geographic boundaries within Australia but applies nationally as per the federal nature of the Customs Act 1901. The Act does not extend its application through subordinate instruments but rather operates within the framework set out in the primary legislation. Exclusions from the application of this tariff concession include goods specified in section 269SJ of the Act, which cannot be subject to a TCO, ensuring that the concessions are appropriately targeted.
Key Provisions
The main operative sections of Tariff Concession Instrument No. 0802941 under the Customs Act 1901 (section 269P(3)) involve the declaration of certain oil and gas downlink modulators as goods to which a prescribed item of Schedule 4 to the Customs Tariff Act 1995 applies. This declaration is contingent on the Chief Executive Officer (CEO) of Customs being satisfied that no substitutable goods were produced in Australia at the time the application was lodged (section 269C). The instrument specifies that the goods in question are subject to item 50 of Schedule 4, resulting in a duty rate of free, as opposed to the general rate of 5% (section 269P(3)).
The Act imposes specific obligations on parties applying for a Tariff Concession Order (TCO). Applicants, such as Schlumberger Oilfield Australia Pty Limited in this case, must ensure that their application satisfies the core criteria, particularly that no substitutable goods were produced in Australia on the day the application was lodged (section 269C). The CEO must also ensure that the goods in question are not specified in section 269SJ, which lists goods that cannot be subject to a TCO (section 269F). Additionally, the CEO is required to publish a notice in the Gazette inviting submissions from any interested parties regarding the application, and to consider any submissions received (subsection 269K(1)).
The Act includes provisions for civil and administrative consequences in the event of non-compliance with its requirements. While the explanatory statement does not specify particular offences or penalties, breaches of the Customs Act 1901 can generally lead to substantial fines and, in serious cases, imprisonment. The maximum penalties can vary depending on the specific breach but can include fines of up to $22,200 for individuals and significantly higher amounts for corporations, alongside potential imprisonment terms for more severe violations.
The TCO itself, once made, does not affect the rights of any person other than the Commonwealth as at the date of registration. This means that it does not impose any new liabilities on individuals or entities and does not disadvantage anyone who dealt with the goods prior to the TCO's effective date (subsection 269S(1)). Importers, however, will benefit from being able to apply for a refund of duty on goods imported since the date the TCO is deemed to have come into force (paragraph 126(1)(r) of the Regulations).
In summary, the Tariff Concession Instrument No. 0802941 provides a streamlined process for reducing customs duty on specific oil and gas downlink modulators, ensuring compliance with the core criteria outlined in the Customs Act 1901. The CEO's role is crucial in assessing applications and publishing notices to invite public submissions. The TCO's commencement date aligns with the date of the application, and it does not retroactively impose any liabilities on non-Commonwealth parties, offering benefits to importers in the form of duty refunds.