EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0814000
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 oil and gas cement head on 23 June 2008.
Instrument
TCO No 0814000 was made on 08 September 2008. It declares that those certain oil and gas cement head 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. 0814000 is taken to have come into force on 23 June 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 Tariff Concession Instrument No. 0814000, enacted in 2008, is a legislative measure under the Customs Act 1901, which was designed to address the issue of ensuring that certain goods, specifically oil and gas cement head, receive tariff concessions when no substitutable goods are produced in Australia. This instrument was introduced to facilitate trade by reducing customs duties for specific imported goods, thereby making them more competitively priced in the Australian market. The enacting body for this instrument was the Chief Executive Officer of Customs, who has the authority to make Tariff Concession Orders (TCOs) under section 269F of the Act. The policy objective behind this legislation is to support industries by lowering the cost of imported goods that do not have local alternatives, thus encouraging trade and economic activity. The instrument was designed to ensure that the application process for tariff concessions is transparent and allows for public consultation, as stipulated by subsection 269K(1) of the Act.
Scope and Application
The Customs Act 1901, through Part XVA, facilitates the application of Tariff Concession Orders (TCOs) which provide a reduced rate of customs duty on specified goods. This scheme applies to any person who applies to the Chief Executive Officer of Customs for a TCO, provided the goods in question do not fall under the exclusions outlined in section 269SJ of the Act. A TCO is applicable when the CEO determines that no substitutable goods are produced in Australia in the ordinary course of business, as defined by sections 269D and 269E of the Act. The application of TCOs is intended to benefit importers by allowing them to claim refunds for duty paid on goods imported from the date the TCO is deemed to have come into force. Importantly, the TCO does not retroactively affect the rights of any person or impose new liabilities on anyone, except in the case of the Commonwealth. The CEO must publish a notice of the TCO application in the Gazette, inviting any interested parties to submit objections, although no objections were received in this instance. The TCO No. 0814000, effective from 23 June 2008, specifically applies to certain oil and gas cement heads, granting them a free rate of duty under item 50 of Schedule 4 to the Customs Tariff Act 1995.
Key Provisions
The main sections of the Tariff Concession Instrument No. 0814000 under the Customs Act 1901 (section 269F) detail the process for applying for a Tariff Concession Order (TCO), which allows for a lower rate of customs duty on certain goods. If the Chief Executive Officer (CEO) of Customs is satisfied that an application meets the core criteria, as specified in section 269C, they must make a written order declaring the goods to which the TCO applies (section 269P(3)). In this case, Schlumberger Oilfield Australia applied for a TCO for certain oil and gas cement heads on 23 June 2008, and the CEO made TCO No. 0814000 on 8 September 2008, declaring these goods to be subject to the concession (section 50 of Schedule 4 of the Customs Tariff Act 1995), with a duty rate of free instead of the general rate of 5%.
The obligations imposed by the Act on the parties or entities it governs include the requirement for the CEO to review TCO applications to determine if they meet the core criteria, particularly ensuring that no substitutable goods were produced in Australia on the day the application was lodged (section 269C). This involves verifying that the goods in question do not have Australian alternatives that could be used in the same way, as defined by sections 269D and 269E of the Act. Furthermore, the CEO must publish a notice in the Gazette inviting submissions from any interested parties who may oppose the making of the TCO (subsection 269K(1)). In this case, no submissions were received in response to the published notice.
In terms of offences, penalties, or consequences, the Act does not specify penalties for failing to meet the requirements of the TCO process itself. However, misuse or fraudulent claims for tariff concessions could lead to criminal charges under other sections of the Customs Act 1901 or related legislation. For example, knowingly making a false statement in an application could result in a fine or imprisonment, as outlined in sections 224 and 226 of the Act. The Act ensures that the TCO does not affect the rights of any person other than the Commonwealth as at the date of registration and does not impose any liabilities on any person, as stated in subsection 269S(3). The rights of importers are beneficially affected by the TCO, and they may apply for a refund of duty on goods imported since the day the TCO is taken to have come into force, as per paragraph 126(1)(r) of the Regulations.