EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0814605
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 downhole insulated cable on 25 June 2008.
Instrument
TCO No 0814605 was made on 12 September 2008. It declares that those certain downhole insulated 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. 0814605 is taken to have come into force on 25 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 Customs Act 1901 was amended to introduce the scheme under which Tariff Concession Orders (TCOs) can be made, enabling a lower rate of customs duty for certain goods. This legislation was enacted to address the need for a streamlined process to grant tariff concessions for specific goods, ensuring that Australian businesses can access necessary materials at reduced costs. The Tariff Concession Instrument No. 0814605, made under the authority of the Customs Act 1901, was introduced by the Chief Executive Officer of Customs following an application by Schlumberger Oilfield Australia for a tariff concession on certain downhole insulated cables. The policy objective, as stated, is to provide tariff relief for goods that are not substitutable by Australian-produced alternatives, thereby supporting Australian industries and promoting economic efficiency.
Scope and Application
The Customs Act 1901, as amended through Tariff Concession Instrument No. 0814605, applies to any person or entity seeking tariff concessions on certain goods imported into Australia. This legislation facilitates the reduction or exemption of customs duty on specific goods, provided that these goods are not substitutes for any goods produced in Australia and that they meet the criteria set out in the Act. The application of this Instrument is national, extending across all states and territories of Australia, as it operates under the authority of the Commonwealth. The Tariff Concession Orders (TCOs) made under this legislation allow for the declaration of specific goods that qualify for reduced duty rates or duty-free status, contingent on the absence of substitutable goods being produced domestically. Exclusions under this Act pertain to goods specified in section 269SJ of the Act, which cannot be subject to a TCO. Furthermore, the Act provides for subordinate instruments to extend or specify further details of the application of TCOs. In the case of Schlumberger Oilfield Australia’s application for downhole insulated cables, the TCO has been effective from the date of the application, 25 June 2008, and does not affect any pre-existing rights or impose new liabilities on non-Commonwealth entities.
Key Provisions
The primary operative sections of Tariff Concession Instrument No. 0814605 under the Customs Act 1901 (section 269P(3)) pertain to the making of a Tariff Concession Order (TCO) by the Chief Executive Officer of Customs (CEO). Specifically, this instrument declares that certain downhole insulated cables are goods to which item 50 of Schedule 4 to the Customs Tariff Act 1995 applies, resulting in a tariff rate of free duty instead of the general rate of 5%. The core criteria for a TCO, outlined in sections 269C and 269D of the Act, include the requirement that no substitutable goods were produced in Australia on the day the application was lodged.
The obligations and requirements imposed by this Act on the parties involved include the duty of the CEO to assess whether an application for a TCO meets the core criteria, as set forth in section 269C. If the CEO determines that the application is valid, they must make a written order declaring the specified goods subject to a lower tariff rate. Additionally, the CEO must publish a notice in the Gazette, inviting any interested parties to submit any reasons why the TCO should not be made, as per section 269K(1). In this instance, no submissions were received in response to the published notice.
The Act also outlines specific consequences for breaches of its provisions. Although the explanatory statement does not detail specific offences, penalties, or civil/criminal consequences for breach, it is known that breaches of the Customs Act 1901 can lead to significant penalties. Under section 226A of the Customs Act 1901, penalties for contraventions of the Act can include substantial fines and, in severe cases, imprisonment. The exact penalties depend on the nature and severity of the breach. For example, an individual found guilty of knowingly importing prohibited goods could face fines of up to $275,000 or imprisonment for up to 10 years, or both, as stipulated in section 234 of the Act. The TCO itself ensures that no person, other than the Commonwealth, is disadvantaged or imposed liabilities in respect of actions taken prior to the date of registration of the TCO.