EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0819324
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 multifunctional flowhead on 16 July 2008.
Instrument
TCO No 0819324 was made on 10 October 2008. It declares that those certain multifunctional flowhead 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. 0819324 is taken to have come into force on 16 July 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 Commonwealth Parliament, established a framework for the imposition of customs duties on imported goods. To address specific economic needs and to foster industry development, the Act allows for the creation of Tariff Concession Orders (TCOs) under Part XVA, which provide for reduced or waived customs duties on certain goods. The problem or gap this legislation aimed to address includes facilitating access to essential goods by reducing financial burdens on businesses and consumers, thereby encouraging investment and economic growth. The Tariff Concession Instrument No. 0819324 was introduced to provide a tariff concession on certain multifunctional flowheads, effective from 16 July 2008, the date the application was lodged. This measure was designed to ensure that such goods, crucial for particular industries, could be imported at a lower or no duty rate, aligning with the policy objective of supporting specific sectors by reducing their input costs.
Scope and Application
The Tariff Concession Instrument No. 0819324 under the Customs Act 1901 applies to goods that are the subject of a Tariff Concession Order (TCO) made by the Chief Executive Officer of Customs (CEO). Specifically, this instrument pertains to certain multifunctional flowhead, for which Schlumberger Oilfield Australia applied on 16 July 2008. The Act allows for a lower rate of customs duty on goods that are subject to a TCO, provided that the application meets certain core criteria, such as no substitutable goods being produced in Australia. The TCO affects the general rate of duty on these goods, reducing it from 5% to free, and is effective from the date the application was lodged. The instrument does not disadvantage any person other than the Commonwealth and does not impose any new liabilities. Additionally, the rights of importers are positively impacted, as they can apply for a refund of duty on goods imported since the effective date of the TCO. The geographic reach of the Act is national, applying across Australia, and its application may be further extended or restricted through subordinate instruments.
Key Provisions
The primary operative sections of the Customs Act 1901 relevant to Tariff Concession Orders (TCOs) include section 269F, which allows a person to apply to the Chief Executive Officer (CEO) of Customs for a TCO concerning specific goods (s 269F). If the application is deemed not to be in respect of goods specified in section 269SJ, which lists goods that cannot be subject to a TCO, the CEO must assess whether the application meets the core criteria outlined in section 269C (s 269C). This provision stipulates that an application meets the core criteria if, on the day it was lodged, no substitutable goods were produced in Australia in the ordinary course of business (s 269C). Definitions for key terms such as "goods produced in Australia," "ordinary course of business," and "substitutable goods" are provided in sections 269D, 269E, and 269B respectively (ss 269B, 269D, 269E).
The Act imposes several obligations and requirements on the parties involved. For instance, the CEO must publish a notice in the Gazette inviting submissions from any person who believes there are reasons why the TCO should not be made (s 269K(1)). This step ensures transparency and allows for public consultation. Additionally, the CEO must ensure that the application meets the core criteria set out in section 269C, specifically verifying that no substitutable goods were produced in Australia in the ordinary course of business (s 269C). If satisfied, the CEO must then make a written order declaring the goods subject to the TCO (s 269P(3)). The TCO does not affect the rights of any person as at the date of registration, ensuring that no person, other than the Commonwealth, is disadvantaged or imposed upon regarding actions taken before the date of registration (s 269S(1)).
In terms of breaches and penalties, the Act does not explicitly detail offences or penalties for failing to comply with the requirements for TCOs. However, non-compliance with the Customs Act 1901 in general may lead to civil and criminal consequences. For instance, knowingly making a false statement or representation in an application or other document can result in penalties, including fines and imprisonment. The maximum penalties can vary based on the severity and intent behind the breach. Additionally, failure to adhere to the terms of a TCO could result in the revocation of the concession, leading to the reapplication of standard customs duties and potential financial penalties for the affected parties.