EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0827690
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 directional drilling tools collars on 22 August 2008.
Instrument
TCO No 0827690 was made on 14 November 2008. It declares that those certain directional drilling tools collars 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. 0827690 is taken to have come into force on 22 August 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 Parliament of Australia, establishes a framework through which Tariff Concession Orders (TCOs) can be made by the Chief Executive Officer of Customs. These orders allow for reduced rates of customs duty on certain goods, provided they meet specific criteria such as the absence of substitutable goods being produced in Australia in the ordinary course of business. The Act was designed to address the gap in facilitating access to critical goods that are not domestically produced, thereby supporting industries that rely on imported materials. Policy objectives include promoting economic efficiency and supporting industries that might otherwise face significant competitive disadvantages due to the high cost of customs duties on imported goods.
The explanatory statement outlines that the Tariff Concession Instrument No. 0827690 was introduced following an application by Schlumberger Oilfield Australia for a TCO concerning directional drilling tools collars. After reviewing the application and finding that no substitutable goods were produced in Australia, the CEO issued the TCO, which was published in the Gazette with no objections received. This concession effectively reduces the duty on these goods from the general rate of 5% to free, taking effect from the date of the application, 22 August 2008. This legislative action aims to benefit importers by potentially allowing them to claim refunds on duties paid since the TCO's effective date, while ensuring no new liabilities are imposed on any parties.
Scope and Application
The Tariff Concession Instrument No. 0827690 applies to specific goods, namely certain directional drilling tools collars, and the process of granting tariff concessions under the Customs Act 1901. It specifically applies to Schlumberger Oilfield Australia, the entity that applied for the tariff concession, and to goods that meet the criteria for tariff concessions as outlined in the Customs Act. The geographic reach of this instrument is national, as it pertains to the application of tariff concessions across Australia under the federal Customs Act. The Act excludes certain goods that are specified in section 269SJ of the Customs Act, which cannot be subject to a tariff concession. The instrument may extend its application through subordinate instruments, such as regulations or further orders, as needed to implement or adjust the tariff concessions.
The application process for a tariff concession order under this instrument requires an applicant to demonstrate to the Chief Executive Officer of Customs that no substitutable goods are produced in Australia in the ordinary course of business. This involves a specific set of criteria under sections 269C, 269D, 269E, and 269F of the Customs Act. Once the CEO is satisfied that the application meets the criteria, they are mandated to make a written order, known as a Tariff Concession Order (TCO), specifying the applicable tariff item. The TCO for Schlumberger Oilfield Australia's directional drilling tools collars was declared under item 50 of Schedule 4 to the Customs Tariff Act 1995, resulting in a duty-free rate for these goods. The instrument came into force on the date the application was lodged, which was 22 August 2008, and does not affect the rights of persons as at the date of registration in a way that would disadvantage them or impose liabilities for actions prior to registration.
Key Provisions
The main operative sections of this legislation (F2009L00367) pertain to the creation and effect of Tariff Concession Orders (TCOs) under the Customs Act 1901. Section 269F allows for applications to be made to the Chief Executive Officer of Customs (CEO) for a TCO in respect of goods, provided those goods are not specified in section 269SJ, which lists goods ineligible for a TCO (269F, 269SJ). If the CEO determines that the application meets the core criteria set out in section 269C, which involves verifying that no substitutable goods were produced in Australia in the ordinary course of business (269C, 269D, 269E), they must make a written order (a TCO) specifying the prescribed item of Schedule 4 to the Customs Tariff Act 1995 that applies to the goods (269P(3)).
The obligations and requirements imposed by the Act on the parties involved are primarily centred around the application and approval process for a TCO. The applicant must ensure their application complies with the conditions outlined in section 269F, and the CEO must rigorously assess the application against the core criteria in section 269C. Additionally, under subsection 269K(1), the CEO is required to publish a notice in the Gazette inviting submissions from interested parties regarding the proposed TCO. This process ensures transparency and allows for public scrutiny of the TCO application. Importantly, the Act ensures that the rights of third parties are not adversely affected by the registration of a TCO, preserving their rights as they stood before the registration (269S(1), 126(1)(r)).
The legislation also outlines the consequences for non-compliance with the provisions of the Customs Act 1901 and related regulations. While specific offences and penalties are not detailed in the explanatory statement, breaches of customs legislation typically result in civil or criminal penalties. These can include fines and imprisonment, depending on the severity of the breach. The maximum penalties for customs-related offences can vary, but they can be substantial, reflecting the seriousness with which the law treats non-compliance. Importers and other affected parties must ensure adherence to the terms of the TCO and the broader customs framework to avoid these potential consequences.
In summary, the key provisions of this legislation establish a framework for the application, approval, and effect of Tariff Concession Orders, with specific obligations for applicants and the CEO. The Act ensures that the process is transparent and protects the rights of third parties. Non-compliance carries significant penalties, underscoring the importance of adhering to the customs regulations.