EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0827738
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 downhole hydraulic turbine on 22 August 2008.
Instrument
TCO No 0827738 was made on 14 November 2008. It declares that those certain oil and gas downhole hydraulic turbine 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. 0827738 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 was amended to introduce Tariff Concession Orders (TCOs) under Part XVA, which allow for lower rates of customs duty on certain goods. Enacted by the Australian Parliament, this legislative change was introduced to provide relief and support to industries where the goods in question are not produced domestically, thereby encouraging imports and potentially lowering costs for businesses. Schlumberger Oilfield Australia's application for a TCO regarding certain oil and gas downhole hydraulic turbines was processed under this framework, with the CEO of Customs satisfied that no substitutable goods were produced in Australia, thus meeting the core criteria for a concession. The TCO granted a free duty rate on these specific goods, effective from the date of the application, and did not disadvantage any existing rights or impose new liabilities.
Scope and Application
The Tariff Concession Instrument No. 0827738 under the Customs Act 1901 applies specifically to the concession of customs duty rates for certain oil and gas downhole hydraulic turbines, as determined by the Chief Executive Officer of Customs. The instrument was enacted in response to an application by Schlumberger Oilfield Australia on 22 August 2008, and it came into force on the same date. The Act allows for the application of lower rates of customs duty on goods specified in a Tariff Concession Order (TCO), provided certain criteria are met, notably that no substitutable goods are produced in Australia in the ordinary course of business. This particular TCO was made on 14 November 2008, declaring that the specified oil and gas downhole hydraulic turbines are subject to item 50 of Schedule 4 to the Customs Tariff Act 1995, resulting in a duty rate of free, down from the general rate of 5%. The TCO does not disadvantage any existing rights of persons other than the Commonwealth and imposes no new liabilities, potentially benefiting importers by allowing them to apply for a refund of duty on goods imported since the effective date of the TCO.
Key Provisions
The Tariff Concession Instrument No. 0827738, issued under the Customs Act 1901, pertains to the application of a Tariff Concession Order (TCO) for certain oil and gas downhole hydraulic turbines. Section 269F of the Act allows for an application to the Chief Executive Officer of Customs (CEO) for a TCO if the goods are not excluded under section 269SJ. If the CEO determines that the application meets the core criteria in section 269C, they are required to make a TCO under section 269P(3). The CEO must ensure that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged, as defined in sections 269D and 269E.
Entities and individuals governed by the Customs Act 1901 have specific obligations under the legislation. Any applicant seeking a TCO must submit a valid application that meets the criteria outlined in section 269C. The CEO is obligated to review the application and determine if the goods in question are substitutable by any Australian-produced goods. If the CEO finds that no such substitutable goods exist, they must proceed to make the TCO as required by section 269P(3). Additionally, the CEO must publish a notice in the Gazette inviting submissions from any interested parties regarding the application, as per section 269K(1).
Failure to comply with the requirements of the Customs Act 1901 or the provisions of a TCO can lead to various legal consequences. Although the explanatory statement does not detail specific offences under this TCO, the general provisions of the Customs Act 1901 may include penalties for non-compliance. For example, section 164 of the Act provides for penalties for breaches of the Customs Act, which can include fines and imprisonment. The maximum penalties can vary depending on the nature and severity of the breach, but they can include substantial fines and imprisonment terms as prescribed by the relevant legislation. It is essential for entities and individuals to adhere to the requirements set out in the Act to avoid any potential legal repercussions.