EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0838623
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.
Baker hughes Inteq applied for a TCO in respect of certain downhole stabilisers on 05 November 2008.
Instrument
TCO No 0838623 was made on 25 March 2009. It declares that those certain downhole stabilisers 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. 0838623 is taken to have come into force on 05 November 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. 0838623, enacted in 2009, amends the Customs Act 1901 by introducing a tariff concession for certain downhole stabilisers, effective from the date of application on 5 November 2008. This legislation was developed to address the specific need of Baker Hughes Inteq, which sought a tariff concession for these goods, ensuring that they are exempt from the general duty rate of 5% and instead are subject to a duty-free regime. Enacted by the Chief Executive Officer of Customs, the instrument aligns with the policy objectives set out in the Customs Act 1901, which aim to facilitate the importation of goods not produced domestically, thereby supporting trade and economic activities without imposing undue burdens on importers or other stakeholders.
Scope and Application
The Tariff Concession Instrument No. 0838623, made under the Customs Act 1901, applies to any person or entity seeking to import certain downhole stabilisers into Australia. The application of this instrument is limited to the goods specified in the application, namely those particular downhole stabilisers, and is contingent upon the Chief Executive Officer of Customs determining that no substitutable goods were produced in Australia at the time of the application. The geographic scope of this legislation is national, as it pertains to the customs duties applicable across Australia. The Act allows for the reduction or exemption of customs duties for specific goods, provided that they meet the outlined criteria and do not fall under the restricted categories specified in section 269SJ of the Act. Additionally, the Act can be extended or refined through subordinate instruments, ensuring that the application of tariff concessions remains flexible and responsive to changing economic and industrial conditions.
Key Provisions
The Tariff Concession Instrument No. 0838623 under the Customs Act 1901 provides a tariff concession for certain downhole stabilisers, reducing their customs duty rate from the general rate of 5% to free (sections 269F, 269C, 269P(3)). This concession applies to goods specified in the application and approved by the Chief Executive Officer (CEO) of Customs, provided that no substitutable goods were produced in Australia on the date of the application (section 269SJ). The concession is effective from the date the application was lodged, 05 November 2008 (subsection 269S(1)).
The Act imposes certain obligations on the applicant and the CEO. The applicant must ensure that their application meets the core criteria, primarily that no substitutable goods were produced in Australia (section 269C). The CEO must review the application, publish a notice in the Gazette inviting submissions from interested parties, and decide whether the application meets the core criteria (subsections 269K(1), 269P(3)). The CEO must also ensure that the concession does not affect the rights of any person adversely as at the date of registration and that no new liabilities are imposed (subsection 269S(2)).
Failure to comply with the requirements of the Act or the conditions of a Tariff Concession Order can result in legal consequences. While the explanatory statement does not detail specific offences or penalties, breaches of customs laws generally can lead to civil or criminal penalties. Under the Customs Act, penalties for non-compliance can include fines and, in serious cases, imprisonment. For instance, section 208 of the Act provides for fines and imprisonment for wilful neglect or default in relation to customs laws, with maximum penalties varying depending on the offence. Additionally, the Customs Tariff Act 1995 may also impose penalties for incorrect classification or misdeclaration of goods, which could be relevant in the context of tariff concessions.