EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0839714
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 nitrogen pumping system on 13 November 2008.
Instrument
TCO No 0839714 was made on 23 January 2009. It declares that those certain nitrogen pumping system 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. 0839714 is taken to have come into force on 13 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 Customs Act 1901, enacted by the Australian Parliament, serves as a foundational piece of legislation governing the regulation of customs and border control in Australia. The Act was introduced to address the need for a comprehensive framework that could effectively manage the import and export of goods, ensuring compliance with customs regulations and the collection of necessary duties and taxes. Part XVA of the Act specifically introduces a scheme for Tariff Concession Orders (TCOs), which allow for the application of reduced customs duty rates on certain goods, provided they meet specified criteria. The explanatory statement for Tariff Concession Instrument No. 0839714, issued under this scheme, details the process and conditions under which a TCO was granted to Schlumberger Oilfield Australia for certain nitrogen pumping systems. The primary policy objective behind such concessions is to support Australian industries by making essential goods more affordable, thereby encouraging their use and production within the country.
Scope and Application
The Tariff Concession Instrument No. 0839714, made under Part XVA of the Customs Act 1901, applies to any person who applies for a Tariff Concession Order (TCO) in respect of goods that are not specified as ineligible under section 269SJ of the Act. The legislation targets entities seeking reduced customs duty rates for specific goods by applying to the Chief Executive Officer of Customs. The instrument is designed to facilitate the importation of goods by providing a pathway to lower duty rates when certain conditions are met, such as the absence of substitutable goods produced in Australia. This Act has a Commonwealth jurisdictional reach and is applicable across Australia. It is important to note that the application of a TCO does not extend to goods specified in section 269SJ, which includes those goods that are inherently prohibited from such concessions. The Act may also be extended or modified through subordinate instruments, which allows for the flexibility in administering tariff concessions as required by the evolving needs of trade and industry.
Key Provisions
The key operative sections of Tariff Concession Instrument No. 0839714 under the Customs Act 1901 (section 269F) and Customs Tariff Act 1995 (Schedule 4, item 50) establish the framework for the tariff concession order. Section 269F allows an application for a tariff concession order (TCO) by any person, which, if approved by the Chief Executive Officer (CEO) of Customs, results in the application of a reduced customs duty rate on the specified goods. Schedule 4, item 50, specifies that the general duty rate for these nitrogen pumping systems is 5%, but the TCO reduces this rate to free. This means that upon the TCO's effective date, no customs duty is payable on these goods.
The Act imposes several obligations on the parties involved. Firstly, the CEO must assess applications for TCOs to ensure they meet the core criteria outlined in sections 269C and 269SJ of the Act. If the CEO is satisfied that the application meets these criteria, they are mandated to issue a TCO. Section 269K(1) further requires the CEO to publish a notice in the Gazette inviting any interested parties to submit objections or reasons why the TCO should not be made. In the case of TCO No. 0839714, no submissions were received, leading to the approval and issuance of the TCO.
In terms of offences, penalties, and consequences, the Act does not specify particular penalties for non-compliance with the TCO process itself. However, any misuse or fraudulent activity related to the TCO may result in civil or criminal penalties under other provisions of the Customs Act 1901 and related legislation. The TCO ensures that the rights of existing importers are protected and that no new liabilities are imposed on them for actions taken before the TCO's effective date. Importers may also apply for a refund of duty on goods imported since the TCO's effective date, which in this case is 13 November 2008.