EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1001707
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 subsea oil and or gas well test trees on 11 January 2010.
Instrument
TCO No 1001707 was made on 22 March 2010. It declares that those certain subsea oil and or gas well test trees 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. 1001707 is taken to have come into force on 11 January 2010.
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. 1001707 was enacted in 2010 under the Customs Act 1901 to address the specific needs of certain industries by providing tariff concessions on particular goods. This instrument was introduced to provide relief from customs duty for Schlumberger Oilfield Australia's application concerning subsea oil and gas well test trees, which were determined to have no substitutable goods produced in Australia. The instrument was made by the Chief Executive Officer of Customs (CEO) following the application on 11 January 2010 and was published in the Gazette with no objections received. The instrument came into force on the date of application, providing a zero rate of duty on the specified goods, which contrasts with the general rate of 5%. This legislative measure was enacted by the Australian Parliament with the policy objective of facilitating smoother operations for businesses and potentially encouraging investment in certain sectors by reducing import costs.
Scope and Application
The Tariff Concession Instrument No. 1001707, under the Customs Act 1901, applies to Schlumberger Oilfield Australia's application for a Tariff Concession Order (TCO) concerning certain subsea oil and gas well test trees. This legislation is specifically tailored to goods that are not substitutable with any currently produced in Australia, thereby qualifying for a lower customs duty rate, in this case, reducing it to free from the general rate of 5%. The application of this instrument is restricted to the geographic scope of Australia and its territories, as per the Customs Act 1901. Notably, the TCO does not affect the rights of any person other than the Commonwealth and does not impose liabilities on any person regarding actions taken before the TCO’s effective date. Any imports of the specified goods after the effective date of 11 January 2010 can benefit from a duty refund as per the Customs Tariff Act 1995. The CEO of Customs made the decision to grant the TCO after considering the application and confirming that no substitutable goods were produced domestically, adhering strictly to the statutory criteria.
Key Provisions
The main operative sections of the Tariff Concession Instrument No. 1001707 under the Customs Act 1901 (section 269F) provide a framework for the application and approval of Tariff Concession Orders (TCO). Specifically, section 269F outlines the process by which a person may apply to the Chief Executive Officer of Customs (CEO) for a TCO in respect of goods. The CEO is required to assess whether the application meets the core criteria (section 269C), particularly if no substitutable goods are produced in Australia in the ordinary course of business (section 269D and 269E). If the application satisfies these criteria, the CEO must make a written order, declaring the goods subject to a prescribed rate of duty, in this case, free of duty (section 269P(3)).
The obligations and requirements imposed by the Act on the parties involved are stringent. The CEO must ensure that any application for a TCO is valid and meets the criteria stipulated in the Act. This includes verifying that no substitutable goods are produced in Australia in the ordinary course of business, as defined by sections 269D and 269E. Additionally, 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 (subsection 269K(1)). This ensures transparency and provides an opportunity for interested parties to voice their concerns. Once the CEO is satisfied that the application meets the core criteria, a TCO is issued, and the specified goods are subject to the reduced duty rate.
Breaching the requirements of the Customs Act 1901 can lead to various civil and criminal consequences. While the explanatory statement does not detail specific offences under this Act, general provisions of the Customs Act may include penalties for providing false information or engaging in fraudulent activities related to customs duties. The maximum penalties for such offences can be substantial, including fines and imprisonment, depending on the severity of the breach. The Act also includes provisions for the imposition of civil penalties for non-compliance, which can further deter violations.
Under the explanatory statement, the Tariff Concession Instrument No. 1001707 ensures that the rights of importers are beneficially affected, allowing them to apply for a refund of duty on goods imported since the day the TCO is taken to have come into force (paragraph 126(1)(r) of the Regulations). Importantly, the TCO does not impose any liabilities on any person, ensuring that the rights of individuals or entities are not adversely affected by the concession. This protects the interests of all stakeholders and maintains the integrity of the customs duty system.