EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1007517
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 field winches on 11 February 2010.
Instrument
TCO No 1007517 was made on 30 April 2010. It declares that those certain oil and gas field winches 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. 1007517 is taken to have come into force on 11 February 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 Customs Act 1901 was enacted by the Australian Parliament to provide a framework for the administration of customs and excise in Australia. The Tariff Concession Instrument No. 1007517, introduced in 2010, addresses the problem of ensuring that certain goods, in this case oil and gas field winches, receive tariff concessions if they do not have substitutable goods produced domestically. This instrument enables the Chief Executive Officer of Customs to make Tariff Concession Orders (TCOs) that provide lower rates of customs duty for specific goods when it is determined that no equivalent goods are produced in Australia. The policy objective of this particular TCO, as outlined in the explanatory statement, was to support Schlumberger Oilfield Australia's application for tariff concessions on certain oil and gas field winches by setting the duty rate at free, reducing the general rate from 5%. The instrument was effective from the date the application was lodged, 11 February 2010, and did not impose any liabilities on persons other than the Commonwealth, while allowing importers to apply for duty refunds on goods imported since the commencement date.
Scope and Application
The Customs Act 1901, through the Tariff Concession Instrument No. 1007517, applies to specific oil and gas field winches, permitting them to benefit from a lower rate of customs duty under a Tariff Concession Order (TCO). The application of the Act extends to any person who applies for such a concession, provided that the goods in question are not specified as ineligible under section 269SJ of the Act. The instrument was made by the Chief Executive Officer of Customs, following an application by Schlumberger Oilfield Australia on 11 February 2010, and was satisfied that the goods in question were not substitutable by any produced in Australia, thereby meeting the core criteria for a TCO. The application of the TCO is national in scope, applying across all jurisdictions within Australia, and it does not affect any existing rights or liabilities of persons other than the Commonwealth as at the date of registration. The TCO, which came into force on the date of application, provides a duty-free rate for the specified goods, benefiting importers who can apply for duty refunds on imports made since the effective date of the TCO.
Key Provisions
The primary operative sections of the legislation are sections 269C, 269F, and 269P of the Customs Act 1901. Section 269F allows for the application for a Tariff Concession Order (TCO) to the Chief Executive Officer of Customs (CEO), while section 269C outlines the core criteria that must be met for a TCO to be granted. Specifically, an application will meet these criteria if, on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business. If the CEO is satisfied that the application meets the core criteria, section 269P mandates that a written TCO be made, declaring that the goods in question are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995.
The Act imposes several obligations on the CEO. Upon receiving a TCO application, the CEO must determine whether the application meets the core criteria as set out in section 269C. This involves assessing whether any substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged. If the CEO decides that the application meets the criteria, a TCO must be made under section 269P. Additionally, under section 269K, the CEO must publish a notice in the Gazette inviting submissions from any person who believes the TCO should not be made. Although no submissions were received in response to the notice for TCO No. 1007517, the requirement to publish the notice remains.
The legislation does not explicitly outline specific offences or penalties for breach. However, the consequences of not complying with the requirements to apply for and receive a TCO could lead to the continued imposition of higher customs duties on the goods in question, which could result in financial losses for the applicant or the importing party. Additionally, if the CEO determines that a TCO should not have been made, the TCO could be revoked, potentially resulting in the re-imposition of customs duties on the goods in question. While the Act itself does not specify maximum penalties for non-compliance, the failure to adhere to the prescribed process could have significant financial implications for the parties involved.