EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1007910
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 or gas well test tree valves on 12 February 2010.
Instrument
TCO No 1007910 was made on 23 April 2010. It declares that those certain subsea oil or gas well test tree valves 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. 1007910 is taken to have come into force on 12 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, enacted by the Commonwealth Parliament, serves as the foundational statute for regulating customs and excise in Australia. Specifically, Part XVA of the Act establishes a framework for Tariff Concession Orders (TCOs) that can be made by the Chief Executive Officer of Customs. This legislative instrument was introduced to address the need for providing tariff concessions on certain imported goods under specific conditions. The policy objective behind these concessions is to support industries that cannot produce substitutable goods domestically, thereby fostering economic growth and competitiveness. In the case of Tariff Concession Instrument No. 1007910, Schlumberger Oilfield Australia applied for a TCO on certain subsea oil or gas well test tree valves, which was granted as no substitutable goods were produced in Australia, leading to a reduction of customs duty from 5% to free. This tariff concession was effective from the date the application was lodged, 12 February 2010, and no submissions were received in opposition to the concession.
Scope and Application
The Tariff Concession Instrument No. 1007910 pertains to the Customs Act 1901 and establishes a framework under which Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs. This Act applies to entities and individuals who seek tariff concessions for specific goods, ensuring that these goods are not substitutable by Australian-produced goods. The geographic reach of this legislation is national, as it is governed under the Commonwealth's purview. The Act mandates that any person can apply for a TCO for goods, provided the application adheres to the criteria outlined in the Act, such as the absence of substitutable goods produced in Australia. The TCO in question, made on 23 April 2010, pertains to certain subsea oil or gas well test tree valves, which were granted a duty-free status as no equivalent goods were produced domestically. The legislation does not disadvantage any person by retroactively affecting rights or imposing liabilities for actions taken before the TCO's effective date.
Key Provisions
The main operative sections of this legislation (F2010L02030) pertain to the making and effect of Tariff Concession Orders (TCOs) under the Customs Act 1901 (section 269F). Specifically, section 269C stipulates that a TCO application meets the core criteria if no substitutable goods are produced in Australia on the day the application is lodged, as defined by section 269D (subsection 269P(3)). If these criteria are met, the Chief Executive Officer of Customs (CEO) must issue a written order, a TCO, which applies a prescribed item from Schedule 4 of the Customs Tariff Act 1995, with a specified rate of duty. For instance, in this case, the TCO No. 1007910 declares that certain subsea oil or gas well test tree valves are subject to a 5% duty rate, but with a concession making it free under the TCO (section 269P(3)).
The Act imposes certain obligations and requirements on parties applying for a TCO. An applicant, such as Schlumberger Oilfield Australia, must ensure their application is not in respect of goods specified in section 269SJ of the Act. Additionally, the CEO must publish a notice in the Gazette inviting submissions if the application is accepted as valid (subsection 269K(1)). If no submissions are received, as in this case, the CEO proceeds to issue the TCO. The CEO must also ensure that the TCO does not disadvantage any person or impose liabilities on them in respect of actions taken before the TCO’s effective date (subsection 269S(1)).
The legislation also outlines potential consequences for breaches of its provisions. Although specific offences and penalties are not detailed in this particular explanatory statement, breaches of the Customs Act 1901 can generally lead to criminal charges, fines, or other civil and criminal penalties. For example, knowingly making a false statement in an application for a TCO could result in significant penalties under the Act. In the case of this TCO, any misuse or fraudulent claims regarding the eligibility of goods for tariff concessions could lead to legal action and penalties as prescribed by the Customs Act.