EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1013985
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 Australia Pty Ltd applied for a TCO in respect of certain drillstem test string parts on 22 March 2010.
Instrument
TCO No 1013985 was made on 11 June 2010. It declares that those certain drillstem test string parts 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. 1013985 is taken to have come into force on 22 March 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 Parliament of Australia, establishes a framework within which the Chief Executive Officer of Customs can issue Tariff Concession Orders (TCOs) that reduce the customs duty payable on certain goods. The Act addresses the problem of ensuring that Australian businesses can compete effectively in the global market by providing a mechanism for the government to offer tariff concessions on goods that are not produced in Australia. Instrument No. 1013985 under the Customs Act, made on 11 June 2010, is an example of such a concession, where Schlumberger Australia Pty Ltd applied for and was granted a TCO for certain drillstem test string parts, resulting in a duty reduction from 5% to free. This particular concession was made without any objections, reflecting the policy objective of facilitating smoother trade practices and enhancing economic efficiency by avoiding unnecessary tariffs on non-domestically produced goods.
Scope and Application
The Customs Act 1901, as amended through Tariff Concession Instrument No. 1013985, pertains to the process and criteria for granting Tariff Concession Orders (TCOs) which reduce the customs duty on specific imported goods. This legislation applies to individuals or entities that apply for a TCO, which in this case was Schlumberger Australia Pty Ltd for certain drillstem test string parts. The scope of the Act encompasses any goods that are subject to a TCO application, provided they meet the core criteria outlined in the Act, specifically that no substitutable goods are produced in Australia in the ordinary course of business. The application of the Act is national in reach, as it falls under the Commonwealth's jurisdiction. Notably, the Act excludes certain goods from being subject to a TCO, as specified in section 269SJ of the Customs Act 1901. The Act's application may be extended or clarified through subordinate instruments such as regulations or orders, although this particular TCO does not impose any additional liabilities or affect pre-existing rights negatively.
The explanatory statement details that Schlumberger Australia Pty Ltd successfully applied for a TCO for certain drillstem test string parts, which was granted by the Chief Executive Officer of Customs on 11 June 2010, effective from 22 March 2010. The CEO's decision was based on the absence of substitutable goods produced in Australia. As a result, the general customs duty rate of 5% was replaced by a free rate for these goods, as specified in item 50 of Schedule 4 to the Customs Tariff Act 1995. The process included a public consultation period where no objections were raised, and the TCO does not impose any liabilities or disadvantage any parties with respect to actions taken prior to its enactment.
Key Provisions
The main operative sections of the Tariff Concession Instrument No. 1013985 under the Customs Act 1901 (the Act) are sections 269C, 269F, and 269P. Section 269F allows a person to apply to the Chief Executive Officer of Customs (the CEO) for a Tariff Concession Order (TCO). If the CEO determines that the application meets the core criteria as outlined in section 269C, and no substitutable goods are produced in Australia, the CEO must make a written TCO. Section 269P(3) mandates that the CEO make a written TCO if the application meets these criteria.
The Act imposes certain obligations and requirements on parties involved in the TCO process. The CEO must accept a TCO application as valid if it complies with the requirements of the Act. Once accepted, the CEO is required to publish a notice in the Gazette, inviting any person who considers the TCO should not be made to lodge a submission (subsection 269K(1)). The CEO must then consider these submissions before deciding whether to make the TCO. In this case, no submissions were received in response to the published notice.
Under the Act, there are potential consequences for breaches of the provisions related to TCOs. While the explanatory statement does not explicitly outline offences, penalties, or consequences for non-compliance, it is implied that failure to follow the legislative requirements for applying for and processing a TCO could lead to legal ramifications. The maximum penalties for breaches of customs-related legislation can vary, but they typically include fines and, in serious cases, imprisonment. The precise penalties would be governed by other sections of the Customs Act 1901 and related regulations.
In this specific instance, Schlumberger Australia Pty Ltd applied for a TCO in respect of certain drillstem test string parts, which was subsequently granted as TCO No. 1013985. This TCO came into effect on 22 March 2010, the date the application was lodged, and it declares that these parts are subject to a 5% duty rate, which is reduced to free under the TCO. Importantly, the TCO does not disadvantage any person or impose any liabilities on anyone in respect of actions taken before the date of registration. Importers of these goods can apply for a refund of duty on goods imported since the effective date of the TCO.