EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1015459
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 oil and gas well umbilical reeler systems on 31 March 2010.
Instrument
TCO No 1015459 was made on 18 June 2010. It declares that those certain oil and gas well umbilical reeler systems 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. 1015459 is taken to have come into force on 31 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 Australian Parliament, provides for a scheme under which Tariff Concession Orders (TCOs) can be made by the Chief Executive Officer of Customs (CEO) to apply a lower rate of customs duty on certain goods. This Act was introduced to address the need for flexible tariff arrangements to support specific industries and goods that are not produced domestically. In this context, Tariff Concession Instrument No. 1015459 was introduced on 18 June 2010, declaring that certain oil and gas well umbilical reeler systems are subject to a TCO, reducing their customs duty rate from 5% to free. The policy objective here is to facilitate the importation of these specific goods by providing a tariff concession, thereby supporting the industry without imposing any liabilities on individuals or entities other than the Commonwealth.
Scope and Application
The Customs Act 1901, as modified by Tariff Concession Instrument No. 1015459, facilitates the reduction of customs duty on specific goods through the issuance of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs. This particular Instrument applies to certain oil and gas well umbilical reeler systems, which are now subject to a zero rate of duty instead of the general rate of 5%. The Act applies to any person or entity that imports the specified goods into Australia, provided that no substitutable goods are produced in Australia in the ordinary course of business. The scope of the Act is national, as it operates under the Commonwealth of Australia, affecting the customs duties on the goods covered by the TCO. It is noteworthy that this TCO does not affect any existing rights or impose new liabilities on persons other than the Commonwealth, and it does not disadvantage any party in relation to actions taken before the TCO's effective date. The TCO provides a benefit to importers by potentially allowing them to apply for a refund of duty on goods imported since the TCO's effective date, which is considered to be the date the application was lodged. The Act’s application may be further extended or restricted through subordinate instruments, though no such provisions are specified in this context.
Key Provisions
The main operative sections of the Customs Act 1901 in this context include section 269F (269F), which allows a person to apply to the Chief Executive Officer of Customs (CEO) for a Tariff Concession Order (TCO). If the CEO is satisfied that the application meets certain criteria, they must make a written order declaring that the goods in question are subject to the order (section 269P(3)). The TCO, in this case, No. 1015459, specifies that certain oil and gas well umbilical reeler systems are goods to which item 50 of Schedule 4 to the Customs Tariff Act 1995 applies, resulting in a duty-free rate for these goods (section 269P(3)). The application for the TCO is taken to have come into force on the day it was lodged, which in this instance was 31 March 2010 (subsection 269S(1)).
The Act imposes several obligations and requirements on the parties involved. For instance, section 269C of the Act stipulates that a TCO application meets the core criteria if, on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business. Furthermore, the CEO is required to publish a notice in the Gazette inviting submissions from any person who considers there are reasons why the TCO should not be made (subsection 269K(1)). In this case, no submissions were received in response to the invitation. The TCO also ensures that the rights of importers are beneficially affected, and they can apply for a refund of duty on goods imported since the TCO came into force under paragraph 126(1)(r) of the Regulations.
The Customs Act 1901 includes provisions for offences, penalties, and consequences for breaches. However, the explanatory statement does not provide explicit information on the maximum penalties or specific consequences for breaches in relation to TCOs. It is essential to refer to the relevant sections of the Act and associated regulations for detailed information on penalties and consequences for non-compliance. Generally, breaches of the Customs Act 1901 can result in both civil and criminal penalties, depending on the nature and severity of the offence.