EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1020869
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 production subsea control modules on 07 May 2010.
Instrument
TCO No 1020869 was made on 02 August 2010. It declares that those certain oil and gas production subsea control modules 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. 1020869 is taken to have come into force on 07 May 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 for the administration of customs duties and regulations. This legislation aims to facilitate international trade while protecting domestic industries and ensuring revenue collection. The Act was introduced to address the need for a structured approach to customs duties and to provide a legal basis for the regulation and control of goods entering and leaving Australia. One notable component of this Act is the provision for Tariff Concession Orders (TCOs), which allow for the reduction or elimination of customs duties on certain goods under specific conditions. The introduction of Tariff Concession Instrument No. 1020869 in 2010 exemplifies this, as it was designed to provide tariff relief for specific oil and gas production subsea control modules, thereby supporting the import of these critical components without incurring duty costs. This instrument was enacted to ensure that Australian industries have access to necessary goods, promoting economic efficiency and competitiveness in sectors reliant on imported materials.
Scope and Application
The Customs Act 1901, through Tariff Concession Orders (TCOs), provides a mechanism for reducing customs duty on specified goods, which are those not produced in Australia in the ordinary course of business. This legislation applies to any entity or individual seeking to import goods eligible for a tariff concession, as defined by the Chief Executive Officer of Customs (CEO). The Act operates nationally across Australia, with the scope of TCOs extending to any goods specified in the application, provided they meet the core criteria set out in the Act. Any goods listed in section 269SJ, which cannot be subject to a TCO, are excluded from the concessions. The TCO in question, No. 1020869, applies to certain oil and gas production subsea control modules, which were determined to be free of duty as no substitutable goods were produced in Australia. This order came into effect on 7 May 2010, the date the application was lodged, and does not affect the rights of any person in relation to actions taken prior to the registration of the TCO. The CEO published a notice in the Gazette inviting submissions against the TCO, though none were received.
Key Provisions
The main operative sections of Tariff Concession Instrument No. 1020869, under the Customs Act 1901, revolve around the process and criteria for the Chief Executive Officer of Customs (CEO) to grant Tariff Concession Orders (TCOs). Section 269C specifies that an application for a TCO is valid if it meets core criteria, primarily that no substitutable goods are produced in Australia on the day the application was lodged (s 269C). Under section 269F, any person can apply for a TCO concerning goods that are not listed in section 269SJ, which excludes certain goods from TCO eligibility. If the CEO determines that the application meets the core criteria, a written order, or TCO, must be issued under section 269P(3), declaring the goods to which a specific item in Schedule 4 to the Customs Tariff Act 1995 applies. For Schlumberger Australia Pty Ltd’s application regarding oil and gas production subsea control modules, TCO No. 1020869 was issued on 02 August 2010, declaring that these goods are subject to item 50 of Schedule 4, with a duty rate of free, down from the general rate of 5%.
The Act imposes certain obligations on the parties involved. Section 269K(1) mandates that the CEO must publish a notice in the Gazette, inviting submissions from any person who believes the TCO should not be made. This ensures transparency and provides an opportunity for interested parties to voice their concerns. Schlumberger Australia Pty Ltd must ensure their application adheres to the stipulated criteria, particularly that no substitutable goods are being produced in Australia. The CEO has the responsibility to assess the application against these criteria and make a decision based on the evidence presented.
Failure to comply with the provisions of the Customs Act 1901 or the terms of a TCO can lead to legal consequences. While the explanatory statement does not explicitly detail specific offences or penalties, breaches of customs regulations generally can result in significant civil and criminal penalties. Under Australian law, unauthorised importation of goods or misrepresentation of goods to secure tariff concessions can lead to fines or imprisonment, depending on the severity of the breach. It is essential for all parties to adhere strictly to the requirements set forth by the Customs Act and any associated regulations to avoid these penalties.