EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1037130
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 applied for a TCO in respect of certain subsea hydraulic accumulator modules on 12 August 2010.
Instrument
TCO No 1037130 was made on 08 November 2010. It declares that those certain subsea hydraulic accumulator 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. 1037130 is taken to have come into force on 12 August 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, provides the framework for the administration of customs and excise in Australia. One aspect of this framework is the establishment of a scheme under which Tariff Concession Orders (TCOs) may be made by the Chief Executive Officer of Customs (CEO) to apply a lower rate of customs duty on specified goods. The Tariff Concession Instrument No. 1037130 was introduced to address the specific need of Schlumberger Australia for tariff concessions on certain subsea hydraulic accumulator modules. The CEO, after assessing the application against the core criteria set out in the Customs Act, determined that no substitutable goods were produced in Australia, thus satisfying the conditions for concession. The instrument was made on 8 November 2010, and it declares that the specified modules are subject to a free rate of duty, down from the general rate of 5%. This measure is expected to benefit importers by potentially allowing them to claim refunds on duty paid on these goods since the effective date of the concession on 12 August 2010.
Scope and Application
The Customs Act 1901, as detailed in Tariff Concession Instrument No. 1037130, pertains to the establishment of Tariff Concession Orders (TCOs) which lower the rate of customs duty on specific goods. This legislation applies to any person or entity seeking to import goods that are eligible for a tariff concession, provided that no substitutable goods are produced in Australia in the ordinary course of business. The instrument is applicable nationally across Australia, as it falls under the Commonwealth’s legislative authority. It is important to note that the Act does not apply to goods specified in section 269SJ of the Customs Act 1901, which lists goods ineligible for tariff concessions. The CEO of Customs must ensure that an application complies with the core criteria set out in section 269C of the Act, which includes the absence of substitutable goods produced in Australia. Any subordinate instruments or regulations can further extend or restrict the application of the TCOs as per the provisions of the Customs Act 1901 and the Customs Tariff Act 1995. The commencement of this particular TCO is effective from the date of the application, 12 August 2010, and it benefits importers by potentially allowing them to apply for a refund of duty on goods imported since this date.
Key Provisions
The main operative sections of the Tariff Concession Instrument No. 1037130, as referenced in the Customs Act 1901, are sections 269C, 269F, 269K, and 269S, among others. Section 269F allows for the application of a Tariff Concession Order (TCO) by a person to the Chief Executive Officer of Customs (CEO). If the application meets the core criteria set out in section 269C, which includes the absence of substitutable goods produced in Australia on the day the application was lodged, the CEO must make a TCO (subsection 269P(3)). The TCO declares that the specified goods are subject to a prescribed rate in Schedule 4 of the Customs Tariff Act 1995. Additionally, section 269K mandates the CEO to publish a notice in the Gazette inviting submissions from any person who may have reasons against the making of the TCO.
The obligations imposed by the Act on the parties or entities it governs include the requirement for the CEO to thoroughly assess the TCO application against the core criteria and to publish an invitation for submissions in the Gazette if the application is accepted as valid. Schlumberger Australia, as the applicant, must ensure that their application is complete and meets the specified criteria. The CEO must then review the application and, if satisfied, proceed to make the TCO. The CEO must also be prepared to consider any submissions received during the notice period, although in this instance, no submissions were received. Importers of the specified goods are entitled to apply for a refund of duty on goods imported from the day the TCO is taken to have come into force, as outlined in paragraph 126(1)(r) of the Regulations.
Breaching the provisions of the Customs Act 1901 or the associated regulations can lead to various offences, penalties, or civil/criminal consequences. While the specific penalties are not detailed in the provided text, the Act generally includes provisions for fines and imprisonment for breaches related to customs duties and tariff concessions. The CEO’s decisions and actions are guided by the Act to ensure compliance and the proper application of tariff concessions, which are intended to benefit importers by reducing or eliminating customs duty on specified goods. The absence of substitutable goods produced in Australia is a critical factor in the decision-making process for granting a TCO, as stipulated in section 269C. Any failure to comply with these provisions could result in legal action against the offending party.