EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1041726
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 downhole flow control valves on 09 September 2010.
Instrument
TCO No 1041726 was made on 06 December 2010. It declares that those certain downhole flow control 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. 1041726 is taken to have come into force on 09 September 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, serves as the foundation for regulating the import and export of goods within Australia. Among its various provisions, Part XVA of the Act establishes a scheme allowing for Tariff Concession Orders (TCOs), which the Chief Executive Officer of Customs (CEO) can implement to reduce customs duty on specified goods. This legislative framework was designed to address the need for flexibility in tariff applications, particularly when no substitutable goods are produced domestically. The policy objective behind the TCO scheme is to facilitate trade by providing tariff relief, provided certain criteria are met. The Tariff Concession Instrument No. 1041726, made on 6 December 2010, exemplifies this process by granting Schlumberger Australia a concession for certain downhole flow control valves, setting their duty rate at free, thereby directly benefiting importers of these goods.
Scope and Application
The Customs Act 1901, through its Part XVA, facilitates the establishment of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO). These orders apply a lower rate of customs duty to specific goods, as determined by the CEO following an application from an eligible entity. The application process mandates that the goods in question do not fall within the exclusions specified in section 269SJ of the Act, and that the application meets the core criteria set out in sections 269C, 269D, and 269E. These criteria essentially require that no substitutable goods, which are defined in section 269F, are produced in Australia at the time of application. Once these conditions are met, the CEO must issue a TCO, as outlined in section 269P(3), specifying the reduced duty rate. This instrument's scope is limited to entities applying for tariff concessions on specific goods and does not extend to the production of those goods within Australia. The geographic reach of the Act is national, applying across all jurisdictions within Australia, and its application is not restricted by subordinate instruments.
Key Provisions
The Tariff Concession Order No. 1041726 under the Customs Act 1901, specifies the conditions and provisions regarding the application and implementation of tariff concessions for certain downhole flow control valves. According to section 269F, a person may apply to the Chief Executive Officer (CEO) of Customs for a tariff concession. If the application is deemed valid and meets the core criteria set out in section 269C, the CEO must make a written order, known as a Tariff Concession Order (TCO), as detailed in section 269P(3). In this instance, Schlumberger Australia applied for the concession on 9 September 2010, and the CEO issued TCO No. 1041726 on 6 December 2010. This order applied item 50 of Schedule 4 to the Customs Tariff Act 1995, granting these valves a duty-free status, down from the general rate of 5%.
The Act imposes specific obligations on the parties involved. According to section 269K(1), the CEO must publish a notice in the Gazette, inviting any interested parties to submit reasons why the TCO should not be granted. In this case, no submissions were received. Additionally, the CEO is required to ensure that the application meets the core criteria, which includes verifying that no substitutable goods were produced in Australia on the date of the application. Furthermore, section 269S(1) stipulates that the TCO comes into force on the date the application is lodged, which for this TCO was 9 September 2010.
There are no direct offences, penalties, or consequences outlined in the Act for the failure to comply with the TCO provisions. However, any breach of the Customs Act 1901 or associated regulations could lead to legal consequences under the broader framework of the Customs Act. For example, knowingly making a false statement or representation to Customs officers, which could occur in the context of a TCO application, is an offence under section 237 of the Act, carrying a maximum penalty of 10,000 penalty units. Similarly, contravening any provision of the Act or regulations may result in fines and other penalties as specified under the relevant sections of the Act. While the specific TCO itself does not impose penalties, its implementation relies on compliance with the overarching legislative framework, which does.