EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1042686
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 blast joints on 16 September 2010.
Instrument
TCO No 1042686 was made on 06 December 2010. It declares that those certain downhole blast joints 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. 1042686 is taken to have come into force on 16 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, establishes a framework within which Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs. These orders provide for reduced rates of customs duty on specific goods, addressing the issue of potentially higher tariffs for goods not readily available within Australia's domestic production landscape. The 2011 instrument, Tariff Concession Instrument No. 1042686, was introduced to provide tariff relief for certain downhole blast joints, following an application by Schlumberger Australia on 16 September 2010. The instrument declares that these specific goods are subject to a duty-free rate as per item 50 of Schedule 4 to the Customs Tariff Act 1995, given that no substitutable goods were being produced in Australia at the time of the application. The objective of this measure is to facilitate trade and reduce the cost burden on importers of these goods, ultimately supporting economic efficiency and competitiveness in relevant sectors.
Scope and Application
The Tariff Concession Instrument No. 1042686 under the Customs Act 1901 pertains to the granting of tariff concessions on certain goods, in this case, downhole blast joints, which were applied for by Schlumberger Australia on 16 September 2010. The instrument applies to any goods specified within a Tariff Concession Order (TCO) and is subject to the approval of the Chief Executive Officer of Customs (CEO). The application and subsequent approval of a TCO are governed by specific criteria, including the absence of substitutable goods produced in Australia on the day the application was lodged. This means that the CEO must determine if no equivalent goods were being produced domestically that could serve the same purpose as the goods in question. If the CEO finds that the core criteria are met, a TCO is issued, effectively reducing or eliminating customs duty on the specified goods. The geographic reach of this legislation is national, as it is part of the Commonwealth's customs framework. The legislation does not impose any liabilities on persons other than the Commonwealth and does not disadvantage existing rights. Instead, it aims to benefit importers by allowing them to apply for duty refunds on goods imported since the effective date of the TCO. The instrument does not include any exclusions or exemptions beyond those specified in the Act, and its application is not further extended or restricted by subordinate instruments.
Key Provisions
The main operative sections of the Tariff Concession Instrument No. 1042686, pursuant to the Customs Act 1901 (the Act), include sections 269F, 269C, 269B, 269D, 269E, and 269P(3) (subsections 269K(1) and 269S(1) also play a crucial role). Section 269F allows a person to apply to the Chief Executive Officer of Customs (the CEO) for a Tariff Concession Order (TCO) in respect of goods. If the CEO determines that the application is valid and meets the core criteria outlined in section 269C, they are required to make a written order (a TCO). This order declares that the goods in question are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995, effectively applying a specified rate of duty, which in this case is free of charge. The CEO must also publish a notice in the Gazette inviting submissions from any interested parties (subsection 269K(1)). A TCO comes into force on the date the application is lodged (subsection 269S(1)).
Under this Act, the CEO is responsible for ensuring that the application for a TCO is valid and meets the core criteria, specifically that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged (section 269C). This requires a thorough assessment of whether the goods specified in the application have local substitutes. If the CEO is satisfied with the application, they must proceed to issue a TCO (section 269P(3)). Additionally, the CEO must publish a notice in the Gazette as soon as practicable after accepting the application as valid, providing an opportunity for any interested party to submit their views on whether the TCO should be made (subsection 269K(1)).
The obligations imposed by the Act on the CEO include carefully evaluating the application for a TCO, ensuring it complies with the criteria set out in section 269C, and publishing a notice in the Gazette to allow for public submissions. The CEO must also make a written TCO if the application meets the criteria. The obligations on the applicant include providing a valid application that demonstrates the absence of substitutable goods in Australia. The rights of importers are positively affected by the TCO, allowing them to apply for a refund of duty on goods imported since the TCO was taken to have come into force (paragraph 126(1)(r) of the Regulations).
There are no explicit offences or penalties mentioned in the Act for breaches related to the TCO application process. However, the Act does provide for potential civil or administrative consequences for non-compliance with the Act's requirements, such as the failure to meet the core criteria for a TCO. While the Act does not specify maximum penalties, breaches of related provisions could result in legal action, fines, or other administrative penalties as determined by the relevant authorities. The Act’s provisions ensure that the TCO process is transparent and fair, protecting both the interests of the applicant and the public.