EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1042754
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 Pty Ltd applied for a TCO in respect of certain oil and gas well pocket mandrels on 16 September 2010.
Instrument
TCO No 1042754 was made on 06 December 2010. It declares that those certain oil and gas well pocket mandrels 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. 1042754 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 Parliament of Australia, provides the legal framework for the administration of customs and excise duties in Australia. This Act establishes a scheme under which Tariff Concession Orders (TCOs) can be made by the Chief Executive Officer of Customs, aiming to lower the rate of customs duty on certain goods. Specifically, the Customs (Tariff Concession) Order No. 1042754, issued on 06 December 2010, addresses the specific application by Schlumberger Pty Ltd for tariff concessions on certain oil and gas well pocket mandrels, setting the duty rate for these goods at free, down from the general rate of 5%. This concession was granted after the CEO determined that no substitutable goods were produced in Australia, thus meeting the core criteria as outlined in the Act. The policy objective of this order is to facilitate the importation of these goods by reducing the financial burden on importers, thereby potentially stimulating trade and industry within Australia.
Scope and Application
The Tariff Concession Instrument No. 1042754 under the Customs Act 1901 applies to the goods specified in the instrument, namely certain oil and gas well pocket mandrels. It is applicable to Schlumberger Pty Ltd, which applied for the concession on 16 September 2010. The instrument is a response to the company's application for a Tariff Concession Order (TCO) under section 269F of the Customs Act 1901, which allows for a lower rate of customs duty on goods not produced in Australia and where no substitutable goods are produced domestically. The instrument was registered on 06 December 2010, and it applies to the importation of these specific goods, with the rate of duty reduced from the general rate of 5% to free. The instrument is effective from the date the application was lodged, in accordance with subsection 269S(1) of the Customs Act 1901. It applies nationally across Australia and is subject to the Commonwealth jurisdiction, with no submissions made against the application as required by subsection 269K(1) of the Act.
Key Provisions
The Customs Act 1901 (the Act) enables the Chief Executive Officer of Customs (the CEO) to make Tariff Concession Orders (TCOs) (s 269F), which apply a lower rate of customs duty to specified goods. Schlumberger Pty Ltd applied for a TCO for certain oil and gas well pocket mandrels, which were granted on 06 December 2010 (s 269P(3)). This TCO, numbered 1042754, declares that these specific goods are subject to item 50 of Schedule 4 of the Customs Tariff Act 1995, with the rate of duty for these goods being free instead of the general rate of 5% (s 269P(3)).
The Act imposes certain core criteria that a TCO application must meet for the CEO to consider it. Section 269C of the Act requires the CEO to ensure that, on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business. Substitutable goods, as defined in section 269D, are goods produced in Australia that are put, or are capable of being put, to a use that corresponds with a use to which the goods the subject of the application can be put (s 269B, s 269E).
Failure to comply with the requirements of the Customs Act 1901 can result in various consequences. While the explanatory statement does not explicitly detail offences or penalties, it is reasonable to infer that breaches of the Act could lead to enforcement actions, including potential fines or other penalties as prescribed by the relevant legislation. The Act ensures that the rights of persons other than the Commonwealth are not adversely affected by the TCO, and it does not impose any liabilities on any person (s 269S(1)).
Upon accepting a TCO application as valid, the CEO must publish a notice in the Gazette inviting submissions from any person who believes there are reasons why the TCO should not be made (s 269K(1)). In the case of Schlumberger Pty Ltd’s application, no submissions were received in response to this notice. This process ensures transparency and allows for any objections to be considered before the TCO is issued.
The TCO is deemed to have come into force on the day the application was lodged, which in this instance was 16 September 2010 (s 269S(1)). This means that from that date, the specified oil and gas well pocket mandrels are subject to the TCO, with the rate of duty being free. Importers of these goods can apply for a refund of duty on goods imported since the TCO is taken to have come into force, under paragraph 126(1)(r) of the Regulations. The TCO does not disadvantage any person or impose any liabilities on them in respect of actions taken before the date of registration.