EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1044710
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 rotary steering drilling tool parts on 01 October 2010.
Instrument
TCO No 1044710 was made on 07 January 2011. It declares that those certain rotary steering drilling tool parts 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. 1044710 is taken to have come into force on 01 October 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 for administering customs and excise tariffs, among other things. One of the mechanisms it includes is the Tariff Concession Order (TCO), which provides a lower rate of customs duty on specified goods, subject to certain criteria. The Act aims to streamline and rationalise the application process for tariff concessions, ensuring that duty reductions are granted where appropriate and do not disadvantage domestic producers. This legislative approach seeks to balance the interests of importers and the broader economy by reducing the cost of imported goods, thus fostering competitiveness and potentially lowering consumer prices. The process involves an application by interested parties to the Chief Executive Officer of Customs, who must assess whether the application meets the core criteria, such as the absence of substitutable goods produced in Australia. The Tariff Concession Instrument No. 1044710, made on 7 January 2011, exemplifies this process by granting Schlumberger Australia a tariff concession on certain rotary steering drilling tool parts, reducing the duty rate from 5% to free, effective from 1 October 2010.
Scope and Application
The Tariff Concession Instrument No. 1044710, which pertains to the Customs Act 1901, outlines a specific scheme under which Tariff Concession Orders (TCOs) can be made by the Chief Executive Officer of Customs (CEO). The Act applies to entities or individuals who wish to apply for a TCO in respect of goods, provided that the goods are not specified as ineligible under section 269SJ of the Act. The instrument was created following an application by Schlumberger Australia for certain rotary steering drilling tool parts, which the CEO approved on 7 January 2011, making it effective from 1 October 2010. This instrument allows for a lower rate of customs duty, in this case, a duty-free rate, for the specified goods. The Act ensures that the TCO does not disadvantage any person or impose liabilities on them for actions taken prior to the order's registration, while benefiting importers by allowing them to apply for a refund of duty on goods imported since the effective date. The CEO must consult and publish a notice inviting submissions on TCO applications, although in this instance, no submissions were received. The Act's application is extended through subordinate instruments, which can further specify the conditions and criteria for TCOs.
Key Provisions
The Customs Act 1901, under section 269F (1), provides the framework for applying for Tariff Concession Orders (TCOs) through the Chief Executive Officer (CEO) of Customs. This section outlines the process whereby an individual or entity can request a TCO for goods that do not fall under the prohibitions specified in section 269SJ. The core criteria for approving a TCO application, as per section 269C, necessitates that on the date of application, no substitutable goods were produced in Australia in the ordinary course of business, as defined by sections 269D and 269E. Substitutable goods, under section 269B, are those produced in Australia that serve a similar use to the goods in question.
The obligations imposed by the Customs Act 1901 on parties applying for TCOs include ensuring compliance with the core criteria and submitting a valid application. The CEO must publish a notice in the Gazette inviting submissions from any interested parties who might oppose the granting of the TCO. This requirement is stipulated in section 269K (1). If the CEO is satisfied that the application meets the core criteria, they must make a written order, as mandated by section 269P (3), declaring that the goods in question are subject to a prescribed item in Schedule 4 of the Customs Tariff Act 1995. The TCO in question, No. 1044710, was made in respect of certain rotary steering drilling tool parts and came into effect on the date the application was lodged, 01 October 2010.
Breach of the requirements set out in the Customs Act 1901 could lead to civil or criminal consequences, although the specifics of these penalties are not detailed in the explanatory statement. However, the Act does ensure that the rights of persons, other than the Commonwealth, are not adversely affected by the TCO. Importers, under paragraph 126(1)(r) of the Regulations, can apply for a refund of duty on goods imported since the TCO came into effect. The explanatory statement does not mention any specific penalties for non-compliance but highlights the importance of adhering to the legislative requirements to avoid any potential repercussions.