EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1045124
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 oil and gas well hydrostatic setting tools on 05 October 2010.
Instrument
TCO No 1045124 was made on 07 January 2011. It declares that those certain oil and gas well hydrostatic setting tools 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. 1045124 is taken to have come into force on 05 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 Parliament of Australia, provides a framework for the regulation of customs and excise in Australia. One specific mechanism within this Act is the provision for Tariff Concession Orders (TCOs) under Part XVA, which was introduced to address the need for lowering customs duties on certain imported goods where no suitable domestic alternatives exist. This initiative ensures that businesses can access necessary goods more affordably while promoting competition and economic efficiency. The Tariff Concession Instrument No. 1045124, issued on 7 January 2011, exemplifies the application of this framework, granting Schlumberger Australia a concession on oil and gas well hydrostatic setting tools, resulting in a zero duty rate for these specific goods. This instrument was developed following a public consultation process, which in this instance, did not yield any submissions opposing the concession, thus facilitating a streamlined approval process.
Scope and Application
The Customs Act 1901, specifically under Part XVA, facilitates the creation of Tariff Concession Orders (TCO) by the Chief Executive Officer of Customs, applicable to goods that meet certain criteria. An application for a TCO can be made by any person, provided the goods are not listed in section 269SJ of the Act, which details goods ineligible for tariff concessions. The core criteria for approving a TCO, outlined in sections 269C, 269B, and 269D of the Act, require that on the application date, no substitutable goods are produced in Australia in the ordinary course of business. Schlumberger Australia successfully applied for a TCO concerning specific oil and gas well hydrostatic setting tools, resulting in Instrument TCO No. 1045124, which reduced the duty on these goods from 5% to free. The Act mandates public consultation upon accepting a valid TCO application, though no submissions were received for this particular case. The TCO’s effective date aligns with the application date, thus benefiting importers by potentially allowing them to apply for duty refunds for goods imported since the TCO’s effective date, without imposing any new liabilities.
Key Provisions
The key operative sections of this legislation, particularly those in Part XVA of the Customs Act 1901, establish the framework for Tariff Concession Orders (TCOs) (sections 269C, 269F, 269P). These sections outline the conditions under which the Chief Executive Officer of Customs (CEO) can grant a TCO to lower the customs duty on specific goods, provided the application meets the core criteria and no substitutable goods are produced in Australia (section 269C). The CEO must publish a notice in the Gazette inviting objections to the TCO application (subsection 269K(1)) and make the TCO if the application meets the core criteria (subsection 269P(3)). The TCO in question, TCO No. 1045124, was made on 7 January 2011 for certain oil and gas well hydrostatic setting tools, declaring them to be subject to a zero duty rate under item 50 of Schedule 4 to the Customs Tariff Act 1995 (subsection 269P(3)).
The Customs Act 1901 imposes certain obligations on parties and entities it governs. Applicants, such as Schlumberger Australia in this case, must submit a valid TCO application to the CEO, ensuring it does not pertain to goods specified in section 269SJ of the Act, which are ineligible for TCOs (section 269F). The CEO must assess the application against the core criteria, particularly the absence of substitutable goods produced in Australia (section 269C). If satisfied, the CEO is obligated to make a written TCO (subsection 269P(3)). The CEO is also required to publish a notice in the Gazette as soon as practicable after accepting a valid TCO application, inviting any objections (subsection 269K(1)).
The legislation does not explicitly outline specific offences or penalties for breaches of the TCO provisions. However, any non-compliance with the requirements set forth in the Customs Act 1901, such as submitting a fraudulent TCO application or misrepresenting facts, could potentially lead to civil or criminal consequences under other sections of the Act or related legislation. For example, providing false or misleading information in an application could be considered an offence under the Crimes Act 1914, which could result in fines and imprisonment. The maximum penalties for such offences are determined by the severity of the offence and are prescribed in the respective legislation.