EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1047268
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 hydraulic winch drum frames on 21 October 2010.
Instrument
TCO No 1047268 was made on 10 January 2011. It declares that those certain hydraulic winch drum frames 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. 1047268 is taken to have come into force on 21 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 duties, including the ability to grant tariff concessions for certain goods through Tariff Concession Orders (TCOs). The Act was introduced to facilitate the import of goods that are not produced domestically or for which there are no suitable substitutes, thereby encouraging trade and economic efficiency. The Tariff Concession Instrument No. 1047268 was made on 10 January 2011, following an application by Schlumberger Australia for a TCO concerning certain hydraulic winch drum frames. The Chief Executive Officer of Customs determined that no substitutable goods were produced in Australia, leading to the declaration that the specified goods are subject to a 5% duty rate under the Customs Tariff Act 1995, with the TCO effectively granting a free rate of duty. The instrument's commencement date was 21 October 2010, the date of the application, and it does not disadvantage any person or impose liabilities for actions taken before its registration. Importers of the affected goods are eligible to apply for a refund of duties paid since the effective date of the TCO.
Scope and Application
The Customs Act 1901, specifically under Part XVA, facilitates the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO). This legislation applies to any person who can apply for a TCO for goods that are not specified in section 269SJ of the Act, which excludes certain goods from tariff concessions. The application process involves satisfying the core criteria outlined in sections 269C and 269D, ensuring that no substitutable goods are produced in Australia in the ordinary course of business. The geographic scope of the Act is national, affecting all imports into Australia. The TCOs provide a lower rate of customs duty, with Schlumberger Australia's application for certain hydraulic winch drum frames resulting in a concession that lowers the duty rate from 5% to free. The instrument is retrospective to the date of the application, 21 October 2010, and does not disadvantage existing rights or impose new liabilities on non-Commonwealth entities. The application of the Act can be further defined or restricted by subordinate instruments, ensuring its adaptability to specific economic or trade conditions.
Key Provisions
The primary operative sections of this legislation are sections 269C, 269P(3), and 269S(1) of the Customs Act 1901. Section 269C sets out the core criteria for a Tariff Concession Order (TCO) application to be deemed acceptable by the Chief Executive Officer of Customs (CEO), which requires that no substitutable goods are produced in Australia on the day the application is lodged. Section 269P(3) requires the CEO to issue a written TCO if these core criteria are met. Lastly, section 269S(1) specifies that a TCO is effective from the date the application was lodged, not the date of issuance. This means that the tariff concessions applied to the specified goods commence from the date the application was submitted, not from the date the TCO is formally made.
The Customs Act 1901 imposes several obligations on the parties involved. The applicant, such as Schlumberger Australia in this case, must ensure that their TCO application meets the specified criteria, primarily that no substitutable goods are produced in Australia. The CEO has the duty to assess the application against these criteria and, if satisfied, to issue the TCO. The CEO is also required to publish a notice in the Gazette inviting any objections to the TCO and to consider any submissions received. The CEO must ensure that no substitutable goods are being produced domestically before issuing a TCO. In this case, Schlumberger Australia had to provide sufficient evidence to support their claim that no substitutable goods were produced in Australia.
Breaching the provisions of the Customs Act 1901 can result in both civil and criminal penalties. While the explanatory statement does not specify the exact penalties, the general framework of the Customs Act 1901 provides for significant penalties for non-compliance. For instance, knowingly making a false statement in an application for a TCO could be considered a criminal offence, potentially leading to imprisonment or fines as stipulated under the relevant sections of the Customs Act 1901. Additionally, any failure to comply with the terms of a TCO once granted could result in financial penalties, including the payment of back duties and interest. The exact penalties would depend on the specific nature of the breach and the discretion of the court or relevant authority.