EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1103423
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 Pty Ltd applied for a TCO in respect of certain rotary directional oil and gas drilling system parts on 21 January 2011.
Instrument
TCO No 1103423 was made on 18 April 2011. It declares that those certain rotary directional oil and gas drilling system 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. 1103423 is taken to have come into force on 21 January 2011.
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, established a framework for tariff concession orders (TCOs) to be issued by the Chief Executive Officer of Customs. This legislative instrument was introduced to address the need for tariff reductions on specific goods that are not produced in Australia, thereby encouraging trade and economic efficiency. The explanatory statement accompanying Tariff Concession Instrument No. 1103423, made on 18 April 2011, details the process by which Schlumberger Australia Pty Ltd successfully applied for a TCO for certain rotary directional oil and gas drilling system parts. This application was processed under section 269F of the Act, with the CEO concluding that no substitutable goods were produced in Australia, thus meeting the core criteria for tariff concessions. The policy objective of this legislation is to facilitate the importation of goods that are critical for specific industries while ensuring that Australian producers are not disadvantaged. The instrument came into effect on the date the application was lodged, 21 January 2011, and provides a zero-rate duty on the specified goods, benefiting importers who can now apply for duty refunds.
Scope and Application
The Customs Act 1901, through its Part XVA, governs the scheme under which Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs. This Act applies to any person or entity seeking to import specific goods for which a lower rate of customs duty is desired. Such applicants must satisfy the core criteria outlined in the Act, primarily that no substitutable goods are produced in Australia at the time of application. The geographic reach of this legislation is national, as it applies across the Commonwealth of Australia. However, it specifically excludes certain goods detailed in section 269SJ of the Act from being eligible for a TCO. The scope of the Act can be further extended or restricted through subordinate instruments, though these are not specified in the provided text. The Tariff Concession Instrument No. 1103423, made in 2011, exemplifies this process by granting free duty rates on specific rotary directional oil and gas drilling system parts, effective from the date of the application.
Key Provisions
The Tariff Concession Instrument No. 1103423, made under the Customs Act 1901, provides a concessional rate of customs duty on certain rotary directional oil and gas drilling system parts. Section 269F (1) of the Customs Act allows an application for a Tariff Concession Order (TCO) to be made to the Chief Executive Officer (CEO) of Customs. If the CEO is satisfied that the application meets the core criteria, a TCO is made under section 269P (3). For this TCO, the CEO was satisfied that no substitutable goods were produced in Australia on the day the application was lodged, as required by section 269C. Consequently, item 50 of Schedule 4 to the Customs Tariff Act 1995 applies, with the general rate of duty being reduced from 5% to free.
The obligations imposed by this Act on the parties involved include ensuring that the application for a TCO meets the core criteria, as outlined in section 269C. The CEO must also publish a notice in the Gazette inviting submissions from any person who may have reasons why the TCO should not be made, as stipulated in section 269K (1). In this instance, no submissions were received. The TCO does not affect the rights of any person other than the Commonwealth as at the date of registration, and does not impose any liabilities on any person, as provided under section 269S (1) of the Customs Act.
For breaches of the provisions of this Act, the CEO may face various consequences. The Act does not specify particular offences or penalties within the Explanatory Statement itself. However, breaches of the Customs Act 1901 generally may result in criminal or civil penalties, depending on the nature of the offence. Under the Customs Act, the maximum penalties for various offences include fines and imprisonment terms. For example, section 243D of the Act imposes a penalty of up to 10,000 penalty units for serious breaches involving deception or fraud. The exact penalties applicable would depend on the specific nature of any breach, and would be determined by a court or tribunal.