EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1114829
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 oil and gas well reelers on 11 May 2011.
Instrument
TCO No 1114829 was made on 01 August 2011. It declares that those certain oil and gas well reelers 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. 1114829 is taken to have come into force on 11 May 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, facilitates the establishment of a scheme whereby Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs. This scheme addresses the problem of ensuring that Australian industries can access necessary goods at reduced customs duty rates, provided that no substitutable goods are produced in Australia. The Explanatory Statement for Tariff Concession Instrument No. 1114829, issued on 1 August 2011, exemplifies the application of this scheme. Schlumberger Australia Pty Ltd applied for a TCO for certain oil and gas well reelers, which was subsequently granted as no substitutable goods were being produced in Australia at the time of the application. The policy objective is to support industries by providing tariff concessions on imported goods where local production does not exist, thereby fostering economic efficiency and competitiveness.
Scope and Application
The Customs Act 1901, through Part XVA, establishes a framework whereby Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs (CEO) to provide lower rates of customs duty on specified goods. The Act applies to entities and individuals who import goods that are eligible for tariff concessions, and it allows for a streamlined application process where applicants can seek a TCO if certain criteria are met, notably if no substitutable goods are produced in Australia in the ordinary course of business. The application process includes a requirement for public notification and consideration of submissions, although no submissions were received for TCO No. 1114829. This TCO, which came into effect on 11 May 2011, applies nationally and provides a zero duty rate for certain oil and gas well reelers, which contrasts with the general duty rate of 5%. The TCO does not affect the rights of any person except to confer benefits such as the eligibility for duty refunds on imports since the effective date of the order, and it imposes no additional liabilities on any person. The scope of the Act is further extended through subordinate instruments that may provide additional detail or modify the application of the primary legislation.
Key Provisions
The primary operative sections of the Tariff Concession Instrument No. 1114829 under the Customs Act 1901 include section 269C, which stipulates the core criteria for a Tariff Concession Order (TCO) application. If a TCO application meets these criteria, specifically that no substitutable goods were produced in Australia on the day the application was lodged (section 269C), the CEO must make a written order (section 269P(3)). This order declares that the goods in question are subject to a prescribed tariff item, in this case, item 50 of Schedule 4 to the Customs Tariff Act 1995, resulting in a duty rate of free for these goods, as opposed to the general rate of 5% (section 269P(3)).
The obligations imposed by the Act on parties involved include the requirement for applicants, such as Schlumberger Australia Pty Ltd, to submit a valid application to the CEO for a TCO (section 269F). The CEO must then assess whether the application meets the core criteria, ensuring that no substitutable goods are produced in Australia (section 269C). Upon satisfying these conditions, the CEO must publish a notice in the Gazette inviting submissions from any interested parties (subsection 269K(1)) and make a written order if no objections are received (section 269P(3)). Additionally, the Act mandates that any TCO must not affect the rights of persons (other than the Commonwealth) as at the date of registration to disadvantage them or impose liabilities for actions taken before the registration date (subsection 269S(1)).
The consequences of breaching the requirements set out in the Customs Act 1901 are not explicitly detailed in the explanatory statement for this specific TCO. However, in general, the Act provides for both civil and criminal penalties for non-compliance with its provisions. Civil penalties can include fines, while criminal penalties can involve imprisonment, depending on the nature and severity of the breach. The specific penalties would be determined in accordance with the broader provisions of the Customs Act 1901 and related legislation.
The Tariff Concession Instrument No. 1114829, effective from 11 May 2011, allows for the importation of certain oil and gas well reelers without incurring the usual customs duty, provided the application criteria are met. This not only benefits importers by eliminating duty charges but also ensures that no existing rights or liabilities are adversely affected by the concession. The absence of submissions against the TCO indicates that the application process was transparent and adequately communicated to stakeholders.