EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0708936
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.
Ikea Pty Ltd applied for a TCO in respect of certain stainless steel tableware on 13 June 2007.
Instrument
TCO No 0708936 was made on 12 October. It declares that those certain stainless steel tableware 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. 0708936 is taken to have come into force on 13 June 2007.
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 administration of customs and excise duties, including the process for granting tariff concession orders (TCOs). The primary purpose of the TCO scheme is to offer reduced customs duties on specific goods if certain criteria are met, facilitating trade and supporting Australian industry by potentially lowering the cost of imported goods. The instrument F2007L04160, specifically Tariff Concession Instrument No. 0708936, was introduced to address the need for tariff concessions on certain stainless steel tableware, as applied for by Ikea Pty Ltd. The instrument was enacted to provide a tariff concession, declaring that these particular goods would be subject to a zero rate of duty, which contrasts with the general rate of 5% applied to similar goods. The policy objective was to ensure that no substitutable goods were being produced in Australia at the time of the application, thereby supporting the concession without adversely affecting local production.
Scope and Application
The Tariff Concession Instrument No. 0708936, made under Part XVA of the Customs Act 1901, applies to the goods specified in the instrument, which in this instance are certain stainless steel tableware. The Act allows for the Chief Executive Officer of Customs to grant a Tariff Concession Order (TCO) to lower the rate of customs duty for goods if specific criteria are met. This process is applicable to any entity or person who wishes to import goods that are not being produced in Australia and for which a TCO can be applied. The TCO’s effect is limited to the goods specified in the instrument and is contingent on the CEO’s determination that no substitutable goods are produced in Australia. The application and effect of the TCO are confined to the Commonwealth jurisdiction, impacting primarily the importers who stand to benefit from the reduced customs duty. The rights and obligations of entities and individuals, other than the Commonwealth, are not adversely affected by this Order, particularly regarding any actions taken prior to the TCO's effective date. Any subordinate instruments that might extend or restrict the application of the TCO would be subject to the provisions of the Customs Act 1901 and related regulations.
Key Provisions
The main operative sections of the Customs Act 1901, in the context of the Tariff Concession Order (TCO) No. 0708936, include sections 269C, 269F, 269P, and 269SJ (sections referenced in parentheses). Section 269F allows for an application to be made to the Chief Executive Officer (CEO) of Customs for a TCO. The CEO must assess whether the application meets the core criteria, as outlined in section 269C. If satisfied, the CEO must issue a written order, a TCO, specifying the lower duty rate applicable to the goods in question. Section 269P(3) mandates that the TCO must declare the specific item in Schedule 4 to the Customs Tariff Act 1995 that applies to the goods. Additionally, section 269SJ excludes certain goods from being subject to a TCO.
The Customs Act 1901 imposes several obligations on the CEO and other relevant parties. The CEO must evaluate the TCO application to determine if it meets the core criteria, specifically whether substitutable goods are produced in Australia in the ordinary course of business, as per section 269C. If the application satisfies these criteria, the CEO must issue a TCO. Furthermore, the CEO is required to publish a notice in the Gazette, inviting submissions from interested parties, under subsection 269K(1). This process ensures transparency and provides an opportunity for objections to be raised. Importers also have the obligation to apply for a refund of duty on goods imported since the TCO came into force, as per the Regulations.
The Customs Act 1901 does not explicitly outline specific offences, penalties, or civil/criminal consequences for breaches related to TCO applications. However, general provisions within the Act regarding the administration of tariffs and duties may apply. Non-compliance with tariff regulations or fraudulent claims for tariff concessions could potentially lead to civil or criminal penalties under other relevant sections of the Customs Act or associated regulations. These could include fines or other financial penalties, as well as potential legal action for misrepresentation or fraud.