EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0708940
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 kitchenware on 13 June 2007.
Instrument
TCO No 0708940 was made on 9 November 2007. It declares that those certain kitchenware 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 0%.
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. One submission objecting to the TCO application was received from Bessemer Pty Ltd.
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. 0708940 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 Australian Parliament, provides a framework for the administration of customs duties and other import charges, including mechanisms for tariff concessions. The 2008 Explanatory Statement outlines the process and criteria for making Tariff Concession Orders (TCOs) under the Act. A TCO can result in a lower rate of customs duty for specified goods, provided certain conditions are met, such as the absence of substitutable goods produced in Australia. This instrument was introduced to address the need for a streamlined process to potentially reduce import costs for businesses and consumers by applying lower customs duties on specific goods. The policy objective is to facilitate trade and support economic activity by offering tariff relief where appropriate. In this instance, Ikea Pty Ltd successfully applied for a TCO for certain kitchenware, resulting in a 0% duty rate for these goods, effective from 13 June 2007.
Scope and Application
The Tariff Concession Instrument No. 0708940 applies to the entities and individuals involved in the importation of specified kitchenware goods, facilitating the reduction of customs duty from 5% to 0% for these goods under the Customs Act 1901. This concession is contingent upon the Chief Executive Officer of Customs determining that no substitutable goods were produced in Australia on the day the application was lodged. The scope of the Act is thus limited to the importation of goods for which a Tariff Concession Order (TCO) is sought and granted, and it is applicable nationally within Australia. The exclusions outlined in section 269SJ of the Act prevent certain goods from being subject to a TCO. The Act allows for the extension of its application through subordinate instruments, which can further define the criteria and specifics of the concessions available. This particular TCO was published in the Gazette to allow for objections, although only one submission was received and considered by the CEO.
Key Provisions
The main operative sections of this instrument, Tariff Concession Instrument No. 0708940, under the Customs Act 1901, are sections 269C, 269F, 269P, and 269S, among others. Section 269F allows a person to apply to the Chief Executive Officer of Customs (CEO) for a Tariff Concession Order (TCO) in respect of goods. If the CEO is satisfied that the application meets the core criteria, they must make a written order (TCO) (section 269P). Section 269C provides that a TCO application meets the core criteria if, on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business. Section 269S specifies that the TCO is taken to have come into force on the day on which the application for the TCO was lodged.
The obligations and requirements imposed by this Act on the parties or entities it governs include the necessity for the CEO to make a decision on the application for a TCO within the confines of the law. The CEO must ensure that the application does not pertain to goods specified in section 269SJ of the Act, which cannot be subject to a TCO. If the CEO determines that the application meets the core criteria, they must make a written order 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 applies. The CEO is also required to publish a notice in the Gazette inviting submissions from any person who considers there are reasons why the TCO should not be made (subsection 269K(1)).
Any breaches of the provisions outlined in this legislation can lead to significant consequences. While the explanatory statement does not detail specific offences or penalties, it is clear that failing to comply with the conditions for a TCO or submitting an application for goods ineligible for a TCO could result in the CEO not making the order. Furthermore, the CEO's failure to follow the procedural requirements, such as publishing a notice in the Gazette, could also have legal repercussions. The specific penalties for such breaches would be determined by the broader legal context and applicable laws.