EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0708941
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 0708941 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. 0708941 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 Tariff Concession Instrument No. 0708941 was enacted in 2007 under the Customs Act 1901 to provide a framework for the Chief Executive Officer of Customs to make Tariff Concession Orders (TCOs). These orders allow for a lower rate of customs duty to be applied to specific goods that meet certain criteria, such as the absence of substitutable goods produced in Australia. This legislative instrument addresses the need for a streamlined process to review and potentially reduce customs duties on imported goods, ensuring they are not unnecessarily burdened by tariffs when suitable domestic alternatives do not exist. The primary policy objective is to facilitate trade by making imported goods more competitively priced relative to locally produced goods, thereby benefiting consumers and importers while not disadvantaging the Commonwealth or imposing new liabilities on any party. The instrument was made effective from the date the application was lodged, providing a prompt and efficient means of addressing tariff concessions.
Scope and Application
The Tariff Concession Instrument No. 0708941, under the Customs Act 1901, applies to entities that seek a tariff concession order (TCO) for certain goods imported into Australia. Specifically, it pertains to Ikea Pty Ltd's application for a TCO on certain kitchenware, where the concession lowers the customs duty from 5% to 0%. The instrument is part of a broader scheme established under Part XVA of the Act, which allows the Chief Executive Officer of Customs to grant TCOs to eligible applicants, provided the goods are not specified in section 269SJ of the Act as ineligible and meet the core criteria outlined in sections 269C, 269B, and 269D. This concession is applicable nationally and is effective from the date the TCO application was lodged, in this case, 13 June 2007. The instrument does not disadvantage any person or impose liabilities on anyone for actions taken prior to its registration. The scope of the Act can be extended or restricted through subordinate instruments, ensuring that the application of tariff concessions remains flexible and responsive to changing economic and trade conditions.
Key Provisions
The Customs Act 1901, under Part XVA, establishes a framework whereby the Chief Executive Officer (CEO) of Customs can issue Tariff Concession Orders (TCOs) (s 269F). These orders allow for a lower rate of customs duty on specified goods. If a person applies for a TCO for goods, the CEO must consider whether the application meets the core criteria, primarily that no substitutable goods were produced in Australia on the day the application was lodged (s 269C). This is subject to the goods not being those listed in section 269SJ of the Act, which are ineligible for TCOs. If the CEO is satisfied that the application meets these criteria, a TCO must be issued (s 269P(3)).
For Ikea Pty Ltd's application regarding certain kitchenware, a TCO No. 0708941 was issued on 9 November 2007. This TCO declared that the specified kitchenware are subject to item 50 of Schedule 4 to the Customs Tariff Act 1995, resulting in a duty rate of 0%, down from the general rate of 5%. This TCO came into effect on 13 June 2007, the date the application was lodged (s 269S(1)). Notably, the TCO does not disadvantage any person's rights or impose liabilities for actions taken before its registration (s 269S(2)). Importers of these goods will benefit from being able to apply for a duty refund on imports made since the TCO's effective date (Reg 126(1)(r)).
The Act imposes several obligations on the CEO regarding TCO applications. Firstly, the CEO must promptly publish a notice in the Gazette inviting objections to the application (s 269K(1)). This notice was published following Ikea Pty Ltd's application, and one objection was received from Bessemer Pty Ltd. The CEO's role also includes assessing whether the application meets the core criteria and issuing the TCO if satisfied. The CEO must ensure that the TCO does not adversely affect any person's rights existing prior to its registration, which was adhered to in this case.
The Customs Act 1901 imposes consequences for non-compliance with its provisions. While specific offences and penalties related to TCOs are not detailed in the explanatory statement, general penalties for breaches of the Customs Act can include fines and imprisonment. For instance, under section 234, knowingly making a false statement in a customs declaration can result in a penalty of up to five times the duty and penalties evaded or $55,000, whichever is greater. For entities involved in TCOs, failure to adhere to the conditions or misrepresent facts could lead to similar penalties, reinforcing the importance of compliance with the Act’s stipulations.