EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0708943
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 kitchen utensils on 13 June 2007.
Instrument
TCO No 0708943 was made on 9 November 2007. It declares that those certain kitchen utensils 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. 0708943 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, establishes a framework within which Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs. The Act addresses the problem of ensuring that certain goods receive preferential tariff treatment when they are imported, provided that no equivalent goods are being produced in Australia. This mechanism aims to encourage the importation of goods that are not domestically manufactured, thereby supporting the broader economic policy of fostering international trade. The legislative process allows for applications to be considered and evaluated against specific criteria, ensuring that the concessions are granted appropriately. In the case of Ikea Pty Ltd's application for a TCO on kitchen utensils, the CEO determined that no substitutable goods were produced in Australia, resulting in a zero percent duty rate on these imported items.
Scope and Application
The Customs Act 1901, specifically under Part XVA, governs the establishment of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO). This Act applies to individuals and entities that seek tariff concessions for imported goods, ensuring that these goods are not substitutable by Australian-made products. The CEO evaluates applications based on whether substitutable goods are produced in Australia, as defined in sections 269D, 269E, and 269F. If the application meets the criteria, a TCO is issued, reducing or eliminating customs duty on the specified goods. The instrument’s jurisdictional reach is national, as it pertains to customs regulation across Australia. Notably, certain goods, as outlined in section 269SJ, are ineligible for TCOs. Any subordinate instruments or regulations under this Act further detail the application process and eligibility criteria, thereby extending or restricting the application scope as necessary.
Key Provisions
The Tariff Concession Instrument No. 0708943, under section 269P(3) of the Customs Act 1901, mandates that the Chief Executive Officer of Customs (CEO) must make a written order, known as a Tariff Concession Order (TCO), if satisfied that an application for tariff concession meets the core criteria. This includes confirming that no substitutable goods were produced in Australia in the ordinary course of business on the date the application was lodged, as outlined in section 269C. In the case of Ikea Pty Ltd's application for certain kitchen utensils, the CEO confirmed that no such substitutable goods existed, leading to the issuance of TCO No. 0708943. This order specifies that the kitchen utensils are subject to item 50 of Schedule 4 to the Customs Tariff Act 1995, with a duty rate of 0%, rather than the general rate of 5%.
The Act imposes several obligations on the CEO and applicants. Under section 269K(1), the CEO must publish a notice in the Gazette inviting submissions from any interested parties if they believe the TCO should not proceed. This provision ensures transparency and allows for objections to be considered. In the instance of TCO No. 0708943, an objection was lodged by Bessemer Pty Ltd, which was duly considered by the CEO. Additionally, section 269S(1) requires that a TCO be taken to have come into force on the date the application was lodged, in this case, 13 June 2007.
Section 269SJ of the Customs Act 1901 specifies that certain goods cannot be subject to a TCO, thereby setting boundaries on the types of goods that may benefit from tariff concessions. The Act also mandates that the rights of persons, other than the Commonwealth, are not adversely affected by a TCO, as per the explanatory statement. This means that any existing rights or duties related to the goods before the TCO's effective date remain unchanged. Importers, however, can benefit from the reduced duty rate and may apply for a refund of duty on goods imported since the TCO's effective date, as provided under paragraph 126(1)(r) of the Regulations.
Failure to comply with the requirements of the Customs Act 1901 and the related TCO may result in legal consequences. While specific offences and penalties are not detailed in the explanatory statement, general provisions within the Act suggest that breaches could lead to civil or criminal penalties. These penalties could include fines or imprisonment, depending on the severity and intent of the breach. It is important for all parties involved to adhere to the provisions of the Act to avoid any potential repercussions.