EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0708948
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 0708948 was made on 12 October 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. 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. 0708948 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 was enacted by the Parliament of Australia to provide for the regulation of customs and excise, including the imposition and collection of customs duty. The Tariff Concession Instrument No. 0708948, introduced to address the specific issue of tariff concessions for certain goods, was designed to alleviate the financial burden on importers by reducing the customs duty on specific items. This instrument was enacted to streamline the process of obtaining tariff concessions for goods that do not have substitutable alternatives produced in Australia. The policy objective is to facilitate smoother importation and trade of these goods by providing a lower duty rate, thus supporting economic efficiency and competitiveness without disadvantaging existing rights or imposing new liabilities on individuals or entities.
Scope and Application
The Customs Act 1901, specifically Part XVA, governs the process for Tariff Concession Orders (TCOs), which allow for reduced customs duty rates on certain goods. These orders can be applied for by any person, with the Chief Executive Officer of Customs (CEO) determining eligibility based on certain criteria. If the CEO is satisfied that the application meets the core criteria, a TCO is issued, lowering the customs duty rate for the specified goods. The application process requires that no substitutable goods are produced in Australia in the ordinary course of business, as defined by the Act. This instrument applies on a Commonwealth level, affecting the rights of importers by allowing them to seek refunds for duties paid on the specified goods since the effective date of the TCO. The TCO does not disadvantage or impose liabilities on any person for actions taken prior to its registration. The CEO is also mandated to publish notices inviting submissions from interested parties, although in this case, no submissions were received.
Key Provisions
The main operative sections of the Customs Act 1901, as they pertain to the Tariff Concession Order (TCO) in this context, are sections 269C, 269B, 269D, 269E, 269F, 269P, and 269S. Section 269F outlines the process by which an entity can apply to the Chief Executive Officer (CEO) of Customs for a TCO. Section 269C sets out the core criteria that must be satisfied for a TCO application to be successful, specifically that no substitutable goods were produced in Australia on the day the application was lodged. Sections 269B, 269D, and 269E provide definitions for terms such as 'goods produced in Australia', 'ordinary course of business', and'substitutable goods', which are crucial in determining whether the core criteria are met. Section 269P(3) mandates that if the CEO determines the application meets the core criteria, a written order (TCO) must be made. Section 269S details the commencement of the TCO, stating it takes effect from the date the application is lodged.
The Act imposes several obligations on both the entities applying for a TCO and the CEO. For the applicant, the obligation is to ensure their application meets the core criteria specified in section 269C, which includes demonstrating that no substitutable goods were produced in Australia on the day of application. The CEO, on the other hand, is required to evaluate the application against these criteria. If satisfied, the CEO must not only make a written TCO but also publish a notice in the Gazette inviting any interested party to lodge submissions against the application. In this instance, the CEO published the notice and did not receive any submissions, thereby proceeding with the TCO.
Under the Customs Act 1901, any breach of the requirements or provisions concerning the TCO could lead to various legal consequences. Although the explanatory statement does not detail specific offences related to the TCO process, breaches of the Customs Act generally can attract civil or criminal penalties. Civil penalties might include fines, while criminal penalties could involve imprisonment, reflecting the severity of the breach. The exact penalties would depend on the nature and extent of the breach, as well as any relevant regulations or subsequent legislation. For instance, section 126(1)(r) of the Regulations allows importers to apply for a refund of duty on goods imported since the TCO came into effect, indicating a structured process for addressing potential financial impacts due to the concession.