EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0708951
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 table top mirrors on 13 June 2007.
Instrument
TCO No 0708951 was made on 13 November 2007. It declares that those certain table top mirrors 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 Pilkington Australia 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. 0708951 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, as amended, introduced a framework allowing the Chief Executive Officer of Customs to grant Tariff Concession Orders (TCOs) that provide for lower rates of customs duty on specific goods. This was enacted to address the gap where certain imported goods could benefit from reduced tariff rates, provided they meet specific criteria and no equivalent goods are produced in Australia. Enacted by the Australian Parliament, the policy objective behind this mechanism is to encourage trade and competitiveness by reducing the cost of importing particular goods, thus making them more affordable and accessible for businesses and consumers. The application process for TCOs is designed to ensure that the concessions do not undermine local production and are aligned with broader trade policy goals.
Scope and Application
The Customs Act 1901 applies to individuals and entities seeking tariff concessions for goods imported into Australia. Specifically, the Act allows the Chief Executive Officer of Customs to grant Tariff Concession Orders (TCOs) for goods that meet certain criteria, such as the absence of substitutable goods produced in Australia at the time of application. The Act operates on a national level, applying across the Commonwealth of Australia, and it sets a framework for the creation of TCOs through subordinate instruments, which can specify the particular goods and the conditions under which a concession may be applied. Exclusions are provided for in section 269SJ, which lists goods that cannot be subject to a TCO. The application of a TCO, such as TCO No. 0708951 for certain table top mirrors, is subject to public consultation, and while it does not retroactively affect the rights of any person, it does provide benefits to importers by potentially allowing them to apply for refunds of duty on eligible goods.
Key Provisions
The main operative sections of this legislation (subsections 269C, 269P(3), and 269S) provide a framework for the Chief Executive Officer of Customs (CEO) to make Tariff Concession Orders (TCOs) that reduce the rate of customs duty on certain goods. According to section 269C, a TCO can be granted if the CEO determines that no substitutable goods are being produced in Australia at the time of the application. This requirement ensures that the concession does not undermine domestic production. Section 269P(3) mandates that if the CEO finds the application meets the criteria, they must issue a TCO, specifying the goods and the applicable tariff item from Schedule 4 of the Customs Tariff Act 1995. Section 269S establishes that the TCO is effective from the date the application is lodged, ensuring timely benefits for importers.
The Act imposes several obligations on the parties involved. For applicants like Ikea Pty Ltd, the primary obligation is to submit a valid application to the CEO, ensuring all criteria, such as the absence of substitutable goods produced in Australia, are met. The CEO must, upon receiving a valid application, assess whether the application meets the core criteria and make a written order if satisfied. Additionally, the CEO is required to publish a notice in the Gazette inviting submissions from interested parties, providing an opportunity for objections or comments before the TCO is made. The Act also obligates the CEO to consider any submissions received and decide whether to proceed with or reject the TCO application.
The legislation does not explicitly outline specific offences or penalties for breaches within the scope of TCOs. However, any misuse or improper application of the concessions provided by a TCO could potentially lead to legal consequences under broader customs laws or other relevant legislation. For instance, fraudulent claims for tariff concessions or misrepresentation in an application might attract penalties under sections of the Customs Act 1901 or the Crimes Act 1914, which could include fines or imprisonment depending on the severity of the offence. The precise penalties would be determined based on the nature and extent of the breach in accordance with the relevant laws.