EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0816565
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 can openers on 08 July 2008.
Instrument
TCO No 0816565 was made on 03 October 2008. It declares that those certain can openers 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 free.
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. 0816565 is taken to have come into force on 08 July 2008.
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 Commonwealth Parliament, addresses the need for a streamlined process to grant tariff concessions on imported goods. Specifically, the Act allows for the creation of Tariff Concession Orders (TCOs) through which the Chief Executive Officer of Customs can reduce or eliminate customs duty on certain goods. This process was introduced to ensure that Australian importers can access goods at lower costs, provided that there are no suitable Australian-made alternatives. In the case of Ikea Pty Ltd’s application for tariff concessions on certain can openers, the CEO determined that no substitutable goods were produced in Australia, thereby fulfilling the core criteria set out in the Act. This decision resulted in a Tariff Concession Instrument, No. 0816565, which came into force on the date of the application, 8 July 2008, granting these specific can openers a duty-free status.
Scope and Application
The Customs Act 1901 provides a framework through which Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs (CEO). Specifically, Part XVA of the Act facilitates the application process for TCOs, which are designed to lower the rate of customs duty on certain goods. This legislative scheme applies to any person who may seek a TCO for goods that are not explicitly excluded under section 269SJ of the Act. The core criteria for a TCO application to be considered successful are outlined in sections 269C, 269D, and 269E, which collectively ensure that no substitutable goods are produced in Australia in the ordinary course of business. Upon meeting these criteria, the CEO must issue a TCO, as stipulated in section 269P(3) of the Act. The geographic and jurisdictional reach of this legislation is national, extending across Australia. The application process also involves public consultation, where any interested parties can submit objections to the proposed TCO, although no submissions were received for TCO No. 0816565. This TCO became effective from the date the application was lodged, on 8 July 2008, and does not impose any liabilities or affect existing rights adversely.
Key Provisions
The Customs Act 1901, particularly Part XVA, establishes the framework for Tariff Concession Orders (TCOs), which allow for a reduced rate of customs duty on certain goods (s 269F). When an applicant such as Ikea Pty Ltd submits an application to the Chief Executive Officer of Customs (CEO) for a TCO, the CEO is required to assess whether the application meets the core criteria outlined in the Act (s 269C). These criteria include determining if no substitutable goods are produced in Australia at the time the application is lodged (s 269D, s 269E, s 269B). If the CEO is satisfied that the application meets these criteria, they must issue a TCO (s 269P(3)).
For Ikea Pty Ltd’s application regarding certain can openers, the CEO issued TCO No. 0816565 on 03 October 2008, declaring that these can openers are subject to a 0% duty rate under item 50 of Schedule 4 to the Customs Tariff Act 1995. This decision was based on the CEO’s satisfaction that no substitutable goods were produced in Australia. This TCO came into effect on 08 July 2008, the date the application was lodged (s 269S(1)). Importantly, this order does not affect any rights or liabilities accrued before its registration, thereby protecting existing rights and imposing no new liabilities (s 269S(1)).
Part of the process for issuing a TCO involves public consultation. Under subsection 269K(1) of the Customs Act, the CEO must publish a notice in the Gazette inviting submissions from any interested parties who might have reasons why the TCO should not be granted. In this instance, no submissions were received in response to the notice published for TCO No. 0816565, indicating no opposition to the concession. This transparency ensures that the process is fair and considers all potential impacts.
Breaching the conditions set out in the Customs Act 1901 can result in significant consequences. While the Act does not explicitly outline specific penalties for non-compliance with TCO provisions, breaches of customs regulations generally can lead to severe penalties. These may include substantial fines and, in more serious cases, imprisonment. For instance, under section 156 of the Customs Act, a person who knowingly imports goods in a way that contravenes the Act may face a penalty of up to $22,000 or imprisonment for up to two years, or both, for each offence. Therefore, entities must adhere strictly to the terms of any TCO to avoid these potential penalties.