EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0816567
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 candle snuffers on 08 July 2008.
Instrument
TCO No 0816567 was made on 26 September 2008. It declares that those certain candle snuffers 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. 0816567 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 Parliament of Australia, provides a framework under which the Chief Executive Officer of Customs can issue Tariff Concession Orders (TCOs) to apply a lower rate of customs duty on specific goods. This legislative mechanism was introduced to address the need for flexibility in tariff rates to support certain economic activities or industries, ensuring that Australian consumers and businesses are not unduly burdened by high import duties. In line with the policy objective to foster economic efficiency and competitiveness, the Act allows for tariff concessions where no substitutable goods are produced domestically. This particular instrument, TCO No. 0816567, was issued in response to an application by Ikea Pty Ltd for tariff concessions on certain candle snuffers, resulting in a reduction of duty from 5% to free. The instrument came into force on the date of the application, 08 July 2008, and benefits importers by potentially allowing them to claim refunds on duties paid before the order's effective date.
Scope and Application
The Customs Act 1901, specifically under Part XVA, provides the framework for Tariff Concession Orders (TCOs) which can be applied for and granted by the Chief Executive Officer of Customs (CEO). These TCOs apply to goods that are eligible for a lower rate of customs duty and are subject to certain criteria, such as the non-production of substitutable goods in Australia at the time of application. The Act applies to persons or entities applying for a TCO and those importing the goods subject to the concession. The geographic reach of the Act is national, as it is a Commonwealth statute. The application of TCOs is restricted by section 269SJ of the Act, which specifies goods that cannot be subject to a TCO. The Act also allows for the extension and restriction of application through subordinate instruments. The explanatory statement for TCO No. 0816567, which granted a tariff concession on certain candle snuffers, details the CEO’s satisfaction with the application meeting the core criteria and the absence of any submissions against the concession, resulting in its effective date on the day the application was lodged.
Key Provisions
The main operative sections of the Tariff Concession Instrument No. 0816567 are sections 269C, 269P, and 269S of the Customs Act 1901, which set out the process for making a Tariff Concession Order (TCO) and the criteria that must be met. 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 269P requires the Chief Executive Officer of Customs (the CEO) to make a written order (a TCO) if satisfied that the application meets the core criteria. Section 269S specifies the commencement date of a TCO, which is taken to be the day on which the application for the TCO was lodged.
The obligations imposed by the Customs Act 1901 on the parties governed by the TCO are primarily those of the applicant, who must ensure that the application meets the core criteria, and the CEO, who is required to make a written order if the application is valid. The CEO must also publish a notice in the Gazette inviting any person who considers that there are reasons why the TCO should not be made to lodge a submission. The applicant must ensure that the goods are not substitutable and are not produced in Australia in the ordinary course of business. The CEO must ensure that the TCO application is valid and meets the core criteria before making the written order.
The Customs Act 1901 provides for both civil and criminal consequences for breach of the Act's provisions. Under section 166 of the Act, a person who contravenes any provision of the Act or the Regulations is liable to a penalty of up to 10,000 penalty units or imprisonment for up to five years, or both. A person who makes a false or misleading statement in an application for a TCO may also be liable to a penalty of up to 10,000 penalty units or imprisonment for up to five years, or both. The maximum penalty for making a false or misleading statement is the greater of three times the value of the goods that are the subject of the TCO application or 10,000 penalty units. It is important for parties governed by the TCO to ensure that they comply with the Act's provisions to avoid any potential consequences.