EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0816585
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 unplated household tools on 08 July 2008.
Instrument
TCO No 0816585 was made on 26 September 2008. It declares that those certain unplated household tools 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. 0816585 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 Australian Parliament, establishes a framework for the imposition of customs duties on imported goods. One of its provisions, Part XVA, allows the Chief Executive Officer of Customs to issue Tariff Concession Orders (TCOs) that reduce the duty on specific goods. This mechanism was introduced to address the need for flexibility in the tariff system, allowing for duty concessions where certain conditions are met. The objective is to support economic efficiency by reducing duties on goods for which no suitable domestic alternatives are produced, thereby encouraging trade and benefiting consumers. In the case of Tariff Concession Instrument No. 0816585, issued in 2008, the CEO granted a concession to Ikea Pty Ltd for certain unplated household tools, setting their duty rate to free, effective from the date of application, 8 July 2008.
Scope and Application
The Customs Act 1901, through its Tariff Concession Instrument No. 0816585, facilitates the concession of customs duties for specific goods, enhancing trade efficiency and competitiveness. This instrument applies to entities seeking reduced tariff rates on goods that are not produced in Australia and for which there are no substitutable goods in the Australian market. The instrument allows for the application of a zero duty rate on certain unplated household tools, specifically those declared under item 50 of Schedule 4 to the Customs Tariff Act 1995, which otherwise carry a 5% duty. The instrument’s scope extends to all entities complying with the Act's provisions and its geographic reach is national, as it operates under the overarching authority of the Commonwealth. The instrument does not affect the rights of any person adversely and does not impose new liabilities on any party, ensuring that its implementation does not disadvantage existing stakeholders. Subordinate instruments may further refine the application and scope of the TCO, thereby extending or restricting its application as necessary.
Key Provisions
The main operative sections of Tariff Concession Instrument No. 0816585 under the Customs Act 1901 (section 269P(3)) mandate that the Chief Executive Officer of Customs (CEO) must make a written order, known as a Tariff Concession Order (TCO), if satisfied that the application for tariff concession meets the core criteria. Specifically, section 269C requires that the application meets the core criteria if, on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business. If the CEO decides to make a TCO, it declares that the goods specified in the application are subject to a prescribed tariff item (section 269P(3)).
The obligations imposed by the Act on the parties involved include the requirement for applicants, such as Ikea Pty Ltd in this case, to submit an application to the CEO for a TCO, ensuring it is not in respect of goods specified in section 269SJ of the Act, which lists goods ineligible for a TCO. The CEO, upon accepting a valid application, must publish a notice in the Gazette inviting submissions from any person who believes the TCO should not be made (subsection 269K(1)). The CEO must then consider these submissions and decide whether to grant the TCO based on the core criteria outlined in section 269C. In this instance, the CEO did not receive any submissions opposing the TCO.
The legislation also includes provisions for the commencement of the TCO, which is effective from the date the application was lodged (subsection 269S(1)). This means that the TCO for Ikea Pty Ltd's unplated household tools, declared on 08 July 2008, came into force on that date. The Act ensures that the TCO does not disadvantage any person or impose liabilities in respect of actions taken before the registration of the TCO (subsection 269S(2)). Importers benefit from this TCO as they can apply for a refund of duty on goods imported since the effective date of the TCO (paragraph 126(1)(r) of the Regulations).
Breaches of the provisions in the Customs Act 1901 may result in both civil and criminal consequences. For instance, providing false or misleading information in an application for a TCO could lead to penalties. While specific penalties are not detailed in the provided text, breaches of similar provisions in the Customs Act generally incur fines and, in serious cases, imprisonment. The exact penalties would depend on the specific breach and relevant legislation.