EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0816590
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 sets of kitchen tools on 08 July 2008.
Instrument
TCO No 0816590 was made on 26 September 2008. It declares that those certain sets of kitchen 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. 0816590 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 Tariff Concession Instrument No. 0816590 was enacted in 2008 under the Customs Act 1901, providing a framework for the Chief Executive Officer of Customs to grant tariff concessions on certain goods. This instrument was introduced to address the gap in duty-free concessions for specific imported goods, particularly those not produced in Australia and for which no substitutable domestic products exist. The instrument was enacted by the Australian Parliament and its policy objective is to facilitate the import of goods that are not produced domestically, thereby benefiting importers and potentially lowering consumer prices. The instrument came into force on 8 July 2008, the date the application was lodged, and does not disadvantage existing rights or impose new liabilities on any person other than the Commonwealth.
Scope and Application
The Tariff Concession Instrument No. 0816590, made under Part XVA of the Customs Act 1901, applies to goods for which a Tariff Concession Order (TCO) is sought and granted by the Chief Executive Officer of Customs (CEO). Specifically, this instrument pertains to certain sets of kitchen tools applied for by Ikea Pty Ltd, which have been granted a tariff concession effective from the date of application, 08 July 2008. The TCO reduces the customs duty on these goods from the general rate of 5% to free, provided that no substitutable goods were produced in Australia at the time of application. The CEO's decision to grant the TCO was based on the absence of any submissions opposing the concession, as required by the Act. The instrument's geographic reach is national, applying across Australia, and it does not disadvantage any person or impose new liabilities on anyone for actions taken prior to the order's registration.
Key Provisions
The primary operative sections of the Customs Act 1901 as applied to Tariff Concession Orders (TCOs) include sections 269C, 269F, 269P, and 269SJ (subsection 269K(1)). Section 269F allows a person to apply to the Chief Executive Officer of Customs (CEO) for a TCO in respect of goods. If the CEO is satisfied that the application is valid and does not pertain to goods specified in section 269SJ, which lists those goods that cannot be subject to a TCO, the CEO must determine if the application meets the core criteria under section 269C. If these criteria are met, the CEO is required to make a written order (a TCO) under section 269P(3), 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 applies. The CEO must also publish a notice in the Gazette inviting submissions on the application, as per subsection 269K(1).
The Act imposes several obligations and requirements on the parties involved. Firstly, any person seeking a TCO must submit a valid application to the CEO, ensuring it does not pertain to goods listed in section 269SJ. The CEO, upon accepting the application, must publish a notice in the Gazette and invite submissions from interested parties. The CEO must then decide whether the application meets the core criteria by assessing whether no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged. If these criteria are met, the CEO must issue a TCO that specifies the applicable customs duty rate for the goods, which typically results in a lower or free rate compared to the general rate of duty. The TCO also comes into force on the day the application was lodged, as per subsection 269S(1).
Failure to comply with the requirements set out in the Act may lead to various consequences. While the explanatory statement does not detail specific offences under the Act, breaches of customs regulations generally can result in civil and criminal penalties. For civil penalties, the Act provides for fines up to a maximum of $11,000 for individuals and $55,000 for bodies corporate, as stipulated in section 283 of the Act. Additionally, criminal penalties may apply for more severe breaches, including imprisonment, as outlined in section 283AA. However, the explanatory statement does not explicitly mention any penalties for failing to comply with the TCO provisions, but it is reasonable to infer that the same penalties applicable to general breaches of the Customs Act would apply.
In summary, the Tariff Concession Instrument No. 0816590 under the Customs Act 1901 allows for lower customs duty rates on certain goods through a TCO. The CEO must evaluate applications against specific criteria and publish notices inviting submissions. The TCO comes into effect on the date of application, and it does not impose liabilities on individuals or entities for actions taken before its registration. Failure to comply with the Act's requirements may result in civil and criminal penalties as outlined in the Act.