EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0816597
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 paper fibreboard storage boxes on 08 July 2008.
Instrument
TCO No 0816597 was made on 26 September 2008. It declares that those certain paper fibreboard storage boxes 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. 0816597 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, establishes a framework through which the Chief Executive Officer of Customs may issue Tariff Concession Orders (TCOs) to provide lower rates of customs duty on certain goods. This legislative instrument addresses the problem of ensuring that Australian industries and consumers have access to competitively priced imported goods, provided that such imports do not displace local production. Specifically, the Act aims to facilitate trade by reducing the customs duty on goods for which no substitutable Australian-made products exist. The Tariff Concession Instrument No. 0816597, made under the authority of the Customs Act 1901, exemplifies this approach by granting a free rate of duty on certain paper fibreboard storage boxes, effective from the date the application was lodged, thereby benefiting importers and ensuring that the TCO does not impose any new liabilities or disadvantage existing rights holders.
Scope and Application
The Tariff Concession Instrument No. 0816597 applies to goods that are the subject of a Tariff Concession Order (TCO) under the Customs Act 1901. Specifically, it applies to certain paper fibreboard storage boxes for which Ikea Pty Ltd applied for a TCO. The Act allows for the reduction of customs duty on goods specified in a TCO, provided the goods are not substitutable goods produced in Australia. The TCO in this instance applies nationally, and it exempts the specified paper fibreboard storage boxes from the general customs duty rate of 5%, instead imposing a duty rate of free. The application of the TCO is subject to the CEO of Customs determining that no substitutable goods are produced in Australia. The TCO does not affect any pre-existing rights or liabilities except as it benefits importers by allowing them to apply for a refund of duty paid on the goods since the TCO's effective date. The TCO came into force on the date the application was lodged, which was 8 July 2008.
Key Provisions
The main operative sections of this legislation, specifically Tariff Concession Instrument No. 0816597, are found under Part XVA of the Customs Act 1901 (section 269C). This section outlines the criteria for approving Tariff Concession Orders (TCOs). In this case, the Chief Executive Officer of Customs (CEO) must ensure that the goods in question are not produced in Australia and that no substitutable goods are being produced domestically (sections 269D and 269E). If these criteria are met, the CEO must issue a TCO, effectively applying a lower rate of customs duty to the specified goods (section 269P(3)).
Entities or individuals seeking to apply for a TCO must adhere to the requirements set forth in the Customs Act 1901. They must ensure their application is lodged correctly and is not for goods explicitly excluded under section 269SJ. The CEO also has an obligation to publish a notice in the Gazette inviting any interested parties to object to the proposed TCO within a reasonable timeframe (subsection 269K(1)). The CEO’s role is crucial in assessing applications and determining whether the core criteria are met, which is fundamental to the effectiveness of the TCO scheme.
In terms of consequences for non-compliance or misuse, the Customs Act 1901 does not specify particular offences related to TCOs. However, any breach of the Act's provisions or the misuse of a TCO could potentially lead to civil or criminal penalties under the general provisions of the Act. For example, any misrepresentation or fraud in the application process could result in criminal charges. Additionally, the penalties for any breaches of customs regulations could include fines and imprisonment, depending on the severity and intent behind the breach. It is essential for entities to ensure their compliance with the Act to avoid such repercussions.