EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0816603
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 curtain panels of paper on 08 July 2008.
Instrument
TCO No 0816603 was made on 26 September 2008. It declares that those certain curtain panels of paper 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. 0816603 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 provide tariff concessions on specific goods to foster trade and economic efficiency. This Act allows the Chief Executive Officer of Customs to grant Tariff Concession Orders (TCOs) that reduce the rate of customs duty on certain goods, provided that no substitutable goods are produced in Australia. The instrument in question, Tariff Concession Instrument No. 0816603, was introduced to offer a tariff concession for certain curtain panels of paper, reducing the general duty rate of 5% to zero, thereby benefiting importers who can claim refunds for duties paid on imports of these goods since the effective date of the concession. This instrument came into effect on the date the application was lodged, 8 July 2008, and does not disadvantage any existing rights or impose new liabilities on persons other than the Commonwealth.
Scope and Application
The Tariff Concession Instrument No. 0816603, made under the Customs Act 1901, applies to specific goods, in this case certain curtain panels of paper, that are subject to a Tariff Concession Order (TCO) made by the Chief Executive Officer of Customs (CEO). The instrument targets entities that import these goods and aims to provide a tariff concession by reducing the customs duty on them. This concession is available to any importer of the specified goods, thereby encouraging the importation of these items by lowering the financial burden associated with customs duty. The instrument has a Commonwealth reach, operating under federal law, and its application is limited to the goods specified in the TCO. It excludes any goods listed in section 269SJ of the Act, which are ineligible for tariff concessions. The instrument's application can be extended or modified through subordinate instruments, allowing for flexibility in response to changing circumstances or needs.
Key Provisions
The Tariff Concession Order No. 0816603, as provided under the Customs Act 1901 (sections 269C, 269F, and 269P), applies a concessional rate of duty to certain curtain panels of paper, allowing them to enter Australia duty-free. This concession is contingent upon the Chief Executive Officer (CEO) of Customs being satisfied that no substitutable goods were produced in Australia on the day the application was lodged (section 269C). This TCO was made effective from 8 July 2008, the date on which Ikea Pty Ltd applied for the concession (section 269S). The CEO was required to publish a notice in the Gazette inviting submissions from any interested parties who believed the concession should not be granted, although no such submissions were received (subsection 269K(1)).
The obligations imposed by this TCO on Ikea Pty Ltd and other entities primarily revolve around the compliance with the conditions set out in the TCO. Specifically, Ikea Pty Ltd must ensure that the curtain panels of paper imported under this concession meet the criteria established by the CEO. Any party importing goods under the TCO must adhere to all related customs regulations and declarations. Furthermore, the CEO must ensure that any application for a TCO is assessed against the core criteria set out in section 269C of the Act, verifying that no substitutable goods were produced in Australia on the date of application.
Breaches of the conditions stipulated in the TCO or non-compliance with the requirements of the Customs Act 1901 can lead to civil and criminal consequences. Under section 208 of the Act, wilful contravention of the Act may result in penalties, including fines and imprisonment. The maximum penalty for individuals can be up to 12 months imprisonment or a fine of up to $11,000, or both (section 209). For corporations, the penalties can be significantly higher, with fines reaching up to 500 penalty units ($99,500 as of 2023) for serious offences. Additionally, any importer found to be non-compliant with the TCO conditions may face further penalties, including the requirement to repay any duty benefits received under the concession.