EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0816606
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 plastic recycling bag on 08 July 2008.
Instrument
TCO No 0816606 was made on 26 September 2008. It declares that those certain plastic recycling bag 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. 0816606 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 was enacted to establish a comprehensive framework for customs and excise duties, including mechanisms for tariff concessions that facilitate trade by reducing duty on certain goods. The Customs Act 1901 was enacted by the Parliament of Australia to regulate and control the import and export of goods, including the imposition of customs duties and other charges. The Tariff Concession Instrument No. 0816606, introduced under Part XVA of the Customs Act 1901, specifically addresses the need for tariff concessions to lower the duty on goods where it is established that no substitutable goods are produced in Australia. The policy objective of this instrument is to support trade by reducing the cost of imported goods, thereby making them more competitive in the domestic market. The Customs Act 1901 empowers the Chief Executive Officer of Customs to make Tariff Concession Orders when satisfied that certain criteria are met, including the absence of substitutable goods produced in Australia. This process ensures that tariff concessions are granted fairly and in accordance with established legislative requirements.
Scope and Application
The Customs Act 1901, specifically under Part XVA, outlines the procedure for Tariff Concession Orders (TCOs), which provide for reduced customs duty rates on specified goods. The Act applies to any individual or entity that imports goods into Australia, where a TCO can be applied for by the importer or their representative. The application process is overseen by the Chief Executive Officer of Customs, who assesses whether the application meets the core criteria, primarily whether substitutable goods are produced in Australia. The geographic reach of this legislation is national, as it applies across all states and territories of Australia. The scope of the legislation is limited by the exclusion of goods specified in section 269SJ, which cannot be subject to a TCO. Furthermore, the Act can be extended or restricted through subordinate instruments such as regulations, which may provide further detail on the application process or eligibility criteria. The explanatory statement for Tariff Concession Instrument No. 0816606 provides a concrete example of how the Act operates in practice, detailing a specific application by Ikea Pty Ltd for certain plastic recycling bags and the subsequent making of the TCO by the CEO.
Key Provisions
The Customs Act 1901, under Part XVA, provides the framework for the creation of Tariff Concession Orders (TCOs) through which lower rates of customs duty can be applied to certain goods (s 269F). An applicant, such as Ikea Pty Ltd, may apply to the Chief Executive Officer of Customs (the CEO) for a TCO in respect of specific goods, provided these goods are not listed in section 269SJ as ineligible for a TCO. The CEO must assess the application against the core criteria set out in sections 269B, 269C, 269D, and 269E of the Act. If the CEO determines that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged, the CEO is required to make a TCO (s 269P(3)).
Under this scheme, Ikea Pty Ltd applied for a TCO for certain plastic recycling bags on 8 July 2008. Following the CEO’s satisfaction that the application met the core criteria, TCO No. 0816606 was issued on 26 September 2008, declaring that these bags are subject to item 50 of Schedule 4 to the Customs Tariff Act 1995, with the duty rate set at free, as opposed to the general rate of 5%. This concession effectively reduces the customs duty for these goods to zero.
The obligations imposed by the Customs Act 1901 on the parties involved include the requirement for the CEO to publish a notice in the Gazette inviting any interested parties to submit objections to the TCO if they believe it should not proceed (s 269K(1)). In this case, no submissions were received by the CEO. Furthermore, the Act mandates that the TCO does not disadvantage any person other than the Commonwealth and does not impose any new liabilities on individuals or entities for actions taken prior to the TCO’s effective date (s 269S(1)). The rights of importers are positively affected, as they can apply for a refund of duties paid on the goods imported since the TCO came into force.
The Customs Act 1901 also delineates the consequences for non-compliance with the provisions of a TCO. While the explanatory statement does not explicitly detail the penalties for breaching the Act, it is reasonable to infer that violations of customs duty regulations generally may incur substantial penalties. For example, under section 273 of the Customs Act 1901, penalties for underpayment of duty can include fines and imprisonment, with specific maximum penalties varying based on the severity and intent of the offence. The implications of these penalties underscore the importance of compliance with the tariff regulations and the obligations placed on applicants and the CEO.