EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0816609
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 shoe trees of plastic on 08 July 2008.
Instrument
TCO No 0816609 was made on 03 October 2008. It declares that those certain shoe trees of plastic 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. 0816609 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, provides the legal framework for the administration of customs duties and other import and export controls. Part XVA of this Act facilitates the establishment of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs. These orders allow for reduced customs duty rates on specific goods under certain conditions. The introduction of this scheme aimed to address the gap in the tariff structure by providing tariff concessions to support the competitiveness of Australian businesses and consumers by potentially lowering the cost of imported goods. The policy objective is to ensure that goods for which no suitable Australian-made alternatives exist can be imported at a lower duty rate, thereby encouraging trade and economic efficiency. Ikea Pty Ltd's application for a TCO for certain plastic shoe trees, which was granted under Instrument TCO No. 0816609, exemplifies the application of this legislative framework to benefit both businesses and consumers by reducing the duty on these specific goods from 5% to free.
Scope and Application
The Tariff Concession Instrument No. 0816609 is a legislative instrument under the Customs Act 1901, which applies to the goods specified in the instrument, in this case, certain shoe trees of plastic, and is relevant to the person who applied for the concession, Ikea Pty Ltd. The Act allows for the reduction or exemption of customs duty on certain goods, subject to certain conditions. The instrument is applicable on a Commonwealth level, as it is an instrument under the Customs Act, which is a Commonwealth Act. The instrument does not apply to goods specified in section 269SJ of the Act, which are goods that cannot be subject to a Tariff Concession Order. The instrument does not impose any liabilities on any person and does not affect the rights of a person as at the date of registration so as to disadvantage that person or impose liabilities in respect of anything done or omitted to be done before the date of registration. The instrument extends the application of the Customs Act by providing for a reduction in the customs duty for the specified goods.
Key Provisions
The Customs Act 1901 establishes a framework under which Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs (CEO). Specifically, section 269F allows individuals or entities to apply to the CEO for a TCO in respect of certain goods. If the CEO determines that the application is valid and meets the core criteria outlined in sections 269C and 269P(3), a TCO is issued. This order allows for a lower rate of customs duty on the specified goods. For instance, Ikea Pty Ltd applied for a TCO for certain plastic shoe trees on 8 July 2008, and this application was subsequently approved, resulting in TCO No. 0816609 issued on 3 October 2008. This order applies the general duty rate of 5% to the specific item 50 of Schedule 4 to the Customs Tariff Act 1995.
Entities applying for a TCO must ensure that the goods in question are not those specified in section 269SJ of the Act, which lists goods ineligible for a TCO. The core criteria, as per section 269C, require that no substitutable goods were produced in Australia on the day the application was lodged. Definitions for "goods produced in Australia", "ordinary course of business", and "substitutable goods" are provided in sections 269D, 269E, and 269F respectively. If the CEO is satisfied with the application, a written order declaring the goods subject to the TCO must be made.
The obligations imposed by the Customs Act 1901 on parties governed by the TCO include the requirement for the CEO to consult with the public after accepting a valid TCO application. This is mandated by subsection 269K(1), which requires the CEO to publish a notice in the Gazette inviting any interested parties to submit their views on whether the TCO should proceed. Although Ikea Pty Ltd’s application did not elicit any submissions, the process ensures transparency and stakeholder engagement. Furthermore, section 269S(1) stipulates that the TCO takes effect from the date the application was lodged, in this case, 8 July 2008, thereby providing immediate benefits to importers who can apply for duty refunds on goods imported since that date.
In terms of penalties and consequences, the Act outlines that a breach of the conditions set by a TCO could result in various civil or criminal repercussions. While specific penalties are not detailed in the explanatory statement, general provisions under the Customs Act 1901 may include fines, imprisonment, or both. The severity of the penalties depends on the nature and extent of the breach, and they are intended to enforce compliance and uphold the integrity of the tariff concession scheme.