EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0816610
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 organisers on 08 July 2008.
Instrument
TCO No 0816610 was made on 03 October 2008. It declares that those certain shoe organisers 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. 0816610 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 facilitate the regulation of customs duties and the administration of customs and excise in Australia. One of the provisions of the Act, specifically Part XVA, establishes a framework for Tariff Concession Orders (TCOs), which allow for the reduction or exemption of customs duty on certain goods. The Act empowers the Chief Executive Officer of Customs to make these orders, provided the application meets specific criteria, such as the absence of substitutable goods produced in Australia. This mechanism was introduced to address the need for tariff adjustments that could benefit particular industries or products, ensuring fair trade practices while potentially stimulating local production or innovation. The Parliament enacted this provision to provide a structured way for industries to apply for tariff reductions, aiming to balance economic growth with fiscal policy objectives. The process includes public consultation to ensure transparency and fairness in the decision-making process regarding tariff concessions.
Scope and Application
The Customs Act 1901, specifically under Part XVA, establishes a framework for the Chief Executive Officer (CEO) of Customs to make Tariff Concession Orders (TCOs) which apply lower rates of customs duty to certain goods. These orders can be applied for by any person, provided the goods in question do not fall under the restricted category specified in section 269SJ of the Act, which includes goods that are subject to security controls or are of strategic importance. The CEO is required to consider whether the application meets the core criteria, namely that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged. Once the CEO is satisfied with the application, a TCO is issued, effectively applying a prescribed tariff rate from Schedule 4 of the Customs Tariff Act 1995 to the specified goods, with the rate for the goods in question being set at free, as opposed to the general rate of 5% for such goods. The CEO is also mandated to publish a notice in the Gazette inviting submissions from any interested parties who may have reasons to oppose the concession, although no submissions were received for TCO No. 0816610. The order is retroactive to the date the application was lodged, meaning it came into effect on 8 July 2008 for the specific shoe organisers in question, and does not affect the rights of any person as at the date of registration in a manner that would disadvantage them or impose liabilities for actions prior to the registration.
Key Provisions
The primary operative sections of the Customs Act 1901 (section 269F) allow a person to apply to the Chief Executive Officer of Customs (CEO) for a Tariff Concession Order (TCO) in respect of certain goods. Upon receiving such an application, the CEO is obligated to determine whether the goods in question are eligible for a tariff concession, which typically means assessing if no substitutable goods are produced in Australia in the ordinary course of business (section 269C). If the CEO finds that the application meets the core criteria, they must issue a written order (a TCO) that specifies the goods to which the concession applies (section 269P(3)).
In the case of TCO No. 0816610, the CEO found that certain shoe organisers were eligible for a tariff concession, as no substitutable goods were produced in Australia. The CEO issued a TCO that declared these shoe organisers as eligible for a zero rate of duty, as opposed to the general rate of 5% (section 269P(3)). This means that upon importation, these specific shoe organisers will not incur the usual customs duty.
The Act imposes specific obligations on both the CEO and the applicant. The CEO must ensure that the application is valid and meets the criteria stipulated in the Act (section 269C). They must also publish a notice in the Gazette inviting any interested parties to lodge submissions if they believe the TCO should not proceed (subsection 269K(1)). The applicant must provide sufficient information to demonstrate that the goods are eligible for a concession (section 269F). Furthermore, the TCO does not retroactively affect any pre-existing rights or liabilities, ensuring that only future transactions are impacted by the concession (subsection 269S(1)).
Breach of the conditions outlined in the Customs Act 1901 can lead to civil and criminal consequences. For instance, making false statements or providing misleading information in an application could result in penalties under section 274 of the Act, which includes fines up to $22,200 for individuals and $111,000 for corporations. Additionally, any importer who fails to comply with the terms of a TCO may be subject to penalties for non-compliance with customs regulations, including fines and imprisonment for serious breaches.