EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0817628
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 child safety lock plastic fittings on 14 July 2008.
Instrument
TCO No 0817628 was made on 03 October 2008. It declares that those certain child safety lock plastic fittings 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. 0817628 is taken to have come into force on 14 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 by the Australian Parliament to facilitate the regulation of customs and excise within the country. This Act was introduced to establish a comprehensive framework for the administration of customs duties, excise, and other related matters. The problem or gap it addressed was the need for a systematic approach to managing imports and exports, ensuring revenue collection, and protecting domestic industries. The Explanatory Statement outlines a specific instance of the Act's operation through the issuance of Tariff Concession Orders (TCOs). For example, TCO No. 0817628, made on 3 October 2008, was introduced to provide tariff concessions on certain child safety lock plastic fittings. The Chief Executive Officer of Customs determined that no substitutable goods were produced in Australia, thereby satisfying the core criteria for a TCO. This concession resulted in a reduction of the duty rate from 5% to free, effective from 14 July 2008, the date the application was lodged. The policy objective behind such concessions is to promote the availability of specific goods in the market, benefiting consumers while also ensuring compliance with the Act's broader regulatory framework.
Scope and Application
The Tariff Concession Instrument No. 0817628 under the Customs Act 1901 applies specifically to the application process for Tariff Concession Orders (TCOs) that reduce the duty on certain imported goods. This legislative instrument is targeted at individuals or entities, such as Ikea Pty Ltd in this instance, who seek to import goods for which a lower rate of customs duty is applicable. The instrument facilitates the process whereby the Chief Executive Officer of Customs can make a TCO if the application meets the core criteria, specifically that no substitutable goods are produced in Australia at the time of application. This Act operates on a Commonwealth level, impacting the customs duties across Australia. However, certain goods specified in section 269SJ of the Act are excluded from the scope of TCOs. The application of the Act can be further refined or detailed through subordinate instruments, which may provide additional criteria or processes for applications and approvals.
Key Provisions
The primary operative sections of this legislation, specifically section 269C and 269P(3) of the Customs Act 1901, outline the process and criteria for applying for and granting a Tariff Concession Order (TCO). Section 269C establishes that an application for a TCO is deemed to meet the core criteria if, on the date of application, there are no substitutable goods produced in Australia. Section 269P(3) stipulates that if the Chief Executive Officer (CEO) of Customs is satisfied that the application meets these criteria, they must issue a written TCO.
Under these sections, the obligations for parties involve ensuring that applications for TCOs are made in good faith and with accurate information. The CEO, upon receiving a valid application, is required to publish a notice in the Gazette inviting any objections from interested parties. If no objections are received, the CEO must then proceed to make the TCO, as outlined in section 269P(3). Additionally, any party affected by the TCO, such as importers, must comply with the new tariff rates specified in the TCO.
In terms of penalties and consequences, the Act does not explicitly state penalties for breaches related to the application or issuance of TCOs. However, general legal principles imply that any fraudulent application or misrepresentation of facts to obtain a TCO could result in civil or criminal liability under relevant Australian laws. The TCO itself, once issued, imposes a lower customs duty on the specified goods, and failure to comply with these new rates could lead to disputes or litigation regarding the duty payable on the goods.
The commencement of the TCO, as per subsection 269S(1), is effective from the date the application was lodged. This means that any goods imported from this date forward will be subject to the new tariff rates outlined in the TCO. The rights of persons other than the Commonwealth are not adversely affected by the TCO, and importers can benefit by applying for duty refunds on goods imported since the TCO's effective date.