EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0817637
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 stove top guards on 14 July 2008.
Instrument
TCO No 0817637 was made on 03 October 2008. It declares that those certain child safety stove top guards 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. 0817637 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 Commonwealth Parliament and serves as a foundational piece of legislation governing customs and excise in Australia. One of its components, Part XVA, introduces a scheme through which Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs. This mechanism allows for reduced customs duty rates on specified goods, provided certain criteria are met. The primary problem or gap addressed by this legislation is the facilitation of lower customs duty rates for goods that are not produced in Australia or are not substitutable by domestically produced goods, thereby encouraging trade and reducing costs for importers. The Tariff Concession Instrument No. 0817637, enacted to provide tariff concessions for certain child safety stove top guards, exemplifies this process. The instrument was made following an application by Ikea Pty Ltd and was effective from 14 July 2008, the date of the application. No submissions opposing the TCO were received, and the order provides a zero-rate duty for the specified goods, benefiting importers by potentially allowing for duty refunds on goods imported since the effective date of the TCO.
Scope and Application
The Customs Act 1901, specifically Part XVA, governs the creation of Tariff Concession Orders (TCOs) which allow for lower rates of customs duty on certain goods. This legislative framework is applicable to any person or entity seeking a concession on customs duty for specific goods. The geographic scope of this Act is national, as it falls under the purview of the Commonwealth. The Act does not apply to goods specified in section 269SJ, which outlines those ineligible for tariff concessions. The core criteria for a TCO are detailed in sections 269C, 269B, and 269D of the Act, focusing on whether substitutable goods are produced in Australia and the use of the goods in question. The application process involves the Chief Executive Officer of Customs (CEO) making a written order if satisfied that the core criteria are met. In the instance of Ikea Pty Ltd's application for a TCO on child safety stove top guards, the CEO determined that no substitutable goods were produced in Australia, leading to a concession that reduced the duty rate from 5% to free. This concession is effective from the date of the application, 14 July 2008, and does not disadvantage or impose liabilities on persons other than the Commonwealth for actions taken prior to the order.
Key Provisions
The main operative sections of this legislation pertain to the process of applying for and granting Tariff Concession Orders (TCOs) under the Customs Act 1901. Specifically, section 269F allows a person to apply to the Chief Executive Officer of Customs (CEO) for a TCO in respect of goods. If the application is not for goods specified in section 269SJ, which are ineligible for TCOs, the CEO must assess whether the application meets the core criteria outlined in section 269C. If the CEO is satisfied that no substitutable goods were produced in Australia in the ordinary course of business, as defined in sections 269D and 269E, then a TCO can be issued under section 269P(3).
The Act imposes specific obligations on both the applicant and the CEO. For the applicant, it is necessary to ensure that the goods in question are not specified in section 269SJ and to provide sufficient information for the CEO to determine if the core criteria are met. For the CEO, once an application is deemed valid, they must publish a notice in the Gazette inviting any interested parties to submit objections (subsection 269K(1)). If no submissions are received, the CEO must then make a written TCO if the core criteria are satisfied.
In terms of consequences for breaches, the Customs Act 1901 does not explicitly state offences, penalties, or civil/criminal consequences for failing to comply with the provisions related to TCOs. However, it is worth noting that the Act does not impose any liabilities on any person in respect of anything done or omitted to be done before the date of registration of the TCO, as per subsection 269S(1). The rights of importers are beneficially affected, and they can apply for a refund of duty on goods imported since the TCO is taken to have come into force under paragraph 126(1)(r) of the Regulations.