EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0817642
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 aluminium sanitary ware on 14 July 2008.
Instrument
TCO No 0817642 was made on 26 September 2008. It declares that those certain aluminium sanitary ware 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. 0817642 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, enacted by the Parliament of Australia, establishes a framework through which Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs. This legislative instrument addresses the problem of ensuring that Australian businesses can access certain goods at a reduced customs duty rate if these goods are not produced in Australia and have no substitutable domestic alternatives. Specifically, the Act enables the application for tariff concessions to be processed by the CEO, who must determine if the application meets the core criteria set out in section 269C of the Act, primarily focusing on the absence of substitutable goods produced in Australia. The policy objective is to support Australian businesses by reducing the cost of importing necessary goods that are not domestically produced, thus facilitating competitive pricing and potentially encouraging local consumption of Australian-made alternatives.
On 26 September 2008, Tariff Concession Order No. 0817642 was issued by the CEO, following an application by Ikea Pty Ltd for certain aluminium sanitary ware. The CEO determined that no substitutable goods were produced in Australia, satisfying the core criteria. Consequently, the TCO was made effective from the date the application was lodged, 14 July 2008, granting a free rate of duty on these goods, which otherwise carry a general rate of 5%. This order was made without any objections from the public, as no submissions were received in response to the notice published in the Gazette. The TCO ensures that importers can apply for duty refunds for goods imported since the effective date, without imposing any new liabilities on any person.
Scope and Application
The Customs Act 1901, through its Tariff Concession Orders (TCOs), facilitates tariff concessions on specified goods by granting reduced customs duty rates. The Act applies to any person or entity seeking to import goods into Australia, provided these goods are not restricted under section 269SJ and meet the core criteria outlined in section 269C. This means that the Act is relevant to importers, customs brokers, and any other stakeholders involved in the importation process of the specified goods. The application of the Act is national, as it operates under the Commonwealth’s jurisdiction. However, the Act does not apply to goods specified in section 269SJ, which are excluded from tariff concessions. The TCO mechanism extends its application through subordinate instruments, as evidenced by TCO No. 0817642, which was made for certain aluminium sanitary ware. This TCO, effective from 14 July 2008, provides a zero duty rate for the specified goods, benefiting importers by potentially allowing them to apply for duty refunds on imports made since the TCO’s effective date.
Key Provisions
The main operative sections of the Customs Act 1901 that pertain to Tariff Concession Orders (TCOs) include section 269F, which allows a person to apply to the Chief Executive Officer (CEO) of Customs for a TCO in respect of goods. Section 269C stipulates that a TCO application meets the core criteria if, on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business. Section 269P(3) mandates that if the CEO is satisfied the application meets the core criteria, they must make a written order (a TCO) declaring that the goods in question are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995.
The Act imposes several obligations and requirements on the parties it governs. The CEO must determine whether an application meets the core criteria by ensuring that no substitutable goods were produced in Australia in the ordinary course of business. Additionally, as soon as practicable after accepting a TCO application as valid, the CEO must publish a notice in the Gazette inviting any person who believes there are reasons why the TCO should not be made to lodge a submission with the CEO. The CEO also has to ensure that the TCO does not disadvantage any person (other than the Commonwealth) 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 Act outlines specific consequences for breaches of its provisions. If a TCO is found not to meet the core criteria, or if it imposes liabilities on persons contrary to the Act, it may be subject to review or challenge. While the explanatory statement does not detail specific penalties for breaches, under the general legal framework, breaches of the Customs Act could result in civil or criminal penalties. Civil penalties may include fines, and in more severe cases, criminal penalties could include imprisonment, reflecting the severity of the breach and the intent behind it. However, the maximum penalties are not specified within this particular explanatory statement.