EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0817656
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 base metal bookends on 14 July 2008.
Instrument
TCO No 0817656 was made on 03 October 2008. It declares that those certain base metal bookends 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. 0817656 is taken to have come into force on 14 July 2007.
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 amended to introduce the scheme for Tariff Concession Orders (TCOs) to provide relief to importers and businesses by offering reduced customs duty rates on specific goods. This Act allows the Chief Executive Officer of Customs to make TCOs, which apply a lower rate of customs duty to the goods specified in the order. Enacted by the Parliament of Australia, the aim of this legislative instrument is to ensure that certain goods, where no substitutable domestic production exists, are afforded tariff concessions. This is achieved by assessing applications against core criteria, primarily whether substitutable goods are produced in Australia in the ordinary course of business. The explanatory statement for Tariff Concession Instrument No. 0817656 indicates that Ikea Pty Ltd applied for a TCO for certain base metal bookends, which was granted after confirming that no substitutable goods were produced domestically. Consequently, the TCO made these goods duty-free, effective from the date the application was lodged.
Scope and Application
The Tariff Concession Instrument No. 0817656 under the Customs Act 1901 applies to the specific goods for which Ikea Pty Ltd applied, namely certain base metal bookends. This instrument is applicable to the entities and individuals involved in the importation of these goods, effectively offering them a reduced customs duty rate as specified in the instrument. The instrument operates within the Commonwealth jurisdiction, and its scope is limited to the particular goods identified in the application and the corresponding tariff concession order. The instrument does not apply to any other goods not specified in the application. Any exclusions or exemptions from this tariff concession are defined under section 269SJ of the Customs Act 1901, which lists goods that cannot be subject to a tariff concession order. Additionally, the application of this tariff concession may be further extended or restricted through subordinate instruments, although the primary focus remains on the specified base metal bookends.
Key Provisions
The primary operative sections of the Tariff Concession Instrument No. 0817656 are those that enable the application for and issuance of Tariff Concession Orders (TCOs). Section 269F of the Customs Act 1901 allows a person to apply to the Chief Executive Officer (CEO) of Customs for a TCO in respect of goods, provided the goods are not specified in section 269SJ, which lists those goods that cannot be subject to a TCO. Section 269C stipulates that an application meets the core criteria if, on the day the application is lodged, no substitutable goods were produced in Australia in the ordinary course of business. If the CEO is satisfied that the application meets these criteria, section 269P(3) mandates that a written order (a TCO) be made, declaring the goods subject to a prescribed rate of duty in the Customs Tariff Act 1995.
The obligations and requirements imposed by the Act on the parties involved are primarily on the applicant and the CEO of Customs. The applicant must ensure that the goods they are applying for do not fall under the category of goods that cannot be subject to a TCO, as outlined in section 269SJ. Additionally, the applicant must provide sufficient evidence to support their claim that no substitutable goods were produced in Australia at the time of application, as per section 269C. The CEO, on the other hand, must promptly assess the application, consult with relevant parties if necessary, and publish a notice in the Gazette inviting submissions from interested parties, as required by section 269K(1). The CEO's decision to grant or deny a TCO must be based on whether the application meets the core criteria established by the Act.
The Act also outlines specific consequences and penalties for breaches of its provisions. Although the explanatory statement does not explicitly state penalties for non-compliance, breaches of the Customs Act 1901 can generally result in substantial fines and, in severe cases, criminal charges. For example, under section 256 of the Customs Act, persons found guilty of fraud or other breaches related to customs duty may face fines of up to $22,200 for individuals and $111,000 for corporations, as well as potential imprisonment terms. Given the serious nature of customs legislation, it is crucial for all parties to adhere to the requirements and obligations set forth by the Act to avoid these penalties.