EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0818793
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 drink strainers on 15 July 2008.
Instrument
TCO No 0818793 was made on 26 September 2008. It declares that those certain drink strainers 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. 0818793 is taken to have come into force on 15 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 Commonwealth Parliament, outlines a scheme for Tariff Concession Orders (TCOs) which reduce the rate of customs duty on certain goods. These orders are made by the Chief Executive Officer of Customs, provided the goods do not fall under specific exclusions and meet the criteria that no substitutable goods are produced in Australia. This scheme aims to encourage trade and support industries by offering lower duty rates for imported goods that are not locally manufactured. The explanatory statement for Tariff Concession Instrument No. 0818793, issued on 26 September 2008, details an application from Ikea Pty Ltd for a TCO on certain drink strainers. The CEO granted the TCO as no substitutable goods were being produced in Australia, resulting in the drink strainers being subject to a duty rate of free, down from the general rate of 5%. The TCO took effect from the date of the application, 15 July 2008, and no submissions were received opposing the order. This legislative action ensures that importers of these goods can benefit from the reduced duty rate and, where applicable, apply for refunds on duties paid prior to the TCO's effective date.
Scope and Application
The Customs Act 1901, as amended, facilitates the issuance of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO) for specific goods that meet certain criteria, thereby reducing the applicable customs duty on those goods. The legislation applies to any person or entity that makes an application for a TCO concerning goods that are not specified in section 269SJ of the Act, which includes goods that cannot be subject to a TCO. The process involves assessing whether no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged, as outlined in sections 269C and 269D of the Act. The CEO must also consider the definitions of 'ordinary course of business' and 'substitutable goods' as provided in sections 269E and 269F respectively. Once the application meets the core criteria, the CEO is required to make a written order that specifies the lower rate of duty applicable to the goods, as set out in Schedule 4 of the Customs Tariff Act 1995. TCO No. 0818793, for instance, was made in relation to certain drink strainers on 26 September 2008, and it declared that these goods are subject to a zero percent duty rate. This TCO came into effect on the date the application was lodged, 15 July 2008, without any retroactive disadvantage to the rights of any person, except for the Commonwealth.
Key Provisions
The Customs Act 1901, through its Tariff Concession Orders (TCOs) under Part XVA, allows for the application of lower customs duty rates on certain goods. Specifically, section 269F enables an application to the Chief Executive Officer of Customs (CEO) for a TCO on goods. If the CEO is satisfied that the application does not pertain to goods specified in section 269SJ, which are ineligible for TCOs, the CEO must then determine if the application meets the core criteria set out in section 269C. This requires an assessment to confirm that, on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business.
The Act imposes several obligations and requirements on the parties involved. Under section 269B, the definitions of key terms such as "goods produced in Australia," "ordinary course of business," and "substitutable goods" are crucial. A TCO application is deemed to meet the core criteria if no substitutable goods were produced in Australia in the ordinary course of business on the date of the application. Section 269K(1) also requires the CEO to publish a notice in the Gazette inviting submissions from any interested parties if they believe the TCO should not be made, although in the case of TCO No. 0818793, no submissions were received.
In terms of consequences for non-compliance, the Customs Act does not explicitly outline offences or penalties for breaching the provisions related to TCOs. However, the Act ensures that the TCO does not adversely affect the rights of any person other than the Commonwealth, as per subsection 269S(1). For instance, the rights of importers will be positively affected, allowing them to apply for duty refunds on goods imported since the TCO was taken to have come into force. Importantly, the TCO does not impose any liabilities on any person. The general rate of duty for the goods subject to TCO No. 0818793 is reduced from 5% to free, reflecting the intent to encourage the importation of these specific goods by reducing the financial burden on importers.