EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0818839
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 sanitary pails and buckets on 15 July 2008.
Instrument
TCO No 0818839 was made on 10 October 2008. It declares that those certain sanitary pails and buckets 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. 0818839 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 Australian Parliament, provides a framework for the imposition of customs duties on imported goods. It enables the Chief Executive Officer of Customs to grant Tariff Concession Orders (TCOs) that lower the duty on certain goods under specific conditions. The primary gap addressed by this legislation is the need to provide relief to importers by reducing the customs duty on goods that cannot be substituted by Australian-made alternatives, thereby making imported goods more competitive in the market. The policy objective is to foster trade and economic efficiency by ensuring that only non-substitutable goods are eligible for tariff concessions, thereby avoiding undue advantages to imported products.
Tariff Concession Instrument No. 0818839, made on 10 October 2008, applies to certain sanitary pails and buckets imported by Ikea Pty Ltd, reducing their customs duty from 5% to free. This instrument was introduced after the CEO determined that no substitutable goods were produced in Australia, satisfying the core criteria set out in the Customs Act. The TCO aims to benefit importers by allowing them to apply for a refund of duty on goods imported since 15 July 2008, the date the application was lodged. No submissions were received in response to the notice published in the Gazette, and the TCO does not impose any liabilities on any person.
Scope and Application
The Customs Act 1901 provides a framework for the application of tariff concession orders (TCOs) through which the Chief Executive Officer of Customs (the CEO) can reduce customs duty on certain goods. This legislative mechanism is applicable to entities or individuals seeking lower customs duty rates for goods not produced in Australia in the ordinary course of business, and not specified as ineligible under section 269SJ of the Act. This concession aims to benefit importers by reducing the financial burden of customs duty on eligible goods, facilitating trade and potentially lowering consumer prices. The scope of this Act extends across the Commonwealth of Australia, impacting all importers and exporters dealing with goods subject to TCOs. However, it excludes goods specified in section 269SJ of the Act and any goods for which substitutable products are produced domestically. The application of this Act can be further refined through subordinate instruments, allowing the CEO to specify additional conditions or criteria for TCO applications. The process of establishing a TCO involves a public consultation period, as mandated by section 269K(1) of the Act, ensuring transparency and providing an opportunity for stakeholders to voice any objections.
Key Provisions
The primary operative sections of this legislation revolve around the establishment and implementation of Tariff Concession Orders (TCOs) under Part XVA of the Customs Act 1901 (section 269C). Section 269F outlines the application process, where an individual or entity can apply to the Chief Executive Officer (CEO) of Customs for a TCO if the goods in question do not fall under the prohibited category specified in section 269SJ. If the application is deemed valid and meets the core criteria, which include the absence of substitutable goods produced in Australia (section 269P(3)), the CEO is mandated to issue a written order declaring the goods to which the concession applies. This specific concession, Tariff Concession Order No. 0818839, pertains to certain sanitary pails and buckets, reducing their customs duty from the general rate of 5% to free, as outlined in item 50 of Schedule 4 to the Customs Tariff Act 1995.
The obligations imposed on the parties governed by this Act are primarily on the CEO of Customs, who must rigorously evaluate each application to ensure it meets the stipulated criteria. This includes verifying that no substitutable goods are produced in Australia on the date the application is lodged, as defined by sections 269D, 269E, and 269F. The CEO must also publish a notice in the Gazette (subsection 269K(1)) inviting public submissions if the application is accepted as valid. The legislation further requires that any person, excluding the Commonwealth, who considers that a TCO should not be made, must lodge a submission with the CEO. In this particular case, no submissions were received. The TCO, once issued, takes effect from the date the application was lodged (subsection 269S(1)), ensuring that it does not retroactively affect any rights or impose liabilities for actions prior to its issuance.
Breaching the provisions of this legislation can lead to various consequences. If an individual or entity does not comply with the conditions set out in the TCO, they may face civil or criminal penalties. The exact nature of these penalties would depend on the specific breach and the relevant provisions of the Customs Act 1901 or any other applicable laws. For instance, incorrectly claiming a tariff concession or providing false information in an application could lead to fines or other legal actions. The maximum penalties for such breaches are not explicitly stated in this explanatory statement but would be outlined in the relevant sections of the Customs Act 1901 or other pertinent legislation. It is imperative for entities like Ikea Pty Ltd to ensure compliance with all the stipulated conditions to avoid any adverse legal ramifications.