EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0818848
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 pails and buckets on 15 July 2008.
Instrument
TCO No 0818848 was made on 10 October 2008. It declares that those certain aluminium 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. 0818848 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, governs the regulation of goods entering and exiting Australia, including the imposition of customs duties. A significant aspect of this Act is the provision for Tariff Concession Orders (TCOs) under Part XVA, which allow for the reduction or exemption of customs duty on certain imported goods. This mechanism was introduced to address the problem of ensuring that Australian consumers and businesses have access to competitively priced goods, particularly when there are no suitable Australian-made alternatives. The explanatory statement for Tariff Concession Instrument No. 0818848, made in 2008, exemplifies this process, where the Chief Executive Officer of Customs granted a concession reducing the duty on specific aluminium sanitary pails and buckets from 5% to free, based on the absence of substitutable goods produced in Australia. This initiative aligns with the policy objective of promoting fair trade practices and supporting economic efficiency by preventing unnecessary tariffs on goods where local production does not exist.
Scope and Application
The Tariff Concession Instrument No. 0818848 under the Customs Act 1901 provides a mechanism for the Chief Executive Officer of Customs to grant tariff concessions on specific goods, thereby reducing the rate of customs duty applied to those goods. This applies to any entity or individual who applies for such a concession on behalf of goods that are not specified as ineligible under section 269SJ of the Act. The instrument is applicable across Australia, as it operates under the jurisdiction of the Commonwealth. The Act does not specify exclusions or exemptions beyond those detailed in section 269SJ, which outlines goods ineligible for tariff concessions. The scope of application may be further defined or modified through subordinate instruments issued by the CEO under the authority of the Customs Act 1901. The commencement of the tariff concession is effective from the date the application is lodged, and it does not retroactively affect the rights or impose liabilities on persons other than the Commonwealth concerning actions taken prior to the concession's registration.
Key Provisions
The main operative sections of the Customs Act 1901, as relevant to Tariff Concession Orders (TCOs), are sections 269C, 269F, 269P, and 269S. Section 269F allows a person to apply to the Chief Executive Officer (CEO) of Customs for a TCO concerning certain goods. If the CEO is satisfied that the application does not pertain to goods specified in section 269SJ, which are ineligible for a TCO, they must then determine if the application meets the core criteria outlined in section 269C. This section requires that, on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business. If the CEO is convinced that the application meets these criteria, they must issue a written order, a TCO, specifying the prescribed item of Schedule 4 to the Customs Tariff Act 1995 that applies to the goods in question.
The Act imposes several obligations and requirements on the parties involved in the TCO process. Firstly, applicants for a TCO must ensure their application is not for goods that are specified in section 269SJ, which precludes certain goods from being subject to a TCO. The CEO of Customs is required to publish a notice in the Gazette as soon as practicable after accepting an application as valid, inviting any person who believes there are reasons why the TCO should not be made to lodge a submission. Additionally, the CEO must make a decision on whether the application meets the core criteria, which includes verifying that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged.
Failure to comply with the requirements and obligations set out in the Customs Act 1901 may result in various consequences. While the Act does not explicitly state offences or penalties for non-compliance with TCO applications, breaches of other provisions within the Customs Act may lead to criminal or civil penalties. For instance, section 238 of the Act outlines the general penalty for knowingly importing goods in contravention of the Act, which can result in a fine of up to 10,000 penalty units or imprisonment for up to five years, or both. Similarly, section 240A imposes penalties for breaches of the Customs Act that may lead to fines of up to 22,200 penalty units or imprisonment for up to ten years, or both, depending on the severity of the breach. These provisions underscore the importance of adhering to the legislative requirements to avoid potential legal ramifications.