EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0823641
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 applied for a TCO in respect of certain furniture or cabinet handles or knobs on 29 July 2008.
Instrument
TCO No 0823641 was made on 17 October 2008. It declares that those certain furniture or cabinet handles or knobs 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. 0823641 is taken to have come into force on 29 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 Tariff Concession Instrument No. 0823641, enacted under the Customs Act 1901, was introduced to address the need for tariff concessions for specific imported goods, in this case, certain furniture or cabinet handles or knobs. The Customs Act 1901, through its Part XVA, provides a framework for the Chief Executive Officer of Customs to make Tariff Concession Orders (TCOs) that apply lower rates of customs duty to specified goods. The Tariff Concession Instrument No. 0823641 was created following an application by Ikea on 29 July 2008, seeking a tariff concession for certain furniture or cabinet handles or knobs. The CEO of Customs was satisfied that no substitutable goods were produced in Australia, thus meeting the core criteria under section 269C of the Act. Consequently, a TCO was issued on 17 October 2008, declaring that these goods are subject to item 50 of Schedule 4 to the Customs Tariff Act 1995, resulting in a duty rate of free instead of the general rate of 5%. This instrument was designed to benefit importers by allowing them to apply for a refund of duty on goods imported since the TCO's effective date of 29 July 2008, without imposing any liabilities on any person.
Scope and Application
The Tariff Concession Instrument No. 0823641, made under the Customs Act 1901, applies to goods specified in the instrument, namely certain furniture or cabinet handles or knobs, which are subject to a Tariff Concession Order (TCO). The TCO provides for a reduced rate of customs duty, from the general rate of 5% to free, for these specified goods. The application of the TCO is contingent upon the CEO of Customs determining that no substitutable goods are produced in Australia and that the application meets the core criteria set out in the Act. This legislation operates on a national level and applies to any individual or entity importing the specified goods into Australia. The application is not subject to any exclusions or exemptions aside from those already detailed in the Customs Act 1901, such as goods specified in section 269SJ which are ineligible for a TCO. The instrument extends the primary Act by providing specific details on the goods eligible for tariff concessions and the conditions under which these concessions apply.
Key Provisions
The key operative sections of the Tariff Concession Instrument No. 0823641 (section 269C, 269B, 269E, 269P(3)) mandate that a Tariff Concession Order (TCO) can be made by the Chief Executive Officer of Customs (section 269F) if the application for the concession meets core criteria, which include the absence of substitutable goods produced in Australia in the ordinary course of business. If the CEO determines that the application meets these criteria, they are required to issue a written order declaring that the goods in question are subject to a prescribed tariff item, which in this case, is item 50 of Schedule 4 to the Customs Tariff Act 1995. This specific TCO (section 269S) applies to certain furniture or cabinet handles or knobs, which now enjoy a free rate of duty instead of the general rate of 5%.
The Act imposes several obligations on parties applying for a TCO. An applicant must ensure that their application is lodged in accordance with the provisions of the Customs Act 1901 and that the goods in question do not fall under the prohibited list outlined in section 269SJ. Additionally, the CEO is mandated to publish a notice in the Gazette inviting submissions from interested parties once an application is accepted as valid, as per subsection 269K(1). In the case of TCO No. 0823641, the CEO did not receive any submissions opposing the TCO.
The Customs Act 1901 does not explicitly state offences, penalties, or consequences for breaches related to TCOs. However, the legislation does specify that the TCO does not affect the rights of any person, other than the Commonwealth, as at the date of registration and does not impose any liabilities on any person. This means that while the TCO provides tariff concessions on certain goods, it does not retroactively impose duties or liabilities on any party. Importers of these goods, however, may be entitled to apply for a refund of duty paid on imports since the effective date of the TCO, as per paragraph 126(1)(r) of the Regulations. The lack of specified penalties suggests that the primary focus of the Act is on the administrative and tariff processes rather than punitive measures for non-compliance with the TCO provisions.