EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0823646
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 base metal kitchen tools sets on 29 July 2008.
Instrument
TCO No 0823646 was made on 17 October 2008. It declares that those certain base metal kitchen tools sets 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. 0823646 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 Customs Act 1901, enacted by the Australian Parliament, establishes the framework for the administration of customs and excise duties. To address the need for tariff concessions for certain imported goods that are not produced in Australia, Part XVA of the Act allows for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs. This legislative mechanism aims to provide relief by lowering customs duties on specified goods, thereby facilitating access to affordable products for consumers and potentially supporting domestic industries by preventing the local production of substitutable goods. The policy objective is to ensure that when no Australian-made alternatives exist, the importation of these goods is not unduly hindered by excessive customs duties. The explanatory statement for Instrument No. 0823646, which grants tariff concessions to Ikea for certain base metal kitchen tool sets, highlights that no objections were received during the public consultation period, reinforcing the suitability of the concession.
Scope and Application
The Tariff Concession Instrument No. 0823646 under the Customs Act 1901 applies to any person who applies for a Tariff Concession Order (TCO) in respect of goods that are not specified as ineligible under section 269SJ of the Act. The instrument specifically targets base metal kitchen tool sets for which Ikea made an application on 29 July 2008. The application was approved and a TCO was issued on 17 October 2008, effective from the date of application, thereby granting these goods a zero duty rate. The application process involves a review by the Chief Executive Officer of Customs to determine if the goods are substitutable by Australian-made products, with the condition that if no such products exist, the application meets the core criteria for a TCO. The instrument applies nationally across Australia and there are no exclusions or exemptions specified within this particular TCO, although the overarching Customs Act 1901 and its regulations may contain other provisions that could apply more broadly. The instrument does not disadvantage any person other than the Commonwealth and does not impose any liabilities on persons other than the Commonwealth.
Key Provisions
The main operative sections of this legislation revolve around the process and criteria for making Tariff Concession Orders (TCOs) under the Customs Act 1901 (section 269F). The CEO of Customs is required to determine whether an application for a TCO meets the core criteria (section 269C) and if no substitutable goods were produced in Australia in the ordinary course of business at the time of the application (section 269P(3)). If the CEO is satisfied that these criteria are met, they must make a written order (section 269P(3)) and declare that the goods in question are subject to a lower rate of customs duty as specified in the Tariff (section 269P(3)). For example, in the case of Ikea's application for a TCO concerning certain base metal kitchen tools sets, the CEO declared that these goods are subject to item 50 of Schedule 4 to the Tariff, resulting in a duty rate of free, down from the general rate of 5% (section 269P(3)).
The Customs Act 1901 imposes several obligations on the CEO of Customs, including the requirement to publish a notice in the Gazette as soon as practicable after accepting a TCO application as valid (subsection 269K(1)). This notice must invite any person who considers that there are reasons why the TCO should not be made to lodge a submission with the CEO. In the case of Ikea's application, no submissions were received in response to this invitation (subsection 269K(1)). Furthermore, the Act requires that a TCO is to be taken to have come into force on the day on which the application for the TCO was lodged (subsection 269S(1)). Consequently, TCO No. 0823646 is taken to have come into force on 29 July 2008, the date Ikea lodged their application.
Failure to comply with the requirements of the Customs Act 1901 can lead to various consequences. While the explanatory statement does not explicitly outline specific offences, penalties, or civil/criminal consequences for breach, the act of not adhering to the prescribed processes for making a TCO could potentially lead to legal challenges or administrative penalties. For instance, if the CEO fails to properly assess an application or neglects to publish a notice in the Gazette, this could result in the TCO being contested in court, with potential implications for both the applicant and the Commonwealth. Additionally, any person who provides false or misleading information in their application may face criminal charges under other relevant sections of the Customs Act 1901, which could include fines or imprisonment.