Case update: refusal of tariff concession order

24 August 2021

The Administrative Appeals Tribunal handed down its decision in favour of the Comptroller-General of Customs on 9 August 2021 in Ceramic Oxide Fabricators Pty Limited and Comptroller-General of Customs [2021] AATA 2770 regarding a decision to refuse the importer’s application for a tariff concession order (TCO) in respect of a particular imported good (a kiln).

By way of background, the importer had applied for a TCO which should have entitled it to a reduction of duty ordinarily payable when importing the kiln. As with any TCO application that is lodged with Customs, the importer must satisfy Customs that on the day the application is lodged, there was no ‘substitutable goods’ produced in Australia. ‘Substitutable goods’ 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 or of the TCO can be put.

To be able to discharge the importer’s obligation to demonstrate that there are no substitutable goods; it must supply to Customs a description of and the results from its investigations as to whether there exist Australian manufacturers of substitutable goods. There must be evidence that these investigations had been undertaken by the day that the TCO application is lodged.

In this case, the importer had provided the results of online searches undertaken about potential Australian manufacturers of substitutable goods for the kiln – but noted that none demonstrated that it could produce the size and operational temperature as the kiln proposed to be imported. The Tribunal however referred to the evidence that these searches of potential local manufacturers were not undertaken at the time of lodgement with the broker explaining that the importer had significant depth of knowledge in the industry to be confident that no Australian manufacturer of substitutable goods was available at the time of the TCO’s lodgement.

The Tribunal, in upholding Customs’ decision, said that inquiries that a TCO applicant is expected to make are ‘more than simple internet search that lists multiple Australian entities’ and instead imposes on the importer the obligation to ‘undertake proactive inquiries to potential local producers of substitutable goods’.

The Tribunal’s reasons also highlight the importance of ensuring that a statement of the use to which the goods may be put is not part of the actual description of the goods in the TCO application. In this case, the Tribunal was concerned that the importer’s description referred to the end use – being a kiln described to sinter alumina.

This case is an example of the complexities involved in the tariff concession process and a timely reminder of the comprehensive inquiries required to satisfy Customs that all reasonable efforts have been made by the importer that there is no Australian producer of substitutable goods.

If you have any questions or need any support with enquiries by Customs in respect of imported goods, please do not hesitate to contact Kristie Schubert and Jacqueline McGrath.

This article was written by Kristie Schubert, Partner and Jacqueline McGrath, Special Counsel. 



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