close
Share with your friends

Australia: Tariff concession order denied, “substitutable goods” at issue

Australia: Tariff concession order denied

The Administrative Appeals Tribunal affirmed the denial of a tariff concession order (TCO) for an importer of driverless passenger trains. The tribunal held that “substitutable goods” in the form of driven passenger trains are produced in Australia.

1000

Related content

Substitutable goods are defined in section 269B of the Customs Act 1901 (Cth) (Customs Act) as:

substitutable goods, in respect of goods the subject of a TCO application or of a TCO, 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.

The importer argued that the driverless trains operate on a specialised rail network developed exclusively for driverless trains, and cannot be used on a driven passenger train rail network, and therefore that the driven and driverless trains are not capable of being put to the same use.

The tribunal, however, found that the correspondence of one of a number of uses—rather than the precise use—is sufficient when establishing substitutability, and that “as a vehicle for the transportation of persons by rail,” the use of the driven passenger trains corresponds to that of driverless passenger trains.

KPMG observation

The case serves as a reminder for importers that whether imported goods (intended to be covered by a TCO) and locally manufactured goods compete in any market is irrelevant when determining substitutability for TCO purposes. If the tribunal’s decision is not challenged or is upheld on appeal, importers applying for TCOs need to consider taking a broad view of substitutability when conducting research on local production. Also, the decision serves as a reminder that a TCO is not a given, particularly when local manufacturers object on the basis they produce substitutable goods in Australia.

The decision also presents local manufacturers with greater scope to object to the making of TCOs, and applying for the revocation of existing TCOs when they produce goods that are capable of being put to a broad corresponding use.


Read a July 2019 report prepared by the KPMG member firm in Australia

 

For more information contact a KPMG professional in Australia: 

Leonie Ferretter | +61 2 9455 9330 | lferretter@kpmg.com.au


Or for more information on this topic or to learn more about KPMG’s Trade & Customs Services, contact:

Doug Zuvich
Partner and Global Practice Leader
T: 312-665-1022
E: dzuvich@kpmg.com

John L. McLoughlin
Principal and East Coast Leader
T: 267-256-2614
E: jlmcloughlin@kpmg.com

Andy Siciliano
Partner and National Practice Leader
T: 631-425-6057
E: asiciliano@kpmg.com

Steve Brotherton
Principal and Global Export and Sanctions Leader
T: 415-963-7861
E: sbrotherton@kpmg.com

Luis (Lou) Abad
Principal, Washington National Tax
T: 212-954-3094
E: labad@kpmg.com

Irina Vaysfeld
Principal
T: 212-872-2973
E: ivaysfeld@kpmg.com

Amie Ahanchian
Managing Director
T: 202-533-3247
E: aahanchian@kpmg.com

Robert Waldrop
Principal
T: 212-954-8117
E: rwaldrop@kpmg.com

Gisele Belotto
Managing Director
T: 305-913-2779
E: gbelotto@kpmg.com

Christopher Young
Principal
T: 312-665-3229
E: christopheryoung@kpmg.com

Andy Doornaert
Managing Director
T: 313-230-3080
E: adoornaert@kpmg.com

George Zaharatos
Principal
T: 404-222-3292
E: gzaharatos@kpmg.com

Jessica Libby
Managing Director
T: 612-305-5533
E: jlibby@kpmg.com

 

The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.

Connect with us

 

Want to do business with KPMG?

 

loading image Request for proposal