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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.


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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 |

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

John L. McLoughlin
Principal and East Coast Leader
T: 267-256-2614

Andy Siciliano
Partner and National Practice Leader
T: 631-425-6057

Steve Brotherton
Principal and Global Export and Sanctions Leader
T: 415-963-7861

Luis (Lou) Abad
Principal, Washington National Tax
T: 212-954-3094

Irina Vaysfeld
T: 212-872-2973

Amie Ahanchian
Managing Director
T: 202-533-3247

Robert Waldrop
T: 212-954-8117

Gisele Belotto
Managing Director
T: 305-913-2779

Christopher Young
T: 312-665-3229

Andy Doornaert
Managing Director
T: 313-230-3080

George Zaharatos
T: 404-222-3292

Jessica Libby
Managing Director
T: 612-305-5533


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