According to the decision in in Vestas - Australian Wind Technology Pty Limited and Chief Executive Officer of Customs [2015] AATA 348 (21 May 2015), the objective of the Tariff Concession System “...is to ensure that industry is not taxed by a tariff where it is serving no protective function. …. a tariff serves no protective function where there are no goods serving similar functions, and so no substitutable goods, made by Australian industry in the normal course of business.”
If a TCO exists, then substitutable goods are not manufactured in Australia and there is therefore no industry to protect. Why then has the revoking and reissuing of TCOs under s.269SD changed over about the last five years to deny refunds and/or ongoing duty savings to legitimate importers of goods in conflict with the stated intent of the TCO scheme? This result is occurring because the TCO is either not reissued when revoked with a narrower wording or is not revoked on and from the original operative date, with a new TCO made from that date. This has not always been the regulator’s practice. In the past the TCO in the second case was revoked on and from the original operative date, with the replacement narrower TCO then operative from that date. Refunds to legitimate importers were then available.
ABF current practice has been that if a TCO is revoked under s.269SD (1AA), no replacement narrower TCO is made. This practice is maintained even when only one of a number of components is found to have a substitutable good manufactured in Australia. Note that the ABF does has the authority to revoke the TCO and make a narrower TCO for those goods for which substitutable goods are not manufactured in Australia, but it does not do so. If the decision in Vestas is followed, why then does it not maintain the duty saving for these goods? Why did the policy change? The legislation does not appear to have changed.
The impact for revocations under s.269SD (2) is as severe. Customs Act s.269SD (2) requires that
“(2) If the CEO is satisfied that:
(c) having regard to written advice on the matter given by an officer of Customs;
the tariff classification that is stated in a TCO to apply to the goods the subject of the TCO has not, with effect from a particular day, applied to those goods, the CEO must:
(d) make an order revoking the TCO with effect from that day; and
(e) make a new TCO in respect of the goods with effect from the revocation.”
If a TCO when made was keyed when made to an incorrect tariff classification, then the legislation seems clear that the revocation should apply back to the operative date given that the tariff classification will always have been wrong, which under s.269SD(2) means that the new TCO should then be made with effect from that original operative date.
The rationale I was advised in one matter was that importers will then claim refunds – as they are legally entitled to do had the TCO been keyed correctly – but companies that have used the TCO incorrectly in the past will not then be covered. I maintain my query as to how it is acceptable to support incorrect classification and TCO usage in any circumstance.
The Act at s.269SD (4) provides: “(4) The particular day referred to in subsection (2) may be the day on which the TCO that is revoked came into force or a later day.”, but as a matter of equity how is this fair? Acknowledging of course that the law has little to do with fairness or justice.
This practice effectively supports classification and TCO use by word search. It penalises companies whose brokers have correctly classified the goods to support companies that have not. Should this be supported at the expense of companies that have undertaken proper diligence in tariff classification?