The objective of the Tariff Concession System was stated in Vestas - Australian Wind Technology Pty Limited and Chief Executive Officer of Customs [2015] AATA 348 (21 May 2015) as “... the object of the systems 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 then no industry to protect. Why then has the revoking and reissuing of TCOs under s.269SD changed over the 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 ABF practice. In the past the TCO in the second case was revoked on and from the original operative date, with the replacement TCO then operative from that date.
ABF current view is that if a TCO is revoked under s.269SD (1AA), no replacement narrower TCO need be made. Given that applicants have been required under past guidelines and policy to write TCOs with a broad coverage this penalises applicants whose applications were accepted by ABF as valid when lodged.
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 advised to me by ABF has been 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 query how it is acceptable to support incorrect classification and TCO usage in any circumstance.
The Act at s.269SD (4) does provide: “(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 haven’t. It doesn’t mean that the TCO will not apply to the goods already claiming it as it’s possible that the tariff classification is incorrect. Companies claiming the TCO would appear to have often found it through word search rather than correct classification techniques, but should this be supported at the expense of companies that have undertaken proper diligence in the preparation of their FIDs?
This article does not constitute legal advice and should not be relied upon as such. It is intended only to provide a summary and general overview on matters of interest and it is not intended to be comprehensive. You should seek legal or other professional advice before acting or relying on any of the content.