Australia: Tariff concession order applications, and addressing objections of local manufacturers

Court case demonstrates wording of a tariff concession order application is critical.

Court case demonstrates wording of a tariff concession order application is critical.

A decision from the Administrative Appeals Tribunal (on remand from the Full Federal Court) highlights the importance of the wording in applications for a tariff concession order and provides applicants with greater confidence in addressing objections from local manufacturers that claim to produce substitutable goods, particularly in respect of made-to order capital equipment.

The case is: Alstom Transport Australia Pty Ltd. v. Comptroller-General of Customs [2021] AATA 3816 (19 October 2021). Read the appeals tribunal decision


In 2019, the tribunal upheld a decision of the Australian Border Force not to grant a trade concession order on the basis that substitutable goods were manufactured in Australia by a local manufacturer. The implication of not having a tariff concession order was that the imported driverless trains would be subject to 5% customs duty rather than free under a tariff concession order.

In order to have a tariff concession order granted, section 269C of the Customs Act 1901 states that the application will meet the core criteria if:

…on the day on which the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business.

Local manufacturers can object to the making of a tariff concession order during a 50-day period and also may seek a revocation of a tariff concession order at any other time—for instance, when they commence manufacture of substitutable goods in Australia after the tariff concession order has come into force. 

The reasoning for the AAT’s initial decision—that the locally manufactured passenger trains (which were non-automated rolling stock) were substitutable for the fully automated, driverless trains, the subject of the tariff concession order application—was that they found a corresponding use of the two types of trains: that they were both for the “transportation of passengers by rail.”

However, the Full Federal Court stated that substitutability (specifically, whether the respective goods possess a corresponding use) must be determined on the full description of the tariff concession order—and not some other “broad genus of goods.” The Full Federal Court went so far as to suggest the tribunal may find that the use of the goods described in the tariff concession order application is “the transport of passengers on a high capacity, high frequency, driverless metropolitan train line system.”  

On remand and review, the tribunal adopted this suggested use of the goods and subsequently decided that that non-automated trains produced in Australia were not substitutable for the driverless metro trains. Additionally, the tribunal found that the local manufacturer did not possess the labour skill, technology, and design expertise nor did it have production facilities required to produce the made-to-order trains described in the tariff concession order. Lastly, the tribunal was not satisfied that the locally manufactured trains were made-to-order capital equipment due to intermittent production in Australia.

KPMG observation

For purposes of tariff concession orders, goods are considered to be produced in Australia if at least one substantial process of manufacture was carried out in Australia. 

In the case of made-to-order capital equipment, to meet the “ordinary course of business” test, producers are required to demonstrate the requisite labour skills, technology, and design expertise to produce the goods with existing facilities; and a willingness to accept an order. 

Ultimately, substitutability is a matter of fact and must be considered in relation to the description of the goods in the tariff concession order application.

This case demonstrates how critical the wording of a tariff concession order is and the importance of getting it right at the application stage. Careful preparation of the applications includes an application completed well in advance of the arrival of goods into Australia, appropriate research of the relevant local manufacturer, and precise language in the tariff concession order application.

For more information, contact a KPMG professional in Australia:

Leonie Ferretter | +61 2 9455 9330 |

Daniel Rae | +61 2 9335 8564 |


The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained 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 3712, 1801 K Street NW, Washington, DC 20006.