Businesses, Agents and Trade Professionals

Consultation Legislative Proposal

Public comment is sought on a proposal to remove a redundant provision in the Customs Act 1901 that requires manufacturers to supply details of their manufacturing costs when seeking to revoke a Tariff Concession Order (TCO) or objecting to the making of a TCO.


Australian manufacturers have the right to apply to revoke a Tariff Concession Order or to object to the making of a new Tariff Concession Order. To do so, Australian manufacturers must meet two tests relating to their production. They are required to provide evidence that at least 25% of factory costs occur in Australia and demonstrate that a substantial process of manufacture occurs in Australia.

In the last 100 cases where the Australian manufacturer demonstrated that a substantial process of manufacture occurred in Australia, they always easily exceeded the 25% costs test. The costs’ test is therefore unnecessary and imposes a significant financial workload on Australian manufacturers. Provision of costings is time-consuming as balance sheets, accounting worksheets, sales invoices and other commercial-in-confidence material may be required. Additional costs can be incurred if cases are subsequently contested in the Administrative Appeals Tribunal and it becomes necessary to seek to maintain confidentiality of costing information.

The use of a single test will align the TCS with Australia’s anti-dumping legislation, which requires Australian manufacturers to meet only one test – that they can demonstrate a substantial process of manufacture occurs in Australia.

Legislative change proposed

Paragraph 269D(1)(b) of the Customs Act 1901 requires that in order for goods to be regarded as “produced in Australia” the sum of the value of Australian labour, Australian materials and factory overhead costs must not be less than 25% of the factory costs of the goods.

It is proposed that this paragraph be removed from section 269D. This will simplify the objection/revocation process while retaining the core requirement that an Australian manufacturer must undertake a substantial process of manufacture in Australia. Consequential amendments to delete subsections 269D(4) and (5) would also be required.