Australia — Tariff Classification

Tariff classification of goods imported into Australia is governed by the Customs Tariff Act 1995 (Cth), which came into force on 1 July 1996 and replaced the Customs Tariff Act 1987. The Act imposes customs duty on imported goods and establishes the framework for determining the applicable duty rate through a classification system set out in Schedule 3, known as the Combined Australian Customs Tariff Nomenclature and Statistical Classification or "Working Tariff."

Schedule 3 classifies goods in accordance with Australia's obligations as a party to the World Trade Organization Agreement and is based on the Harmonized Commodity Description and Coding System (HS) maintained by the World Customs Organization. The current Working Tariff incorporates changes from the WCO's sixth review of the Harmonized System, which commenced 1 January 2022, along with subsequent legislative and statistical code amendments.

Classification methodology is prescribed in sections 6 and 7 of the Customs Tariff Act 1995. Section 6 defines "tariff classification" as a reference in Schedule 3, which may be either a heading or a subheading (or statistical code where specified). Section 7 directs that goods are to be classified in Schedule 3 in accordance with the General Rules for the Interpretation of the Harmonized System set out in Schedule 2 of the Act—the Australian implementation of the internationally standardized General Rules of Interpretation (GRIs) 1 through 6.

The Australian Border Force (ABF), within the Commonwealth Department of Home Affairs, is the administering agency responsible for enforcing customs law, managing tariff classifications, and clearing imported goods at the border. The ABF publishes the online Working Tariff and maintains operational guidance for importers, brokers, and trade practitioners.

Importer self-assessment is the cornerstone of the Australian classification regime. Importers are legally required to self-assess the tariff classification of goods imported into Australia. The obligation applies to all goods, though import declarations are required for goods valued over AUD 1,000. Importers bear legal responsibility for the accuracy of the declared classification, and penalties may apply for incorrect or misleading information provided to the Department of Home Affairs.

Importers who are uncertain about the proper classification of goods are encouraged to engage a licensed customs broker. Customs brokers are licensed by the ABF under the Customs Act 1901 and provide professional classification services (for a fee).

The ABF also provides a tariff advice service free of charge. The service offers advice on goods an importer intends to import, helping inform business decisions. Tariff advice is specific to particular goods from particular manufacturers. Once issued, tariff advice is administratively binding: the importer must follow the advice or risk penalties for non-compliance. Tariff advice is issued under an advance-rulings framework and is distinct from public advice products (tariff precedents and tariff classification guides), which provide general guidance on classification issues but are not binding on specific importers or specific goods.

The tariff classification assigned to goods determines not only the rate of customs duty but also eligibility for preferential tariff treatment under Australia's free trade agreements, the applicability of tariff concession orders (duty-free treatment for goods with no Australian-made substitute), and compliance with import prohibitions and restrictions.

Source: Customs Tariff Act 1995 (Cth) Source: Australian Border Force – Tariff Classification Overview Source: Australian Border Force – Current Tariff

The General Rules for the Interpretation of the Harmonized System (GRI 1–6) are the mandatory classification methodology for all goods imported into Australia. They are codified in Schedule 2 of the Customs Tariff Act 1995 and must be applied sequentially to determine the tariff classification of goods within Schedule 3 (the Working Tariff). Section 7(1) of the Customs Tariff Act 1995 directs that goods are to be classified "in accordance with the Interpretation Rules," making them legally binding.

The Interpretation Rules—commonly referred to in Australia as the "IRs"—implement the internationally standardized General Rules of Interpretation adopted by the World Customs Organization under the International Convention on the Harmonized Commodity Description and Coding System (HS Convention). The current Schedule 2 incorporates changes from the WCO's sixth review of the Harmonized System, which commenced 1 January 2022.

GRI 1: Classification by heading terms, Section/Chapter Notes, and subordinate rules

GRI 1 establishes the primacy of heading text and legal Notes. It states: "The titles of Sections, Chapters and sub-Chapters are provided for ease of reference only; for legal purposes, classification shall be determined according to the terms of the headings and any relative Section or Chapter Notes and, provided such headings or Notes do not otherwise require, according to the following provisions."

Under GRI 1, classification is determined in the following order of authority:

1. The terms of the headings in Schedule 3;
2. Section Notes and Chapter Notes (including Australian Additional Notes, which have the same legal force);
3. GRI 2–6 (only if headings or Notes do not otherwise require).

GRI 1 is dispositive if the goods fall clearly within the terms of one heading and no Section or Chapter Note excludes them. If GRI 1 resolves classification, the classifier does not proceed to GRI 2–6. Section and Chapter titles are for reference only and have no legal effect.

GRI 2: Incomplete, unfinished, or unassembled goods; mixtures and combinations of materials

GRI 2 has two parts:

GRI 2(a) provides that any reference in a heading to an article includes:

• Articles incomplete or unfinished, provided the incomplete article has the essential character of the complete or finished article; and
• Articles presented unassembled or disassembled (whether complete or finished).

GRI 2(b) extends references to a material or substance to include:

• Mixtures or combinations of that material or substance with other materials or substances; and
• Goods consisting wholly or partly of such material or substance.

GRI 2(b) clarifies that classification of goods consisting of more than one material or substance is governed by GRI 3.

GRI 3: Goods prima facie classifiable under two or more headings

GRI 3 applies when goods are, by application of GRI 2(b) or for any other reason, prima facie classifiable under two or more headings. GRI 3 has three subordinate rules applied in sequence:

GRI 3(a)—Most specific description: The heading which provides the most specific description is preferred to headings providing a more general description. However, when two or more headings each refer to part only of the materials or substances in mixed or composite goods, or to part only of the items in a retail set, those headings are equally specific—even if one gives a more complete description.

GRI 3(b)—Essential character: Mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets for retail sale that cannot be classified by GRI 3(a) are classified as if they consisted of the material or component which gives them their essential character, insofar as this criterion is applicable. Essential character is a case-by-case determination based on factors such as the nature of the material or component, its bulk, quantity, weight, value, or the role it plays in relation to the use of the goods.

GRI 3(c)—Last in numerical order: When goods cannot be classified by reference to GRI 3(a) or 3(b), they are classified under the heading that occurs last in numerical order among those which equally merit consideration.

GRI 4: Goods not classifiable under GRI 1–3

GRI 4 states that goods which cannot be classified in accordance with GRI 1–3 are classified under the heading appropriate to the goods to which they are most akin. This is a residual rule rarely invoked in practice.

GRI 5: Cases and containers

GRI 5 has two parts addressing packing and presentation:

GRI 5(a)—Specially shaped containers: Camera cases, musical instrument cases, gun cases, drawing instrument cases, necklace cases and similar containers, specially shaped or fitted to contain a specific article or set of articles, suitable for long-term use and presented with the articles for which they are intended, are classified with such articles when of a kind normally sold therewith. This rule does not apply to containers which give the whole its essential character.

GRI 5(b)—Packing materials and containers: Packing materials and packing containers presented with the goods therein are classified with the goods if they are of a kind normally used for packing such goods. However, this provision is not binding when such packing materials or containers are clearly suitable for repetitive use.

GRI 6: Subheading and statistical code classification

GRI 6 provides that the GRI 1–5 principles also govern classification at the subheading level within a heading, and at the statistical code level within a subheading. The comparison for classification purposes under GRI 6 is only between subheadings or statistical codes at the same level. Subheading Notes and statistical code descriptions have the same legal effect as Section and Chapter Notes for their respective levels.

Application in practice

The ABF expects importers and licensed customs brokers applying for a Tariff Advice or Tariff Concession Order to demonstrate application of the GRIs, including identifying which GRI was used to reject competing headings and which GRI supports the claimed classification. The ABF Tariff Advice Guidelines state that applicants must specify "the General Rules for the Interpretation (IR) of Schedule 3 used to reject a heading" and "fully explain the reasons if using IR3(a) to reject a heading (i.e. the goods are more specifically covered by another heading)."

Source: Customs Tariff Act 1995 (Cth), Schedule 2 Source: Australian Border Force – Schedule 2, General Rules for the Interpretation of Schedule 3 Source: ABF Tariff Advice Guidelines

Schedule 3 to the Customs Tariff Act 1995 contains the Australian customs tariff nomenclature used to classify goods imported into Australia and to determine the applicable rate of customs duty. The Australian Border Force (ABF) publishes Schedule 3 online as the Combined Australian Customs Tariff Nomenclature and Statistical Classification, commonly referred to as the Working Tariff.

## Harmonized System foundation and HS 2022 implementation

Schedule 3 is based on the Harmonized Commodity Description and Coding System (HS) maintained by the World Customs Organization under the International Convention on the Harmonized Commodity Description and Coding System (the HS Convention), done at Brussels on 14 June 1983. The current Working Tariff incorporates the tariff changes from the WCO's sixth review of the Harmonized System, commonly referred to as HS 2022, which commenced on 1 January 2022. The Customs Tariff Amendment (2022 Harmonized System Changes) Act 2021 received Royal Assent on 2 September 2021 and implemented the HS 2022 nomenclature changes into Australian law with effect from 1 January 2022.

The HS Convention text is set out in Australian Treaty Series 1988 No. 30. Schedule 3 classifies goods in accordance with Australia's international obligations as a party to the World Trade Organization Agreement.

## Organisational structure — 21 Sections, 97 Chapters

Schedule 3 is divided into 21 Sections and 97 Chapters. Each Section groups related Chapters by broad category (for example, Section I covers live animals and animal products; Section XV covers base metals and articles of base metal; Section XVI covers machinery and mechanical appliances; Section XX covers miscellaneous manufactured articles).

Section titles and Chapter titles are provided for ease of reference only and have no legal effect for classification purposes. General Rule of Interpretation 1 (GRI 1) makes this explicit: "The titles of Sections, Chapters and sub-Chapters are provided for ease of reference only; for legal purposes, classification shall be determined according to the terms of the headings and any relative Section or Chapter Notes."

Section Notes and Chapter Notes — including Australian Additional Notes — are legally binding and have the same legal force as the terms of the headings. GRI 1 establishes that classification is determined according to the terms of the headings and any relative Section or Chapter Notes. The Section Notes and Chapter Notes are codified within Schedule 3 and appear at the start of each Section or Chapter.

Australian Additional Notes are unique to the Australian tariff and supplement the internationally harmonised Section and Chapter Notes from the HS Convention. They carry the same legal weight as the HS Convention Notes. For example, Chapter 30 (Pharmaceutical products) contains Australian Additional Notes that exclude certain dietary supplements containing vitamins or plant extracts from headings 3003 and 3004 unless the goods are listed in particular Schedules to the current Poisons Standard under the Therapeutic Goods Act 1989.

## Eight-digit classification structure

Each tariff classification in Schedule 3 is expressed as an eight-digit code:

• The first four digits constitute the heading (for example, 8703 — motor cars and other motor vehicles principally designed for the transport of persons).
• The first six digits constitute the subheading (for example, 8703.60 — vehicles with compression-ignition internal combustion piston engine (diesel or semi-diesel)).
• All eight digits together constitute the statistical code or statistical classification (for example, 8703.60.12 — plug-in hybrid electric vehicles valued not over the fuel-efficient car limit).

The first six digits of the Australian tariff (heading and subheading) are internationally harmonised under the HS Convention. This means that Australia uses the same six-digit HS codes as other countries that are parties to the HS Convention, subject to the same revision cycle (currently HS 2022).

The final two digits (the seventh and eighth digits) are domestic splits or domestic subheadings set by Australia and are unique to the Australian tariff. These digits allow Australia to collect more detailed import statistics or to apply differentiated duty rates to goods that fall within the same six-digit HS subheading.

Section 6 of the Customs Tariff Act 1995 defines "tariff classification" as a reference in Schedule 3, which may be a heading, a subheading, or a statistical code (where the statistical code level is specified). Section 7(1) directs that goods are to be classified in Schedule 3 in accordance with the General Rules for the Interpretation of the Harmonized System set out in Schedule 2.

## Duty rates — general and preferential columns

For each tariff classification, Schedule 3 displays the applicable rate of customs duty. The Working Tariff shows multiple duty-rate columns corresponding to different country groupings and free trade agreement (FTA) preferences:

• General rate — the most-favoured-nation (MFN) rate applicable to imports from countries with which Australia has normal trade relations.
• Preferential rates by country or FTA — designated by country code abbreviations such as NZ (New Zealand), PG (Papua New Guinea), FI (Forum Island Countries), DC (Developing Countries), CA (Canada under CETA), US (United States under AUSFTA), CN (China under ChAFTA), JP (Japan under JAEPA), and many others. Unless otherwise indicated in the relevant FTA Schedule (Schedules 4A to 15 of the Customs Tariff Act), the preferential rate for originating goods under a free trade agreement is Free (zero duty).
• DCS and DCT rates — DCS denotes the rate for developing countries and places listed in Part 4 of Schedule 1 to the Customs Tariff Regulations 2004; DCT denotes the rate for Hong Kong (HK), Korea (KR), Singapore (SG), and Taiwan (TW). If no DCT rate is shown, the DCS rate applies; if no DCT or DCS rate is shown, the general rate applies.
• Special country-specific rates — For example, Section 18A (operative from 25 April 2022) imposes an additional duty on goods from Russia and Belarus equal to the general rate plus 35% of the value of the goods. Section 18B (operative from 4 July 2022) provides Free (zero duty) treatment for goods of Ukraine.

An importer's ability to claim a preferential rate depends on whether the goods are originating goods under the relevant FTA rules of origin, which are set out in the corresponding FTA Schedule and the Customs (International Obligations) Regulation 2015.

## Relationship to concessional Schedules

Schedule 3 sets out the principal tariff and the general and FTA-preferential duty rates. Importers may also qualify for concessional rates of duty under Schedule 4 of the Customs Tariff Act 1995, which lists classes of goods eligible for concessional treatment (for example, Item 20 of Schedule 4 applies a Free rate to goods covered by a Tariff Concession Order in force under Part XVA of the Customs Act 1901). When entering goods that qualify for a Schedule 4 concessional item, the importer must still classify the goods according to their Schedule 3 classification and then apply the concessional rate by reference to the applicable Schedule 4 item number and treatment code.

## Use in practice and compliance obligations

Importers are required by law to self-assess the correct tariff classification of goods they import into Australia. The classification assigned determines the rate of customs duty payable, eligibility for preferential tariff treatment under FTAs, and compliance with import prohibitions, restrictions, and reporting requirements.

The ABF warns that penalties may apply for incorrect or misleading information provided on import declarations. Importers who are uncertain about the proper classification of their goods are encouraged to engage a licensed customs broker or to apply for a Tariff Advice (an administratively binding advance ruling on classification) free of charge from the ABF's National Trade Advice Centre.

The online version of the Working Tariff is accessible through the ABF website and is updated to reflect legislative amendments, new statistical codes, and FTA rate changes that take effect after 1 January 2022. The ABF advises that the information in the Working Tariff is provided as a guide for general purposes only and should be read in conjunction with the Customs Tariff Act 1995 itself; the information should not be relied upon for any particular action or decision unless read in conjunction with the Act.

Source: Customs Tariff Act 1995 (Cth), Schedule 3 Source: ABF – Current Working Tariff (Schedule 3) Source: ABF – 2022 Harmonized System Changes Source: Customs Tariff Amendment (2022 Harmonized System Changes) Act 2021

The Tariff Advice system is Australia's advance ruling mechanism for tariff classification. A Tariff Advice (TA) is an administratively binding ruling issued by the Australian Border Force on the tariff classification of specific goods from a specific manufacturer before those goods are imported. The service enables importers to obtain classification certainty for business planning and duty-rate estimation prior to committing to a transaction.

Scope and specificity

A Tariff Advice is issued for a specific good from a specific manufacturer only. The ruling does not cover entire product ranges, collections, or multiple models. If an importer seeks classification rulings for multiple models or variations of a product, a separate TA application must be lodged for each model.

The Tariff Advice system is designed for intended imports of new goods to allow business decisions to be made. It is not designed to deliver real-time advice on goods awaiting clearance. Importers who have already imported goods and need post-entry classification guidance must use other avenues, such as post-entry amendment or seeking advice from a licensed customs broker.

Application procedure

Importers may apply for a Tariff Advice through two methods:

1. Electronic submission via TAPIN (the ABF's Tariff Advice Public Information Network system). Licensed customs brokers and others with TAPIN access can electronically submit TA applications through the Integrated Cargo System (ICS). If the application is submitted through TAPIN, the applicant must provide the application and all supporting documents by email or hard copy to the National Trade Advice Centre within 5 days of creating the request in TAPIN.

1. Documentary submission using Form B102 (Application for Advance Ruling – Tariff). Importers without TAPIN access must complete Form B102 and submit it with supporting documentation to the National Trade Advice Centre by email at tariffclassification@abf.gov.au or by post to GPO Box 2809, Melbourne VIC 3001.

Documentary requirements and application quality standards

The ABF publishes Guidelines for Lodgement of Tariff Advices, which apply to both electronic and documentary applications. The applicant must provide:

• A detailed description of the goods as they will be imported (not as they will be used post-importation);
• Identifiable documentary material (IDM) such as product specifications, technical drawings, manufacturer's literature, photographs, or samples (if the goods are already available);
• The applicant's proposed tariff classification at the heading, subheading, or statistical code level (four, six, or eight digits);
• A written explanation of the reasons for the claimed classification, including identification of the General Rules of Interpretation (IR) applied and the reasons for rejecting alternative headings. The ABF specifically requires applicants to "fully explain the reasons if using IR3(a) to reject a heading (i.e. the goods are more specifically covered by another heading)."

The ABF will not process Tariff Advice applications where the identifiable documentary material is illegible or irrelevant. Applications that do not meet the documentary standards outlined in the Guidelines may be automatically rejected.

If the ABF accepts a Tariff Advice application but requires further information, the applicant will have 14 days to respond with the requested material. Failure to respond within this period will result in rejection of the application. The National Trade Advice Centre will consider an extension of the 14-day period on a case-by-case basis where the applicant demonstrates that more time is needed to provide the information.

Service standard and cost

The service standard for the provision of a Tariff Advice under normal circumstances is 30 days from receipt of all required information. Processing time can be longer during periods of heavy demand.

The Tariff Advice service is provided free of charge by the ABF. Where an importer employs a licensed customs broker to prepare and submit a TA application, the broker would normally charge a fee for this service.

Legal effect and validity period

Once a Tariff Advice is issued, it is administratively binding: the importer must follow the classification ruling if the goods covered by the TA are subsequently imported. An importer who imports goods covered by a TA and declares a classification inconsistent with the TA risks penalties for providing false or misleading information to the Department of Home Affairs under the Customs Act 1901.

A Tariff Advice is valid and binding for five years from the date of issue, unless voided earlier. The ABF may void a Tariff Advice in certain circumstances, including where a tariff classification expires or is amended by legislative change, or where the TA was issued based on incorrect or incomplete information provided by the applicant.

If the information provided in the TA application is incorrect, or if the goods actually imported differ in any aspect from those described in the application, the ABF does not consider itself bound by the resulting ruling.

Circumstances in which the ABF may refuse to issue a Tariff Advice

The ABF may refuse to issue a Tariff Advice in certain circumstances, including:

• The applicant already holds a valid TA for the same goods;
• The goods are the subject of legal action or tribunal proceedings;
• The tariff classification of the goods is already being assessed as part of an active application for a Tariff Concession Order (TCO).

Distinction from public advice products

A Tariff Advice issued under the advance rulings framework is legally distinct from tariff public advice products such as tariff precedents and tariff classification guides. Public advice products provide general guidance on classification issues or types of goods, but they are not administratively binding on specific importers or specific goods. Only a Tariff Advice gives binding advice on a specific good for a specific importer based on documentary information provided by the applicant.

Use of Tariff Advices in Tariff Concession Order applications

If an importer holds a valid Tariff Advice and subsequently applies for a Tariff Concession Order (TCO) for the same goods, the TA may be quoted on the TCO application. Where a valid TA is quoted on a TCO application for the same goods, the TCO application and identifiable documentary material will not be referred to the National Trade Advice Centre for confirmation of the tariff classification. The TCO application must include a copy of the valid Tariff Advice and IDM as part of the supporting material.

Source: ABF – Tariff Advice System Source: ABF – Guidelines for Lodgement of Tariff Advices Source: ABF – Interpretation of wording in Tariff Concession Orders Source: ABF – Tariff Public Advice Products Source: Tariff Concessions Gazette TC19/25, 3 July 2019

A Tariff Concession Order (TCO) is a legislative instrument that permits duty-free importation of goods when there are no known Australian manufacturers producing substitutable goods. TCOs are issued under Part XVA of the Customs Act 1901 (specifically section 269P for standard TCOs and section 269Q for goods requiring repair) and operate as a revenue concession designed to reduce input costs for Australian businesses that rely on imported equipment, components, or materials that cannot be sourced domestically.

Statutory framework and Schedule 4

When a TCO is made under section 269P of the Customs Act 1901, it applies the Item 20 concessional duty rate in Part III of Schedule 4 to the Customs Tariff Act 1995. Item 20 imposes a customs duty rate of Free on goods described in a TCO in force under Part XVA of the Customs Act 1901. The TCO itself is a legislative instrument registered on the Federal Register of Legislation and published in the Commonwealth of Australia Tariff Concessions Gazette, which is issued by the Australian Border Force each Wednesday.

Each TCO contains a unique TCO number (e.g., TCO 1045652), a precise goods description, the tariff classification (HS heading, subheading, and statistical code) to which the goods are classified, and the operative date from which the TCO takes effect. Section 269S of the Customs Act 1901 governs the operation of TCOs and provides that a TCO continues in force until revoked under sections 269SC or 269SD, or until the date (if any) specified in the TCO itself.

Substitutability test — the threshold for TCO eligibility

A TCO can only be made if substitutable goods are not produced in Australia in the ordinary course of business. The substitutability test is central to the Tariff Concession System and is designed to protect Australian manufacturers.

"Substitutable goods" are goods that have a corresponding use to the imported goods. The corresponding-use test does not require the Australian-made goods to be identical to the imported goods; rather, it asks whether the Australian goods can reasonably be used for the same purpose or application. The ABF and the Administrative Appeals Tribunal have developed a body of case law interpreting "corresponding use" for different categories of goods. The ABF's publication on corresponding use notes that for made-to-order capital equipment, substitutability may include consideration of notional or hypothetical capacity of Australian industry to manufacture substitutable goods.

If an Australian manufacturer produces goods that are substitutable (have corresponding use) for the goods described in a TCO application, the manufacturer may lodge an objection using Form B444. If the objection is upheld, the TCO will not be made. An Australian manufacturer may also seek revocation of an existing TCO using Form B441 if they commence production of substitutable goods or can demonstrate that they were already producing substitutable goods at the time the TCO was made.

Application procedure — Form B443

Importers apply for a TCO by submitting Form B443 — Application for Tariff Concession Order. The ABF states that the application must include a full and precise description of the goods to be imported (including all relevant technical specifications and features), the proposed tariff classification (heading, subheading, and statistical code), identifiable documentary material (manufacturer's specifications, technical drawings, photographs, brochures) sufficient to allow assessment of whether substitutable goods are produced in Australia, and a statement confirming that the applicant has searched for substitutable Australian-made goods.

The applicant must provide all information required on Form B443; the ABF warns that incomplete applications may be delayed or rejected. Home Affairs Notice 2019/21 — Applicant's obligations when applying for a Tariff Concession Order (TCO) sets out the applicant's obligations, including the requirement to conduct a reasonable search for Australian-made substitutes and to provide sufficient detail in the goods description to allow potential objectors (Australian manufacturers) to assess substitutability.

Publication, objection period, and making of the TCO

Once a TCO application is accepted, the ABF publishes a TCO application notice in the Tariff Concessions Gazette, allowing Australian manufacturers a prescribed period to lodge an objection if they produce or are prepared to produce substitutable goods. If no objection is received, or if any objections are rejected, the ABF will make the TCO. The TCO is published in the Gazette as a legislative instrument.

The operative date of a TCO made under section 269P is the date the application was lodged. This means that goods imported after the application date—even if imported before the TCO is formally made—may be eligible for concessional entry under the TCO once it takes effect. The ABF's guidance on interpretation of TCO wording notes that "relevant legislation also allows for imported goods to be placed into bond (Nature 20 entry) while a TCO application is lodged. If the TCO is granted, its operative date will be the date the application was lodged."

Use of an existing TCO — precise-fit requirement

An importer who wishes to use an existing TCO made by another applicant must ensure that the goods to be imported precisely match the TCO description. The ABF's guidance on interpretation of wording in Tariff Concession Orders states that "a key conclusion in the Toro decision was that …'the goods must precisely fit the description set out in the TCO.' (para 50)." The guidance references three Federal Court and Administrative Appeals Tribunal decisions that provide interpretive guidance:

• Toro Australia Pty Ltd v Comptroller-General of Customs (Federal Court): the goods must precisely fit the TCO description;
• Brand Developers Pty Ltd v Chief Executive Officer of Customs (AAT): packaging and instructional booklets are not part of the "good" for the purpose of determining whether the good is described by the TCO;
• Becker Vale Pty Ltd v Comptroller-General of Customs (Federal Court): further guidance on TCO interpretation and the substitutability test.

Under the precise-fit rule, the ABF's guidance provides an example: a TCO description for "TELEVISION, colour" would include a television imported with a remote control and a detachable power cable (normal parts or features of a television that need not be listed in the TCO description), but would not cover a television with an inbuilt disc player, because a disc player is not a normal component of a television and the TCO description "TELEVISION, colour" does not apply. Such goods would require a TCO with the description "TELEVISION, with a built-in disc player."

Importer obligations and penalties

When an importer claims concessional entry under a TCO, the onus is on the importer or licensed customs broker to correctly enter the goods, including declaring which TCO applies and ensuring that the goods precisely match the TCO description and tariff classification.

The ABF warns that "if you import goods, and claim a revenue concession through a Tariff Concession Order, you need to be aware that penalties may apply if your goods do not precisely match the TCO description and/or its tariff classification." If the goods imported do not precisely match the TCO description, the concessional rate does not apply, and the importer is liable for the full rate of customs duty applicable under the normal Schedule 3 tariff classification.

The ABF advises that "importers using an existing TCO are advised there is inherent risk in using a TCO that may have been applied for at a different time and by a different applicant," because the applicant's goods and the user's goods may differ in ways that are not immediately apparent from the TCO description alone.

Certainty tools — Tariff Advice and new TCO applications

Importers who are uncertain whether their goods precisely match an existing TCO description may apply for a Tariff Advice. The ABF's guidance on interpretation of TCO wording states that "a Tariff Advice is a binding private ruling by the Department that a particular tariff classification applies to a particular good. A Tariff Advice can state whether the goods are eligible to receive the benefit of a TCO. A Tariff Advice applies for five years."

Alternatively, if no existing TCO covers the goods, or if an importer is uncertain about fit, the importer may lodge a new TCO application (Form B443) describing their specific goods. The TCO application procedure requires a full goods description and all relevant technical specifications.

Revocation of TCOs — sections 269SC and 269SD

A TCO continues in force until revoked under section 269SC (revocation by the Comptroller-General of Customs) or section 269SD (revocation on application by an Australian manufacturer or other person) of the Customs Act 1901. Manufacturers seeking revocation must complete Form B441 — Request for revocation of a TCO or a Commercial TCO.

Purpose and policy rationale

The Tariff Concession System is a long-standing Commonwealth program administered by the Australian Border Force. The ABF describes TCOs as "an Australian Government revenue concession that exists where there are no known Australian manufacturers of goods that are substitutable for imported goods." The system's dual purpose is to assist Australian businesses by reducing the cost of imported inputs that have no Australian-made substitute, while protecting Australian manufacturers by ensuring that concessional treatment is not extended to goods that compete with domestically produced goods.

Source: Customs Act 1901 (Cth), Part XVA Source: Customs Tariff Act 1995 (Cth), Schedule 4 Part III Item 20 Source: ABF — Tariff Concession Order (TCO) Source: ABF — Interpretation of wording in Tariff Concession Orders Source: ABF — Compliance with Tariff Concession Orders Source: ABF — Corresponding use of Tariff Concession Orders

Section Notes and Chapter Notes are legally binding provisions codified within Schedule 3 to the Customs Tariff Act 1995 that govern the interpretation and scope of tariff headings. Under General Rule of Interpretation 1 (GRI 1) in Schedule 2 of the Act, classification is determined "according to the terms of the headings and any relative Section or Chapter Notes." Section and Chapter Notes have the same legal force as the terms of the headings themselves and often exclude goods that would otherwise appear to fall within a heading's scope, limit the heading's application, or define terms used in the heading.

GRI 1 establishes a hierarchy: classification is determined by (1) the terms of the headings, (2) any relative Section or Chapter Notes, and (3) GRI 2–6 only if the headings or Notes do not otherwise require. This means that Section and Chapter Notes must be consulted before applying GRI 2–6. A heading that appears to cover certain goods on its face may in fact exclude those goods through an express exclusion in a Section or Chapter Note.

## Types of Notes in Schedule 3

Schedule 3 contains three categories of legally binding Notes:

1. Section Notes appear at the start of each Section (before the first Chapter in that Section) and apply to all Chapters within that Section. For example, Section VI (covering chemical products) contains Section Notes that define "pellets" and establish exclusions applicable across Chapters 28 through 38.

2. Chapter Notes appear at the start of each Chapter and apply only to headings within that Chapter. For example, Chapter 15 (animal or vegetable fats and oils) contains Chapter Notes that exclude goods such as edible preparations of heading 2106, fatty acids in isolated state (which fall in Chapter 38), soap (Chapter 34), and certain residues that are classified elsewhere.

3. Subheading Notes appear after Chapter Notes and apply only to subheadings within the relevant heading. GRI 6 provides that the GRI 1–5 principles also govern classification at the subheading level, and that Subheading Notes have the same legal effect at the subheading level as Section and Chapter Notes have at the heading level.

## Australian Additional Notes

In addition to the Section Notes, Chapter Notes, and Subheading Notes derived from the International Convention on the Harmonized Commodity Description and Coding System (the HS Convention), Schedule 3 also contains Australian Additional Notes. These are Notes unique to the Australian tariff that supplement the internationally harmonized Notes. Australian Additional Notes are identified by the label "Additional Note" or "Additional Notes" and are codified within the relevant Section or Chapter.

Australian Additional Notes have the same legal force as HS Convention Notes. They are binding provisions that form part of the classification framework under GRI 1. For example, Chapter 30 (Pharmaceutical products) contains Australian Additional Notes that exclude certain dietary supplements containing vitamins or plant extracts from headings 3003 and 3004 unless the goods are listed in particular Schedules to the current Poisons Standard under the Therapeutic Goods Act 1989. These Additional Notes modify the scope of the headings beyond the limits established by the HS Convention Notes.

## Common functions of Section and Chapter Notes

Section and Chapter Notes serve several functions in the classification framework:

Exclusions: Many Notes exclude goods from the scope of a Section, Chapter, or heading. For example, a Section Note may state that "This Section does not cover [list of goods]," directing the classifier to search elsewhere in the tariff for those goods. Exclusion Notes override the apparent scope of heading text.

Definitions: Notes may define terms used in headings. For example, a Chapter Note may define "pellets," "dried products," or "In this Chapter" terms that limit or clarify the goods covered by headings in that Chapter.

Inclusions: Some Notes extend the scope of a heading by specifying that certain goods are included within a heading. For example, a Note may state "For the purposes of heading XXXX, the expression 'Y' includes Z."

Classification directions: Some Notes direct how goods are to be classified when multiple headings appear to apply. These Notes often state that certain goods "are to be classified" in a particular heading.

Scope limitations: Notes may limit the application of a heading or Chapter by reference to use, form, composition, or other criteria.

## Mandatory application and importer obligations

Because Section and Chapter Notes are part of the legal classification framework established by GRI 1, importers and licensed customs brokers are legally required to consult and apply the Notes when classifying goods. Failure to apply an exclusion Note may result in incorrect classification, leading to underpayment or overpayment of customs duty and potential penalties under the Customs Act 1901 for providing false or misleading information to the Department of Home Affairs.

The Australian Border Force (ABF) expects Tariff Advice applicants and Tariff Concession Order applicants to demonstrate that they have consulted the relevant Section and Chapter Notes and applied any exclusions or limitations when proposing a classification. The ABF's Tariff Advice Guidelines require applicants to provide a written explanation of the reasons for the claimed classification, including identification of the General Rules of Interpretation used to reject alternative headings. This explanation must account for Section and Chapter Notes that may exclude the goods from a heading that otherwise appears to cover them.

## Location and accessibility

Section Notes, Chapter Notes, Subheading Notes, and Australian Additional Notes are codified within Schedule 3 to the Customs Tariff Act 1995. The ABF publishes Schedule 3 online as part of the Working Tariff. The online Working Tariff displays the Notes at the start of each Section or Chapter. Importers and brokers using the online Working Tariff should scroll to the start of the relevant Section or Chapter to read the Notes before proceeding to classify goods within a specific heading.

The printed and online versions of Schedule 3 include the full text of all legally binding Notes. The Working Tariff does not display only headings and duty rates; it includes the Notes as integral parts of the classification structure.

## Relationship to WCO Explanatory Notes

The World Customs Organization (WCO) Explanatory Notes to the Harmonized System are interpretive guidance published by the WCO to assist customs administrations and trade practitioners in applying the HS Convention. The WCO Explanatory Notes are not legally binding in Australia. They are not codified in the Customs Tariff Act 1995 and do not form part of the classification framework established by the GRIs.

However, the ABF and Australian courts have treated the WCO Explanatory Notes as persuasive interpretive aids. The Explanatory Notes may be consulted to clarify the meaning of a heading or Note when ambiguity exists, but they do not override the terms of Schedule 3 itself or the mandatory application of Section and Chapter Notes under GRI 1. When the text of a Note in Schedule 3 is clear, the Note must be applied according to its terms, regardless of the content of the WCO Explanatory Notes.

Source: Customs Tariff Act 1995 (Cth), Schedule 2 — General Rules for the Interpretation of the Harmonized System Source: Customs Tariff Act 1995 (Cth), Schedule 3 — Classification of goods and general and special rates of duty Source: ABF — Schedule 2, General Rules for the Interpretation of Schedule 3 Source: ABF — Schedule 3, Current Working Tariff Source: ABF Tariff Advice Guidelines

The Harmonized System Explanatory Notes (HSENs or HS Explanatory Notes) published by the World Customs Organization provide detailed commentary and guidance on the interpretation of the Harmonized System nomenclature. While the HSENs are not legally binding in Australia, they are persuasive authority routinely considered by the Australian Border Force and Australian tribunals when resolving classification questions.

The HS Explanatory Notes are the official WCO interpretive companion to the International Convention on the Harmonized Commodity Description and Coding System (HS Convention). They provide detailed commentary on the scope of headings, the meaning of technical terms, and illustrative examples of goods classified within particular headings. The WCO publishes the HSENs in multiple volumes and updates them periodically to reflect amendments to the Harmonized System. The current edition is HS 2022 Explanatory Notes, corresponding to the sixth review of the Harmonized System that Australia implemented with effect from 1 January 2022.

## Legal status — persuasive but not binding

The HS Explanatory Notes are not incorporated into Australian law and are not binding on importers, customs brokers, or the ABF. The Customs Tariff Act 1995 does not reference the HSENs, and they are not part of the statutory framework governing tariff classification. Section 7(1) of the Customs Tariff Act 1995 directs that goods are to be classified in accordance with the General Rules for the Interpretation of the Harmonized System set out in Schedule 2, and according to the terms of the headings and Section or Chapter Notes in Schedule 3. The HS Explanatory Notes are not mentioned in this statutory hierarchy.

However, the ABF's published tariff precedents demonstrate that Australian tribunals have accepted the HS Explanatory Notes as persuasive interpretive guidance. The ABF's List of Current Precedents includes an entry stating: "This approach is supported by the Harmonised System Explanatory Notes (HSENs). The Tribunal accepted that regard may be had to the HSENs." The precedent then quotes General Notes to Chapter 12 to resolve the classification of heat-treated seeds and fruits. This precedent confirms that the Administrative Appeals Tribunal accepts the HS Explanatory Notes as a permissible interpretive resource when construing the scope of tariff headings, though the HSENs do not override the plain language of the headings or legal Notes in Schedule 3.

## Use by the ABF in tariff precedents and Tariff Advices

The Australian Border Force routinely cites the HS Explanatory Notes in tariff precedents — the ABF's public advice products that provide general guidance on classification issues and types of goods. The ABF's published List of Current Precedents defines the abbreviation "HSEN" as "Harmonised System Explanatory Notes" and uses it throughout the precedents to support classification reasoning. Tariff precedents frequently quote General Notes to Chapters or heading-specific Explanatory Notes verbatim and apply them to resolve questions about the scope of headings, the treatment of goods that have undergone heat treatment or processing, or the application of GRI 3(b) essential-character tests.

For example, the precedents cite the General HSENs to Chapter 10 when determining whether cereal grains suitable for use as vegetables remain classified as cereals. Another precedent cites Chapter 20 Note 3 in combination with the General HSENs to Chapter 10 to resolve whether canned baby corn is classified as a vegetable or as a cereal. These precedents demonstrate that the ABF considers the HS Explanatory Notes a standard interpretive resource when drafting public classification guidance.

When the ABF issues a Tariff Advice (an administratively binding advance ruling on classification), the National Trade Advice Centre may refer to the HS Explanatory Notes to support the classification determination. While the HS Explanatory Notes are not themselves binding, they are treated as authoritative interpretive guidance developed by the international body that maintains the Harmonized System.

Importers and licensed customs brokers applying for a Tariff Advice or defending a classification position are encouraged to cite relevant passages from the HS Explanatory Notes where they support the claimed classification. Conversely, if the HS Explanatory Notes appear to support a different classification, the applicant should address that divergence and explain why the heading text, Section or Chapter Notes, or General Rules of Interpretation nonetheless support the claimed classification.

## Access to the HS Explanatory Notes

The HS Explanatory Notes are a copyrighted publication of the World Customs Organization. The WCO sells the printed multi-volume set and offers subscription access to the online version through the WCO's HS Database. Australia does not republish the full text of the HS Explanatory Notes on the ABF website, though the ABF's tariff precedents and classification guides quote relevant passages and cite to specific HS Explanatory Note sections by heading number.

Importers, brokers, and trade practitioners who regularly classify goods are advised to obtain access to the HS Explanatory Notes, either through purchase of the printed volumes or through an online subscription service. Licensed customs brokers and large importers commonly maintain access to the HS Explanatory Notes as part of their standard classification reference library.

## Compendium of Classification Opinions (COCO)

In addition to the HS Explanatory Notes, the WCO publishes the Compendium of Classification Opinions (COCO), which contains classification rulings and opinions adopted by the WCO Harmonized System Committee on specific goods or borderline cases. The ABF's tariff precedents reference the COCO (using the abbreviation "COCO" as defined in the List of Current Precedents). Like the HS Explanatory Notes, the COCO is persuasive but not legally binding in Australia. It provides additional interpretive guidance that the ABF and importers may consider when resolving difficult classification questions.

## Interaction with the statutory classification hierarchy

When the HS Explanatory Notes conflict with the plain language of a heading, a Section Note, a Chapter Note, or an Australian Additional Note in Schedule 3, the statutory text prevails. The HS Explanatory Notes are interpretive aids, not legal authority. Their purpose is to clarify the intended scope of headings and to provide illustrative examples, but they cannot override or expand the terms of the headings or Notes as enacted in the Customs Tariff Act 1995.

General Rule of Interpretation 1 makes clear that "for legal purposes, classification shall be determined according to the terms of the headings and any relative Section or Chapter Notes." The HS Explanatory Notes are not mentioned in GRI 1 and do not have the same legal force as the headings or Notes. Where the HS Explanatory Notes provide guidance consistent with the heading text and Notes, they are a useful interpretive tool; where they diverge, the statutory text controls.

## Practical significance in classification disputes

In practice, the HS Explanatory Notes play a significant role in classification disputes and Tariff Advice applications. When two headings appear to cover the same goods prima facie, the HS Explanatory Notes for each heading often provide detailed scope descriptions, exclusions, and illustrative lists that help resolve the ambiguity. The ABF's published precedents demonstrate routine reliance on the HS Explanatory Notes to support arguments that goods fall within one heading rather than another, or that goods have been subjected to a degree of processing that takes them outside a particular heading's scope.

Because the HS Explanatory Notes are developed by the WCO Harmonized System Committee — the international body that drafts and maintains the Harmonized System itself — they are treated by the ABF as authoritative evidence of the intended meaning of heading terms, though they remain persuasive rather than binding.

Source: ABF — Tariff Public Advice Products Source: ABF — List of Current Precedents (PDF)