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© Commonwealth of Australia 2015
[2015] AATA 215
Division GENERAL ADMINISTRATIVE DIVISION
File Number 2014/4531
Re Brand Developers Aust Pty Ltd
APPLICANT
And Chief Executive Officer of Customs
RESPONDENT
DECISION
Tribunal Deputy President S A Forgie
Date 10 April 2015
Place Melbourne
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The Tribunal decides to affirm the decision of the Chief
Executive Officer of Customs dated 8 August 2014 refusing to refund
customs duty paid under protest when entering Genius Nicer Dicer
Plus food processors for home consumption under Import Declaration
ACF643LPN.
…[sgd] S A Forgie……..
Deputy President
CATCHWORDS
CUSTOMS DUTY – whether eligible for concessional rate – whether
description of TCO to be met precisely – whether goods may have
additional features outside the description of the TCO – precise
description of TCO to be met – “Y-shaped” vegetable peeler and lid
each takes goods outside of description of TCO but booklet and
packaging do not – decision affirmed
LEGISLATION Acts Interpretation Act 1901; sections 15AA, 15AB,
46 Customs Act 1901; sections 132, 132AA, 269B, 269C, 269D, 269F,
269FA, 269H, 269K, 269P, 269Q, 269S, 269SA, 269SB, 269SC, 269SD,
269SF, 269SJ, Part VIII, Part XVA Customs Amendment Act 1983;
sections 2, 5 Customs Legislation (Tariff Concessions and
Anti-Dumping) Amendment Act 1992; sections 2, 10 Customs Tariff Act
1995; sections 3, 7, 16, 17, 18, 20, 22, 269B, 269C, 269E, 269F,
269M, 269P; Schedule 2, Schedule 3; Heading 8210.00.00, Schedules
5, 6, 7 Legislative Instruments Act 2003; sections 5, 13
CASES ACI Pet Operations Pty Ltd v Comptroller of Customs [1990]
FCA 398; (1990) 26 FCR 531 Alcan (NT) Alumina Pty Ltd v
Commissioner of Territory Revenue [2009] HCA 41; (2009) 239 CLR 27;
260 ALR 1; 83 ALJR 1152; 73 ATR 256; [2009] ATC 20-134 Amcor Ltd v
Comptroller-General of Customs and Others (1988) 79 ALR 221
Collector of Customs v Agfa-Gevaert Ltd [1996] HCA 36; (1996) 186
CLR 389; 141 ALR 59; 43 ALD 193; 24 AAR 282; 71 ALJR 123
Comptroller-General of Customs v ACI Pet Operations Pty Ltd (1994)
49 FCR 56; 121 ALR 347; 32 ALD 48 Corinthian Industries (Syd) Pty
Ltd v Comptroller-General of Customs and Others [1989] FCA 100;
(1989) 86 ALR 387 Davies Craig Pty Ltd v Comptroller – General of
Customs (1986) 68 ALR 105
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Project Blue Sky Inc v Australian Broadcasting Authority [1998]
HCA 28; (1998) 194 CLR 355; 72 ALJR 841; 153 ALR 490 Re Australian
Plastic Products Pty Ltd and Chief Executive Officer of Customs
[1998] AATA 433 Re Cameron Australasia Pty Ltd and Chief Executive
Officer of Customs [2012] AATA 865 Re Downer EDI Rail Pty Limited
and Chief Executive Officer of Customs and United Group Rail
Services Limited [2010] AATA 866; (2010) 118 ALD 454 Re Greig
Novelties Pty Ltd and Chief Executive Officer of Customs [1996]
AATA 355 Re Klockner Moeller Pty Ltd and Collector of Customs
[1989] AATA 283 Re Pioneer Electronics Australia Pty Ltd and
Collector of Customs and Kenwood Electronics Australia Pty Ltd
Decision Nos. 6611 and 6614; 31 January 1991 Re Robert Bosch
Australia Pty Ltd and Collector of Customs [1986] AATA 250 Re
Sheldon & Hammond Pty Ltd and Chief Executive Officer of
Customs [2007] AATA 1929; (2007) 67 ATR 731 Re SMS Autoparts Pty
Ltd and Chief Executive Officer of Customs [1996] AATA 158; (1996)
41 ALD 615; 23 AAR 44 Re STI Tyres as Trustee for On Track Tyre
Trust and Chief Executive Officer of Customs [2009] AATA 877;
(2009) 112 ALD 381 Re Toro Australia Group Sales Pty Ltd and Chief
Executive Officer of Customs [2014] AATA 187 Re Tridon Pty Ltd and
Collector of Customs [1982] AATA 119; (1982) 4 ALD 615 Re Zoratto
Enterprises Pty Ltd and Collector of Customs [1991] AATA 210 Times
Consultants Pty Ltd and Collector of Customs (QLD) (1987) 16 FCR
449; 76 ALR 313 Voxson Sales Pty Ltd v Collector of Customs [1993]
FCA 609; (1993) 19 AAR 129
OTHER MATERIAL Customs Amendment Bill 1982, Second Reading
Speech, Hansard, Senate, 24 May 1983 Customs Legislation (Tariff
Concessions and Anti-Dumping) Amendment Bill 1992; Second Reading
Speech, Hansard, House of Representatives, 7 May 1992
REASONS FOR DECISION
1. The applicant, Brand Developers Aust Pty Ltd (Brand
Developers) imports hand operated
food processors and markets them under the name of “Genius Nicer
Dicer Plus” (Nicer
Dicer) (subject goods). Each Nicer Dicer comes packaged in a box
containing 13 pieces.
The parties agree, as do I, that the Nicer Dicer is classified
to subheading 8210.00.00 of
Schedule 3 to the Customs Tariff Act 1995 (CT Act). Their
disagreement comes about
regarding the decision made by the delegate of the respondent,
the Chief Executive Officer
of Customs (CEO), that the subject goods are not eligible for
entry for home consumption at
a concessional rate of duty under Tariff Concession Order (TCO)
9107322.
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2. At the heart of the disagreement lies the fact that, among
the 13 pieces, are a “Y” shaped
vegetable peeler, a “Fresh-keeping lid for container”, an
“Attachable container with
measurements” and a recipe book.1 Their point of difference lies
in whether these four
features disentitle the subject goods from the benefit of TCO
9107322. As Mr Slonim
summarised the issue on behalf of Brand Developers, do the
subject goods have to meet the
description in TCO 9107322 in each and every respect. He
submitted that they did not and,
on behalf of the CEO, Mr Millea submitted that they did.
3. I have decided that the plastic lid and the Y peeler take the
goods outside the description of
those in TCO 9107322 and they are not eligible for entry at a
concessional rate of duty.
Therefore, I have affirmed the decision of the CEO dated 8
August 2014.2
BACKGROUND
4. On 17 July 2013,3 Brand Developer’s representative, Clemenger
International Freight Pty
Ltd (CIFPL), lodged Tariff Advice Application (TA) 20769900 with
supporting illustrative
descriptive material. It did so in respect of the Nicer Dicer
imported by Brand Developers.
The Nicer Dicer was described as a:
“… 13 piece Set said to contain the following:
1 x removable top part with self-cleaning function
1 x cutting base
1 x attachable container with measurements
1 x fresh-keeping lid for container
1 x dual blade for cutting 6mmx6mm OR 12mmx12mm cubes
1 x dual blade for cutting 6mmx36mm OR 18mmx18mm cubes
1 x dual wedging blade
1 x plug-in cutting stamp
1 x partial blade cover
1 x slicer with blade protector
1 x food holder
1 x grater with protective cover
1 As described on the box in which the subject goods are
packaged. 2 Documents lodged under s 37 of the Administrative
Appeals Tribunal Act 1975 (T documents); T7 at 79-88 3 T documents;
T3 at 19
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1 x perfect peeler
Includes recipe book.”4
5. CIFPL went on to describe its functions:
“Genius Nicer Dicer Plus 13 set. You can chop, slice, dice, cut,
julienne, cube, wedge, quarter, grate and much more. There are 5
blades, each made of ultrasharp stainless steel. Just press down
the lid and they’ll easily cut through virtually any food. Each
blade gives you a choice of different cutting sizes: cut into
segments of 4 or 8, cube food in 3 different sizes.”5
6. CIFPL initially claimed that the Nicer Dicer should be
classified under Heading 8214.90.00
in Schedule 3 of the CT Act but later agreed with the decision
made by a delegate of the
CEO on 6 September 2013 and affirmed on 27 February 2014 that
the Nicer Dicer is
properly classified to Heading 8210.00.00. That Heading
reads:
“HAND-OPERATED MECHANICAL APPLIANCES, WEIGHING 5% 10 kg OR LESS,
USED IN THE PREPARATION, CONDITIONING DCS:4% OR SERVING OF FOOD OR
DRINK DCT:5%”
In classifying the Nicer Dicer to this heading, the delegate
relied on Rules 3(b) and 6 of the
General Interpretation Rules for the Interpretation of the
Harmonized System set out in
Schedule 2 of the CT Act.6 Those rules must be used for working
out the tariff classification
under which goods are classified (Interpretation Rules).7
7. On 19 September 2013, an officer of Australian Customs and
Border Protection Service
decided that the Nicer Dicer was not eligible for the benefit of
TCO 9107322 due to the
inclusion of the “Y” shaped vegetable peeler in the set.8 That
decision was affirmed on
27 February 2014.9 The terms of that TCO are:
“PROCESSORS, food, hand operated, having ALL of the following
functions: (a) chopping; (b) crushing; (c) grating;
4 T documents; T3 at 20-21 5 T documents; T3 at 21 6 CT Act; s
3(1) 7 CT Act; s 7(1) 8 T documents; T4C at 39-44 9 T documents; T7
at 79-88
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(d) rasping; (e) slicing but NOT including pepper or salt
grinding mills Stated Use: Processing and preparing food”10
TCO 9107322 is keyed to Heading 8210.00.00.
8. A few months later, CIFPL lodged a further version of an
Import Declaration and claimed a
refund of duty on the ground that the Nicer Dicer is covered by
TCO 9107322.11 A delegate
of the CEO refused the application for refund on 8 August
2014.12
TARIFF CLASSIFICATION ORDERS Legislative scheme
9. The import of goods into Australia and their export is
regulated by the Customs Act 1901
(Customs Act). Part VIII provides for the payment and
computation of any duty payable on
those goods. If the rate of duty has varied, generally the rate
is that in force when the goods
entered Australia for home consumption.13 Duty is payable at
that time of entry.14
10. The rate of duty payable in respect of goods is not dealt
with in the Customs Act but in the
CT Act. Although there are qualifications and exceptions,
usually duty in respect of goods
is worked out by reference to the general rate set out in the
third column of the tariff
classification under which the goods are classified.15 For most
purposes, those
classifications are set out in Schedule 3 of the CT Act or, in
relation to goods that originated
in a number of specified countries, under Schedules 5, 6 and
7.
11. The CT Act provides for concessional duty. In broad terms, s
18 of the CT Act provides for
the duty that is to be paid on goods to which an item in
Schedule 4 prima facie applies. An
assessment is then made of the duty payable under that item. If
it is less than it would be if,
apart from s 18, it were payable under Schedules 3, 5, 6, 7 or
8, the item under Schedule 4
10 T documents; T8 at 89 11 T documents; T11 at 106-111 12 T
documents; T16 at 133-134 13 Customs Act, s 132(1) 14 Customs Act,
s 132AA(1), item 1 15 CT Act, s 16(1)(a). Qualifications and
exceptions are set out in the remaining provisions of s 16 and in
ss 17, 18, 20 and 22.
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applies.16 The amount of duty payable in respect of goods under
an item in Schedule 4 is an
amount worked out by first deciding whether the goods are goods
of one of the originating
countries named in s 18(2)(a).17 If they are not, the amount is
calculated by reference to the
general rate set out in the third column of the relevant item.18
If they are, regard is had to
s 18(2)(b) to (n) for the rate. In some instances, the
concessional rate of duty is “Free” and,
in others, a reduced rate is specified.
12. The item that is relevant in this case is Item 50 of
Schedule 4. It provides that, unless goods
are classified under subheadings 3817.00.10 or 3819.00.00 of
Schedule 3, a rate of “Free”
applies to “Goods that a Tariff Concession Order declares are
goods to which this item
applies”. As the subject goods are classified under heading
8210.00.00, the subheadings
that are excluded from that rate are not relevant in this
case.
Features of the legislative scheme
13. I have set out the processes leading to the making of a TCO
and the relevant provisions of
the Customs Act in Attachment A below. Without repeating those
processes or provisions, I
note that:
(1) an application for a TCO is made in respect of specific
goods which are fully described in that application;19
(2) in order to make a TCO, the CEO must be satisfied that the
application meets the core criteria.20
(a) the application meets the core criteria if, on the day it
was made, no substitutable goods were produced in Australia in the
ordinary course of business;21
(i) the corollary is that no substitutable goods will have been
produced in Australia if there were no goods produced in Australia
that were put, or were capable of being put, to a use that
corresponds with a use (including a design use) to which the goods
the subject of the application for the TCO can be put;22
(3) the terms used mean:
(a) “substitutable goods” are:
16 CT Act; s 18(1) 17 CT Act; s 18(2)(b) 18 CT Act; s 18(2)(a)
19 Customs Act; s 269F(3)(a) 20 Customs Act; s 269P(1) and (3) 21
Customs Act; s 269C 22 Customs Act; s 269B(1)
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“… in respect of goods the subject of a TCO application or of a
TCO, … goods produced in Australia that are put, or are capable of
being put, to a use that corresponds with a use (including a design
use) to which the goods the subject of the application or of the
TCO can be put.”23
(b) Goods “are taken to be produced in Australia” if they are
wholly or partly manufactured in Australia and if they meet the
factory and works costs specified in s 269D(1)(b).
(c) Goods that are substitutable goods in relation to goods the
subject of a TCO application are taken to have been produced in the
ordinary course of business if:
(i) they have been produced in Australia in the 2 year period
before the application, have been produced and held in stock in
Australia, or produced on an intermittent basis in the previous 5
years and a producer is prepared to accept an order to supply
them;24 or
(ii) they are made-to-order capital equipment and are taken to
have been produced in Australia in the meaning of s 269E(2);
(3) When made, a TCO must include:
(a) a description of the goods that are the subject of that
order; and
(b) a reference to the tariff classification that, in the CEO’s
opinion, applies to the goods.25
14. This outline of the process leading to the making of a TCO
underlines the links:
(1) between the goods described in a TCO application and the TCO
– they are one and the same;
(2) between the goods and the core criteria – the goods
described in the TCO application must meet the core criteria
meaning that there must be no substitutable goods produced in
Australia in the ordinary course of business on the day on which
the TCO application was made; and
(3) between the goods described in the TCO and the tariff
classification – the goods described in the TCO must either be
those described in the tariff classification or a sub-set of
them.
23 Customs Act; s 269B(1) 24 Customs Act; s 269E(1) 25 Customs
Act; s 269P(4)(a)
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INTERPRETING AND APPLYING A TCO
Keying the goods to the relevant tariff classification
15. In Voxson Sales Pty Ltd v Collector of Customs26 (Voxson),
Spender J noted that:
“ The fundamental requirement is that, before goods can fit
within a particular TCO they must be within the tariff
classification to which that TCO is keyed. …”27
The relevant tariff classification has been agreed upon between
the parties but, for
completeness, I will outline the approach to be taken to
identifying that tariff classification.
16. In their majority judgment in Times Consultants Pty Ltd v
Collector of Customs (QLD)28
(Times Consultants), Morling and Wilcox JJ established that the
first step in the proper
classification of particular goods is to identify them. The
second step is to construe the tariff
classifications to determine to which tariff classification the
subject goods should be
classified. Having said that there are two steps does not
determine the order in which those
steps are taken for taking one may well inform how the other is
taken.
17. The overlap between the two steps is evident in the second
and third principles identified by
a differently constituted Tribunal in the following passage from
Re Tridon Pty Ltd and
Collector of Customs29 (Tridon) as relevant in carrying out the
task of identifying the goods
to be classified. Referring to various authorities, the Tribunal
in Tridon identified eight
principles as relevant to the task:
“(i) Identification must be objective, having regard to the
characteristics which the goods, on informed inspection, present
...;
(ii) The identification of goods cannot be controlled by the
descriptions of goods adopted in the nomenclature of the Tariff
...;
(iii) Nevertheless in identifying goods it is necessary to be
aware of the structure of the nomenclature, the basis on which
goods are classified and the
26 [1993] FCA 609; (1993) 19 AAR 129 27 Voxson Sales Pty Ltd v
Collector of Customs [1993] FCA 609; (1993) 19 AAR 129 at 135 per
Spender J. His Honour was referring to r 181(1)(d) of the Customs
Regulations which previously prescribed that this information had
to be given by an applicant for a TCO. At that time, the
application was made under s 269G and s 269G(2)(a) prescribed
particulars that had to be given in the TCO application. Since the
repeal and substitution of Part XVA by s 10 of the Customs
Legislation (Tariff Concessions and Anti-Dumping) Amendment Act
1992 (Act No 89 of 1992) (CL Amendment Act), the requirements have
been included within s 269P. Section 10 commenced operation on 1
November 1992, which was a day fixed by Proclamation: CL Amendment
Act; s 2(2). 28 (1987) 16 FCR 449; 76 ALR 313 Morling and Wilcox
JJ; Fox J dissenting 29 [1982] AATA 119; (1982) 4 ALD 615; Mr Hall,
then Senior Member, and Mr Wickens and Mr Prowse, Members
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characteristics of goods which may be relevant to the frequently
complex task of classification ...;
(iv) In the identification of goods, knowledge of how those who
trade in the goods describe them will usually be relevant, but not
necessarily conclusive ...;
(v) All the descriptive terms, both specific and generic, by
which the goods may fairly be identified may be relevant to the
classification of the goods within the Tariff ...;
(vi) Descriptive terms may be of varying degrees of specificity
(eg windscreen wiper blade refills, parts for a windscreen wiper or
parts for a motor vehicle). Generic descriptions may be by
reference to the materials or substances from which the goods are
manufactured ...;
(vii) Identification will frequently extend to characterisation
of goods by reference to their design features cf Re Virgo
Manufacturing Co Pty Ltd and Collector of Customs (Vic) (1981) 3
ALN No 15, or by reference to their suitability for a particular
use where those characteristics emerge from informed inspection of
the goods as imported ... . The extent to which these
characteristics may be relevant to the ultimate classification of
the goods and whether evidence of the use to which goods are put
after importation is relevant, will depend upon the language of the
Tariff Nomenclature ...;
(viii) Composite goods, notwithstanding that they have
components which are separately identifiable, may nevertheless be
identifiable in combination as a new entity if the identity of the
separate units is subordinated to the identity of the combination
...”30
18. I also note that classification is undertaken according to
the General Interpretation Rules for
the Interpretation of the Harmonized System set out in Schedule
2 of the CT Act.31 Those
rules must be used for working out the tariff classification
under which goods are classified
(Interpretation Rules).32
Interpretation of a TCO A. A species of delegated
legislation
19. In Collector of Customs v Agfa-Gevaert Ltd33 (Agfa-Gevaert)
the High Court described
TCOs “… as a species of delegated legislation.”34 On that basis,
the High Court continued,
30 [1982] AATA 119; (1982) 4 ALD 615 at [15]; 620-621 (citations
omitted) 31 CT Act; s 3(1) 32 CT Act; s 7(1) 33 [1996] HCA 36;
(1996) 186 CLR 389; 141 ALR 59; 43 ALD 193; 24 AAR 282; 71 ALJR
123; Brennan CJ, Dawson, Toohey, Gaudron and McHugh JJ 34 [1996]
HCA 36; (1996) 186 CLR 389; 141 ALR 59; 43 ALD 193; 24 AAR 282; 71
ALJR 123 at 398; 65; 199; 288; 128
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the general principles of statutory interpretation apply to its
interpretation. It then went on
to address those principles:
“… The general principles relating to the interpretation of Acts
of Parliament are equally applicable to the interpretation of
delegated legislation …. To use the words of Dixon J, ‘subordinate
or delegated legislation ... [stands] on the same ground as an Act
of Parliament and [is] governed by the same rules of construction’
… [King Gee Clothing Co Pty Ltd v The Commonwealth [1945] HCA 23;
(1945) 71 CLR 184 at 195].
Because the CTCOs are governed by the rules of statutory
construction, the speech of Lord Simon of Glaisdale in Maunsell v
Olins … [[1975] AC 373 at 391] is a useful starting point in
determining the construction of the instruments. His Lordship
said:
Statutory language, like all language, is capable of an almost
infinite gradation of ‘register’ - ie, it will be used at the
semantic level appropriate to the subject matter and to the
audience addressed (the man in the street, lawyers, merchants,
etc). It is the duty of a court of construction to tune in to such
register and so to interpret the statutory language as to give to
it the primary meaning which is appropriate in that register
(unless it is clear that some other meaning must be given in order
to carry out the statutory purpose or to avoid injustice, anomaly,
absurdity or contradiction). In other words, statutory language
must always be given presumptively the most natural and ordinary
meaning which is appropriate in the circumstances.
When construing revenue statutes that utilise trade or technical
terms, therefore, the law generally favours interpretation of the
terms as they are understood in the trade to which the statute
applies. In Herbert Adams Pty Ltd v FCT, … Dixon J said:
A revenue law directed to commerce usually employs the
descriptions and adopts the meanings in use among those who
exercise the trade concerned.
The courts have also said that it may be less difficult to
establish a trade meaning
which extends the ordinary meaning of an expression than one
which limits the ordinary meaning in a specialised way. … However,
the ‘presumption’ in favour of a trade meaning in revenue statutes
does not deny the possibility that words used in a revenue statute
directed to commerce are to be understood in their ordinary
meaning. …”35
20. When Agfa-Gevaert was decided, s 46 of the Acts
Interpretation Act 1901 (AI Act) applied
to instruments made under authority conferred by an Act. It
provided that, unless the
contrary intention appeared, expressions and the like used in
any instrument had the same
meaning as in the Act, the AI Act applied to any instrument as
if it were an Act and an
35 [1996] HCA 36; (1996) 186 CLR 389; (1996) 141 ALR 59; (1996)
71 ALJR 123 at 398; 65-66; 128 (citations omitted)
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instrument was not to exceed the power of the authority given to
make it.36 The High Court
did not address the specific question whether the interpretation
of an instrument was to be
limited by the terms of the AI Act and, in particular, those of
ss 15AA and 15AB relating to
purpose or object and to the use of extrinsic material
respectively.
21. Specific provision is now made for the interpretation of
such delegate legislation under the
Legislative Instruments Act 2003 (LI Act). Section 13(1) of that
legislation provides that the
AI Act applies to any legislative instrument as if it were an
Act of Parliament and each of its
provisions were a section of an Act. Interpretation of
expressions it uses are linked back to
those in the enabling legislation37 and “any legislative
instrument so made is to be read and
construed subject to the enabling legislation as in force from
time to time, and so as not to
exceed the power of the rule-maker.”38
22. A TCO is a written instrument that is of a legislative
character and that has been made in the
exercise of a power delegated by Parliament.39 Furthermore, a
TCO alters the content of the
law and so affects the obligations40 otherwise imposed upon the
importer of goods covered
by the TCO to pay duty. The power to make a TCO of the sort in
this case41 is given to the
CEO by s 269P of the Customs Act. The CEO may exercise that
power after receiving an
application for a TCO under Part XVA and that application has
been processed in the
manner required by that Part. A TCO does not come within those
instruments declared by
s 7 of the LI Act not to be legislative instruments. It is,
therefore, subject to the LI Act.
23. As is apparent from the passage I have set out from the
judgment of the majority in Agfa-
Gevaert, the rules of statutory interpretation extend beyond the
AI Act to those under the
general law. Does s 13(1) of the LI Act limit the application of
those rules in any way? If
they were to do so, that would mean that I would, for example,
not have regard to the
general law relating to the meaning of trade and technical
terms. I would have regard only
to s 15AA relating to the objects of a legislative instrument
and not to the broader
expressions of similar principles in cases such as Project Blue
Sky Inc v Australian
36 AI Act; s 46(1) 37 LI Act; s 13(1)(b) 38 LI Act; s 13(1)(c)
39 LI Act; s 5(1) 40 LI Act; s 5(2) 41 That is, it is a TCO in
respect of goods other than those sent out of Australia for repair.
A TCO in respect of goods sent out of Australia for repair may be
made by the CEO under s 269Q of the Customs Act.
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Broadcasting Authority42 (Project Blue Sky) in which McHugh,
Gummow, Kirby and
Hayne JJ said in their joint judgment:
“ The primary object of statutory construction is to construe
the relevant provision so that it is consistent with the language
and purpose of all the provisions of the statute ... The meaning of
the provision must be determined ‘by reference to the language of
the instrument as a whole’ ... In Commissioner for Railways (NSW) v
Agalianos ..., Dixon CJ pointed out that ‘the context, the general
purpose and policy of a provision and its consistency and fairness
are surer guides to its meaning than the logic with which it is
constructed’. Thus, the process of construction must always begin
by examining the context of the provision that is being construed
... A legislative instrument must be construed on the prima facie
basis that its provisions are intended to give effect to harmonious
goals ...”43
24. Project Blue Sky was decided in 1998 and so before the
enactment of the LI Act but while
s 46 of the AI Act was in operation. The terms of s 46(1) mirror
those of s 13(1) in their
substance; only the form is a little different. Agfa-Gavaert had
been decided only two years
earlier. While only one Judge was common to both cases, McHugh
J, it is difficult to
imagine that both Courts would not have been familiar with s 46
of the AI Act. The Court
in Agfa-Gavaert was certainly aware of the status of a TCO as
delegated legislation and
applied general rules of statutory interpretation without
question. That must be taken as
indicative of the present position under the LI Act given that
there has been no substantive
change in the provisions between s 46(1) of the AI Act and s
13(1) of the LI Act. The
AI Act applies to a legislative instrument as if it were an Act
and so too do the general rules
of statutory interpretation.
B. The object of making a TCO
25. Writing in the same vein as the majority in Project Blue
Sky, those delivering the majority
judgment in Alcan (NT) Alumina Pty Ltd v Commissioner of
Territory Revenue44 (Alcan)
said:
“ This Court has stated on many occasions that the task of
statutory construction must begin with a consideration of the text
itself …. Historical considerations and extrinsic materials cannot
be relied on to displace the clear meaning of the text …. The
language which has actually been employed in the text
42 [1998] HCA 28; (1998) 194 CLR 355; 72 ALJR 841; 153 ALR 490;
McHugh, Gummow, Kirby and Hayne JJ; Brennan CJ dissenting 43 [1998]
HCA 28; (1998) 194 CLR 355; 72 ALJR 841; 153 ALR 490 at [69]- [70];
381-382; 855; 509 44 [2009] HCA 41; (2009) 239 CLR 27; 260 ALR 1;
83 ALJR 1152; 73 ATR 256; [2009] ATC 20-134; French CJ, Hayne,
Heydon, Crennan and Kiefel JJ
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of the legislation is the surest guide to legislative intention
…. The meaning of the text may require consideration of the
context, which includes the general purpose and policy of a
provision …, in particular the mischief … it is seeking to
remedy.”45
26. Their Honours were concerned with the interpretation of an
Act of the Northern Territory
and not with a legislative instrument. While the principles
remain the same, interpretation
of a legislative instrument requires me to have regard not only
to the text of that instrument
and the particular context of that text but also to the wider
text of the Act under which the
instrument was made. Apart from any common law principles to
that effect, s 13(1)(c) of
the LI Act requires that, unless there is a contrary intention,
“any legislative instrument so
made is to be read and construed subject to the enabling
legislation as in force from time to
time …”. That draws into consideration not only the particular
purpose of the legislative
instrument but the broader purpose of the enabling legislation
in conferring power to make
instruments of that kind.
27. The provisions of the Customs Act relating to TCOs
necessarily alleviate the imposition of
duties that would otherwise be imposed according to the relevant
tariff classification under
the CT Act. It is clear from the core criteria that must be met
by an application for a TCO
that it will only be granted if, in summary, Australia does not
produce goods that are put, or
capable of being put, to the same use as those being imported.
The TCO regime is clearly
intended to provide some protection to the Australian
manufacturing industry. That this is
so is underlined by the comment made by the then Minister for
Small Business,
Construction and Customs, the Hon Mr Beddall, when giving the
Second Reading Speech
on the Customs Legislation (Tariff Concessions and Anti-Dumping)
Amendment Bill 1992:
“… The objective of the system is to ensure that industry is not
taxed by the tariff where it is
serving no protective function. …”.46
C. The Interpretation Rules have no place in interpreting a
TCO
28. Although they will be relevant in classifying the subject
goods under the appropriate tariff
classification in Schedule 3 to the CT Act, the Interpretation
Rules have no place in
interpreting a TCO. They apply only to the interpretation of a
tariff classification under
Schedule 3 of the CT Act. That is made clear by s 7(1) of the CT
Act.
45 [2009] HCA 41; (2009) 239 CLR 27; 260 ALR 1; 83 ALJR 1152; 73
ATR 256; [2009] ATC 20-134 at [47]; 46-47; 16-17; 1165; 10165 per
Hayne, Heydon, Crennan and Kiefel JJ (citations omitted) 46
Hansard, House of Representatives, 7 May 1992 at 2665
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Application of the TCO: must the goods match the description in
the TCO precisely?
29. On their first reading, the cases to which I have been
referred by the parties appear to answer
the question I have posed in contradictory fashions. Some would
seem to answer it by
suggesting that, provided the goods under consideration come
within the relevant tariff
classification keyed to a TCO under consideration and provided
those goods meet the
description of the goods given in a TCO, it is of no consequence
that they may do more.
They will still be regarded as having the benefit of the TCO.
There are other cases,
however, that conclude that the goods must not only be
appropriately classified within the
tariff classification keyed to the TCO but must meet the
description precisely in order to
have its benefit. If the goods have features beyond those
described, they may not have the
benefit of the TCO and will not be permitted concessional entry
into Australia. Finally,
there is a third group of cases that does not answer the broader
question either way. I have
summarised the essential findings and reasoning in each case at
[89]-[141] of Attachment B
below.
30. In the first group of cases supporting a broader
interpretation of TCOs, but decided under a
different statutory regime, are:
(1) Re Robert Bosch Australia Pty Ltd and Collector of Customs47
(Robert Bosch): “ … Certainly the gun does more than blow air, for
it heats air as well, but blow air it does and we can see nothing
in the wording of the Order to indicate that it was intended that
an article which does precisely what the Order says should be
excluded because it does more. …”48
(2) Re Klockner Moeller Pty Ltd and Collector of Customs49
(Klockner Moeller):
The subject goods were “Motor starters suitable for use with
three-phase motors are also suitable for use with single-phase
motors. …”50. The (Commercial Tariff Concession Order) CTCO
described only those suitable for single-phase motors. In the
absence of any words of limitation in the CTCO, the Tribunal
adopted the approach in Robert Bosch to the effect that goods are
not excluded from a CTCO because they can do more than those
described in the CTCO.
47 [1986] AATA 250; Deputy President Todd and Mr Wilson and Mr
Cohn, Members 48 [1986] AATA 250 at [22] 49 [1989] AATA 283; Senior
Member Balmford and Mr Conn and Mr Wilson, Members 50 [1989] AATA
283 at [20]
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31. In the second group of cases supporting a narrower view and
requiring the subject goods to
fit the description given in the TCO precisely and without
additional features are:
(1) Re Greig Novelties Pty Ltd and Chief Executive Officer of
Customs51 (Greig Novelties): The goods did not come within the
description of those in the TCO because they were not stuffed.
Stuffing was an essential characteristic of the TCO.
(2) Re Australian Plastic Products Pty Ltd and Chief Executive
Officer of
Customs52 (Australian Plastic Products): The length of sheeting
was ten metres less than the specified length of sheeting. “… [T]o
be able to take advantage of a TCO, the products must precisely
meet the criteria …”.53
(3) Re Sheldon & Hammond Pty Ltd and Chief Executive Officer
of Customs54
(Sheldon & Hammond): The goods were more than glass jars
described in the TCO as the jars were held in a frame making them a
spice rack.
(4) Re Cameron Australasia Pty Ltd and Chief Executive Officer
of Customs55
(Cameron): Umbilicals wound on reels took the subject goods
outside a TCO referring only to umbilicals.
(5) Re Toro Australia Group Sales Pty Ltd and Chief Executive
Officer of
Customs56(Toro) “… To say that the goods fit the description
precisely does not permit a finding that in addition to the
description set out in the TCO, the goods have other
characteristics or components. To fit the description precisely
means that the goods have no more or no less of the characteristics
set out in the description. …”57
32. The second group of cases can be further subdivided by
reference to whether the goods were
more than, less than or different from, the goods as described
in the relevant TCO. When
that is done, the grouping becomes:
(1) Subject goods less than those described in relevant TCO:
51 [1996] AATA 355 52 [1998] AATA 433; Senior Member Ettinger
and Rear Admiral Horton AO RAN (Rtd) 53 [1998] AATA 433; N97/843 at
[38] 54 [2007] AATA 1929; (2007) 67 ATR 731; Senior Member Allen 55
[2012] AATA 865; Senior Member Ettinger 56 [2014] AATA 187 57
[2014] AATA 187 at [50]
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(a) Greig Novelties: The goods were not stuffed. Stuffing was an
essential characteristic of the TCO.
(b) Australian Plastic Products: The length of sheeting was ten
metres less than the length of sheeting specified in the TCO.
(2) Subject goods more than those described in relevant TCO:
(a) Cameron: The reels on which the umbilicals were wound were
not mentioned in the description of goods in the TCO.
(b) Toro:
The fittings on the hoses were not part of the description in
the relevant TCOs.
(3) Subject goods different from those described in TCO:
(a) Sheldon & Hammond: Glass jars in a frame made a spice
rack not jars within the meaning of the TCO.
33. On the facts as they found them, the question did not need
to be answered in the third group
as the subject goods were found either to meet the TCO precisely
(Pioneer Electronics and
Zoratto) or not to meet it at all (STI Tyres):
(1) Re Pioneer Electronics Australia Pty Ltd and Collector of
Customs and Kenwood Electronics Australia Pty Ltd58 (Pioneer
Electronics): The subject goods met the description of “cassette
decks” in the TCO at the relevant time because the term “cassette
decks” had come to include features beyond the deck even though
that might not have been the case when the TCO was drafted.
(2) Re Zoratto Enterprises Pty Ltd and Collector of Customs59
(Zoratto):
Goods must comply with the specifications within a TCO but there
was no discussion by the Tribunal as to whether they are restricted
to those specifications.
58 Decision Nos. 6611 and 6614; 31 January 1991 Deputy President
Thompson and Mr Argent and Mr Woodard, Members 59 [1991] AATA
210
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(3) Re STI Tyres as Trustee for On Track Tyre Trust and Chief
Executive Officer of Customs60 (STI Tyres): The subject goods did
not come within the description of the goods in the TCO.
34. When categorised in this way, it becomes apparent that
Pioneer Electronics, Zoratto and
STI Tyres do not assist either Mr Slonim or Mr Millea in his
submissions. Rather, each case
showed the process of first identifying the goods and then
deciding whether they were goods
that the relevant TCO declared to be goods to which Item 50 of
Schedule 4 applied. That is
the question that has to be asked under s 18(1) of the CT Act.
Each case decided either that,
in the case of Pioneer Electronics, that they were those goods
without further features or, in
the case of STI Tyres, that they were not. The reasons for the
decision in Zoratto are a little
less clear but it seems to me that the Tribunal found that the
goods under consideration met
the description in the TCO without enhancement.
35. To my mind, the cases of Greig Novelties, Australian Plastic
Products do not support
Mr Slonim’s submission that the subject goods may have features
in addition to those
specified in the relevant TCO. In each case, the subject goods
did not have the features
specified in the description in the TCO let alone features in
addition to them. Sheldon &
Hammond and STI Tyres do not assist either for they cannot be
taken to support principles
beyond those based on the findings of fact made by the Tribunal.
In each case, the Tribunal
found that the subject goods were goods quite different from
those in the relevant TCO.
Even Sheldon & Hammond, which might be thought to be a case
in which goods came
within the TCO but simply had an additional feature, is not a
case that assists Mr Slonim’s
submission. It does not assist it because, although the jars
alone came within the TCO,
setting those jars in a frame did not make them jars with an
additional feature. When the
two were put together, they became a spice rack and the goods
had nothing to do with the
jars described in the TCO. For similar reasons, STI Tyres does
not assist Mr Slonim’s
submission. The tyres that comprised the subject goods did not
meet the description of the
tyres described in the TCO once the TCO had been interpreted.
Pioneer Electronics is
consistent with the approach in each of these cases for it
interpreted the TCO and
characterised the subject goods.
60 [2009] AATA 877; (2009) 112 ALD 381; Deputy President
McDonald and Mr Fice, Member
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36. Robert Bosch and Klockner Moeller do appear to support Mr
Slonim’s submission at first
sight. On reflection, though, I do not think that their
principles, developed as they were in
the context of Part XVA before its repeal and replacement by the
current scheme on
1 November 1992, can be transferred to the application of TCOs
under Part XVA in its
current form. I will spend a moment exploring the previous
scheme.
37. The scheme under which Robert Bosch and Klockner Moeller
were decided required a TCO
to be made only if “goods serving similar functions” to those
for which the TCO was sought
were not produced in Australia or were not capable of being
produced in Australia in the
ordinary course of business. That was provided for in s 269C as
it was then drafted.
Sections 269B(3) and (4) explained that what was meant by the
expression “similar
functions”. If goods are identical, they were taken to serve
similar functions. In Davies
Craig Pty Ltd v Comptroller-General of Customs61 (Davies Craig),
Davies J said that
mechanical or physical function was covered by s 269(b)(3). That
required identity. If there
was no identity in that sense, the issue was decided by
reference to the requirement of a
“significant cross-elasticity of demand between the goods”. That
was, Davies J continued, a
market or economic test. It was not a mechanical or physical
function test although the
mechanical or physical function of the goods would be a relevant
matter to be considered.62
38. The test of significant cross-elasticity of demand between
goods was considered by Foster J
in ACI Pet Operations Pty Ltd v Comptroller of Customs.63 PVC
and PET were found not
to be identical goods. Therefore, the second ground of the
similar function test rose for
consideration. Foster J said:
“54. In the first place the Comptroller is required to be
satisfied as to the existence of a negative. Although questions of
onus of proof are not to be regarded as having the significance in
areas of administrative decision that they have in curial decision,
nevertheless, it is of some assistance in the focusing of thought
to regard the section as broadly requiring the applicant for a CTCO
to satisfy the Comptroller on the balance of probabilities of the
negative requirements of the section. If this is not achieved,
then, by force of the section, the goods in respect of which the
CTCO is sought shall be taken to serve similar functions to the
relevant ‘other goods’ (or, perhaps, vice versa) with the result
that the applicant cannot satisfy the requirements of s
269C(1).
61 (1986) 68 ALR 105 62 (1986) 68 ALR 105 at 114 63 [1990] FCA
398; (1990) 26 FCR 531 An appeal from his Honour’s judgment was
dismissed; see FN102 below.
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55. Secondly, the Comptroller is required to be satisfied of
what is put as a purely hypothetical situation, namely that the
‘goods’ and the ‘other goods’ be both readily available for sale
throughout Australia. There is no requirement that this state of
fact be established. Quite the reverse: if the factual situation
were that one or both of the goods were not so readily available,
it would make no difference in the application of the section. The
Comptroller (through his delegate) is required to envisage, when
applying the section, the posited situation of ready availability.
56. Thirdly, what meaning is to be given to the words ‘readily
available for sale throughout Australia’? In the first place, the
phrase ‘readily available for sale’ must be read in the context of
the later requirement to consider ‘cross-elasticity of demand’. In
these circumstances I am satisfied that ‘ready availability’ does
not import any consideration as to price. It contemplates no more
than that the relevant goods be in a position to be purchased,
irrespective of whether they are for sale at a generally acceptable
or at a prohibitive price. This part of the section is satisfied if
the ‘goods’ and the ‘other goods’ be present at relevant points of
sale in sufficient quantity or amount to answer consumer demand
based upon need alone. There must be no scarcity of the ‘goods’ or
‘other goods’. 57. In the second place, the phrase ‘throughout
Australia’ may be productive of difficulty. It is to be noted that
the legislature has used the word ‘throughout’ rather than the word
‘in’. In doing so it has introduced the concept of nationwide
availability of the relevant goods at the point of time when the
test of cross-elasticity of demand is to be applied. The way in
which this criterion can be, or can be envisaged to be satisfied
will no doubt vary in accordance with the nature of the goods and
the potential consumer. For instance, some consumer goods of
domestic utility might not be so available unless offered for sale
in most corner stores throughout urban and rural Australia. In the
case of goods which are (as in the present case) materials required
for large scale manufacture of products to be purchased by the end
user, different considerations, no doubt, apply. Here the
purchasers are necessarily far more specialised and less numerous.
The section would doubtless be answered by the contemplation of a
situation in which all such manufacturers, wherever they might be
in Australia, could have their needs satisfied by purchasing the
relevant goods from a central point or central points of sale in
Australia. Even so, considerations not related to the basic price
of the competing goods may, perhaps, come into the assessment of
ready availability. Significantly large freight or handling costs
might arguably influence availability where the putative intending
purchaser was geographically remote from an envisaged point of
sale. I mention these matters as illustrative of difficulties which
may be involved in the application of the section, not as
necessarily arising in the present case.”64
39. It is apparent from a comparison between the
cross-elasticity of demand test and the test of
substitutable goods under the current scheme that the former
test incorporates various
assumptions whereas the current scheme requires reference to the
actual state of affairs. As
the Minister said in introducing the amendments leading to the
insertion of a new Part XVA
in 1993, “… The objective of the system is to ensure that
industry is not taxed by the tariff
64 [1990] FCA 398; (1990) 26 FCR 531 at 549-550
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where it is serving no protective function. …”.65 Given the very
different scheme under
which they were decided, the principles on which the cases of
Robert Bosch and Klockner
Moeller were decided cannot be taken to apply under Part XVA as
it is currently drafted.
40. The cases of Toro and Cameron run counter to Mr Slonim’s
submission. On their face, they
might appear to be consistent with each other in deciding that
the subject goods were not
entitled to the benefit of the TCO because they had features in
addition to those referred to
in the relevant TCO and could not be said to be goods declared
by that TCO to be goods to
which Item 50 of Schedule 4 applied. There is a difference,
though, and it relates to
packaging. No mention is made in Toro to packaging but there is
mention in Toro that the
hoses were garden hoses. The description in the reasons for
decision is consistent with their
being garden hoses:
“ I had in evidence samples of the hoses with fittings attached.
The Jackaroo, Tricoflex, Superflex, Armourflex and Spectrum 12 mm
hoses are fitted with a 12 mm hose connector at each end with one
removable tap adapter fitted to the end of the hose which connects
to the tap. The tap adapter screws into that connector allowing it
to be fitted to 2 different diameter taps. The two hose connectors
are crimped to the ends of the hoses and are not readily removable
unless the hose is cut. The Spectrum range of hoses also comes in
an 18 mm size hose with two 18 mm hose connectors and one tap
adapter. However, the 18 mm hose connectors are not crimped to the
hose but slide onto the hose and are secured by a screw-on collar.
They are readily removable. The Premium and Marine hoses are both
12 mm hoses fitted with two hose connectors and one tap adapter.
The only difference between those hoses is that the fittings on the
Premium hose are made of brass, both fittings being crimped on to
the ends of that hose, while those on the Marine hose are made of
nickel plated brass, one being crimped on to the end and the other
fixed by some means which is not apparent due to a plastic cover
over that section of the hose. It appears to be permanently fixed.
Each of the hoses is 15 m in length.”66
41. It would be reasonable to assume from this description that
each of the hoses would have
been packaged in some way simply for ease of transport, storage
and, in a retail setting,
display. Common experience suggests that packaging might have
been made of cardboard
or could simply have been a couple of ties with or without a
cardboard insert. No mention
was made of any packaging as part of the subject goods just as
none was made in the case I
am considering. Mention was made of packaging in Sheldon &
Hammond but in the sense
that it was the “container in which the subject goods were
contained”.67 No suggestion was
65 See [27] above 66 [2014] AATA 187 at [17] 67 [2007] AATA
1929; (2007) 67 ATR 731 at [8]; 733
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made in the case that the container was ever part of the subject
goods. It seems to me that
none is ever made because it is implicit that goods may need to
be packaged in some way in
order to enable them to be transported, stored and, if available
for sale, displayed. The jars
and frame that made up the spice rack in Sheldon & Hammond
had to be confined in some
way if they were to reach their ultimate destination. So too
with the hoses in Toro if they
were to arrive in something other than in a tangle. In this
case, the Nicer Dicer is packaged
in a cardboard box but there was no suggestion by either party
that the box is part of the
subject goods. It is merely a vessel to ensure that they reach
their intended destination in
mint condition and most efficiently.
42. In light of the view that seems to have been taken of
packaging in other cases, I have
struggled with the Tribunal’s decision in Cameron. Umbilicals
have to be moved. The
evidence before the Tribunal was that:
“ Umbilicals are transported/imported/stored/installed using
various types of reels. … The type of reels used depends on the
specific characteristics of the umbilical (length, diameter,
allowable bend radius, total weight) in order to ensure the
umbilical is not damaged during reel-in/reel-out, transport,
storage and installation. For installation it may be required to
transfer the umbilical from the transport reel to another reel or
device. The reels are not installed with the umbilicals. Following
the umbilical installation the reels are either scrapped, stored or
returned to the manufacturer. [Emphasis added]”68
43. It seems to me that Cameron, can be taken to support Mr
Millea’s submission that goods
should match the description in the relevant TCO precisely and
have no further feature.
That aside, it should not be taken as authority for the
proposition that the packaging or
means by which goods are transported should be regarded as part
of the goods and the whole
matched against the description. That runs counter to the basis
on which the TCO scheme
operates with its focus on the subject goods. It runs counter to
the practical needs associated
with the transport of goods.
44. Having analysed the cases, it seems to me that the cases
decided under Part XVA in its
current form do not support a submission that goods may come
within a TCO when they
have features over and above those that bring them within that
TCO. The propositions that
they do support are twofold. First, the goods must be
characterised and classified under a
68 [2012] AATA 865 at [45]
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Page 23 of 60
tariff heading. They must then be considered in order to
determine whether they can be said
to be goods declared by a TCO, which is keyed to the tariff
heading under which they are
classified, to be goods to which Item 50 of Schedule 4 applies.
Given the strict regime
under which TCOs are made and given the purpose of the TCO
system to ensure that
industry is not taxed by the tariff where it is serving no
protective function, it seems to me
that the goods must meet those described in the relevant TCO
precisely.
THE NICER DICER AND TCO 9107322
45. I have already mentioned that the parties have agreed that
the Nicer Dicer is correctly
classified to subheading 8210.00.00 of Schedule 3 to the CT Act.
Putting aside for the
moment the Y peeler, the plastic lid, the plastic box and the
recipe book, I find that, the
Nicer Dicer meets the description of the goods specified in TCO
9107322. It is a hand
operated food processor that chops, crushes, grates, rasps and
slices but is not a pepper or
salt grinding mill. Its stated use is for processing and
preparing food. Again putting the
four contentious items to one side, the Nicer Dicer is no more
and no less than the goods
described in the TCO.
46. Beginning with the recipe book, I will now consider each of
the items said to take the Nicer
Dicer outside the terms of TCO. The first is the booklet
described as a “Recipe Book”
included in the box in which the Nicer Dicer is packaged.
47. The box in which the Nicer Dicer is placed has a number of
photographs of the fruit and
vegetables cut into different shapes and sizes. It advises how
the Nicer Dicer can be cleaned
under running water or in the dishwasher. Pages 1 to 9 of the 41
page “Recipe Book”
contain information relating to the way the Nicer Dicer is to be
used and cleaned and for
what fruit and vegetables each cutter is suited. The remaining
pages contain recipes
advising which cutting insert to use when cutting the relevant
fruit or vegetables for the
recipe. The recipes illustrate the way in which a Nicer Dicer is
to be used and it remains a
booklet in the nature of an instruction book rather than a
recipe book.
48. An instruction booklet is in much the same position as
packaging. It is something that
relates to the way in which the goods can, may or should be
used. Whether or not an
individual looks at the instruction booklet before using the
goods is often questionable but it
does not change the character of an instruction book. It is
often a necessary accompaniment
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Page 24 of 60
to goods so that they can be effectively and safely used in the
same way as packaging is
often necessary to get the goods safely and efficiently to the
place where they are to be used.
Neither should be regarded as part of the subject goods for the
purposes of deciding whether
or not goods come within a TCO or not.
49. I turn now to the plastic box. The description on the
cardboard box describes it as an
“Attachable container with measurements” but the container that
is included in the box has
no measurements on it. Despite that, it can still be described
as a “container” but I do not
find that is its primary use. Its primary use is as a base for
what is described on the box as
“the removable top part”. The removable top part comprises two
parts that are hinged at
one end. The various blades that form part of the goods are
fitted into the bottom of the two
parts. The base of that bottom part fits exactly over the lip of
the plastic box. The top part
of the two hinged parts acts as a lid but also has two ridged
pieces, one of which is fixed and
the other removable. Those two ridged pieces hold in place the
fruit or vegetables as
pressure is placed on that hinged lid to bring the top and
bottom parts together and so force
the fruit and vegetables through the cutters. Once they are
through the cutters, they fall into
the plastic box. While it is true that, theoretically, the
removable top part could be placed
over a bowl of some sort, the plastic box is clearly custom made
for the purpose. It provides
a firm and stable base while pressure is exerted to cut the
fruit and vegetables. I am satisfied
that it is clearly intended to be an integral part of the goods.
Together, the removable top
part, the plastic box and the various blades make up the goods
that make it a hand operated
food processor that chops, crushes, grates, rasps and slices but
not a pepper or salt mill.
They fall precisely within the description of goods in TCO
9107322.
50. The lid and the Y peeler are different matters. They fall
outside the goods that meet the
description in the TCO. It could be said that the Y peeler will
often be used to peel fruit or
vegetables before they are processed in the hand operated
processor but that does not make
it part of those goods. It is separate from it. So too is the
lid. If used, it makes the plastic
box a storage box and no longer the base for the removable top
part. The lid has no role to
play in the operation of the Nicer Dicer and falls outside the
goods described in the TCO.
51. For these reasons, I have decided that, the addition of the
Y peeler and of the plastic lid take
the subject goods beyond those described in TCO 9107322.
Therefore, Brand Development
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Page 25 of 60
cannot have the advantage of the concessional rate of duty and I
affirm the CEO’s decision
to that effect.
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ATTACHMENT A
Page 26 of 60
TARIFF CONCESSION ORDERS: current provisions 52. A TCO is made
not under the CT Act but under the Customs Act. Section 269F(1)
provides
that a person may apply to the CEO for a TCO in respect of
goods. The manner in which
that application is made and processed is the subject of Part
XVA of the Customs Act. It
has been in force since 1 November 1992 when it was inserted by
the CL Amendment Act.
Applying for a TCO
53. Section 269F(1) of the Customs Act provides that a person
may apply to the CEO for a TCO
in respect of goods. I will set the section out in full:
“(1) A person may apply to the CEO for a tariff concession order
in respect of goods.
(2) An application must: (a) be in writing; and (b) be in an
approved form; and (c) contain such information as the form
requires; and (d) be signed in the manner indicated in the
form.
(3) Without limiting the generality of paragraph (2)(c), a TCO
application must contain: (a) a full description of the goods to
which the application relates; and (b) a statement of the tariff
classification that, in the opinion of the
applicant, applies to the goods; and (c) if the applicant is not
proposing to make use of the TCO to import the
goods to which the application relates into Australia on the
applicant’s own behalf – the identity of the importer for whom the
applicant is acting; and
(d) particulars of all inquiries made by the applicant
(including inquiries of prescribed organisations) to assist in
establishing that there were reasonable grounds for believing that,
on the day on which the application was lodged, there were no
producers in Australia of substitutable goods.
(4) A TCO application may be lodged with Customs: (a) by leaving
it at a place that has been allocated for lodgement of TCO
applications in Customs House in Canberra; or (b) by posting it
by prepaid post to a postal address specified in the
approved form; or
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Page 27 of 60
(c) by sending it by electronic facsimile to a facsimile number
specified in the approved form;
and the application is taken to have been lodged when the
application, or a facsimile of the application, is first received
by an officer of Customs.
(5) The day on which an application is taken to have been lodged
must be recorded on the application.”
54. In addition to complying with the requirements of s 269F
with regard to the contents and
lodgement of an application, an applicant for a TCO has a
further obligation. It is imposed
by s 269FA, which provides:
“It is the responsibility of an applicant for a TCO to
establish, to the satisfaction of the CEO, that, on the basis of:
(a) all information that the applicant has, or can reasonably be
expected to
have; and (b) all inquiries that the applicant has made, or can
reasonably be expected to
make; there are reasonable grounds for asserting that the
application meets the core criteria.”
Criteria for determining whether a TCO will be made A. Core
criteria
55. The CEO will not make a TCO unless the application for it
meets the core criteria. That is
the effect of s 269P, which is found in Part XVA of the Customs
Act. Section 269C sets out
what is required in order to meet the core criteria:
“For the purposes of this Part, a TCO application is taken to
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.”
I will now set out the provisions that expand upon the three
sub-criteria that must be met on
the day the application was lodged: i.e. there were (1) no
substitutable goods; (2) produced
in Australia; (3) in the ordinary course of business.
B. Substitutable goods
56. The expression “substitutable goods” is defined in s
269B(1):
“.. in respect of goods the subject of a TCO application or of a
TCO, means goods produced in Australia that are put, or are capable
of being put, to a use that
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corresponds with a use (including a design use) to which the
goods the subject of the application or of the TCO can be put.”
C. Goods produced in Australia
57. Section 269D sets out the meaning of the expression “goods
produced in Australia”.69 The
general principles are set out in s 269D(1):
“For the purposes of this Part, goods, other than unmanufactured
raw products, are taken to be produced in Australia if: (a) the
goods are wholly or partly manufactured in Australia; and (b) not
less than ¼ of the factory or works costs of the goods is
represented by
the sum of: (i) the value of Australian labour; and (ii) the
value of Australian materials; and (iii) the factory overhead
expenses incurred in Australia in respect of the
goods.”
C.1 “Partly manufactured in Australia” 58. For the purposes of
Part XVA of the Customs Act:
“… goods are to be taken to have been partly manufactured in
Australia if at least one substantial process in the manufacture of
the goods was carried out in Australia.”70
59. The expression “substantial process in the manufacture of
the goods” is explained in
s 269D(3) but that provision does not limit its meaning. Section
269D(3) provides:
“Without limiting the meaning of the expression substantial
process in the manufacture of the goods, any of the following
operations or any combination of those operations does not
constitute such a process: (a) operations to preserve goods during
transportation or storage; (b) operations to improve the packing or
labelling or marketable quality of
goods; (c) operations to prepare goods for shipment; (d) simple
assembly operations; (e) operations to mix goods where the
resulting product does not have different
properties from those of the goods that have been mixed.”
69 Customs Act; s 269B(1) 70 Customs Act; s 269D(2)
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C.2 Calculating costs, value and expenses 60. The CEO may
publish directions in the Gazette that the way the factory or works
cost of
goods, value of Australian labour, Australian material or
factory overhead expenses incurred
in Australia in respect of goods are to be determined in a
specified manner.71
D. “in the ordinary course of business”
61. Section 269E provides for the circumstances in which goods,
which are the subject of a
TCO application, are taken to be produced in Australia in the
ordinary course of business for
the purposes of Part XVA other than those in s 269Q.72 Those
circumstances vary according
to whether the goods are made-to-order capital equipment but I
will set out only that
provision relating to goods other than made-to-order capital
equipment. Section 269E(1)
provides:
“For the purposes of this Part, other than section 269Q, goods
(other than made-to-order capital equipment) that are substitutable
goods in relation to goods the subject of a TCO application are
taken to be produced in Australia in the ordinary course of
business if: (a) they have been produced in Australia in the 2
years before the application
was lodged; or (b) they have been produced, and are held in
stock, in Australia; or (c) they are produced in Australia on an
intermittent basis and have been so
produced in the 5 years before the application was lodged; and a
producer in Australia is prepared to accept an order to supply
them.”
CEO required to screen application
62. The CEO must decide whether the application has been validly
made within 28 days of its
being lodged. That requires the CEO to be satisfied that the
applicant for the TCO has
satisfied ss 269F and 269FA of the Customs Act.73 It also
requires the CEO to satisfy
himself that “… he … is not aware of any producer in Australia
of substitutable goods”.74
71 Customs Act; s 269D(4) and see also s 269D(5) providing, in
effect, that they are to be interpreted by reference to those rules
applicable to regulations. Since the repeal of s 48 of the AI Act,
the interpretation of regulations has been determined according to
the Legislative Instruments Act 2003. Section 13(1)(a) of that
legislation provides that the AI Act applies to their
interpretation as if they were an Act. 72 Section 269Q is concerned
with goods requiring repair and that is not relevant in this case.
73 Customs Act; s 269H(1)(a) 74 Customs Act; s 269H(1)(b)
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If, within the 28 day time period, the CEO neither accepts nor
rejects the application, it is
taken to have been validly made.75
63. Section 269HA provides a further ground on which the CEO may
reject an application and it
is a ground that is not limited to the first 28 days after
lodgement. The CEO must not make
a TCO in respect of goods if he is satisfied under s 269SJ(1)
that the goods the subject of the
TCO are:
“… (aa) described in terms other than generic terms; or (a)
described in terms of their intended use; or (b) declared by
regulations to be goods to which a TCO should not extend.”
Processing a valid application
64. Under s 269K(1) of the Customs Act, the CEO is required to
publish a notice in the Gazette
as soon as practicable after receiving a valid application.
Among the information he is
required to publish, the CEO must describe the goods to which
the application relates and
include a reference to the customs tariff classification that,
in his opinion, applies to the
goods. The CEO must also invite persons to lodge a submission
within 50 days of the
gazettal if they consider there are reasons why the TCO should
not be made. The
submission must comply with ss 269K(2) and (3) of the Customs
Act and be lodged with the
CEO. Under s 269K(4), if a person lodges a submission more than
50 days after the gazettal
day without being invited to do so by the CEO under s 269M, the
CEO must not take the
submission into account in determining whether to make a
TCO.
CEO may invite submissions or seek other information, documents
or material
65. The CEO may invite third persons to take part in the process
in two separate ways. The first
is provided for in s 269M(1) when he considers that a person may
object to the making of a
TCO. It provides:
“If the CEO considers that, in relation to a particular TCO
application, a person may have reason to oppose the making of the
TCO to which the application relates, he or she may, by notice in
writing, invite the person to lodge a written submission with the
CEO within a period specified in the notice ending not later than
150 days after the gazettal day.”
75 Customs Act’ s 269H(2)
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The submission must comply with the requirements to s 269M(2)
and be lodged in the same
manner as is specified in relation to the application for a TCO.
Once lodged, it is taken to
have been lodged on the same day as that TCO application.76
66. The second way the CEO may invite third persons to
participate is provided for in
s 269M(4):
“If the CEO considers that, in relation to a particular TCO
application, any person (including the applicant or a person who
has lodged a submission with the CEO) may be able to supply
information or produce a document or material relevant to the
consideration of the application, the CEO may, by notice in
writing, request the supply of the information in writing or the
production of the document or material within a period specified in
the notice and ending not later than 150 days after the gazettal
day.”
67. If a person receives an invitation or a request to supply
information but fails to respond
within the time period but does so at a later time, “… the CEO
must not take that
submission, information, document or material into account in
determining whether to make
a TCO.”77
68. The time within which the invitation or request must be
issued and responded to is 150 days
from the day on which the CEO published a notice in respect of
the application in the
Gazette under s 269K(1) of the Customs Act. The CEO has the same
period of time to give
a copy of all, or part of, the TCO:
“… application to a prescribed organisation with a view to
obtaining the advice of the organisation in relation to the
question whether there are producers in Australia of substitutable
goods.”78
The CEO may take that course “… for the purpose of dealing with
a TCO application …”.79
76 Customs Act; s 269M(3) 77 Customs Act; s 269M(5) 78 Customs
Act; s 269M(6) 79 Customs Act; s 269M(6)
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Making a standard TCO
A. Deciding a TCO 69. Section 269P(1) sets out the steps the CEO
must follow once he has accepted the TCO
application as a valid application. The CEO has to decide:
“… not later than 150 days after the gazettal day, whether or
not he or she is satisfied, having regard to: (a) the application;
and (b) all submissions lodged with the CEO before the last day for
submissions; and (c) all information supplied and documents and
material produced to the CEO in
accordance with a notice under subsection 269M(4); and (d) any
inquiries by the CEO; that the application meets the core
criteria.”
70. Once satisfied that the application meets the core criteria,
the CEO:
“… must make a written order declaring that the goods that are
the subject of the TCO application are goods to which a prescribed
item in the order applies.”80
71. Section 269P(4) provides that:
“The TCO must include: (a) a description of the goods the
subject of the order including a reference to
the Customs tariff classification that, in the opinion of the
CEO, applies to the goods; and
(b) a statement of the day on which the TCO is to be taken to
have come into force; and
(c) if subsection 269SA(1) applies in relation to the TCO – a
statement of the day on which it ceases to be in force.”
B. CEO’s failure to make a decision
72. If the CEO does not make a decision in respect of a TCO
application within 150 days of the
gazettal day, the CEO is taken to have decided that he is not
satisfied that the application
meets the core criteria.81
80 Customs Act; s 269P(3) 81 Customs Act; s 269P(2)
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C. CEO decides TCO application meets core criteria 73. If the
CEO decides that a TCO application meets the core criteria, he must
first make a
written order declaring that the goods that are the subject of
that application are goods to
which an item in Schedule 4 of the CT Act provides.82 The TCO
must include a description
of the goods including a reference to the customs tariff as
declared by the CEO. In addition,
it must include a statement of the day on which it is taken to
have come into force or, if
s 269SA applies, the date it came into force and then ceased to
be in force.83
Operation of a TCO
74. In the case of a single application for a TCO and the core
criteria having been met
throughout the period from the date on which the application was
lodged and the date the
TCO was made, the TCO comes into force on the day the TCO was
lodged.84 If there is
more than one application, the day the TCO comes into operation
is the day on which the
earliest application was lodged.85
75. In most cases, a TCO applies to goods that are the subject
of the TCO when they were or are
first entered for home consumption on or after the day on which
the TCO is taken to have
come into force.86
Revocation of a TCO
76. Revocation of a TCO may come about either through the means
of an application by a
person claiming to be a producer of substitutable goods in
relation to the goods covered by
the TCO on a particular day or at the initiative of the CEO.
Both begin with a belief that, if
the TCO were not in force on that particular day and the
application for the TCO had been
made on that day, the TCO would not have been made.
82 Customs Act; s 269P(3) when read with 269B(1) 83 Customs Act;
s 269P(4). Section 269SA(1) provides that, if the CEO is satisfied
that substitutable goods commenced to be produced between the date
the application for the TCO was lodged and the date of the decision
on that application, and that he would not have been satisfied that
the application met the core criteria had production commenced on
lodgement day, the TCO continues in force only until substitutable
goods commenced production. 84 Customs Act; s 269S(1)(a) 85 Customs
Act; s 269S(1)(b) 86 Customs Act; s 269S(2) A qualification is
found in s 269SG in relation to the effect of revocation of a TCO
on goods in transit and capital equipment on order.
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77. The first means is provided for under s 269SB. The
application is based on the producer’s
being of the view that, if the TCO were not in force on a
particular day and had an
application for that TCO been lodged on that day, the TCO would
not have been made.87
The producer must provide the information required and follow
the procedures set out in s
269SB. Section 269SF provides for the CEO to gather his own
information but it must be in
writing.88 The CEO’s authority is found in s 269SF(1):
“If the CEO considers that, in relation to a request for
revocation of a TCO, any person (including the person who made the
request) may be able to supply information or produce a document or
material relevant to the consideration of the request, the CEO may,
by notice in writing, request the supply of the information or the
production of the document or material within a period specified in
the notice and ending not later than 60 days after receiving the
request.”
If a person refuses or fails to supply information or produce a
document or material within
the period as requested but does so after that period, the CEO
must not take it into account
in determining whether to revoke a TCO.89
78. The CEO’s obligation to make a decision on the request for
revocation of a TCO is set out in
s 269SC(1):
“Not later than 60 days after lodgement of a request for
revocation of a TCO, and after having regard to the request and to
any other information, document or material given to the CEO under
section 269SF, the CEO must decide whether or not he or she is
satisfied: (a) that, on the day of lodgement of the request, the
person requesting the
revocation of the TCO is a producer in Australia of goods that
are substitutable goods the subject of the order; and
(b) that, if the TCO were not in force on that day but that day
were the day on which the application for that TCO was lodged, the
CEO would not have made the TCO.”
79. If it is the CEO who has the requisite belief, he may
publish a notice in the Gazette declaring
his intention, subject to s 269SD(1AB), to revoke the TCO from a
particular day and
inviting any person who might be affected by the revocation to
give him a written
87 Customs Act; s 269SB(1) 88 Customs Act; s 269SF(2) 89 Customs
Act; s 269SF(3)
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submission within 28 days.90 The CEO has 60 days from the date
of the publication of the
notice within which to make a decision. He must do so:
“… after consideration of the matters raised in any submissions
made in response to the invitation and of any other relevant
matters:
(a) decide whether or not he or she is satisfied of the matters
referred to in paragraph (1AA)(b); and
(b) if the CEO is so satisfied – make an order revoking the TCO
with effect from the intended revocation day.”91
The remaining provisions in s 269SD go on to make provision for
variations of the decisions
the CEO might make.
Limit on CEO’s power to make a TCO
80. Section 269SJ(1) provides that the CEO must not make a TCO
in respect of goods described
in terms other than generic terms, described in terms of their
intended end use or declared by
regulations to be goods to which a TCO should not extend.
TARIFF CONCESSION ORDERS: provisions before 1992 amendment by CL
Act
81. Part XVA was originally inserted in the Customs Act by s 5
of the Customs Amendment Act
1983 with effect from 1 July 1983.92 It provided for
applications for TCOs,93 notice that
was required to be given of those applications and the way in
which they were processed.
Although they differ from the current procedures to some extent,
those differences are not
relevant in this context and I will not set them out. Where the
relevant differences lie are in
the provisions relating to the circumstances in which a TCO
might be made. Under the
previous provisions, TCOs were made by the Minister and not by
the CEO.
82. In his Second Reading Speech relating to the Customs
Amendment Bill 1982 in the Senate,
the then Minister for Industry and Commerce, Senator Button,
referred to the report of the
Industries Assistance Commission dated 2 July 1982. The new
tariff concession system
introduced by that Bill was largely based on the Commission’s
recommendations. Although
90 Customs Act; ss 269SD(1AA) 91 Customs Act; s 269SD(1AB) 92
Customs Amendment Act 1983; s 2 93 TCOs were then called
“Commercial Tariff Concession Orders” but I will continue to refer
to them as “TCOs”.
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there were one or two qualifications to it, Senator Button
explained how the system was
intended to work in the majority of situations:
“ In broad terms the Government has adopted a new criterion
which will provide that commercial tariff concessions will be
issued where the Minister is satisfied that no goods serving
similar functions are produced or are capable of being produced in
the normal course of business in Australia. The key words in this
criterion are ‘serving similar functions’ and new section 269B(4)
provides an interpretation of them. The test will be the degree of
elasticity of demand between the imported and Australian produced
goods. In practical terms, this means that these tariff concessions
will be decided by determining the effect that a reduced rate of
duty will have on competition or potential competition between the
local and imported goods. This will be based on a practical and
realistic assessment of the market situation. The onus will be on
the applicant for a tariff concession to identify the goods
involved, the market for the goods and the degree of competition or
potential competition between the imported goods and
Australian-made goods.”94
Minister’s power to make TCO
83. Section 269C of the then Part XVA provided:
“(1) Subject to this Part, where the Comptroller, after
considering an application under section 269G for the making of an
order under this section in respect of particular goods, is
satisfied that: (a) goods serving similar functions to the
particular goods are not
produced in Australia; and (b) goods serving similar functions
to the particular goods are not
capable of being produced in Australia by any person in the
normal course of business,
the Comptroller shall make a written order, to be known as a
Commercial Tariff Concession Order, declaring that the goods are
goods to which that particular item applies.
(1A)-(2) … (3) A reference in paragraph (1)(a) or (b) to ‘the
particular goods’ shall, in the
case of particular goods of which there are classes or kinds, be
read as including a reference to goods included in a class or kind
of the particular goods.”
94 Hansard, Senate, 24 May 1983 at 715
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“particular goods”
84. In Part XVA, unless the contrary intention appears, the
expression “particular goods” was
defined in s 269B(1) in inclusive terms: it “… includes goods
included in a particular class
or kind of goods”.95
“similar functions”
85. Sections 269B(3) and (4) were concerned with what is meant
by the expression “similar
functions”:
“(3) For the purposes of this Part, identical goods shall be
taken to serve similar functions.
(4) Without limiting sub-section (3), for the purposes of this
Part, goods shall be taken to serve similar functions to other
goods unless the Comptroller is satisfied that, if both goods were
readily available for sale throughout Australia, there would be no
significant part of Australia in which there would be significant
cross-elasticity of demand between the goods.”
“produced in Australia”
86. Sections 269B(5) and (6) expanded on the meaning of the
expression “produced in
Australia”, which then appeared in s 269C(1)(a) and (b). Section
269B(5) provides that:
“For the purposes of this Part, goods, other than unmanufactured
raw products, shall not be taken to have been produced in Australia
unless – (a) the goods were wholly or partly manufactured in
Australia; and (b) not less than ¼ of the factory or work costs of
the goods is represented by the
sum of - (i) the value of labour of Australia; (ii) the value of
materials of Australia; and (iii) the factory overhead expenses
incurred in Australia in respect of the
goods.” 87. The expression “partly manufactured”, used in s
269B(5), was amplified in s 269B(6):
“For the purposes of this Part, goods shall not be taken to have
been partly manufactured in Australia unless at least one
substantial process in the manufacture of the goods was carried out
in Australia.”
95 Customs Act; s 269B(1)
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“ordinary course of business” 88. Section 269C(1)(b) required
that goods serving similar functions to the particular goods
that
were the subject of a TCO application were not capable of being
produced in Australia by
any person in the normal course of business. Section 269B(7) was
relevant in considering
whether