Air International Pty Ltd v Chief Executive Officer of Customs
[2001] FCA 1386
•28 SEPTEMBER 2001
FEDERAL COURT OF AUSTRALIA
Air International Pty Ltd v Chief Executive Officer of Customs [2001] FCA 1386
ADMINISTRATIVE LAW – appeal from decision of Administrative Appeals Tribunal – imposition of customs duty under the Customs Act on automotive air conditioning kits – Chief Executive’s demand for payment – duty paid under protest – correct classification of tariff – interpretation of headings and sub-headings – consideration of phrase [goods] “of a kind used as replacement components in passenger motor vehicles”
Administrative Appeals Tribunal Act 1975 (Cth) s 44(1)
Customs Tariffs Act 1995 (Cth) ss 7, 15, 16(a), Sch 2, Sch 3
Customs Act 1901 (Cth) ss 167, 273GA(2)Deputy Commissioner of Taxation v Polaroid Australia Pty Ltd (1971) 46 ALJR 32 at 34-35 referred to
Pirelli Tyres Australia Pty Ltd v Chief Executive Officer of Customs (1999) ALD 517 referred to
Hygenic Lily Ltd v Deputy Commissioner of Taxation (1987) 13 FCR 396 followed
Diethelm Manufacturing Pty Ltd v Commissioner of Taxation (1993) 44 FCR 450 referred to
Commissioner of Taxation v Chubb Australia Ltd (1995) 56 FCR 557 referred to
Customs and Excise Commissioners v Mechanical Services (Trailer Engineers) Ltd [1979] 1 WLR 305 at 317 referred to
NSW Associated Blue Metal Quarries Ltd v Federal Commissioner of Taxation (1956) 94 CLR 509 at 512 referred to
Eurovox Pty Ltd v Chief Executive Officer of Customs (unreported, Federal Court of Australia, Merkel J, VG 151 of 1998, 10 December 1998) followed
Collector of Customs v Pozzolanic Enterprises Pty Ltd (1993) 43 FCR 280 at 287 referred to
Collector of Customs v Agfa-Gevaert Ltd (1995) 186 CLR 389 at 395-397 referred to
Walterscheid Australia Pty Ltd v Collector of Customs (1988) 7 AAR 555 referred toAIR INTERNATIONAL PTY LTD (ACN 004 684 628) v CHIEF EXECUTIVE OFFICER OF CUSTOMS
V49 of 2001
WEINBERG J
28 SEPTEMBER 2001
MELBOURNE
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
V49 OF 2001
BETWEEN:
AIR INTERNATIONAL PTY LTD (ACN 004 684 628)
APPLICANTAND:
CHIEF EXECUTIVE OFFICER OF CUSTOMS
RESPONDENTJUDGE:
WEINBERG J
DATE OF ORDER:
28 SEPTEMBER 2001
WHERE MADE:
MELBOURNE
THE COURT ORDERS THAT:
1.The appeal be dismissed.
2.The applicant pay the respondent’s costs of and incidental to the appeal.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
V49 OF 2001
BETWEEN:
AIR INTERNATIONAL PTY LTD (ACN 004 684 628)
APPLICANTAND:
CHIEF EXECUTIVE OFFICER OF CUSTOMS
RESPONDENT
JUDGE:
WEINBERG J
DATE:
28 SEPTEMBER 2001
PLACE:
MELBOURNE
REASONS FOR JUDGMENT
INTRODUCTION
This is an appeal under s 44(1) of the Administrative Appeals Tribunal Act 1975 (Cth) (the “AAT Act”) from a decision of the Administrative Appeals Tribunal (the “AAT”), made on 21 December 2000. The decision of the AAT affirmed that of the Chief Executive Officer of Customs (the “Chief Executive”) to classify the goods the subject of these proceedings under tariff subheadings 8414.59.10 and 8419.50.10 of Sch 3 of the Customs Tariffs Act 1995 (Cth) (the “Tariff Act”). The appeal concerns the Chief Executive’s demand for payment of duty in respect of fan assemblies, condensers and evaporators (the “subject goods”) which are used in the assembly of automotive air conditioning systems.
BACKGROUND
Between December 1998 and June 1999, the applicant, Air International Pty Ltd (“Air International”), paid customs duty pursuant to s 167 of the Customs Act 1901 (Cth) (the “Customs Act”), under protest, in relation to the subject goods. On 4 June 1999, the applicant sought review, pursuant to s 273GA(2) of the Customs Act, of the Chief Executive’s decision to demand payment of the relevant duty.
The AAT made a number of findings in relation to Air International’s business and the automotive air conditioning industry generally in Australia. These may be summarised as follows:
·Air International imports the subject goods for inclusion in air conditioning kits and is the largest supplier of automotive air conditioning systems and components in Australia.
·These kits are designed for particular motor vehicle models or sub-models to conform to the specifications of the particular vehicle and to function optimally in Australian conditions.
·Air International, when supplying locally manufactured vehicles with air conditioning kits, works closely with the manufacturer of the vehicle. Otherwise, where vehicles are manufactured overseas, Air International designs the system to meet those manufacturers’ specifications.
·Air International’s business is divided into three general areas: original equipment, accessory kits and spare parts.
·In its original equipment division, Air International provides air conditioners for vehicle production line assembly in Australia (Holden Commodore and Mitsubishi Magna).
·In its accessory kits division, it also provides accessory kits for installation into vehicles imported without air conditioning, but which have air conditioning as a standard feature.
·In its spare parts division, Air International provides, as part of its contract with vehicle manufacturers, replacement parts for air conditioners installed as original equipment or from accessory kits. Additionally, it provides air conditioner parts to non-manufacturers in minimal quantities.
LEGISLATIVE FRAMEWORK
Section 15 of the Tariff Act provides for the imposition of duties of customs on particular goods.
The duty payable is determined in accordance with s 16, subject to matters, not relevant to these proceedings, contained in ss 17, 18, 20 and 22. Section 16(a) provides that:
“if the goods are not the produce or manufacture of a Preference Country [the duty in respect of those 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 …”.
The term “tariff classification” in s 16(a) refers to the heading and/or subheading, in Sch 3 of the Tariff Act. The third column sets out the appropriate rate of duty.
Turning then to the subject goods, insofar as they comprised fan assemblies, the Chief Executive decided that those goods fell within heading 8414 in Sch 3. That heading reads:
“AIR OR VACUUM PUMPS, AIR OR OTHER GAS COMPRESSORS AND FANS; VENTILATING OR RECYCLING HOODS INCORPORATING A FAN, WHETHER OR NOT FITTED WITH FILTERS:”.
Subheading 8414.5 reads “Fans”. There is then a further subheading, 8414.59.10, which is said to apply to goods within heading 8414 “[O]f a kind used as replacement components in passenger motor vehicles.”
Insofar as the subject goods comprised condensers and evaporators, as mentioned, they were classified under heading 8419 in Sch 3. That heading reads:
“MACHINERY, PLANT OR LABORATORY EQUIPMENT, WHETHER OR NOT ELECTRICALLY HEATED, FOR THE TREATMENT OF MATERIALS BY A PROCESS INVOLVING A CHANGE OF TEMPERATURE SUCH AS HEATING, COOKING, ROASTING, DISTILLING, RECTIFYING, STERILISING, PASTEURISING, STEAMING, DRYING, EVAPORATING, VAPORISING, CONDENSING OR COOLING, OTHER THAN MACHINERY OR PLANT OF A KIND USED FOR DOMESTIC PURPOSES; INSTANTANEOUS OR STORAGE WATER HEATERS, NON-ELECTRIC:”.
Subheading 8419.50 is “Heat exchange units”. The further subheading 8419.50.10 refers to goods in heading 8419 “[O]f a kind used as replacement components in passenger motor vehicles”.
It should be noted that the word “replacement” as found in sub headings 8414.59.10 and 8419.50.10 was omitted as a result of the Customs Tariff Amendment (ACIS Implementation) Act 1999, which commenced on 30 December 1999. Nothing, however, turns upon this fact for present purposes.
Schedule 2 to the Tariff Act contains the General Rules for the Interpretation of Schedule 3 (the “Interpretation Rules”).
Section 7(1) of the Tariff Act provides that:
“The Interpretation Rules must be used for working out the tariff classification under which goods are classified”.
Interpretation Rule 1 provides that:
“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 relevant Section or Chapter Notes and, provided such headings or Notes do not otherwise require, according to the following provisions:”.
Interpretation Rule 2(a) provides that:
“Any reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as presented, the incomplete or unfinished article has the essential character of the complete or finished article. It shall also be taken to include a reference to that article complete or finished (or falling to be classified as complete or finished by virtue of this Rule), presented unassembled or disassembled”.
THE AAT’S REASONS
Mr Churches, who appeared for Air International before the AAT, submitted that the subject goods were properly to be regarded as “accessories” rather than “components” and that the AAT had failed to appreciate that the two terms were mutually exclusive.
The AAT considered the dictionary definition of the term “accessory” and the authorities that had built up surrounding the meaning of that term. It concluded that the fact that an item might be an accessory was not necessarily determinative of whether it was a component. The two terms were not mutually exclusive.
The AAT then considered the meanings of the individual words that formed the phrase “[O]f a kind used as replacement components in passenger motor vehicles” (the “relevant phrase”). It referred to two dictionary definitions of the word “component”, one of which defined that term as meaning “constituent part”, and the other as “constituent”. This led the AAT to various definitions of the term “part”, and to regard the terms “component” and “part” as virtually interchangeable.
The AAT had regard to the decision of Gibbs J in Deputy Commissioner of Taxation v Polaroid Australia Pty Ltd (1971) 46 ALJR 32. His Honour said (at 34-35):
“…A person who contracted to buy a camera could not, in my opinion, successfully contend that his contract entitled him to the supply of a film as well, or, if he had contracted to buy a Polaroid camera to the supply of a film pack or picture roll. The fact that the film pack and the picture roll are each designed to fit only one type of camera, which cannot be worked with any other type of photographic material, merely reinforces the view that the pack and the roll are essential aids to the use of the cameras, but does not show that the pack or roll is part of the camera itself….”
The AAT referred to Pirelli Tyres Australia Pty Ltd v Chief Executive Officer of Customs (1999) ALD 517, where Deputy President Forgie, Senior Member Muller and Mr Horrigan, Member, had considered the same phrase as was relevant to this application. The context in which the issue arose in that case was whether tyres used as replacement tyres for passenger motor vehicles were goods “of a kind used as replacement components in passenger motor vehicles”. The AAT, in Pirelli, held that tyres were parts, which when combined with other parts, gave a passenger motor vehicle its essential characteristic as such a vehicle. They were therefore goods of a kind used as replacement components in passenger motor vehicles.
The AAT went on to say (at par 31 of its reasons):
“Just as a cigarette lighter, arm rests and the like are parts of a passenger motor vehicle, an air conditioning unit incorporated in the manufacture of a passenger motor vehicle is a part of the whole and the whole is a passenger motor vehicle…In other words, in order to be a component of a passenger motor vehicle an item must be a part ‘…which, when combined with other parts, give[s] an object its essential characteristic as a passenger motor vehicle…’ (Pirelli, page 523)” (emphasis added)
Further, in par 32, the AAT said:
“The notion of “essential characteristic” is derived from rule 2(a) of the Interpretation Rules as applied by rule 6 to the interpretation of subheadings…As French J said in Diethelm [Manufacturing Pty Ltd v Commissioner of Taxation (1993) 44 FCR 450]…after referring to the judgment of Davies J in Thomson Australian Holdings Pty Ltd v Commissioner of Taxation (1988) 20 FCR 85:
‘…As explained by his Honour at 86, the essential character of goods is “what essentially the goods are, not some characteristic that the goods might have. Essential character derives from the basic nature of the goods, from what they are, though composition, function and other factors necessarily play a part.” (page 462)
Returning to the facts of the case we must consider, an air conditioner (and so the subject goods comprised in that air conditioner) installed during manufacture is a component of a passenger motor vehicle…” (emphasis added)
In relation to the words “[O]f a kind” in the relevant phrase, the AAT referred, at par 37, to the decision of Gummow J in Hygenic Lily Ltd v Deputy Commissioner of Taxation (1987) 13 FCR 396, and concluded, in relation to the subject goods, that:
“…we must look not to whether they have been designed or manufactured for particular passenger motor vehicles, whether they have been installed in passenger motor vehicles before or after they leave the assembly line or whether they have been installed by a dealer prior to delivery to the purchaser…but to whether they belong to a class or genus of goods used as components of passenger motor vehicles…fan assemblies, condensers and evaporators…are all parts that are used in motor vehicles, some of which are passenger motor vehicles. They are intended to replace components in those vehicles or, in some instances, to install a new feature. For whatever purpose a purchaser uses the parts, they are parts that are commonly used as components in passenger motor vehicles and are commonly used as components involved in cooling the temperature in those passenger motor vehicles. They are goods of that kind. So too are the subject goods. They may be intended to be used for a particular purpose by Air International but, even so, they belong to a class or genus of goods used as components in passenger motor vehicles. They are goods of that kind.” (emphasis added)
The AAT then turned to the meaning of the term “replacement”. It was satisfied that a certain proportion of the subject goods were actually used to replace original parts of passenger motor vehicles. Even if they were not so used, however, the AAT was satisfied that the subject goods were of a genus or class that were used to replace fans assemblies, condensers and evaporators.
GROUNDS OF REVIEW
The grounds upon which the applicant relied in support of its appeal may be summarised as follows:
1.The AAT misinterpreted the word “component” by:
·failing to treat the terms “accessory” and “component” as mutually exclusive;
·disregarding relevant aspects of the dictionary definition of that word;
·not distinguishing where necessary between “parts” and “components” of passenger motor vehicles; and
·finding that components of air conditioning kits which were fitted to passenger motor vehicles after they had left the production line were components of passenger motor vehicles.
2.The AAT incorrectly relied upon rule 2(a) of the Interpretation Rules without first determining whether rule 1 governed the classification of the subject goods.
3.The AAT misinterpreted the word “kind” in the relevant phrase.
4.The AAT erred in concluding that the subject goods were used as “replacement components” in passenger motor vehicles notwithstanding its finding that they were “provided to non-manufacturers [for replacement usage] in minimal quantities”.
5.The AAT erred in failing properly to define the relevant genus for determining the “kind” of goods under consideration. Alternatively, the AAT erroneously defined that genus.
THE APPLICANT’S SUBMISSIONS
Mr Churches, who also appeared on the appeal before me, began by submitting, in relation to the first ground of appeal, that the AAT had erred by declining to accept that the terms “component” and “accessory” were mutually exclusive. He submitted that objects that are accessories differ quite fundamentally from objects that are components. An accessory is merely part of, or attached to, a greater whole. A component is an essential part of the greater object to which it is attached, without which that greater object lacks an essential characteristic.
He noted that the dictionary definition of the term “component” included expressions such as “constituent part” and “constituent”. He submitted that the AAT had fallen into error by focussing upon the meaning of the word “part” rather than the global expression “constituent part”. He submitted that the subject goods were properly to be characterised as accessories. They could not, therefore, be components.
Mr Churches acknowledged that the subject goods might be regarded as components of automotive air conditioning systems. They might end up as parts physically attached in that form to passenger motor vehicles. That did not make them components of passenger motor vehicles.
Moreover, in relation to the air conditioning kits designed for distribution and use after manufacture, these could not be regarded even as constituent parts of passenger motor vehicles. Hence they could not be components of such vehicles.
It followed, so it was submitted, that the subject goods should have been classified under sub-headings 8419.50.10 and 8419.50.10, as “[O]ther” goods. These classifications attract a lower rate of customs duty.
In relation to the finding that air conditioning kits became parts of passenger motor vehicles after they have left the assembly line, thus becoming components of those vehicles, it was submitted that the AAT had erred by failing to distinguish between what Mr Churches described “the larger ambit of ‘part’” and “the narrower concept of ‘component’”. It was submitted that the AAT had erred by relying upon what was said in Pirelli (supra) because air conditioning systems could not be equated with tyres when it came to determining whether or not these goods were necessary to complete the whole of a passenger motor vehicle. Without tyres, whatever existed lacked the essential characteristics of a passenger motor vehicle. Without an air conditioning system, a passenger motor vehicle still existed.
There was some dispute between the parties as to whether, in relation to the first ground of appeal, Mr Churches’ oral submissions differed from his written contentions. It is not necessary to resolve that issue and I do not propose to say anything further about it.
It was submitted, in relation to the second ground of appeal, that the AAT had erred in focussing upon the use of the term “essential characteristic” which was derived from rule 2(a) of the Interpretation Rules. Mr Churches submitted that there was no reason to apply rule 2(a) in the circumstances of this case, and that rule 1 governed classification of the subject goods.
Mr Churches then went on to make submissions regarding the AAT’s interpretation of the word “kind”. He referred to the decisions in Diethelm Manufacturing Pty Ltd v Commissioner of Taxation (1993) 44 FCR 450; Hygenic Lily (supra) and Commissioner of Taxation v Chubb Australia Ltd (1995) 56 FCR 557.
Mr Churches also referred to Customs and Excise Commissioners v Mechanical Services (Trailer Engineers) Ltd [1979] 1 WLR 305, where Megaw LJ said (at 317):
“The only way in which the relevant kind can be ascertained is by ascertaining what is the exclusive or primary purpose for which the specific article is made, or, perhaps, if this should be different, for which it is used…
If the article–in the present case the coupling or the winch–is made exclusively or primarily for use as part of the relevant boats or trailers, then that characteristic establishes and identifies its kind for the purpose of the Schedule…This article, and any other coupling or winch which though not identical, is made exclusively or primarily for that use is ‘goods of a kind’…subject to a higher rate. If it is made exclusively for some other use, no question can arise. If it is made primarily for some other use, then, even though it may incidentally be used suitably as part of a relevant boat or trailer, it is not of a kind…It is a different kind for that purpose; and cannot be of both kinds. If the article has no exclusive or primary use, but can suitably be used for any one of a number of different uses, none of them being its primary use, then its kind…is a kind which includes all such multi-use articles…It cannot be of more than one kind for the purpose of item 6.”
Gummow J referred to this passage with approval in Hygenic Lily.
Mr Churches submitted, on the basis of this reasoning, that even if I were to find that the subjects goods were relevantly components, the applicant was entitled to succeed on the basis that such a small percentage of its goods had been manufactured for use as replacement components. It followed that the subject goods could not be properly be described as goods of a kind used as replacement components within the meaning of the relevant phrase. In other words, to paraphrase Mechanical Services, if the goods were made “primarily for some other use”, then even though they might incidentally be used suitably as replacement components, they could not be said to be goods “of the kind used as replacement components”.
THE RESPONDENT’S SUBMISSIONS
Mr Maxwell QC, who appeared for the respondent, began by submitting that the premise which lay behind the applicant’s contention regarding the meaning of the term “component” was flawed. He identified that premise as being that the word had a special or technical meaning. He submitted that the word was to be given its ordinary meaning according to its common usage. He further submitted that there was no evidence as to the word having any technical meaning or any special usage in industry.
Mr Maxwell referred to the decision of the High Court in NSW Associated Blue Metal Quarries Ltd v Federal Commissioner of Taxation (1956) 94 CLR 509, (at 512), where Kitto J said:
“…it is enough in the present case to say that the expressions are not defined in the Act, that they have no technical legal signification…”
He submitted that the word “component” could not sensibly be distinguished from terms such as “part”, or “constituent”, in the way Mr Churches sought to do. He added that the expressions “component part” or “constituent part” could be considered tautologous.
Mr Maxwell submitted that the dictionary definitions to which the AAT had regard made it clear that the terms “component” and “constituent” were virtually synonymous. He submitted that where an article is easily detachable it would not ordinarily be considered a component. However, where the article becomes an integral part of the vehicle, for example, a cigarette lighter, wing mirror, or rear-window demister, it should be regarded as a component of the vehicle. The fact that the vehicle may be driven without that article does not detract from its being a component.
Mr Maxwell submitted that the evidence made it plain that although the subject goods were generally installed on the assembly line, there was a significant after market supply of these goods. He submitted that the AAT had found, correctly, that they were goods “of a kind used as replacement components in passenger motor vehicles.” He submitted that Mr Churches had, in effect, conceded that the goods could be considered components when they were installed on the assembly line, but not otherwise. Mr Maxwell submitted that once that concession had been made, the subject goods had to be regarded as components. Whether a particular item was a component could not depend upon when, and where, that item was fitted to the vehicle.
Mr Maxwell relied heavily upon a decision at first instance in this Court, Eurovox Pty Ltd v Chief Executive Officer of Customs (unreported, Federal Court of Australia, Merkel J, VG 151 of 1998, 10 December 1998). There the issue was whether certain radio cassette players and compact disc units were used as “replacement components” in vehicles when those players and units were goods of a kind used both as replacement and original components in the vehicles. His Honour found that the words “replacement components” were used in their ordinary and natural sense. Once it was clear that there was a replacement usage which was “real and actual” rather than “possible and trivial”, the goods were of a kind used as replacement components in passenger motor vehicles. Merkel J followed the approach taken by Gummow J in Hygenic Lily in holding that the expression goods “of a kind” was directed not to the use for which the particular goods in question were designed or manufactured, nor to the purpose for which it was intended those goods should be put, but rather to “the nature, quality and adaptation of goods in the class or genus in question.”
CONCLUSION
The AAT concluded that the relevant phrase should be given its ordinary and natural meaning. In my opinion that conclusion was correct.
The various terms which were said to have been misconstrued, including “component”, and “of a kind”, are not technical legal terms, but rather expressions of ordinary common usage. They are to be given their ordinary meaning and not some technical or other meaning. The ordinary meaning of a word or its non-legal technical meaning is a question of fact: Collector of Customs v Pozzolanic Enterprises Pty Ltd (1993) 43 FCR 280 at 287; Collector of Customs v Agfa-Gevaert Ltd (1995) 186 CLR 389 at 395-397.
The applicant’s contention that the word “component” is to be construed in some special and narrow sense, entirely distinct from words such as “constituent” and “part”, cannot be accepted. There is no support for that contention in any dictionary definition of the term “component”. Nor is there any authority in favour of that construction. Although the word “part” is perhaps capable of a somewhat broader interpretation than the word “component”, that is not the case in the particular context in which the issue arises in the present proceeding. In that context, there is no reason in principle to accord to the word “component” a significantly narrower construction than the word “part”.
The applicant’s further contention that the subject goods are properly to be characterised as “accessories” rather than “components” is equally without foundation. There is nothing to suggest that these terms are mutually exclusive. I can see no reason why an air conditioning system which is installed in a passenger motor vehicle should not be regarded as being both an “accessory” and a “component”.
In Walterscheid Australia Pty Ltd v Collector of Customs (1988) 7 AAR 555, the issue to be determined was the correct tariff classification of a tractor shaft. Davies J noted that the AAT in that case had relied upon the observations of Gibbs J in Polaroid (supra) that a part or accessory must assist in the hauling or pushing operation of the tractor in order to fall within the relevant tariff classification. Davies J observed (at 565):
“Much of this reasoning is incorrect for neither the tariff nor the test enunciated by Gibbs J in the Polaroid Australia case required that a part or an accessory for a tractor as defined, must assist in hauling or pushing operation of the tractor. It was simply necessary that the article should be a part for or an accessory for a tractor as defined and, moreover, that the article should be used solely or principally as such a part or accessory. If a cigarette lighter is built into a tractor in the course of manufacture, that lighter will be part of the tractor and a replacement lighter will be a part for the tractor. It will be of no significance that the lighter is simply incorporated into the tractor for the convenience of the driver and in no way assists the hauling or pushing function of the tractor. Likewise, an accessory for a tractor is an extra or additional part of the tractor. The accessory does not have to relate to the essential function of the tractor.”
The AAT referred to Walterscheid, at 564, where his Honour said:
“In one sense, therefore, a part is something which is essential to complete the whole.”
The AAT continued:
“That is so even though it [the part] need not be essential to its functioning. Equally, something, such as petrol or other fuel essential for the operation of a passenger motor vehicle is not a component of a passenger motor vehicle in the same way that a roll of film is essential for the operation of a camera under consideration in that case but is not part of it (Polaroid).”
In my opinion, an air conditioning system which is installed in a passenger motor vehicle is, in ordinary parlance, a component of that vehicle. The fact that the vehicle may be driven without the air conditioning system does not detract from that conclusion. An air conditioning system is not to be equated with a seat cover or car mat, items which are designed to be easily removed. They are not “installed” in any meaningful sense and are not integral parts of a passenger motor vehicle. Although such items may be characterised as “parts” or perhaps accessories (in the broadest sense of those terms), it is difficult to regard them as components. However, an air conditioning system which is installed in a passenger motor vehicle can, in a meaningful sense, be described as being a part, and an accessory, and a component of that vehicle.
The AAT concluded that an air conditioning system was a component of a passenger motor vehicle because, when combined with other parts, it gave the vehicle its essential characteristics as a passenger motor vehicle. It relied upon Pirelli at 523 in support of that conclusion. It also relied upon rule 2(a) of the Interpretation Rules. In my opinion, no error has been demonstrated in the AAT’s reasoning in this regard. Even if I were wrong about that, and rule 2(a) was not applicable, I would still hold, for the reasons set out above, that the subject goods were relevantly components of passenger motor vehicles.
I am also of the view that the AAT was correct in rejecting the applicant’s contention that the expression “of a kind” in the relevant phrase should be construed in a manner directed towards the use for which the particular goods were designed or manufactured, or the purpose for which it was intended they should be put. In both Hygenic Lily and Eurovox, judges of this Court rejected just such a contention. Gummow J in Hygenic Lily and Merkel J in Eurovox both held that the phrase “goods of a kind” was directed to the “nature, quality and adaptation of goods in the class or genus in question”. In Eurovox, Merkel J observed that if the legislature had intended to limit the application of the relevant phrase by the insertion of words such as “ordinarily”, “exclusively”, “principally” or “primarily”, it could be expected to have done so.
It follows, in my opinion, that provided the subject goods are members of a class or genus which commonly or regularly (albeit not necessarily exclusively or principally) are used as replacement components in passenger motor vehicles, they fall within the scope of the relevant phrase.
Applying these principles, the AAT concluded that the subject goods belonged to a class or genus of goods used as components in passenger motor vehicles. That conclusion was open to the AAT upon the material before it and is not amenable to challenge under s 44(1) of the AAT Act. Once it is clear that the subject goods are members of a genus or class used as replacement components, it does not matter whether they are themselves intended to be used as replacement components. As the AAT observed, in relation to condensers and evaporators, (at par 39):
“On the facts of this case, we are satisfied that a certain proportion of the subject goods are actually used to take the place of (i.e. replace) condensers and evaporators that are involved in cooling the temperature in passenger motor vehicles, that are components of passenger motor vehicles and that need to be changed. Even if they were not, we are satisfied that the subject goods are of a genus or class that are used to replace condensers and evaporators that are involved in cooling the temperature in passenger motor vehicles and are used as components in passenger motor vehicles.”
The same observation holds true in relation to fans.
It follows that the appeal must be dismissed. The applicant must pay the respondent’s costs.
I certify that the preceding fifty-five (57) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Weinberg. Associate:
Dated: 28 September 2001
Counsel for the Applicant: Mr S.C. Churches Solicitor for the Applicant: Deacons Counsel for the Respondent: Mr C. Maxwell QC Solicitor for the Respondent: Australian Government Solicitor Date of Hearing: 18 June 2001 Date of Judgment: 28 September 2001
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