Amcor Ltd v Comptroller-General of Customs

[1991] FCA 276

Re: AMCOR LIMITED
And: COMPTROLLER-GENERAL OF CUSTOMS and ROBERT KELLY
No. V G264 of 1990
FED No. 276
Administrative Law
102 ALR 307

COURT

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY
GENERAL DIVISION
Olney J.(1)

CATCHWORDS

Administrative Law - judicial review - customs - error of law - decision by customs authorities on concessional tariff order - error of law alleged in considering whether goods had similar functions and were capable of being produced in Australia in the normal course of business

Customs Act 1901, ss. 269B, 269C

HEARING

MELBOURNE

#DATE 24:5:1991

Counsel for applicant: Dr P. Buchanan QC and Mr J. Judd

Applicant's Solicitors: Arthur Robinson and Hedderwicks

Counsel for respondents: Mr R. Finkelstein QC and Mr R. Tracey

Respondent's Solicitors: Australian Government Solicitor

JUDGE1

INTRODUCTION

This application for judicial review of a decision made pursuant to section 269C of the Customs Act 1901 has a long history. The story thus far is detailed in the decision of the Full Court in Amcor Ltd v Comptroller-General of Customs and others (1988) 79 ALR 221 (hereafter referred to as Amcor). At that stage the applicant's application pursuant to section 269C was referred back to the Comptroller for further consideration. Ultimately, after further consideration, the Comptroller's delegate (the second respondent) refused to grant the order sought and it is from that decision that the present application for review is brought.

1. Although much of what follows is recounted in Amcor and in further reasons of Ryan J. given on 15 February 1990 in proceedings between the same parties (No. V G204 of 1989) it will be necessary in these reasons to again canvass broadly the facts and the statutory framework in which they arise in order to identify the issue which presently calls for determination.
   THE STATUTE

2. The following are the relevant provisions of the Customs Act 1901 (rearranged in a more logical sequence), in the form they took at the time the applicant first sought a Commercial Tariff Concession Order (CTCO).
   

s.269B(1)

"application" means an application section 269G for a concession order.

"concession order" means a Commercial Tariff Concession Order provided for by section 269C. s.269G(1) A person may make an application in writing to the Comptroller for a concession order in respect of particular goods specified in the application. 269C(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, declaring that the particular goods are goods to which a prescribed item specified in the order applies.

s.269C(1C) An order provided for by subsection (1), (1A) or (1B) is to be known as Commercial Tariff Concession Order. 269B(5) 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 1/4 of the factory or works cost 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. 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.

269B(7) For the purposes of this Part, a person shall be taken to be capable of producing goods in the normal course of business if, in the normal course of business, he is prepared to accept orders for the supply of such goods that have been, are being, or are to be, produced by him.

In these proceedings no issue arises as to the fact that goods serving similar functions to the particular goods in question are not produced in Australia (s.269C(1)(a)).

1. The sole issue is whether the second respondent erred in reaching the conclusion that he could not be satisfied that 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 (s.269C(1)(b)).
   THE APPLICATION FOR CTCO

2. The applicant's application for a CTCO in respect of the importation of goods described as "paper-making machine of 5.6 metre wire width" was made on 13 November 1985. The circumstances necessitating that application, the facts established in respect of it and the decision of the Comptroller's delegate on 21 April 1986 refusing the application are set out in detail at pages 223-227 (inclusive) of the report in Amcor. None of those facts has changed and it is unnecessary to repeat them here. However, the relevant pages should be regarded as being incorporated into these reasons. (Further evidence has, however, been adduced since the decision in Amcor and was taken into consideration when the matter was reconsidered by the second respondent.)

3. The applicant initially sought to have the decision of the original decision-maker (Mr Shakespear) reviewed by a single judge but was unsuccessful. It then appealed to the Full Court, with the result previously indicated.
   THE FULL COURT DECISION

4. In dealing with the aspect of the appeal which is presently relevant the Full Court in Amcor summarised the effect of the statutory provisions at p 229 as follows:
   

The decision maker was obliged to consider whether, within the meaning of the legislation, goods serving similar functions to the particular goods specified in the application (i.e. "paper-making machines, having a wire width of 5.6m or greater including initial spares, but not including other parts or components when imported separately") were not capable of being produced in Australia by any person in the normal course of business (s.269C(1)(b) and s.269G of the Customs Act). On the materials before the decision maker, the only candidate which might merit the description of a person capable of producing the goods in question in Australia in the normal course of business was Johns Perry. That company would be taken to be capable of producing goods in the normal course of business "if, in the normal course of business (it was) prepared to accept orders for the supply of such goods, that have been, are being, or are to be, produced by (Johns Perry)": s. 269B(7). Accordingly, in deciding whether Johns Perry was capable of producing goods in Australia in the normal course of business (s.269C(1)(b)), the decision maker had to determine whether or not, in the normal course of business, Johns Perry was prepared to accept orders for the supply of such goods that had been, were being, or were to be, produced by it. The expression "in the normal course of business" thus appears twice in these steps, but crucially in the second, namely the preparedness to accept orders. The consequence of such preparedness would be an affirmative answer to the question whether goods serving similar functions to the particular goods were capable of being produced in Australia by Johns Perry in the normal course of business: s.269C(1)(b). The result would then be that the Commercial Tariff Concession Order would not be made.

1. At p 230 the Full Court commented that "... the preparedness to accept orders of the necessary description must be a preparedness to accept 'in the normal course of business'", and later on the same page, after reproducing an extract from the evidence given by Shakespear in the Court below, observed that "... (t)he announced preparedness of Johns Perry to accept an order does not mean that preparedness was in the normal course of its business, there being an objective element in the expression 'in the normal course of business'".

2. On 15 April 1988 the Full Court allowed the appeal and ordered that the decision made on 21 April 1986 be set aside and that the applicant's application be referred to the Comptroller for further consideration.

3. An application for special leave to appeal to the High Court was refused on 12 August 1988 when it was observed by their Honours that "we do not think that the decision of the Full Court is attended with sufficient doubt to warrant the grant of special leave".
   THE PROCEEDINGS BEFORE RYAN J.

4. Because of what the applicant perceived to be the first respondent's reluctance to determine the CTCO application according to law, particularly in accordance with the interpretation of sections 269B and 269C expounded in Amcor, the applicant sought a writ of mandamus pursuant to section 39B of the Judiciary Act 1903.

5. The application for mandamus came before Ryan J. on 15, 19 December 1989 and 31 January 1990. On 15 February 1990 His Honour ordered:
   

That the respondents determine the applicant's application for a Commercial Tariff Concession Order according to law, and, in particular, in accordance with the interpretation of s.269C(1) and s.269B(7) of the Customs Act 1901 as in force on 13 November 1985, as enunciated by the Full Court of this Court in Amcor Ltd v Comptroller-General of Customs (1988) 79 ALR 221.

THE SECOND DETERMINATION OF THE CTCO APPLICATION

1. By letter dated 10 August 1990, the second respondent in his capacity as a delegate of the first respondent set out reasons for his decision to refuse to promulgate an order for the goods covered by the CTCO application. This letter contains the decision which the applicant now seeks to be reviewed.

2. The second respondent's letter contains 13 numbered paragraphs, all of which have some importance in this application but rather than quote the letter in full I will attempt below to summarise its contents.
   

Para 1: The previous proceedings are referred to. The paragraph concludes with the statement "I was left with the judgment of 15 April 1988 to execute."

Para 2: The material taken into account in reaching the decision is particularised. It is stated that all information utilized in arriving at the decision relates to a point in time no later than 21 April 1986 (the date of Shakespear's decision). Reference is made to a schedule in which is identified the evidence relied upon in making findings on material questions of fact. (It is patent from the contents of the schedule that much of the evidence was gathered subsequent to Shakespear's decision of 21 April 1986.)

Para 3: The effect of section 269C(1) is stated. Para 4: On the basis that it is agreed that the notional paper-making machine that Johns Perry claims it is capable of manufacturing is identical, the conclusion is stated that goods serving similar functions to the machine as imported, have been identified for the purpose of paragraph 269C(1)(b). Para 5: This paragraph states "Provided a local company can comply with the terms of subsections 269B(5) and 269B(6) of the Customs Act it is accepted as a genuine manufacturer." Para 6: After referring to the competing assertions as to the assumed extent of local cost in the production of the notional machine, the finding is made that had the order for the paper making machine been lodged with Johns Perry then the local factory or works cost contained in the total factory cost would not have been less than 25%.

Para 7: The estimated selling price of Johns Perry's notional machine is found to be calculated by that company to be around $A 12,000,000.

Para 8: Reference is made to a submission of the applicant's solicitors that for Johns Perry to satisfy the requirements of s.269B(6) the local manufacturer must be able to manufacture at least one, distinct, complete, sub-assembly. This submission is rejected. The alternative view is expressed that the manufacture within Australia of various components for inclusion throughout the entire paper making machine, if taken collectively, would satisfy the legal requirements. Para 9: Notwithstanding the opinion expressed in para 8, four examples are given of some of the substantial processes that would have been carried out in Australia had the order been received by Johns Perry.

Para 10: Matters to be taken into consideration in determining a company's ability to accept orders in the normal course of business are referred to. These include financial resources, suitable manufacturing premises, personnel and equipment and adequate technical expertise or access thereto. The finding is made that Johns Perry satisfies these requirements. Para 11: The finding is made that some 60% of business conducted by Johns Perry is represented by manufacture resulting from the acceptance of one-off contracts and that had the order been placed on Johns Perry its acceptance would have been within that company's normal course of business. Para 12: The finding is made that had the order been placed on Johns Perry the terms and conditions of sale that would have applied would have been within acceptable commercial limits. Para 13: The conclusion is expressed that in terms of paragraph 269C(1)(b) the decision maker cannot be satisfied that Johns Perry was not capable of manufacturing, in conjunction with Beloit, a paper making machine serving a similar function to the machine specified in the CTCO application. Consequently, the CTCO is refused.

1. Before proceeding further I propose to comment upon some aspects of the second respondent's reasons.

2. First, in paragraph 5 he says that provided a local company can comply with the terms of subsections (5) and (6) of section 269B "it is accepted as a genuine manufacturer". I take this statement to mean that goods will for the purposes of the Act be regarded as being produced in Australia if not less than one quarter of the factory or works cost 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;

and if at least one substantial process in the manufacture of the goods is carried out in Australia. Paragraph 5 of the decision seeks to state in positive terms what is stated in negative terms in the Act. I do not think that anything turns upon this point and it certainly does not disclose any error on the decision maker's part as to the correct construction of the relevant subsections.

1. In paragraph 6 the second respondent has expressed a finding of fact that had the order for the paper making machine been lodged with Johns Perry, the local factory or works cost contained in the total factory cost would not have been less than 25%. The term local factory or works cost is clearly meant to refer to the matters referred to in sub-paragraphs (i), (ii) and (iii) of paragraph 269B(5)(b). The finding was arrived at upon a consideration of competing assertions on the one hand (by Johns Perry) that the local factory or works cost would have approximated 44% and on the other hand (by the applicant) that they would have amounted to 21.6%. Given the speculative nature of both estimates, it seems perfectly reasonable that in the exercise of a value judgment it was open to the second respondent to conclude that the total local factory or works cost would not have been less than 25%. There was no obligation upon him to be any more precise.

2. Subsection 269B(6) bears upon the meaning to be attributed to the words "partly manufactured in Australia" used in paragraph 269B(5)(a). Again the subsection is expressed in the negative but in substance it says that goods will be taken to have been partly manufactured in Australia if at least one substantial process in the manufacture of the goods is carried out in Australia. There is a dispute between the parties as to what is meant by "one substantial process" in the manufacture of goods. The applicant says that it involves the manufacture of at least one, distinct, complete, sub-assembly. The respondents adopt the view that the manufacture within Australia of various components for inclusion throughout the entire machine, if taken collectively, would be sufficient. The dispute is, however, one that can await another occasion for resolution, this for the reason that the second respondent found as fact that at least 4 identified substantial processes would have been carried out in Australia. This finding was clearly open on the material before the second respondent.

3. Before a CTCO can be made the decision maker must, inter alia, be satisfied that:
   

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. (s.269C(1)(b))

1. Subsection 269B(7) deals with the question of capacity to produce goods in the normal course of business and deems such capacity to exist if:
   

in the normal course of business (a person) is prepared to accept orders for the supply of such goods that have been, are being, or are to be, produced by him.

1. The extent of the normal course of any person's business will always be a question of fact to be decided on the evidentiary material at the disposal of the decision maker. In Amcor the Full Court said (at pp 231-2):
   

We read the provisions of Pt XVA as being concerned with the making of a practical and realistic assessment of the situation as to local manufacturing capability. In a given case, that assessment will produce results that affect the interests of local suppliers and the applicant for the order, as well as the national exchequer. The expression "in the normal course of business" does not, in our view, have a meaning which precludes a preparedness to take orders for a supply of goods not previously produced by the local supplier. Thus, it may be normal, in the sense of usual or to be reasonably expected, that a particular product, may be developed from an existing range. However, it is implicit in the requirement of preparedness to accept orders for particular goods in the normal course of business that the supplier has an ability in the normal course of business to attract such orders; otherwise, it would be difficult to see how the acceptance of such orders could be part of the norm. The supplier must be prepared to accept orders in a competitive environment and therefore to supply the goods of acceptable quality, at a competitive price, within a reasonable time and to comply with any other obligations placed upon suppliers of such goods in the normal course of trade. Accordingly, an exceptional or extraordinary departure from the range and character of orders which the supplier accepted may imply, ex hypothesi, that the acceptance of such an order was not in the normal course of business: cf Saracen Shoe Co Ltd v Minister of Customs (1932) NZLR 765 at 775, discussed by Beaumont J. in McDowell and Partners Pty Ltd v Button (1983) 50 ALR 647 at 659-61. It follows that the decision maker fell into error in construing s.269B(7) of the Customs Act and that this error flowed into the interpretation given s.269C(1)(b) of that Act. Accordingly, the appellant was entitled to an order for review under the ADJR Act.

1. Paragraphs 7, 10 and 12 of the decision appear to have directly addressed the issues raised in this passage from the Full Court's reasons. First, there is the assertion in paragraph 7 that the estimated selling price of Johns Perry's notional machine was said to be around $12,000,000. This figure has to be compared with the known contract price of $10,133,059.97. Second, there is the second respondent's assessment (in paragraph 10) of Johns Perry's financial resources, manufacturing premises, personnel, equipment, and technical expertise (or access thereto) which satisfied him that Johns Perry had the "ability to accept orders in the ordinary course of business". Although it may have been expressed more directly there can be no question that this is a finding that Johns Perry had the necessary infrastructure, financial resources and expertise to undertake the manufacture of the goods in question had the order been placed with it. Third, there is the positive finding (in paragraph 12) that had the order been placed on Johns Perry the terms and conditions that would have applied would have been within acceptable commercial limits. The only conclusion that can be drawn from the foregoing is that the second respondent made "a practical and realistic assessment of the situation as to local manufacturing capacity". But that did not of course establish more than that the preparedness of Johns Perry to accept an order for the goods was more than a mere assertion but rather was an assertion backed by actual capacity to perform such a contract.

2. Had the second respondent gone no further than the findings already canvassed it may well have been said of him that he had fallen into much the same error as his predecessor. But that is not the case. The second respondent went beyond that issue and examined the nature of the business of Johns Perry and concluded that some 60% of its business is represented by manufacture resulting from the acceptance of one-off contracts. He drew the conclusion that the acceptance of an order for the paper making machine would be in the ordinary course of Johns Perry's business, and would have been so at the time of Shakespear's original decision.
   THE GROUNDS FOR SEEKING REVIEW

3. The grounds for review as stated and particularised in the application for review occupy 11 pages of typing. For the present it is sufficient to indicate that the general headings under which the various complaints are made are those referred to in subsection 5(1) of the ADJR Act in paragraphs (d) (decision not authorised by enactment), (f) (decision involved an error of law), (e) (decision was an improper exercise of power), (h) (there was no evidence or other material to justify the making of the decision) and (a) (a breach of the rules of natural justice occurred in the making of the decision). In addition, the applicant relies on "Such other grounds as may be relied upon pursuant to section 12(6) of the Administrative Decisions Judicial Review) Act 1977", which I take to be an erroneous reference to section 11(6). At the hearing the applicant did not press the ground based upon the claimed denial of natural justice nor was the final ground referred to.

4. Rather than deal in order with the detailed particulars pleaded in the application, many of which are repetitious, I propose to outline the case as presented in argument by counsel for the applicant and where appropriate to indicate my response thereto.
   THE CASE FOR THE APPLICANT

5. Counsel identified his first argument as relating to "the question whether Johns Perry's preparedness to accept an order was one in the ordinary course of their business". I assume that the reference to "ordinary course of business" was intended to be a reference to "normal course of business".

6. It is said on behalf of the applicant that the second respondent's reasons disclose that whilst he has accepted the correctness of the Full Court's decision, he has not accepted the correctness of the Full Court saying that readiness to accept an order, combined with the ability to produce the machine as a one-off, and the fact that Johns Perry's business involved one-off manufacture, does not bring it within subsection (7) of section 269B. Counsel expanded on this argument thus (T/s p 44):
   

The full court said that's not enough. But then went on to say in a helpful way what perhaps might be enough. And the sort of thing that would be required to take one beyond that threshold point which wasn't good enough to bring one within the subsection. They said that a development of an existing product range could lead to a new machine being made in the normal course of a business. And they said in the present case that further investigation might show that Johns Perry had made complete paper making machines in the past, and had utilised the relationship they had with Beloit in the manner that they contemplated that they would in respect of the Amcor machine.

In our submission, the clear suggestion that the full court made was that those sorts of matters might amount to an extension or be analogous to an extension of an existing practice, which was not so different from what had gone before, as to be said to be outside Johns Perry's normal course of business.

and further at T/s p 45:

In our submission, Customs consistently refuses to acknowledge that the tariff system is designed to protect existing industry, and it's not designed to provide a tariff wall to a person who wants to start a new business in a new market. And in our submission, there's a logical fallacy inherent in saying that because it's part of Johns Perry's normal business to make one off machinery, and it can make this as a one off machine, therefore an order taken by Johns Perry would be one in the normal course of its business.

1. One of the difficulties about this case, and no doubt at least part of the reason why the first respondent initially had some difficulty in accepting the Full Court's decision, is that having identified the error of law made by the decision maker that warranted his decision being set aside, the reasons proceed to make comments about the facts of the case which suggest that the Full Court has made its own findings. Indeed, in its application the applicant asserts under the general ground that the decision was an improper exercise of the power conferred by the Act, that the second respondent failed to take into account relevant considerations, and in particular:
   

disregarded the express findings of fact by the Full Court in relation to Johns Perry.

1. The question decided by the Full Court had to do with Shakespear's approach to the construction of s.269C(7). Whereas Shakespear regarded the willingness to accept orders as evidence of the normal course of business, the Full Court took the view that he should have first ascertained what was the normal course of Johns Perry's business and then determined whether it would have been in the normal course of that business to accept the order in question. I do not think that the Full Court's decision is authority for any other proposition. To the extent that the reasons provide an indication of the type of facts which may provide indicia of what might be in the normal course of a company's business, the comments are obviously helpful and were clearly averted to in the decision later given by the second respondent, but nothing in the Full Court's reasons can be said to bind the respondents as to any finding of fact. And given that Shakespear did not specifically address the question of what was the normal course of Johns Perry's business, it was entirely appropriate that upon the matter being referred for reconsideration, further evidentiary material should be sought to provide a factual basis for such a finding. Indeed, the Full Court clearly indicated that further inquiry would be necessary.

2. Counsel for the applicant addressed some argument as to his understanding of what is a one-off manufacture. At p 45 of the transcript the argument is put thus:
   

Your Honour, the fact is that this is not one off machinery. It's not - why it be available machinery in the sense that you can go to a local shop and buy it, but it is not a unique machine adapted to serve the peculiar requirements of Amcor. It's a machine of the type of which there's an established market. An established market which established manufacturers exist to serve. And it's a machine that produces a commonly needed product. Not a peculiar product; not something which only Amcor and nobody else wants. But a common product, paper that's used in offices and computers. And in our submission, Johns Perry's business of making special one off machines in its capacity with Beloit to produce this machine, cannot constitute a willingness to accept orders for machines of this type in the ordinary course of their business. If it were so, it would lead, we would say, to the absurd result that Johns Perry at its whim would be in a position to deny a commercial tariff concession order to any machine that it might choose to make, or could make.

It may be able to produce as a one off product a washing machine. And according to the reasoning of customs, if it could produce a washing machine, and it said it wanted to get into that market, it could produce it as a one off. It's part of our business to do one off things, ergo, there we are. And we're entitled to insist that commercial tariff concession order not be granted.

1. It may well be that the result contemplated by counsel is that which the legislation permits, albeit unintentionally. But the argument about one-off manufacture in this case has to do not with the policy of the Act but with the fact that Johns Perry has not previously manufactured a machine of the type in question but nevertheless asserts that it is in the normal course of its business to do so. This is said to be so because a large part of its business involves the manufacture of single items of goods rather than the repetitious manufacture of the same items. It is common cause that Johns Perry is a well known heavy engineer (Amcor p 223, line 44). Indeed, it was to Johns Perry that the applicant turned to support its original CTCO application, the inference being that Johns Perry was the manufacturer most likely to be capable of producing the goods in Australia. The second respondent's finding in paragraph 11 of the decision supports the conclusion that it would not have been an extraordinary departure from its normal course of business for Johns Perry to have accepted an order for the manufacture of the paper making machine.

2. The second aspect of the applicant's argument goes to the correct application of subsections (5) and (6) of section 269B. It is said that these subsections dilute the ordinary meaning of "produced in Australia" and render something less as production in Australia than the ordinary meaning of those words connote. But, it is said, the subsections apply to goods which have been produced in Australia and do not apply to goods which have not been produced, but are to be produced. The argument was advanced by counsel in these terms (T/s pp 46-7):
   

We would say that those subsections, 5 and 6 of section 269B, dilute the meaning of, the ordinary meaning of the phrase "produced in Australia", and render something less as production in Australia than the ordinary meaning of those words connote. But they only apply, those subsections we say, to goods which have been produced in Australia. They do not apply to goods which have not been produced, but are to be produced, and we would say that that is clear enough, and part 15A clearly distinguishes between goods which are being produced, or have been produced on the one hand and goods that are to be produced on the other. Section 269C(1), which is the starting point of it all, makes that distinction clear. And we submit that section 269B(7) is only concerned with goods which can be described as goods that have been produced in Australia. In our submission, the question is one of whether, having regard to the ordinary meaning of those words and not a special deemed definition of what they mean, the question is whether Johns Perry was capable of producing goods of this particular type in Australia, and the question is not, never has been, whether 25 percent of the goods and one substantial process can be done or carried out in Australia.

It is clear enough that the delegate simply did not turn his mind to that question. In our submission, the question is one that depends on the application of ordinary words bearing their ordinary usual meaning. The question is, in this present, fitting it to the facts of the present case, whether a machine or whether some parts are made in Australia but over 50 per cent of the labour and components are supplied from a foreign source, is that machine one which can properly be called a machine produced in Australia. In our submission it is not. We accept, your Honour, that it is not necessary that every last item of a particular good, and in particular a complex, huge machine, must be made in Australia for it to answer the description of a machine which is produced in Australia. However, we would say that it must, that is, the machine itself, must at least be substantially made here, and making less than half of the principal components and using foreign technicians to design it and supervise it puts Johns Perry all together outside the concept of a producer of a machine in Australia.

1. The construction of s.269C(1) is not assisted by the drafting style used. The subsection requires the Comptroller to be satisfied of two negative facts, namely, that relevant goods are not produced in Australia and that relevant goods are not capable of being produced in Australia by any person in the normal course of business. If the Comptroller is satisfied as to both, he is required to make an order. Logically it is inescapable that if it is shown that relevant goods are capable of being produced in Australia by a person in the normal course of business, the Comptroller will not be able to be satisfied as to the matter referred to in paragraph 269C(1)(b).

2. Subsections 269B(5) and (7) appear to be intended to provide definitions of terms used in s.269C(1). Subsection 269B(6) provides a subsidiary definition for the term 'partly manufactured in Australia' used in s.269B(5)(a). Subsections 269B(5) and (6) together provide the criteria to be applied in determining for the purpose of paragraph 269C(1)(a) whether goods are not produced in Australia. Subsection 269B(7) on the other hand takes up the wording used in paragraph 269C(1)(b) and provides a statutory meaning for the phrase 'goods ... capable of being produced in Australia by any person in the normal course of business'.

3. In the facts of the present case paragraph 269C(1)(a) presents no problems. It is common cause that goods serving similar functions to the paper making machine are not produced in Australia. The only contentious question which the second respondent had to consider was whether relevant goods are not capable of being produced in Australia by any person in the normal course of business, and quite appropriately he addressed the issues raised by subsection 269B(7).

4. It is conceivable that there will be circumstances in which, although relevant goods are not presently produced in Australia, they may have been so produced in the past, or may even be in the process of production but not yet actually produced. These circumstances are covered by subsection 269B(7) as indeed is the circumstance that a person is in the future to produce those goods. In Amcor the Full Court said at pp 229-230:
   

We accept also the submission for the respondents that the closing phrases in s.269B(7) ("that have been, are being, or are to be, produced by him") and the juxtaposition therein of the expressions "for the supply" and "produced by him", mean that a producer may relevantly be prepared to accept orders for the supply of goods if (i) they are then in stock; (ii) they are then in production; or (iii) they are neither in stock nor yet in production, but to be produced in fulfilment of the very order or orders in question.

1. The function of subsection 269B(7) is to identify circumstances in which for the purpose of Part XVA of the Act a person is to be regarded as having the capacity to produce goods in the normal course of business. It does not assist in determining the normal course of the person's business nor provide any indication as to what is meant by the word "produced" in paragraph 269C(1)(b).

2. It is implicit in the approach adopted by the second respondent that he regarded it as necessary, in determining the capacity of Johns Perry to produce the notional paper making machine in the normal course of business, that at the end of the day, once produced the machine would be goods produced in Australia within the meaning ascribed to those words by subsections 269B(5) and (6). This seems to be an eminently sensible approach although there is no express statutory warrant for it. The findings of fact made by the second respondent clearly indicate that within the framework of the Act, the notional paper making machine, if produced by Johns Perry would be goods produced in Australia.

3. The applicant argues that to satisfy paragraph 269C(1)(b) there must be a capacity to supply a product which is substantially made in Australia. But to adopt that approach involves the decision maker in making a value judgment on uncertain criteria. In my view this would be entirely inconsistent with the legislative regime of Part XVA which goes to considerable length to provide precise definitions for most of the terms used. Even assuming that subsections 269B(5) and (6) do not control the idea of production in Australia in paragraph 269C(1)(b), there seems to be no reason why the ordinary meaning of the words used should not include a case in which perhaps all of the component parts of a piece of equipment are imported and the only local contribution to the production of the end product is the provision of the labour associated with the assembly of the parts. In such a case the minimum requirements of subsections 269B(5) and (6) may well not be met, yet it would seem to be a case in which in the ordinary meaning of the words, the goods could be said to have been produced in Australia. The appellant's argument does not necessarily achieve the end sought.

4. The purpose or object underlying Part XVA of the Act would, in my view, be promoted by adopting the approach followed by the second respondent. Such a construction in no way conflicts with any specific provision of the legislation and is supported in a general way by the introductory words of subsections 269B(5) and (6) which refer to "the purposes of (the) Part" rather than "the purposes of paragraph 269C(1)(a)."

5. I am of the opinion that upon the proper construction of the legislation, the second respondent did not misconstrue any relevant provision of the Act nor did he fail to make any finding of fact required of him in the exercise of his function under section 269C(1).
   CONCLUSION

6. The following is a summary of the findings of fact made by the second respondent.
   

Fact 1: The notional paper making machine which Johns Perry claims to be capable of producing is accepted as being goods serving similar functions to the imported goods. Fact 2: Had the order for the paper making machine been placed on Johns Perry, at least one substantial process in the manufacture of the goods would have been carried out in Australia. Fact 3: Not less than one quarter of the factory or works cost of the goods would have been represented by the sum of the items referred to in s.269B(5)(b).

Fact 4: It would have been in the normal course of Johns Perry's business to accept the order for the supply of the goods Fact 5: Johns Perry had the ability to accept the order in the normal course of its business and was prepared to do so.

All of these findings were, in my opinion, open to the second respondent on the material before him.

1. The conclusions which, by application of subsections 269B(5), (6) and (7), follow from these findings are that:
   

(i) Johns Perry was capable of producing the goods in the normal course of business.

(ii) The goods produced would have been goods produced in Australia within the meaning of the Act.

1. It is an inevitable consequence, therefore, that the second respondent could not be satisfied that "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 CTCO was, therefore, properly refused.

2. I would dismiss the application for review.