Blackwood Hodge (Australia) Pty Ltd v Collector of Customs (NSW)

[1980] FCA 117

Re: BLACKWOOD HODGE (AUSTRALIA) PTY. LTD.
And: THE COLLECTOR OF CUSTOMS, NEW SOUTH WALES (1980) 47 FLR 131
No. G4 of 1980
Customs and Excise

COURT

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Smithers(1), Fisher(2) and Sheppard(3) JJ.

CATCHWORDS

Customs and Excise - customs duties - appeal from Administrative Appeals Tribunal - importation of vehicles having the characteristics of tractors - whether vehicles "tractors" as defined in Tariff - if so, whether they were derivatives of "agricultural tractors" as defined therein - whether it was open to the Tribunal as the tribunal of fact to conclude that the vehicles were "lifting machinery" within the Tariff - consideration of the question of whether the vehicles were imported in an incomplete or unfinished state and, if so, had the essential character of lifting machinery - observations on what amounts to a question of law and the circumstances in which the Court will interfere with the decision of an administrative tribunal whose decisions on questions of fact are final - Customs Tariff 1966, paragraphs 84.23.311 and 84.22.521 of Part II of first schedule, interpretative rule 2(1)(a) and notes 2 and 7 to Chapter 87 of Part II of first schedule.

Customs and Excise - Duty on imported vehicles - Whether lifting machinery - Whether incomplete or unfinished state having essential characteristics of lifting machinery - Whether derivatives of agricultural tractors - Decisions of Administrative Appeals Tribunal - Whether questions of law raised - "Derivative" - "Essential character" - "Hauling" - Customs Tariff 1966. First Schedule, Pt I interpretative r. 2 (1) (a); Pt II pars. 84.23.311, 84.22.521, 87.01.31; Pt II Ch. 87 notes 2, 7 - Administrative Appeals Tribunal Act 1975 (Cth), s. 44.

HEADNOTE

The applicant appealed to the Administrative Appeals Tribunal against the assessment by the respondent of the customs duty payable in respect of four vehicles it had imported. The Tribunal decided that the vehicles were properly classified under par. 84.22.521 of the Customs Tariff 1966. Item 84.22 referred to "lifting, handling, loading or unloading machinery", par. 84.22.52 referred to "other machinery . . ." and par. 84.22.521 referred to machinery within par. 84.22.52 which did not have a working weight of more than fifty tonnes. The Tribunal in reaching those decisions applied interpretative r. 2 (1) (a) of the Customs Tariff to conclude that the vehicles were imported in an incomplete or unfinished state but had the essential character of goods described in par. 84.22.521. The applicant contended that the vehicles came within par. 87.01.31 of the Tariff which referred to: "Agricultural wheeled tractors and other wheeled tractors that are derivatives of agricultural tractors."

On appeal.

Held: Per curiam - (1) The appeal being limited to a question of law pursuant to s. 44 of the Administrative Appeals Tribunal Act 1975, the applicant had to demonstrate that the evidence was such that the vehicles must fall within the words of the paragraph it relied on. Currie v. Commissioners of Inland Revenue, (1921) 2 KB 332; Lombardo v. Federal Commissioner of Taxation (1979), 40 FLR 208, referred to.

Per Fisher J. - Quaere whether any decision of an administrative body such as the Tribunal can be said to involve a question of law because it is based on insufficient evidence.

Federal Commissioner of Taxation v. Miller (1946), 73 CLR 93, referred to.
(2) The vehicles did not fall within par. 87.01.31 of the Tariff because:

Per Smithers J. - They were not constructed essentially for hauling or pushing within the meaning given to "tractor" by note 2 to Ch. 87. The vehicles were a derivative of an agricultural tractor within the meaning of par. 87.01.31.

Per Fisher and Sheppard JJ. - The vehicles had not been developed from an actual existing agricultural tractor, it being insufficient that the vehicles were modelled upon something which in former times was an agricultural tractor or part thereof.
(3) Per Fisher and Sheppard JJ., Smithers J. dissenting - On the evidence taking into account the intrinsic nature of the vehicles themselves at the date of importation, it was open to the Tribunal to conclude that the vehicles were imported in an incomplete state and had the essential character of lifting machinery.

Per Smithers J. - The machines were incomplete in so significant a respect that within the meaning of interpretative r. 2 (1) (a) they could not be said to have the essential character of lifting machinery and the Tribunal's decision to the contrary involved an error of law.
(4) Appeal dismissed.

HEARING

Sydney, 1980, February 21-22; August 22. #DATE 22:8:1980

APPEAL.

The applicant appealed under s. 44 of the Administrative Appeals Tribunal Act 1975 from a decision of the Administrative Appeals Tribunal.

The facts appear from the judgment of Sheppard J.

R. W. R. Parker Q.C. and M. Stanton, for the applicant.

R. J. Burbidge Q.C. and J. J. Steele, for the respondent.

Cur. adv. vult.

Solicitors for the applicant: H. G. Starke & Associates.

Solicitor for the respondent: B. J. O'Donovan, Commonwealth Crown Solicitor.

T. J. GINNANE

ORDER

1. The appeal be dismissed.

2. The decisions of the Administrative Appeals Tribunal of 24 December, 1979, be affirmed.

3. The applicant pay to the respondent his costs of the appeal.

JUDGE1

In this matter I have had the advantage of reading the reasons of my brother Sheppard and I take the privilege of referring to and adopting his statement of the circumstances in which the appeal is brought, the relevant Tariff provisions and the basic facts. I would agree with him in his views of the burdens carried by the appellant to support its appeal.

The Administrative Appeals Tribunal decided that the vehicles in question fall within the relevant provisions of sub-paragraph 84.22.251 of the Tariff as interpreted by reference to Tariff rule 2(1)(a) applicable to Chapter 84 of the Tariff, as "lifting, handling, loading or unloading machinery imported in an incomplete state but having the essential character of goods of that kind."

In this appeal the appellant contends in the first instance that the Tribunal erred in law in making the decisions referred to above. An appeal of this kind from the Administrative Appeals Tribunal lies only on a question of law. Accordingly in order to succeed in its appeal the appellant must demonstrate that on no basis could the Tribunal have made the findings upon which its decision was based. In respect of these findings I would repeat the passage in the judgment of Sheppard J. in the following terms: -

"In the condition in which the vehicles were imported they were plainly not telphers nor conveyers. Nor, upon the uncontradicted description of the vehicles in Mr. Wood's evidence earlier recounted, does it readily occur to one that they are properly described, in the condition in which they came into this country, as lifting, handling, loading and unloading machinery. In their condition upon importation they could not be used for any of those purposes. The Tribunal itself was of that view. It was able to reach the conclusion that the vehicles were within the paragraph only by reason of the operation it considered interpretative rule 2(1)(a) to have."

The basis for that conclusion is set out in the following paragraph of the Tribunal's reasons.

"The findings set out above and our description of the units make it clear that the machine has been designed for the purpose of adding various implements or accessories to carry out a wide variety of functions. The units are clearly used with many different accessories attached carrying out the many functions which they were constructed to perform. We agree with the submission that the modifications performed by the supplier upon the 'skid units' purchased from 'International Harvester' and 'Ford Tractor Division' reveal that the imported machines, although incomplete, have been committed to being completed so as to be able to perform the functions specified within item 84.22 and were sufficiently complete to be identified as belonging to the classification in question. It is clear that the imported units have been adapted to accept a mast and forks for lifting. Also the attachment of hydraulic rams indicates that the machines have been constructed for lifting purposes. Altogether we consider that the units, although incomplete and unfinished, have a character which is on the evidence sufficient to support the classification contended for by the Collector."

I doubt that the Tribunal in that paragraph came to grips with the real tests to be applied under rule 2(1)(a). However I do not doubt that by the application of the appropriate tests the finding that the vehicles in question were lifting, handling, loading or unloading machinery imported in an incomplete state was justified.

It is convenient from this point to use the expression "unit", in the singular to refer to all the vehicles actually under discussion. All observations herein are equally applicable to each vehicle. The imported unit was clearly machinery of the self-propelling tractor kind. As it stood it was equipped to pull other vehicles or implements or to act as a power unit and for controlling of various items of equipment which might be fitted to it. It had three point linkage and provisions for power take off. It had rams so placed so as to supply hydraulic power to forklift equipment on a mast or to other equipment such as a dozer blade, also on a mast. It had also what is described as a third hydraulic double action spool valve for use with many of the attachments available. It could supply power to items such as pumps or other machines. It would accept as a fitting equipment such as harrows, rotators, road sweepers and the like. In anticipation of its use in lifting loads it is fitted with a counter weight at what one may call its rear end. It may well be that the counter weight is useful when the machine is operating with heavy equipment such as a dozer blade or road sweeper. As the unit stood on the Customs House floor it could not lift, handle, load or unload any item of goods or materials.

It is to be observed that the expression "lifting, handling, loading or unloading" refers not to lifting or handling of an item of equipment such as the road sweeper or indeed the fork lift mast itself when fitted to the unit, but to lifting, handling, loading and unloading goods or materials of some kind by means of that equipment. In Chandler & Co. v. Collector of Customs (1907) 4 C.L.R. 1719 at p. 1725 Griffith C.J. speaking with reference to a tariff provision concerning articles with a tariff designation of 'manufactures of paper for advertising purposes' said that the words 'for advertising purposes' did not relate to the intention or state of mind of the importer. He added, ' such words are words of differentiation denoting some quality apparent in the article itself to persons who know its character and which shows that it is especially fit for the particular purpose specified rather than any other.'

It seems to me that the words "lifting, handling, loading or unloading" are also words of differentiation denoting a quality apparent in the article in question to persons who know its character. Accordingly the question is whether the unit standing on the Customs House foor is in itself, to those who know, not merely a tractor power unit useful for many purposes including the operation of equipment which may be fitted to it for the purpose of lifting goods or digging ground or driving a pump, but itself lifting, handling, loading or unloading machinery.

Agreeably with the above it would seem that whether the unit satisfies the description, "lifting, handling, loading or unloading machinery imported in an incomplete state" depends upon whether as imported, it has some quality apparent to persons who know its character which shows that it is within that definition. Mr. Wood, the Marketing Manager of the Manitou division of the appellant in Australia stated in his evidence that in Australia the unit when complete is primarily a lifting machine. And it would appear from his evidence that the same is true of the completed unit even in France and the United Kingdom, although its use for general agricultural purposes in those countries is quite extensive. However no witness stated that without the mast the unit is lifting, handling, loading or unloading machinery, or what is more to the point, lifting, handling, loading or unloading machinery imported in an incomplete state.

But the Tribunal was satisfied on the evidence to draw the conclusion that it was. I think the conclusion was justified. I do so because a person knowing the character of the unit would know that the essential character of the unit was to serve as the mobile power plant and operating base of the unit when equipped with the fork lift mast and that the whole composite entity operated as one integrated unit with interchange of hyudraulic fluid between the machine and the lifting gear of the mast. He would know that it is customary for the unit to be supplied by the manufacturers with fork lift mast attached, and that on arrival in Australia the appellant fits the mast to the unit before selling it. He would know that even for carrying out most of the operations of the unit other than lifting, handling loading or unloading materials the appropriate equipment is fitted to the mast. He would know that the manufacturer's name of the unit for marketing purposes was "site fork lift truck". To a person so informed it would be, in my opinion, that qualities apparent in the unit itself would reveal that it was properly described as lifting, handling, loading or unloading machinery imported in an incomplete state. Certainly the existence and situation of the rams and the existence and situation of the counter weight and the provision to accept the mast all suggest that the machinery was constructed to receive further equipment to be viable and that, that equipment would contain lifting gear to be operated by hydraulic power supplied by the unit.

Accordingly I would accept the finding of the Tribunal that the unit is lifting, handling, loading or unloading machinery imported in an incomplete state. But to qualify as an item within sub-para. 84.22.521 a unit which is lifting, handling, loading or unloading machinery imported in an incomplete state must have, as imported "the essential character" of goods of that kind, that is of lifting, handling loading or unloading machinery. (see Note 2(1)(a) to Chapter 84)

It appears to me that in the context of the schedule the expression "essential character" is used with respect to the physical character or make-up of the article in question. When it is contemplated by the terms of the schedule that an article may be treated as lifting machinery even if it be an incomplete item of such machinery, clearly the reference is to its physical condition. When the terms of the schedule proceed to limit the circumstances in which lifting machinery physically incomplete will qualify as lifting machinery, by stipulating that the machine must have the essential character of lifting machinery, it is to my mind, still referring to the physical condition of the article in question. In the absence of the essential feature of a lifting machine, namely basic gear by which things may be lifted it is difficult to think that the unit has the essential character of lifting machinery.

"A thing may be said to be essential to an entity, if that entity would not be what it is to be, or is, or was, if the part in question were wanting". (Fowler's English Usage 1961 p.150) It is only when it is considered as an entity which includes the mast that this machine qualifies as lifting machinery at all. Without the mast, as it appears to me, it does not have the character of a site fork lift truck. Without the mast that which is left does not have the essential character of machinery equipped for lifting, handling, loading or unloading materials. It is not a case, for instance, in which the unit was imported with the mast attached but inoperative because of the absence of some part, the absence of which did not, from a physical point of view, deprive the machine of the basic elements of a materials lifting machine.

Note 2(1)(a) to Chapter 84 is a saving clause, designed to avoid the frustration of the relevant provisions by a procedure of importing a whole machine less some part possibly vital, but the absence of which does not deprive it, as seen on the floor, of the character, physically speaking, of a goods lifting machine. In that case the machine can be seen to be substantially of the designated kind and only prevented from satisfying the designation, namely a lifting machine, because it is in a condition properly described as incomplete or unfinished. But this saving provision does not apply when the essential element is missing, that is, when that which is missing is a major element relating in particular to that factor which is central to the relevant designation contained in the Tariff Schedule, namely the basic gear for performing a lifting operation.

It is pointed out that the unit is adapted to accept a mast and forks for lifting goods and that the attachment of the rams indicate that the unit has been constructed for purposes of receiving gear to permit it to lift and convey goods. But the rams will serve gear for raising and lowering various attachments which do not lift or convey goods. The relevant consideration is not whether the unit on the floor was designed to receive other parts, with which, when fitted, it would be able to perform lifting functions or whether it contains a good proportion of the "gear" which will contribute to lifting when the machine is complete but whether, as it stood it had "the essential character" of lifting machinery. Certainly it had various features essential to lifting machinery but it was incomplete in so significant a respect that it could not be said to have the "essential character" of lifting machinery. As the machine stood for assessment of duty it did not have that minimum of basic physical "furniture" with which to lift. For the purposes of current discussion one is concerned not with the concept of the machine complete with mast, but with the machine as it stood on the floor. If it is said that this is a narrow view to take of the expression "essential character" of lifting, handling, loading or unloading machinery I think the answer is that for the purpose in hand it is not merely some significant mechanical features which would contribute to lifting capacity that the unit was required to have but the essential character in a physical sense of machinery that is lifting, handling, loading or unloading machinery, namely the basic elements by which lifting, handling, loading or unloading are possible.

If then the Tribunal erred in holding that the unit on the floor had the essential character of a lifting machine it is necessary to enquire whether the error was one of law. In my view it was. It seems clear that the Tribunal construed the provision of the schedule which requires that the article in question should have the essential character of lifting machinery as requiring only that it should be apparent that the unit was designed and constructed to perform lifting operations if the mast or similar equipment be fitted thereto and that it had some significant physical elements of a lifting machine. But the provision is concerned with the physical condition of the unit as it lay on the floor and the test is whether, as it stood, it had the essential character, namely the essential features, of lifting machinery. The Tribunal took a different view of the construction of the relevant statutory provision and was thus able to say that the machine had the essential character of a lifting machine although the gear essential to enable it carry out that function was missing. The missing part was a major item of equipment of a large and complicated kind without which lifting was impossible and upon which, considered as a component of the machine, its very identity as a machine capable of lifting depended. A human being has a character separate from his physical components but that is not true of a site fork lift truck. In the light of the foregoing I am led to conclude that the articles in question do not satisfy the Tariff designation in sub-para. 84.22.521. I should add that if the view expressed herein concerning sub-para. 84.22.52 of the Tariff had commended itself to a majority of the Court a question would have arisen as to whether the matter should be placed in the list for argument on the point. It was more or less passed over at hearing.

I turn therefore to Tariff para.87.01.31. The appellant contends that the unit is to be regarded for tariff purposes as a wheeled tractor, that is, derivative of agricultural tractors within the scope of that item. To qualify as a tractor at all, for this purpose, it must, in accordance with note 2 to Chapter 87 of the Tariff appear that the unit is "a vehicle constructed essentially for hauling or pushing another vehicle, appliance or load." To qualify ultimately as a vehicle within the scope of para.87.01.31 it must appear that not only is it to be regarded as a tractor but as a wheeled tractor being a derivative of agricultural tractors.

The Tribunal was prepared to assume but not to decide that the unit was to be regarded as a wheeled tractor, but took the view that it could not be regarded as a derivative of an agricultural tractor. However, to have made a decision in favour of the appellant on this issue it would have been necessary for the Tribunal to have made a finding that the unit was constructed essentially for hauling or pushing another vehicle, appliance or load.

In this connection, it appears to me, that the essential question was, what purpose was it by reference to which the form of construction was determined? If one can identify that purpose one can then say for what it was essentially that the unit was constructed. It is a question therefore, whether either hauling or pushing or both, were in the appropriate sense, the purpose or purposes to which essentially, the form of construction as adopted by the manufacturer was directed.

In relation to that question it is appropriate, I think, to consider the ultimate purposes for which the unit was constructed, that is the purposes of the unit as a whole with the fork lift mast fitted to it. To decide the critical question, "hauling" must be defined. There is no difficulty about pushing. The Tribunal referred to the definition in the Random House Dictionary of the English Language in which the following meanings of "hauling" appear, namely,

"to pull or draw with force, move by drawing, drag," "to cart or transport, carry," "to do carting or transport, or move freight commercially".

The Shorter Oxford Dictionary with respect to the verb "to haul" supplies meanings including,

"to pull or drag with force" and "to transport by cart or other conveyance."

The New Oxford Dictionary defines "hauling" as "the action of pulling, dragging or traction". "Haulier" is defined as,

"a man employed in hauling something e.g. coal in a mine."

Although it is true that "hauling" is sometimes applied to the movement of goods by truck such use of the word is, I think, a somewhat strained one. Normally in the concept of hauling there is the notion of pulling. Thus one hauls logs from the forest. And one finds the word "hauling" used as the converse of "pushing". One cannot ignore the logical notion that "hauling" was preferred to "pulling" merely to incorporate those aspects of pulling which are usually called hauling, rather than to expand the meaning of hauling to comprehend the type of cartage performed by a fork lift truck. And this is so even although the unit is capable of handling and carrying short lengths of logs. It seems beyond doubt that essentially, the form of construction of the unit has been determined by reference to the function of lifting and carrying loads of goods and materials on rough ground. To this purpose it owes its strengthened chassis, its counter weight, certain of its hydraulic equipment, the design of its wheels, the reversing of the seat and its adaption to accept the fork lift mast. It is true of course that the unit is constructed to haul and push. But the reason that the unit is constructed in the form it is, is not to be found in the purpose that it performs those functions, but that it performs as a fork lift truck.

In the course of time the agricultural tractor which was a vehicle to do the work of a horse has had so much power built into it that it can, in effect, perform as a single entity the work of a horse, dray, lorry and crane. And it is adapting the tractor to perform the functions of dray, lorry and crane, and indeed adding digging and similar functions, that has determined the form of construction of the unit.

Accordingly, it is my view that if the Tribunal had found it necessary to decide whether the unit was constructed essentially for hauling or pushing, it would have been compelled to decide in the negative. This is sufficient to dispose of the contention that the unit falls within Tariff para.87.01.31. But as this opinion is merely my own, I feel I should indicate my views in respect of the remaining matter of contention. The Tribunal rejected the submission that the unit falls within Tariff para. 87.01.31 on the grounds that it was not a derivative of agricultural tractors. However, I am not satisfied that this was a sound ground.

It is a little difficult to decide whether in relation to wheeled tractors the words of differentiation contained in the text of paragraph 87.01.31, namely "agricultural wheeled tractors and other wheeled tractors that are derivatives of agricultural tractors" is to be read distinctively so that with respect to any particular unit the last word, "tractors" should be read as "tractor", or whether the requirement is simply that the unit should be a derivative of agricultural tractors as a class. To my mind a thing is a derivative of another thing when it can be said of the thing in question that its condition or make-up is the result of a process in which it can be seen that from the original thing there was a development or series of developments in circumstances that in a material way each development owed something to the nature and quality in the first instance of the original and thereafter of each preceding thing.

According to Note 7 to Chapter 87 of the Tariff an agricultural tractor is a two-wheel drive tractor of a kind used solely or principally in agriculture, horticulture or viticulture. According to the dictionary, or perhaps, more specifically, the Encyclopaedia Britannica an agricultural tractor is a vehicle of the same kind. A reference to derivatives of agricultural tractors would seem therefore to refer to derivatives of units which were two-wheel drive tractors of a kind used solely or principally in agriculture, horticulture and viticulture with some kind of motor or engine operating to drive the wheels by belt or chain or otherwise.

If therefore the relevant words in para. 87.01.31 of the Tariff require derivation from the class of vehicles known or defined as agricultural tractors, the resulting enquiry is whether the unit in question is derived from that simple class of vehicle. Change and development is of the essence in the process of derivation. Derivation to my mind has a wide connotation. It encompasses development with substantial changes over time. And it seems to me to be no error to refer to the sleek modern limousine as something derived from those motor cars which carried drivers and passengers in the days of Edward VII. Similarly, I would have little difficulty in identifying the unit in question in this case as derivative of agricultural tractors. It has wheels, provision for a driver, it pulls implements and other items, it has a motor with transmission of power to the wheels by gears and shaft and its purpose is, inter alia, to cultivate the land and do other things which assist the farmer in his agricultural pursuits. That is a description of something very like an agricultural tractor. And when one says it is very different from the original, namely, that it has pneumatic tyres, is petrol or diesel driven and has sophisticated gears and transmission, that to my mind is evidence of derivation. Changes in the nature and design of the motor or engine which are incorporated in existing versions of agricultural tractors from time to time are but incidents in derivation.

But if the words of para. 87.01.31 require that the unit be derived from some particular agricultural tractor the question in this case was whether it is derived from a particular agricultural tractor, formerly manufactured and marketed by the McCormick Company. The Tribunal took the view that this was the appropriate question. According to the Shorter English Dictionary, a derivative is something "characterised by transmission", or "of derived character or nature". According to Chambers Twentieth Century Dictionary, a derivative is something "derived or taken from something else", "not radical or original", "that which is derived, a word formed from another word". "Derivation" according to the Shorter Oxford Dictionary includes "transmission, communication, the action of drawing, obtaining or deducing from a source" and in grammar, "the tracing of the origin of a word from its root or radical elements" The Chambers Dictionary includes "the descent or evolution of man or animals."

The subject in hand concerns wheeled tractors and the question is whether one is derived from another. Does the tractor in question have its source in an agricultural tractor? Is it something not radical or original but evolved by transmission, deduction or being "taken from" something else? It was accepted by the Tribunal that the machine is not radical or original. It is said to be a derivative of a skid unit which has been incorporated in various agricultural tractors. But the skid unit is only the basic unit providing power transmission and gears. Those items are useful for agricultural tractors but do not in themselves give to any mechanical entity the character of an agricultural tractor. That character is provided by the tractor chassis, the size and arrangement of its wheels, its brakes, its steering gear, its tyres, its provision for the accommodation of the driver and for attaching implements and other agricultural equipment which has to be pulled or pushed together with incidentals such as lights, warning hooters, steps for mounting and other things. Its function was to operate on the farm and elsewhere.

These features may well be regarded as those which, together with its power and transmission gear, whether skid unit or other, give the agricultural tractor its character as such. And the machines in question have all these things. When one comes to the question of derivation it is not of great importance whether, for instance, the driver's seat faces in one direction or another. As time goes on and the tractor acquires added functions such changes are merely innovations for better performance of the unit. The same is true in relation to the introduction into the machine of a strengthened chassis. That which is derived, almost by definition, differs from the original. If the original was really used as a model to be modified and added to to produce the ultimate machine for its functions, alterations were inevitable, but alterations are of the essence of derivation. Accordingly, it is difficult to see why the unit in question is said to be derived not from the McCormick agricultural tractor but from the skid unit. The skid unit is but the power and transmission element of the unit and was but the power and transmission element when first introduced into the McCormick agricultural tractor. It is important to emphasise that the unit whose derivation is in question in this case is not only the power and transmission but the unit comprising the whole vehicle.

The Tribunal found that the unit has "a historical connection with agricultural tractors in particular a McCormick tractor. The makers took an (agricultural) tractor and experimented with additions. They then substantially modified the machine in order that it might meet its intended purposes". In other words the ultimate unit was the result of experiment with the original and presumably owed much thereto. Such a finding is certainly a firm foundation for thinking that the resulting machine may well be a derivative of the original. That the latter was the source in a real sense of the former seems clear. The existence of the connection be it historical, indicates that throughout the whole process there was an unbroken connecting thread of a physical kind with the probability that each step in the process owed something to what had gone before. Where an original machine has been "taken" and experimented upon and a modified machine has resulted, the connection between the original and the ultimate is almost inevitably more than historical. And when the ultimate unit will for practical purposes do all that the former would do and other things as well, I find it compelling to think that there is significant physical connection in the relevant sense.

I do not see a basis for confining the element of derivation to the skid unit alone rather than the other essential tractor features unless the view be taken that derivation implies practical identity between the original and the derived. From the point of view of derivation the adoption in the ultimate machine of the same skid unit is strong evidence of physical connection. When what is involved not only incorporates the same power transmission and gear unit but also other features albeit modified, as were in the original, the evidence of derivation in a real sense is quite persuasive.

Of course the introduction of the skid unit brought about considerable changes in the original agricultural tractor. But whenever it was introduced it was but a step in the improvement of power and transmission of the basic thing, the two wheel drive tractor. The skid unit was large and inflexible. Physical changes to accommodate it were obviously required. And doubtless the power and efficiency of the skid units contributed to the efficient development of what was in hand, namely a tractor that would accommodate the mast with all the manifold advantages flowing therefrom. But at first and last the basic purpose and design of an agricultural tractor was preserved, namely the particular sizes and designs of the wheels, the tyres, the provision for the driver and provision for pulling loads. It appears to me that in the decision of the Tribunal there is an erroneous assessment of the role of the skid unit. That unit is, after all, merely a power and transmission unit, the hand maiden, of the vehicle. The vehicle had to be modified to accept the skid unit, but the modifications were but developments of the vehicle and what was produced at the end was a vehicle improved in performance but still a two wheeled tractor, self-propelling, for use in agriculture. That it was more does not mean that it was not a derivative of the McCormick agricultural tractor. To say that the resulting unit was "based on" the skid unit is to say no more than that the vehicle was modified to accept it. The skid unit did not dictate the quality of the ultimate vehicle as a tractor. Those things which make the unit a tractor in ordinary parlance do not come from the skid unit They come from the McCormick tractor modified and changed to accommodate and make use of the power of the skid unit. But it is the fundamental features of an agricultural tractor which make the unit both a vehicle and a tractor.

It would seem to me from the comments of the Tribunal that it construed the expression "derivative of agricultural tractors" as requiring substantial physical identity in the derivative with the original. It emphasised that it looked for physical derivation and not merely historical connection.

In the course of its reasons for its decision the Tribunal observed that "the fact that a Fordson or International Harvester engine and transmission which is basically what the skid unit is, constitutes an important part of the subject goods can hardly mean that an item of such goods is a derivative of another product (an agricultural tractor) that is itself based upon such a skid unit" I understand this to mean that the fact that the skid unit is an important part of the subject goods, the Manitou vehicles, can hardly mean that the unit under discussion (the Manitou) is a derivative of the McCormick agricultural tractor that is itself based upon such a skid unit. With this one can agree subject to a reservation as to whether "based upon" does not mis-state the situation in respect of the McCormick tractor when incorporating the skid unit. But adopting a slightly different form of words, it may certainly be said that the fact that the Manitou incorporates the skid unit which is also incorporated in the McCormick is certainly a physical connection between the McCormick and the Manitou of first rate importance on the question of whether the Manitou is derived from the McCormick. Therein there is a direct physical connection between them.

Accordingly I would conclude that the unit in question is a derivative of agricultural tractors and of an agricultural tractor. But whether the difference in conclusion between the Tribunal and that expressed herein be due to an error of law does not in the circumstances call for determination.

In the result I would set aside the decisions of the Tribunal made on the 24th day of December 1979 concerning the vehicles the subject thereof in matters No. 10051 of 1978 and No. 116 of 1979 and remit the matter for further consideration.

JUDGE2

In this matter I have had the advantage of reading in draft form the reasons of Sheppard J. I am in agreement with his conclusion that the vehicles in question do not fall within paragraph 87.01.31 of the Tariff and with his reasons for that conclusion. I also agree with his view that the Tribunal was not in error in point of law in holding that the vehicles fell within paragraph 84.22.521 of the Tariff.

As the appeal to this court lies only upon a question of law (Administrative Appeals Tribunal Act 1975 s.44) the jurisdiction of the court depends upon a finding by it that the Tribunal has made an error of law which affects its decision. The true position of the court in these circumstances has been stated by Lord Radcliffe in Edwards (Inspector of Taxes) v Bairstow (1956) A.C. 14 at p.36, which statement I respectfully adopt:

"When the case comes before the court it is its duty to examine the determination having regard to its knowledge of the relevant law. If the case contains anything ex facie which is bad law and which bears upon the determination, it is, obviously, erroneous in point of law. But, without any such misconception appearing ex facie, it may be that the facts found are such that no person acting judicially and properly instructed as to the relevant law could have come to the determination under appeal. In those circumstances, too, the court must intervene. It has no option but to assume that there has been some misconception of the law and that this has been responsible for the determination. So there, too, there has been error in point of law. I do not think that it much matters whether this state of affairs is described as one in which there is no evidence to support the determination or as one in which the evidence is inconsistent with and contradictory of the determination, or as one in which the true and only reasonable conclusion contradicts the determination. Rightly understood, each phrase propounds the same test. For my part, I prefer the last of the three, since I think that it is rather misleading to speak of there being no evidence to support a conclusion when in cases such as these many of the facts are likely to be neutral in themselves, and only to take their colour from the combination of circumstances in which they are found to occur."

I would comment in passing that I see the last sentence of the extract from Lord Radcliffe's reasons as having particular relevance to the facts of this present matter. It assists in arriving at the proper decision on this aspect of the appeal. However it is appropriate, because of the nature of the error of law alleged here, that I draw attention to the reservations of Dixon J. (as he then was) in Commissioner of Taxation v Miller (1946) 73 C.L.R. 93 when considering whether an appeal lay to the High Court from a decision of a Board of Review. At page 104 he said:

"As the Board of Review is an administrative body it may be doubted whether a decision by it can be said to involve a question of law because it is based on insufficient evidence. But, no doubt, if the facts coming before the Board were incapable of the legal complexion placed upon them, that would involve a question of law and the difference is not great."

This point was neither taken nor argued before us and I am relieved by my ultimate decision not to have to consider it. However in circumstances where the Tribunal was entitled to inform itself on any matter in such manner as it thought fit (Administrative Appeals Tribunal Act 1975 s.33(c)) and particularly where as here the parties expressly agreed that anything the Tribunal saw on an inspection of the vehicles might be regarded as evidence, it may in subsequent matters require consideration. Hereafter I shall assume, probably without justification, that Sir Owen Dixon's doubt was unfounded.

For the applicant in this matter to succeed it is necessary that it establish that there are no reasonable grounds for the Tribunal's finding that the vehicles should be classified within paragraph 84.22.521, in other words that there is no evidence upon which it could reasonably rely to support its conclusion that the vehicles were imported in an incomplete or unfinished state. It is quite irrelevant and nothing to the point that this court might prefer to come to a different or contrary conclusion; the applicant must establish that such conclusion is the only true and reasonable conclusion.

Any conclusion as to whether the vehicles are incomplete or unfinished relates to the identification of the vehicles and the subsequent question of the proper classification under the Tariff of the same does not arise for consideration at this stage. Unless there is no evidence upon which the Tribunal can reasonably support its finding, it will not be in error on a question of law. It follows that if there is some evidence upon which the Tribunal can rely, the question whether the Tribunal has correctly determined that the vehicles were imported in an incomplete or unfinished state is a question of fact upon which there is no appeal to this court. As Diplock L.J. (as he then was) said in Reg v Deputy Industrial Injuries Commissioner, Ex parte Moore (1965) 1 Q.B. 456 at p.488: -

"If it (the evidence) is capable of having any probative value, the weight to be attached to it is a matter for the person to whom Parliament has entrusted the responsibility of deciding the issue. The supervisory jurisdiction of the High Court does not entitle it to usurp this responsibility and to substitute its own view for his."

It is my firm view that this court when hearing appeals from a Tribunal constituted for the purpose of reviewing decisions of this nature, should adopt a restrained approach. Parliament contemplated that only in exceptional circumstances should the decision of the Tribunal not be the final decision. This does not mean that when an error of law is identified, the court should be reluctant to intervene. In fact, it is under a duty to do so. Rather it should heed the comments of Davies L.J. (as he then was) in Reg v Industrial Injuries Commissioner, Ex parte Amalgamated Engineering Union (No. 2) (1966) 2 Q.B. 31 at p.50: -

"I should like to echo the words of my Lord, Lord Denning M.R., in saying that I deprecate the practice, and hope it would not continue, of attempting to magnify or inflate questions of fact into questions of law and of trying to obtain decisions from the courts on matters which the legislature would appear to have thought suitable for decision by the various bodies and authorities set up under the Act of 1946."

As Lord Radcliffe said in Edwards v Bairstow supra at p.38: -

". . . by the system that has been set up the commissioners are the first tribunal to try an appeal, and in the interests of the efficient administration of justice their decisions can only be upset on appeal if they have been positively wrong in law. The court is not a second opinion, where there is reasonable ground for the first."

Lord Reid stated in Griffiths v J.P. Harrison (Watford) Ltd, (1963) A.C. 1 at p.16 that only if "their decision was unreasonable" is the applicant entitled to a second opinion. In the present circumstances such a first decision is only unreasonable if no reasonable man could have come to the conclusion that the vehicle was an incomplete or unfinished fork lift truck. In such circumstances only does the necessary foundation for the intervention of this court subsist. So long as there are one or more relevant features, physical or otherwise, upon which a reasonable man might rely for his opinion that the unit in question was such a truck, the question remains a question of fact. The further question might be posed, namely whether such features are sufficiently significant to warrant one conclusion rather than another, but this is a question of degree and again a question of fact. I refer to Lord Radcliffe in Edwards v Bairstow supra at p.33. The relative significance which a Tribunal attaches to particular features, usually physical, and whether it was justified, is, so long as the features exist, a question of fact and should not be disturbed, The Australian Gas Light Co v The Valuer-General 40 S.R. (N.S.W.) 126 per Jordan C.J., at p.138:

"If however, the facts so inferred are capable of being regarded as either within or without the description, according to the relative significance attached to them, a decision either way by a tribunal of fact cannot be disturbed by a superior court which can determine only questions of law."

It was accepted before us that the expression "incomplete and unfinished" was not a term of art, being a popular and not a technical expression. Certainly no evidence was heard as to any different meaning in the commercial world. Thus the common understanding as to what the words mean is not a question of law but of fact. In the same way that McTiernan J., in Henderson v Forbes 49 A.L.J.R. 335 at p.336 was of the opinion that whether goods would be characterised as "coated" was a question of fact, so whether the vehicles in question here would be characterised or described as incomplete or unfinished is a question of fact. Thus the threshold question for determination is whether there was available any evidence upon which a reasonable man might rely in identifying the vehicles as incomplete and unfinished. In my opinion such evidence is available.

The contest is whether the vehicles should be identified as complete tractors or incomplete or unfinished fork lift trucks. However in the circumstances that the Tribunal's decision is that they are incomplete or unfinished fork lift trucks, the question for this court is more correctly stated as whether there is some evidence to support the finding that they are incomplete and un-finished fork lift trucks or whether the conclusion that they are complete tractors is the only true and reasonable conclusion.

An interesting discussion in the use of the word "unfinished" in customs duty legislation is to be found in Newman Manufacturing Company v Marrable (1931) 2 K.B. 297 where the articles under consideration were described by the plaintiff as beads, and by the defendant as unfinished buttons. It was clear, as Horridge J., at p.30 found, that "they could not be used as they are as buttons without the addition of some sort of shank. It is unquestionable that they were imported for the purpose of having shanks attached to them, and being made into complete buttons." His Lordship's conclusions were in the following terms:

". . . in my view the statute was directed against those who imported goods which were not quite buttons, but upon which the bulk of the work had been done abroad, and very little remained to be done by the manufacturer in England. I think that was the reason why the words 'buttons . . . whether finished or unfinished' were used in this section.

In my judgment these articles were unfinished buttons; they were going to be buttons, and they were going to have a shank put into them. The insertion of that shank only involved one-seventh of the total cost of the finished button. This article with a hole ready to have a shank put into it was an unfinished button within the meaning of s.9 of the Finance Act, 1928."

In the present case there are certain facts which it could be said would have entitled or justified the Tribunal in concluding that the vehicles were tractors. But such a finding does not necessarily mean that that conclusion is the true and only reasonable one. The Tribunal pointed to other facts, namely the large counter weight which was on the vehicle, the purpose of which was to make the vehicle more stable when it was lifting material, and which although it would aid the vehicle in pushing a load, was not attached for this purpose. Likewise the presence of two hydraulic rams at the front of each vehicle, again fitted for the purpose of assisting a lifting operation. There was also evidence that each vehicle had been adapted to accept a mast and also forks, which attachments were essentially for the purpose of lifting material. For the purpose of assessing the significance it would attach to those features, the Tribunal perfectly properly took into account the capabilities of the vehicle as a tractor, i.e. its capacity to haul or push. In this regard it found that the hauling or pushing of which it was capable was "of the most ad hoc kind". If it were pushing the driver would be facing the opposite direction to that in which the vehicle was travelling. If it were pulling from the steering end of the vehicle, steering would be difficult in slippery or rough conditions. Likewise the counter weight, which was "robust enough to push anything along" if pushed at the steering end, required that the object to be pushed be of the right shape and in the right position to enable the counter weight to make contact with it.

In these circumstances it is not possible to say that there was no evidence to support the decision or that all the evidence was inconsistent with and contradictory of the decision. This court might feel that such a decision is unsatisfactory and that too much significance was attached by the Tribunal to these features. However in the light of the principles abovementioned it can not say that it is unreasonable in circumstances where there is some evidence, the weight or significance of which the Tribunal is alone entitled to assess, to support the conclusion that the vehicles were imported in an incomplete state. It must follow that they had some of the characteristics of lifting machinery and whether such characteristics were sufficiently significant to enable the conclusion that they had "the essential character" is a question of degree and thus of fact.

I agree the appeal should be dismissed.

JUDGE3

This is an appeal pursuant to s.44 of the Administrative Appeals Tribunal Act, 1975, against the decision of the Administrative Appeals Tribunal made on 24th December, 1979. The decision was given in respect of a dispute between the applicant and the Collector of Customs as to the correct amount of customs duty to be paid in respect of the importation by the applicant into Australia of certain goods. The applicant is a company carrying on business in Australia. It is an importer of machinery of various kinds.

The goods the subject of the dispute may be described neutrally as vehicles. Four are involved. One was entered for home consumption on 31st May, 1978, two on 28th November, 1978, and the fourth on 3rd April, 1979.

The Collector originally decided that the first vehicle was properly classified as falling within paragraph 84.23.311 of the Customs Tariff 1966 (hereinafter referred to as the Tariff). He subsequently decided that the correct classification of that vehicle and the remaining three vehicles was that they were within paragraph 84.22.521. The applicant on the other hand, eventually contended (it is immaterial to refer to its earlier contentions) that the vehicles fell within paragraph 87.01.31.

The description of the vehicles is not in contest. To a layman each of the vehicles bears general resemblance to a tractor. They were so described in the evidence of Mr. S.R. Wood who is the applicant's marketing manager for the vehicles. Each vehicle has four wheels - two large driving wheels at the front and two smaller wheels at the back. The engine is behind the driver who sits on a seat close to the front of the vehicle. It is directed by a steering wheel which operates the two smaller wheels at the rear. The front wheels are fixed and do not change direction. The wheels are fitted with large rubber tyres. At the rear is a draw hook that would enable another vehicle, for example a trailer, to be hooked on and pulled. Also at the rear, underneath the engine of the vehicle, is a large counterweight. At the front of each vehicle are fitted two hydraulic rams. All vehicles are similar. They differ only in their capacities. Two have a capacity of 4 tonnes, one a capacity of 2.5 tonnes and the other a capacity of 2 tonnes.

The vehicles were imported from France. They were manufactured in Ancenis by a company Braud & Faucheux S.A.. The manufacturer took as a base or starting point what is known as a skid unit acquired either from the Ford Motor Company or International Harvester. The skid unit comprised an engine, a gear box, a differential and transmission to two stub axles which could be fitted with driving wheels. The name "skid unit" comes from the letters S.K.D. which stand for Semi Knocked Down.

The skid unit is fitted to a very strong chassis. The housing over the engine is of sturdy construction as are the wheels and other parts fitted by the manufacturer. The tyres fitted to the wheels are tractor tyres.

In the condition in which the vehicles were imported there were no attachments other than the counterweight, towing hook and hydraulic rams to which reference has been made. There were holes bored in a shaft at the rear of the vehicles to which could be attached a bar or chains for pulling. The counterweight itself could be used for pushing. But the evidence establishes that each of the vehicles the subject of this appeal and a large number of others imported into Australia were brought in to be used as what are known as site lifts. They were to be fitted with a lifting mast and used as a fork lift truck not so much on smooth surfaces such as would be found in warehouses or factories, but on farms or building sites where the terrain is rough and uneven. The purpose of the counterweight is to make the vehicle stable when it is lifting. If the vehicle were to be used only for pulling or pushing there would be no need for a counterweight to be fitted.

The evidence establishes that the vehicles are used in overseas countries for a wide variety of purposes including agricultural purposes. They are fitted with many different attachments although from the literature which was in evidence before the Tribunal many used for agricultural purposes have lifting masts attached to them. The use of the vehicles in Australia has not been so wide ranging. The evidence of Mr. Wood establishes that most, if not all, the vehicles imported into Australia, including the four in question, were intended to be used as fork lift trucks on building sites.

The history of the development of the vehicles is important in the light of some submissions which were made by the applicant. The vehicles were apparently developed from a McCormick agricultural tractor. Originally the complete tractor including bonnet and shield was used. The driver's seat and steering wheel were reversed so that the vehicle was steered from what was originally the rear of the tractor rather than the front. A mast articulated on the driving axle was added as was the counterweight at the rear. The original chassis was reinforced. Later it was only the skid units which Braud & Faucheux used as a basis for the manufacture of the vehicles. The balance of the units were fabricated by the company. Later still the skid units themselves were slightly modified in order to satisfy the needs of the company's tractors, namely, heavy loads and rough terrain. The units imported into Australia are not equipped with lifting masts or other accessories because under the terms of the contract between the company and the applicant the applicant purchases these items separately.

The Tribunal held that the vehicles were properly classified under paragraph 84.22.521. I pause to say that I have had some difficulty in knowing how properly to describe the various items, using that expression neutrally, in the Tariff. I do not find the provisions of s.13(2) of the Tariff (which defines "item", "sub-item", "paragraph" and "sub-paragraph") particularly clear on this question when its provisions are read in conjunction with the schedules to the Tariff. I have tried to use what I believe to be the nomenclature of the legislature. If I have failed in this endeavour, my meaning will nevertheless be clear.

Paragraph 84.22.521 is in Chapter 84 of the Tariff. Chapter 84 is in Division XVI which is entitled "Machinery and Mechanical Appliances; Electrical Equipment; Parts Therefor". Chapter 84 is entitled "Boilers, Machinery and Mechanical Appliances; Parts Therefor". Item 84.22 specified:

"Lifting, handling, loading or unloading machinery, telphers and conveyors, not being machinery falling within item 84.23".

It is not relevant to refer to item 84.23. After item 84.22 there follow a number of paragraphs referring to various kinds of lifting, handling, loading and unloading machinery. These are not material. Paragraph 84.22.52 is, "Other machinery, but not including parts therefor specified in paragraph 84.22.53". That paragraph has no relevance. The other machinery referred to in paragraph 84.22.52 is machinery of the kind specified in item 84.22, that is lifting, handling, loading or unloading machinery, telphers and conveyors. Paragraph 84.22.521 applies to machinery which is within paragraph 84.22.52 and which does not have a working weight of more than 50 tonnes. None of the vehicles here in question had a working weight of more than 50 tonnes.

It was the applicant's submission that the vehicles could not as a matter of law fall within paragraph 84.22.521 because at the date of their importation they could not be used for lifting, handling, loading or unloading. Each was capable only of pulling or pushing another vehicle or load.

As has been mentioned the applicant contended that the vehicles were properly classified within paragraph 87.01.31. That paragraph is within Chapter 87 of the Tariff which is within Division XVII which is entitled "Vehicles, Aircraft and Parts Therefor; Vessels and Certain Assorted Transport Equipment." Chapter 87 is entitled "Vehicles, Other Than Railway or Tramway Rolling Stock and Parts Therefor." Item 87.01 specifies tractors (other than those falling within Item 87.07) whether or not fitted with power take-offs, winches or pulleys. The submissions of the parties were such as not to make it relevant to refer to item 87.07.

Paragraph 87.01.31 specifies tractors which are:

"Agricultural wheeled tractors and other wheeled tractors that are derivatives of agricultural tractors: Having a power of, or exceeding, 15 kilowatts at the power take-off".

The notes to Chapter 87 define the expressions "tractor" and "agricultural tractor". Note 2 defines "tractor" to mean: -

"a vehicle constructed essentially for hauling or pushing another vehicle, appliance or load, whether or not the first-mentioned vehicle contains subsidiary provision for the transport, in connexion with the main use of the tractor, of tools, seeds, fertilisers or other goods".

Note 7 defines "agricultural tractor" to mean:

"a two-wheel drive tractor of a kind used solely or principally in agriculture, horticulture or viticulture".

There is another part of the definition to which it is unnecessary to refer.

At the hearing before the Tribunal it was the applicant's contention that the vehicles were either agricultural tractors within the definition of that expression in Note 7, or were derivatives of agricultural tractors. At the hearing before this Court the submission that the tractors were agricultural tractors was abandoned but it was contended that they were derivatives of agricultural tractors. It was said that the Tribunal's decision that they were not derivatives of agricultural tractors was erroneous in point of law.

It was the primary submission of the Collector that no point of law arose in the case and that the determinations of the Tribunal which were challenged were determinations of questions of fact against which there was no appeal to this Court. The Collector further submitted that the Tribunal had, in any event, made no error of law in arriving at its decisions.

There are contained in Part I of the first schedule to the Tariff rules for the interpretation of Part II of that schedule. The relevant provisions of the Tariff are contained in Part II of its first schedule. The way in which these rules are to be used is provided for in s.14 of the Tariff itself. It is unnecessary to refer to the detail of s.14, but one of the rules should be mentioned. It is Rule 2(1)(a) which is as follows:

"2.(1) A reference in an item (including a reference in a sub-item, paragraph or sub-paragraph) to goods of a particular kind shall be read as including a reference to -

(a) goods that are imported in an incomplete or in an unfinished state but have the essential character of goods of that kind;"

I deal first with the question of whether the Tribunal's decision that the vehicles were not within paragraph 87.01.31 was erroneous in point of law. In order to succeed the applicant must demonstrate that the evidence is such that the vehicles must fall within the words of the paragraph. In this respect I refer to Currie v. Inland Revenue Commissioners (1921) 2 K.B.332, where Lord Sterndale said (p.336):

"There may be circumstances in which nobody could arrive at any other conclusion than that what the man was doing was carrying on a profession; and therefore looking at the matter from the point of view of a judge directing a jury, the judge would be bound to direct them that on the facts they could only find that he was carrying on a profession. That reduces it to a question of law. On the other hand, there may be facts on which the direction would have to be given the other way. But between those two extremes there is a very large tract of country in which the matter becomes a question of degree; and where that is the case the question is undoubtedly in my opinion, one of fact; and if the Commissioners came to a conclusion of fact without having applied any wrong principle then their decision is final upon the matter."

I refer also to Lombardo v. Federal Commissioner of Taxation (1979) 28 A.L.R. 574 at p.576.

I think there is a question as to whether the applicant's submission raises a question of law. In the view that I take of the matter, however, I do not consider it necessary to determine that matter. As earlier mentioned the applicant did not argue before this Court that the vehicles were agricultural tractors, but it did argue that they were derivatives of agricultural tractors. I confess to finding it difficult to understand what is meant by the expression "derivatives of agricultural tractors". I think counsel for the Collector laboured under the same difficulty when he endeavoured to provide examples of tractors which would fall within that classification. But whatever it is that the expression may cover, I am satisfied that the vehicles here in question are not derivatives of agricultural tractors in the sense in which that expression is used in the relevant paragraph.

It was submitted by counsel for the applicant that they were derivatives of agricultural tractors because they were modelled on or based upon the old McCormick agricultural tractor. That was said to be so notwithstanding that no more than the skid unit used in the manufacture of present day agricultural tractors was now used. Counsel referred to a number of dictionary meanings of the words "derived" and "derivative" and showed that one meaning of the expression "derived from" was "coming from a source". It was submitted that this was the meaning which the word derivative had in the relevant provision and that the relevant source was an agricultural tractor.

I agree that the expression "derived from" means "coming from a source". However, the source from which the vehicles here in question had to come in order to fall within the paragraph was an agricultural tractor. It is true, historically speaking, that the vehicles developed, firstly by the adaptation of an old McCormick agricultural tractor, then by the taking of the skid unit from such a tractor and finally by the manufacture of a skid unit more particularly suited to the needs of a vehicle intended by the manufacturer to be able to stand up to the hard work for which these vehicles are designed. But I do not think that the paragraph in question is speaking of the historical development of agricultural tractors. Rather it is concerned to specify an article which itself has been derived from an existing agricultural tractor. To my mind the article, whatever it is, must have been developed from an actual agricultural tractor, not developed from such a tractor in the sense of being modelled upon something which in former times was an agricultural tractor or part of such a tractor. It is for that reason that I am of the opinion that the vehicles do not fall within paragraph 87.01.31.

The next question is whether the Tribunal was in error in point of law in holding that the vehicles fell within paragraph 84.22.521 of the Tariff. In the condition in which the vehicles were imported they were plainly not telphers nor conveyors. Nor, upon the uncontradicted description of the vehicles in Mr. Wood's evidence earlier recounted, does it readily occur to one that they are properly described, in the condition in which they came into this country, as lifting, handling, loading and unloading machinery. In their condition upon importation they could not be used for any of those purposes. The Tribunal itself was of that view. It was able to reach the conclusion that the vehicles were within the paragraph only by reason of the operation it considered interpretative rule 2(1)(a) to have. The provisions of that rule have been earlier set out.

The question is, firstly, whether the vehicles were imported in an incomplete or in an unfinished state and, if that be so, secondly, whether they have the essential character of lifting, handling, loading or unloading machinery. An appeal lying only upon a question of law the applicant will, upon the basis of the principles earlier adverted to, fail unless it be demonstrated that on no basis could the Tribunal have reached the conclusion that the vehicles were imported in an incomplete or unfinished state, or, if it was open to the Tribunal to hold that they were in such a state, that the vehicles (being in that state) could not on any basis be said to have had the essential character of lifting, handling, loading or unloading machinery.

The critical paragraph of the Tribunal's reasons for decision is as follows:

"The findings set out above and our description of the units make it clear that the machine has been designed for the purpose of adding various implements or accessories to carry out a wide variety of functions. The units are clearly used with many different accessories attached carrying out the many functions which they were constructed to perform. We agree with the submission that the modifications performed by the supplier upon the 'skid units' purchased from 'International Harvester' and 'Ford Tractor Division' reveal that "the imported machines, although incomplete, have been committed to being completed so as to be able to perform the functions specified within item 84.22 and were sufficiently complete to be identified as belonging to the classification in question. It is clear that the imported units have been adapted to accept a mast and forks for lifting. Also the attachment of hydraulic rams indicates that the machines have been constructed for lifting purposes. Altogether we consider that the units, although incomplete and unfinished, have a character which is on the evidence sufficient to support the classification contended for by the Collector."

There is no express mention in that paragraph of the counterweight, but I would regard the statement that the vehicles had been adapted to accept a mast and forks for lifting as an indirect reference to it. The evidence establishes that the only purpose of the counterweight is to enable the vehicles to be fitted with an attachment at the other end which will either itself be heavy or capable of lifting heavy weights. The weight at the rear of the vehicle would counter the effect of such a loading and thus keep the vehicle stable. If the vehicle were not fitted with a lifting attachment or an attachment which itself was of substantial weight, there would be no purpose in the vehicle being fitted with the counterweight. For similar reasons there is no purpose either in its being fitted with the hydraulic rams unless something be added. It is the presence of the counterweight and the hydraulic rams which lends support to the contention that the vehicles were imported in an incomplete or unfinished state. On the other hand the vehicles could be driven and steered. They were capable of pushing or pulling objects including other vehicles. Those matters could suggest that the vehicles were complete in themselves at the time of importation.

A tribunal entrusted with deciding how the vehicles should be characterised for the purposes of the Tariff was obliged to take all those considerations into account in reaching a conclusion. Plainly the Tribunal here did so. Having done so it reached the conclusion that the vehicles were imported in an incomplete or unfinished state but had the essential character of goods described in the relevant paragraph of the Tariff. The question is whether it was open to the tribunal to come to those conclusions. In resolving that question the principle which is to be applied is that stated by Lord Sterndale in Currie v. Inland Revenue Commissioners ((1921) 2 K.B. at p.336) earlier cited.

Having reflected upon the matter at some length I have reached the conclusion that, by reason of the presence of the counterweight and the hydraulic rams, it was open to the Tribunal, as the tribunal whose decisions on questions of fact were final, to come to the conclusion that the vehicles were imported in an incomplete, if not unfinished, state, notwithstanding that in many respects they had the features of a complete and finished article. Once that conclusion is reached, it follows, almost as a corollary, that the vehicles had the essential character of lifting machinery. To hold otherwise would be to put on one side the conclusion already arrived at, namely that the vehicles had been imported in an incomplete state.

I should add that in reaching my conclusions I have borne in mind that it is the state or condition of the goods at the time of importation that is the determining factor. The test is an objective one. The purpose of the manufacturer or exporter on the one hand or the importer or user on the other can have no relevance. Otherwise rates of duty for identical articles would vary depending upon what their proposed use was to be. It is the intrinsic nature of the article itself which has to be considered. That is not to say, however, that it will not be relevant to take into account in determining the nature of an article and the question of whether it is in an unfinished or incomplete state the ordinary use to which such an article might reasonably be expected to be put. What ought to be left out of account is the particular purpose which an exporter or importer may have had in mind for the article in question. Nothing in the reasons of the Tribunal leads me to think that it misdirected itself in relation to the matter I have last mentioned.

For the reasons I have given I am of opinion that the appeal should be dismissed and the decision of the Tribunal affirmed. The applicant should pay the respondent's costs.