Brackley Industries Pty Ltd and Chief Executive Officer of Customs
[2015] AATA 210
•8 April 2015
[2015] AATA 210
Division GENERAL ADMINISTRATIVE DIVISION File Number(s)
2014/1814
Re
Brackley Industries Pty Ltd
APPLICANT
And
Chief Executive Officer of Customs
RESPONDENT
Decision
Tribunal John Handley, Senior Member
Date 8 April 2015 Place Melbourne The decision under review is set aside and in substitution the imported goods are entitled to concessional entry under Tariff Concession Order 9810259.
......[sgd]..................................................................
John Handley, Senior Member
CUSTOMS – Applicant imported cases embossed with the Blu-ray trademark – applicable TCO is cases or trays, compact disc – respondent contended the cases were intended to hold discs of Blu–ray format – disc of that type is not a compact disc – applicant contended CD, DVD and Blu-ray discs are optical discs – each being of equivalent size and embossed for reproduction of sound and or image optically – sample products exhibited show Blu-ray trademark embossed covers presented to the public with discs of other formats – some Blu-ray discs housed and presented in CD type covers – prohibition on references to trademarks or end use – essential character of the goods satisfied the TCO – decision set aside.
Legislation
Customs Act 1901, sections 269SJ and 269C
Customs Tariff Act 1995, Schedule 3
Cases
Times Consultants Pty Ltd v Collector of Customs (Queensland) (1987) 76 ALR 313
Secondary Materials
Paul Brian, Common Errors in English Usage (2nd ed)
Macquarie Dictionary (6th ed, 2013)
Lesley Brown (ed), The New Shorter Oxford English Dictionary – On Historical Principles
REASONS FOR DECISION
John Handley, Senior Member
8 April 2015
The applicant imported goods (the subject goods) which were intended to be used for storage of optical discs.
Amongst those goods were plastic cases bearing the logo of a registered trade mark and the words, Blu-ray Disc in the configuration below.
Both parties agree the goods are to be classified to tariff sub-heading 3923.10.00 within Schedule 3 of the Customs Tariff Act 1995, which is in the following terms:
3923ARTICLES FOR THE CONVEYANCE OR PACKING OF GOODS, OF PLASTICS; STOPPERS, LIDS, CAPS AND OTHER CLOSURES OF PLASTICS;
3923.10.00 Boxes, cases, crates and similar articles
Concessional entry, if the applicant succeeds, will be achieved by Tariff Concession Order (TCO) 9810259 which is in the following terms:
CASES OR TRAYS, COMPACT DISK
Issue
The issue between the parties is whether the subject goods are Compact Disk cases. The hearing proceeded without witnesses and was confined to submissions only.
Disk or Disc?
At page 27 of the T-documents, the respondent provided an extract from the book, Common Errors in English Usage (Paul Brian, 2nd ed.) which records that the word disk has a contemporary reference to a computer hard disk, which magnetically reproduces data. The word disc, when used in the expression compact disc, refers to a process of optically reproducing data with lasers.
The respondent concedes (T5, page 25) that the words disc and disk are interchangeable and for the purposes of the decision made upon internal review by the respondent, the expression compact disk also applies to a compact disc (CD). I am satisfied that concession is appropriately made.
It is also worth noting that the Blu-ray trade mark appearing above (paragraph 2) contains the word disc.
Contentions
The respondent contends the subject goods in issue are larger than CD cases and are specifically designed to hold single or multiple Blu-ray discs. The goods are not CD cases (Respondent’s submissions, paragraph 6 and 33).
The applicant contends the TCO must not be interpreted by referring to proprietary mechanisms or trademarks but interpreted generically (Applicant’s submissions, paragraph 1.4). The subject goods are not confined to storage of a Blu-ray disc only. The subject goods are cases, capable of holding a Blu-ray disc, CD and Digital Video Disc (DVD), each being optical discs and are 120mm in diameter and 1.2mm in thickness (Applicant’s submissions, paragraph 3.2 and 3.3).
The Imported Goods
A description of one of the imported sample goods that were lodged with the respondent for tariff classification (T4, pages 18-19) appears to be identical with one of two cases exhibited by the applicant (Exhibit A1). That exhibit is a semi-transparent blue plastic case, bearing the Blu-ray trademark and logo. It has a left side hinged cover measuring 170mm wide x 135mm high x 25mm deep. When opened it readily appears to be moulded and constructed to a shape to allow storage of eight discs. It also has three hinged inserts allowing storage of six discs. The seventh and eighth discs are secured by moulding on the inside of the front and rear of the case. It appears to be similar to the photograph of a (blue) case at page 26 of the T-documents.
The Applicant’s Submissions
The applicant’s representative, Mr Gross submitted there were no dictionary references to compact disk. He relied on dictionary definitions (Macquarie Dictionary (6th ed.) and The New Shorter Oxford English Dictionary - On Historical Principles), which are combined to mean a compact disc is 120mm in diameter and coded digitally with data, usually sound or information, which is reproduced or retrieved when read by a laser beam.
Attention was also drawn to the Macquarie definition of optical disc being any disc storage medium in which digitally-encoded data is read by laser beam. The same dictionary defines a DVD as a high-capacity optical disc, usually 12 cm in diameter, used to store, in digital form, audio, video or text data…. The Online Oxford Dictionary defines Blu-ray as a format of DVD designed for the storage of high-definition video and data.
Mr Gross submitted that there has been a progression in the development of optical discs commencing with a CD, moving later to a DVD and currently a Blu-ray disc. Each of those optical discs is a compact disc as defined above. The subject goods can be used to store optical discs in each of these formats. Exhibit A3 are two films (Ice Age 4 and i, Robot), each contained within a case bearing the Blu-ray trademark. The case for Ice Age 4 contains four discs in Blu-ray, Blu-ray 3D, DVD and Digital formats and the case for i, Robot indicates that it contains three discs in Blu-ray, DVD and Digital formats. The cases, but for the Blu-ray trademark, are identical (colour, width and height) to the cases imported by the applicant when used for storage of more than one disc.
Additionally, an optical disc formatted to Blu-ray will not necessarily be housed in any particular size or type of case. Exhibit A4 is a recordable disc, formatted to Blu-ray, with the brand name Verbatim, housed within a rigid clear plastic case, with the dimensions 142mm wide x 125mm high x 10mm deep more commonly seen for the housing of CDs. This type of case supports the applicant’s contention that optical discs of Blu-ray format are not housed only in a case bearing the Blu-ray trademark. Another example of a Blu-ray disc depicts the performer Beyoncé. It is also housed in a 142mm wide x 125mm high x 10mm deep case and is encoded to sound and image (Exhibit A5). A printed cover for the disc, fitted to the inside of the case, records the Blu-ray logo. The case is not embossed with it.
Attention was drawn to ss 269SJ(1) and (1A) of the Customs Act 1901 (the Act), as follows:
(1)The CEO must not make a TCO in respect of goods:
(aa) described in terms other than generic terms; or
(a)described in terms of their intended end use; or
(b)declared by the regulations to be goods to which a TCO should not extend.
(1A)Without limiting the meaning of the reference in paragraph (1)(aa) to goods described in generic terms, goods are taken not to be so described if the description, either directly or by implication, indicates that they are goods of a particular brand or model, or that a particular part number applies to the goods.
It was submitted that the above section prohibits a TCO being made by reference to a trademark or a brand or by reference to an intended use. Consideration of the TCO in this review should only be made to the physical characteristics of the subject goods and whether they satisfy the terms of the TCO. It was acknowledged by the applicant that the imported cases bearing the Blu-ray trademark were intended to house optical discs of a Blu-ray format but they are capable of holding optical discs of other formats. The intended use of the cases is not relevant. The cases are designed to hold optical discs which fall within the dictionary definition of compact disc and the essential character of the imported goods is to house optical discs (Times Consultants Pty Ltd v Collector of Customs (Queensland) (1987) 76 ALR 313 at 327-328).
In the absence of evidence of any Australian manufacturer of substitutable goods in the ordinary course of business, the applicant as an importer is entitled to concessional entry (s 269C of the Act). All of the exhibited cases in this review are designed to hold optical discs and are substitutable for each other. The format of those discs is irrelevant to the use of the case.
The Respondent’s Submissions
It was accepted that CDs, DVDs and Blu-ray discs were optical discs but the issue of whether the imported goods were capable of holding different types of optical discs was irrelevant. It was submitted that the issue before the Tribunal was whether the imported goods were compact disc cases.
The respondent’s representative, Mr Millea submitted that the words of the TCO should be read, grammatically, as Compact Disk Cases or Tray. The cases in issue by this review differ from the cases that would be used to house a CD or a DVD. A photograph of the cases typically used to house a CD, a DVD and a Blu-ray disc is found at Annexure C of the respondent’s Statement of Facts and Contentions. A customs officer at the wharf-side and a member of the public would readily identify the goods in issue as cases for Blu-ray discs by regard to their shape, size and colour.
Support for the contention that a visual distinction exists between cases for CDs, DVDs and Blu-ray discs is to be found in the invoices from the manufacturer of the imported goods (Annexure H) which distinguishes the goods by the descriptions CD, DVD and Blu-ray and also by colour. It follows that the applicant’s manufacturer also recognised that the cases were other types of goods.
Conclusion and Reasons for Decision
There is no dispute between the parties that the subject goods are cases. The remaining issue of course is the meaning to be given to compact disk (or disc).
A TCO requires strict interpretation of the words comprising it, in the absence of interpretative rules. It follows that there must be a finding of what the goods are in order to determine whether concessional entry may be granted to the importer.
The applicant submitted the TCO was satisfied because the imported goods are constructed to hold optical discs. A CD, DVD and Blu-ray disc are each an optical disc and each have the same dimensions.
Support for the proposition of the similarities between a CD, DVD and Blu-ray disc emerged from dictionary definitions, which in combination referred to a process of digital recording of sound and image which is reproduced by a laser beam. The dictionary definition of optical disc supported the applicant’s proposition because it was defined as any disk storage medium in which digitally encoded data is read by laser beam (emphasis added).
Technical data provided by the applicant at the hearing each described a Blu-ray disc, DVD and CD being an optical disc (Applicant’s documents, tabs 9, 10 and 11).
It therefore follows, by regard also to the equivalent sizes of each disc and the internal dimensions and construction type of each case, that the imported goods are not confined to the storage of Blu-ray discs only.
If a contrary finding were made, it would offend s 269SJ because the cases would then be confined to an intended end use and classification would be influenced, improperly, by reference to a trademark. The respondent’s contention, that the manufacturer’s description of the goods supports its contentions, also offends s 269SJ because those descriptions point to an end use. The net result would be that the goods, as observed at the wharf-side, would not take account of their essential character, being a case for holding or storing an optical disc.
Whilst it was acknowledged that the imported goods bearing the Blu-ray trademark are primarily used to house Blu-ray discs, it was learnt (Exhibits A4 and A5) that some discs in Blu-ray format are sold in cases of a different shape and size of transparent rigid plastic more commonly used for holding a CD. Exhibit A3, being the blue cases bearing the Blu-ray trademark, contained multiple discs, of Blu-ray, Blu-ray 3D, DVD and Digital formats (the DVD and Digital formats not being formats evident by the trademark on the case).
The TCO is silent concerning the shapes, sizes, colours or materials constructing the cases. An informed Customs officer would, on the evidence from this review, be obliged to reach the same conclusion in relation to a case more commonly seen as housing a CD, no less because discs of Blu-ray format are also sold in cases of that type. The respondent’s decision, T-documents page 26 – that the Blu-ray disc case for the transport, storage and retailing of Blu-ray discs could not be sustained in relation to the discs and cases exhibited at Exhibit A3 (although in fairness, nothing from that decision points to the decision-maker being aware that cases bearing the Blu-ray trademark contain discs of other formats). This review concerns the essential character of the cases, not the different formats of the discs which may be housed within them. The cases house optical discs which by definition are compact discs.
Decision
For the reasons recorded above, I am satisfied the decision under review should be set aside and in substitution the goods are to be classified to TCO 9810259 and the applicant is therefore entitled to concessional entry of the subject goods.
I certify that the preceding 31 (thirty -one) paragraphs are a true copy of the reasons for the decision herein of John Handley, Senior Member ......[sgd]..................................................................
Associate
Dated 8 April 2015
Date(s) of hearing 2 March 2015 Solicitors for the Applicant Louis Gross, Gross & Becroft Lawyers Solicitors for the Respondent James Millea, Customs
Key Legal Topics
Areas of Law
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Customs Law
Legal Concepts
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Classification of Goods
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Administrative Review
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Compensatory Damages
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