Chief Executive Officer of Customs v Tony Longo Pty Ltd - [2001] NSWCA 147

No judgment structure available for this case.

Reported Decision:
(2001) 161 FLR 156
(2001) 184 ALR 355
52 NSWLR 458

New South Wales

Court of Appeal

CITATION: Chief Executive Officer of Customs v Tony Longo Pty Ltd [2001] NSWCA 147

FILE NUMBER(S): CA 41037/99

HEARING DATE(S): 07/05/01

JUDGMENT DATE:
23 May 2001

PARTIES :

Chief Executive Officer of Customs (Appellant)
Tony Longo Pty Ltd trading as Aquila Shoes (Respondent)

JUDGMENT OF: Mason P at 1; Heydon JA at 2; Rolfe AJA at 121

LOWER COURT JURISDICTION : Supreme Court

LOWER COURT
FILE NUMBER(S) : CL 11069/98

LOWER COURT
JUDICIAL OFFICER : Adams J

COUNSEL: Mr A Robertson SC/Dr A Gelbart (Appellant)
Mr S J Gageler SC/Mr J R Clarke (Respondent)

SOLICITORS: Australian Government Solicitor (Appellant)
KPMG Legal (Respondent)

CATCHWORDS: Customs - Imported Goods - Non-entry of goods for home consumption - Whether duty payable despite lack of entry for home consumption - Customs Act 1901 (Cth), ss 30, 36, 68, 132, 153 - Customs Tariff Act 1982 (Cth), ss 11, 18 and 19 - Customs Tariff Act 1987 (Cth), ss 13, 21 and 22. - Statutory Construction - Customs legislation - Non-entry of imported goods for home consumption - Whether duty payable despite lack of entry for home consumption - Customs Act 1901 (Cth), ss 30, 36, 68, 132, 153 - Customs Tariff Act 1982 (Cth), ss 11, 18 and 19 - Customs Tariff Act 1987 (Cth), s 13, 21 and 22 - D

LEGISLATION CITED: Customs Act 1901(Cth)
Customs Tariff Act 1982 (Cth)
Customs Tariff Act 1987 (Cth)
Customs Tariff Act 1995 (Cth)

CASES CITED:
Attorney-General v Ansted (1844) 12 M & W 520; 152 ER 1304
Brook's Wharf & Bull Wharf Ltd v Goodman Brothers [1937] 1 KB 534
Businessworld Computers Pty Ltd v Australian Telecommunications Commission (1988) 82 ALR 499
Carmody v F C Lovelock Pty Ltd (1970) 123 CLR 1
Carter Holt Harvey Manufacturing Group Pty Ltd v Comptroller-General of Customs (1996) 128 FLR 96
Collector of Customs for the State of New South Wales v Southern Shipping Co Ltd (1962) 107 CLR 279
Forbes v Trader's Finance Corporation Ltd (1971) 126 CLR 429
General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 129
McCormick v Federal Commissioner of Taxation (1984) 158 CLR 622
Malika Holdings Pty Ltd v Stretton (2001) 178 ALR 218
R v Bull (1974) 131 CLR 203
R v Lyon (1906) 3 CLR 770
Re Prechelt (1999) 149 FLR 334
Wilson v Chambers and Co Pty Ltd (1926) 38 CLR 131
Wing On and Co Ltd v The Collector of Customs for New South Wales 91937) 60 CLR 97

DECISION: See para 120

THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL

CA 41037/99

CL 11069/98

MASON P
HEYDON JA
ROLFE AJA

Wednesday, 23 May 2001

CHIEF EXECUTIVE OFFICER OF CUSTOMS v

TONY LONGO PTY LTD trading as AQUILA SHOES

Customs - Imported Goods - Non-entry of goods for home consumption - Whether duty payable despite lack of entry for home consumption - Customs Act 1901(Cth), ss 30, 36, 68, 132, 153 - Customs Tariff Act 1982 (Cth), ss 11, 18 and 19 - Customs Tariff Act 1987 (Cth), ss 13, 21 and 22.

Statutory Construction - Customs legislation - Non-entry of imported goods for home consumption - Whether duty payable despite lack of entry for home consumption - Customs Act 1901(Cth), ss 30, 36, 68, 132, 153 - Customs Tariff Act 1982 (Cth), ss 11, 18 and 19 - Customs Tariff Act 1987 (Cth), s 13, 21 and 22.

On 12 February 1999 the appellant (plaintiff at first instance) alleged by Statement of Claim that the respondent (defendant at first instance) had unlawfully failed to pay duty in relation to the importation of shoes. The Statement of Claim alleged that shoes owned by the respondent were imported for home consumption but were not entered as required by the Customs Act 1901. It was alleged that customs duty of $579,012.47 was thereby due, but that since no such duty had been paid, the appellant was entitled to recover the amount from the respondent. The respondent moved to strike out the Statement of Claim as disclosing no reasonable cause of action, and on 6 December 1999 the primary judge made an order striking it out.

The decision to strike out the Statement of Claim and this appeal from that decision, turn on the question of whether customs duty is payable on goods which are required by the legislation to be “entered for home consumption”, but in fact are not so entered.

The most relevant parts of the legislation are as follows:

Section 132 of the Customs Act 1901 (Cth):

“(1) Subject to this section and to section 132B, the rate of any import duty

payable on goods is the rate of the duty in force when the goods are entered for home consumption.

(2) Where goods are entered for home consumption more than once before import duty is paid on them, the rate at which the import duty is payable is the rate of the duty in force when the goods were first entered for home consumption.

(3) Subject to subsection 38(5), for the purposes of this section,

where an entry for home consumption in respect of goods is withdrawn under subsections 38(1) and (2) and the goods are subsequently entered for warehousing, the entry for home consumption shall be disregarded.”

Section 18 of the Customs Tariff Act 1982 (Cth):

“(1) Subject to this Act, duties of Customs are imposed, in accordance with

(2) Subsection (1) does not apply to goods imported into Australia before

the commencing date unless they are entered, or again entered, for home consumption on or after the commencing date.”

Section 21 of the Customs Tariff Act 1987 (Cth):

“(1) Duties of customs are imposed, in accordance with this Act, on:

(a) goods imported into Australia on or after the commencement day; and

(b) goods:

(i) imported into Australia before the commencement day;
and
(ii) entered, or again entered, for home consumption on or
after the commencement day.”

Heydon JA (Mason P and Rolfe AJA concurring), allowing the appeal:
1. The primary judge erred in striking out the Statement of Claim on
the ground that it disclosed no reasonable cause of action.

Court, and is of the effect that the legislation

does not require that goods which should be entered for home consumption, actually be so entered as a prerequisite for customs duty to be payable on them.

Re Prechelt

b. In Wilson v Chambers and Co Pty Ltd (1926) 38 CLR 131, five justices of the High Court, as part of the ratio decidendi, distinctly rejected the argument that duty is not payable on unentered goods.

Wing On & Co Ltd v The Collector of Customs for New South Wales

the legislation, this Court is not justified in abandoning the settled construction in the High Court.

THE SUPREME COURT

COURT OF APPEAL

CA 41037/99
CL 11069/98

MASON P
HEYDON JA
ROLFE AJA

Wednesday, 23 May 2001

CHIEF EXECUTIVE OFFICER OF CUSTOMS v
TONY LONGO PTY LTD trading as AQUILA SHOES

JUDGMENT

1 MASON P: I agree with Heydon JA.

2 HEYDON JA:

Background

3 The proceedings commenced by Summons filed on 29 April 1998. An order was made on 2 November 1998 that the proceedings continue on pleadings. By a Statement of Claim dated 12 February 1999, it was alleged that the defendant had unlawfully failed to pay duty in relation to the importing of shoes. There were allegedly 31 importations. The Statement of Claim dealt with each importation separately. Paragraphs 3-7 alleged in relation to the first importation, for example, that 672 pairs of shoes were imported, and imported into Australia for home consumption, from Portugal in or about July 1997; that at that time the defendant was the owner of, the importer of, and beneficially interested in the goods; that the goods were not entered as required under Pt IV of the Customs Act 1901; that customs duty in the amount of $9116.86 was payable; and that no duty had been paid. Paragraph 158 alleged that pursuant to s 153 of the Customs Act, the plaintiff was entitled to recover from the defendant unpaid customs duty in respect of the goods in the amount set out. The total claim was $579,012.47.

4 The defendant moved to strike out the Statement of Claim under Pt 15 r 26 of the Rules of the Supreme Court as disclosing no reasonable cause of action. The defendant argued that the obligation to pay duty depended on the goods being entered for home consumption pursuant to s 68(1) of the Customs Act by reason of s 132. Since, as the plaintiff alleged, there was no entry for home consumption, the defendant contended that there was no obligation to pay duty.

5 The Notice of Motion appeared to rest on the contention that the Statement of Claim disclosed no reasonable cause of action (see Pt 15 r 26(a): the reasons for judgment disclose no trace of any submission that paragraph (b) or paragraph (c) applied). However, the reasoning of the trial judge was not couched in terms of whether there was a reasonable cause of action: General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 129. Rather, it attempted to arrive, as if an order had been made under Pt 31 r 2 for a separate question to be tried, at an answer based on the correct construction of the legislation, not merely a reasonably arguable one.

6 The matter proceeded in the same way in this Court. It was common ground that for the purpose of resolving the arguments it was necessary to assume the truth of the matters of fact alleged in the Statement of Claim.

The key statutory provisions

7 Section 132 of the Customs Act, the key provision on which the defendant relied, provided:

“(1) Subject to this section and to section 132B, the rate of any import duty payable on goods is the rate of the duty in force when the goods are entered for home consumption.

(2) Where goods are entered for home consumption more than once before import duty is paid on them, the rate at which the import duty is payable is the rate of the duty in force when the goods were first entered for home consumption.

(3) Subject to subsection 38(5), for the purposes of this section, where an entry for home consumption in respect of goods is withdrawn under subsections 38(1) and (2) and the goods are subsequently entered for warehousing, the entry for home consumption shall be disregarded.”

8 Section 68(1) at all material times has provided:

“Subject to this Act, goods that are imported are required to be entered:

(a) for home consumption;

(b) for warehousing; or

(c) for transhipment.

9 The process of making entries was regulated by s 36(1) which provided:

“Subject to subsection (2) and section 37, an entry in respect of goods that are required or eligible to be entered under section 68 shall be made by the owner of the goods giving to an appropriate Collector in a manner prescribed by the regulations an entry in respect of the goods containing the particulars required by the regulations and, on the giving of the entry, the goods shall, for the purposes of this Act, be taken to be entered.”

10 Section 30(a) provided:

“Goods shall be subject to the control of the Customs as follows:

(a) As to all goods imported - from the time of importation until the goods are dealt with:

(i) in accordance with an entry of the goods for home

consumption;

(ii) by virtue of an approval under section 71A;

(iii) by virtue of permission given under section 71B; or

(iv) by virtue of permission given under section 162A;

or until exportation to a place outside Australia whichever shall
first happen … .”

11 Section 153 of the Customs Act, the key provision on which the plaintiff relied, provided:

“All duties shall constitute Crown debts charged upon the goods in respect of which the same are payable and payable by the owner of the goods and recoverable at any time in any court of competent jurisdiction by proceedings in the name of the Collector.”

Customs Act

Customs Tariff Act

12 Section 18 of the Customs Tariff Act 1982 provided:

“(1) Subject to this Act, duties of Customs are imposed, in accordance with this Part, on goods imported into Australia, whether before, on or after the commencing date.

(2) Sub-section (1) does not apply to goods imported into Australia before the commencing date unless they are entered, or again entered, for home consumption on or after the commencing date.”

“Subject to this Act, the duty in respect of goods to which this section applies shall be ascertained by reference to the rate of duty set out in column 3 in the tariff classification in Schedule 3 that applies to the goods.”

Customs Act 1901

Customs Act

Customs Tariff Act

13 In the Customs Tariff Act 1987, s 21, which corresponded with s 18 of the 1982 Act, provided:

“(1) Duties of Customs are imposed, in accordance with this Act, on:

(a) goods imported into Australia on or after the commencement day; and

(b) goods:

(i) imported into Australia before the commencement day; and

(ii) entered, or again entered, for home consumption on or after the commencement day.”

“Subject to sections 23, 24, 25, 27 and 29, the duty in respect of goods shall be ascertained:

(a) where the goods are not the produce or manufacture of a Preference Country - by reference to the general rate set out in the third column of the tariff classification under which the goods are classified.”

Section 13(2) was identical with s 11(2) of the 1982 Act. Section 4 was identical with s 3 of the 1982 Act.

The primary judge’s reasoning

14 First, the primary judge considered a decision of Muir J sitting in the Supreme Court of Queensland, Re Prechelt (1999) 149 FLR 334. Muir J was considering the Customs Tariff Act 1995 s 15 (which corresponded in function with s 18 of the 1982 Act and s 21 of the 1987 Act). Muir J held that no duty was payable because the goods in question had not been entered for home consumption, and on the true construction of the legislation, s 132 “performs the critical function of identifying the amount of tax to be calculated and assessed. Absent such a provision, there is no mechanism by which tax imposed in a general way by ss 15 and 16 can attach to particular goods” (at 340). The primary judge considered that Muir J was correct.

15 Secondly, the plaintiff submitted to the primary judge that various authorities to which Muir J did not refer invalidated his approach. The trial judge dealt with these authorities as follows.

(a) He said of Attorney-General v Ansted (1844) 12 M & W 520; 152 ER 1304 that it contained only “general statements” which, having regard to the specific terms of s 132, were “somewhat less convincing than they otherwise would be”.

(b) Attorney-General v Ansted was relied on by Starke J, sitting in the original jurisdiction of the High Court, in Wing On and Co Ltd v The Collector of Customs for New South Wales (1937) 60 CLR 97. The primary judge distinguished this case on the basis that in it the relevant goods had not been entered for home consumption, and had been re-sold with the intention of defeating the revenue, and by saying that no comparable allegation was made in the present proceedings. The trial judge dealt with the dismissal by the Full Court of an appeal from Starke J by saying in effect that the impact of s 132 was not argued.

(c) The primary judge dealt with Wilson v Chambers and Co Pty Ltd (1926) 38 CLR 131 by saying that three of the judges did not deal with the present point, that the judgments of Starke J and Isaacs J did not “deal with the question of calculation”, and that the judgment of Isaacs J rested on a finding of fault on the part of the importer not matched by any allegation in the present Statement of Claim.

(d) The primary judge apparently formed the view that Carter Holt Harvey Manufacturing Group Pty Ltd v Comptroller-General of Customs (1996) 128 FLR 96 was distinguishable. He said: “having regard to the issues in it, I do not consider, with the greatest respect, it demonstrates a flaw in” Muir J’s judgment.

The plaintiff’s submissions on appeal in outline

16 The plaintiff submitted that under s 153 of the Customs Act it was claiming a Crown debt, namely duties of Customs. The relevant duties of Customs were imposed, as s 18(1) of the Customs Tariff Act 1982 and s 21(1) of the Customs Tariff Act 1987 provided, on “goods imported into Australia”. The rates for the particular goods, footwear, were specified in Chapter 64 of Schedule 3 by reason of s 19 and s 22 respectively of those two Acts. The value of the goods to which the rates were to be applied was the customs value of the goods ascertained or determined in accordance with Div 2 of Pt 8 of the Customs Act, by reason of s 11(2) and s 13(2) respectively of those Acts.

17 The plaintiff then submitted that the primary judge had erred in deciding the matter in reliance on s 132. According to the plaintiff, the purpose of s 132 was to fix the rate at which import duty should be levied by reference to the date of entry when the goods were entered; where they had not been entered, the rates in force at the time of importation applied, and s 132 had no operation.

18 The plaintiff then made the following specific submissions. First, Wilson v Chambers and Co Pty Ltd (1926) 38 CLR 131 was a decision of the Full High Court which had rejected the construction that by reason of s 132 the obligation to pay duty was not triggered by importation, but only by entry of goods for home consumption, and the primary judge had erred in his analysis of it. Secondly, the decision of Starke J in Wing On v The Collector of Customs for New South Wales (1938) 60 CLR 97 was a decision rejecting the materiality of s 132, and the primary judge had erred in his analysis of it. Thirdly, the Full High Court in dismissing the appeal from Starke J in Wing On’s case used language favouring Starke J’s approach but inconsistent with the primary judge’s decision, and the distinguishing of the Full High Court’s decision by the primary judge was unsatisfactory. Fourthly, the primary judge erred in failing to apply Attorney-General v Ansted (1844) 12 M & W 520; 152 ER 1304 and Brook’s Wharf & Bull Wharf Ltd v Goodman Brothers [1937] 1 KB 534. Fifthly, the primary judge had erred in distinguishing an observation of the Queensland Court of Appeal in Carter Holt Harvey Manufacturing Group Pty Ltd v Comptroller-General of Customs (1996) 128 FLR 96 at 97-98 that s 153 was applicable notwithstanding that no entry had been made. Sixthly, the primary judge had erred in following Re Prechelt (1999) 149 FLR 334 because it had failed to consider the five contrary authorities and was wrongly decided.

19 Finally, the plaintiff drew attention to the fact that the result of the primary judge’s approach was that no duty could be collected on imported goods if there were no entry, which could facilitate an escape from paying duty. The provisions to which the defendant referred as minimising the practical extent of this problem were said by the plaintiff to have limited effectiveness.

The defendant’s submissions on appeal in outline

20 The defendant submitted that s 18 of the Customs Tariff Act 1982 and s 21 of the Customs Tariff Act 1987 identified the type of goods in respect of which customs duties were imposed, but not which person was liable. The questions of who was liable to pay, the circumstances in which the liability arose, and the rate were only to be answered by reference to the Customs Act. In particular, the rate depended on s 132, and no rate could be struck until the goods were entered for home consumption. Before then there could be no quantification of what was payable, and hence no “debt” recoverable under s 153.

21 The defendant also submitted that the construction it advanced of s 132 was supported by s 35A, s 132A, s 167, s 233, s 233AB and s 234 of the Customs Act.

22 The defendant said that the five cases not dealt with in Re Prechelt were distinguishable or not authoritative in that they were variously dealing with different legislation, dealing with different issues, proceeding on an assumption of what had to be decided, or contained only obiter dicta.

23 Finally, the defendant submitted that the risk of evasion was negated by the fact that persons who imported goods but did not note them for home consumption could be brought to account under s 33, s 35A, s 229(1)(g), s 233, s 233AB and s 234.

The High Court cases

24 The parties presented their respective cases from extreme positions and in a tone excluding the possibility of any contrary position being even arguable. Thus the defendant described a central aspect of its position as “self-evident”. For its part, the plaintiff contended, for example, that this Court was bound by a few words in one sentence in Carter Holt Harvey Manufacturing Group Pty Ltd v Comptroller-General of Customs (1996) 128 FLR 96 at 98. It was, however, common ground that if s 132 had not existed, the defendant’s contentions would fail. The defendant’s written submissions described s 35A, s 132A and s 233AB as serving:

Customs Act

Customs Tariff Act

25 Since the construction of the legislation has been considered by the High Court, it is desirable for this Court, as an intermediate appellate court, to proceed by reference to what the High Court has said as a guide to meaning, rather than to propound a construction of the statutory language by reference to the legislation alone and without aid from the High Court before examining whether the High Court approach can be reconciled with it.

Wilson v Chambers and Co Pty Ltd

26 In Wilson v Chambers and Co Pty Ltd (1926) 38 CLR 131 Knox CJ described the facts as follows (at 134-5):

Nauru Chief

27 Knox CJ then described the procedural background as follows (at 135):

“On these facts the respondent Company was charged with the following offences, namely, (1) failing to enter the goods (sec. 68); (2) evading payment of duty (sec. 234); (3) interfering with goods which were subject to the control of the Customs (sec. 33). The respondents Lawrence Chambers and William Chambers were charged with aiding, abetting or being concerned in the commission of the offences alleged to have been committed (sec. 236). All the offences charged were alleged to have been committed with intent to defraud the revenue.

On the hearing of the informations no evidence was called for the respondents and the Magistrate dismissed all the informations, being of opinion that the evidence given for the prosecution failed to support, and in fact disproved, the averments of the informant. The question for us is whether his determination was erroneous in law. The charges against respondent William Chambers are not now pressed, and the case may be dealt with as if the charges were against the Company and Lawrence Chambers alone.”

28 The charge of failing to enter the goods under s 68 could not be made out unless the goods were imported. The whole court (Knox CJ, Isaacs, Higgins, Rich and Starke JJ) held that there was sufficient evidence of importing and that the charges relating to failing to enter goods had been made out. They also held that the charges relating to interfering with goods subject to the control of the Customs was rightly dismissed. That left the charges relating to evasion of duty which was payable. The High Court held that the Magistrate was correct in dismissing those charges.

29 Section 234(a) provided: “No person shall evade payment of any duty which is payable.” Isaacs J summarised the relevant charge against the company thus (at 137):

“The charges laid against the Company were as follows:- (1) Under sec. 234 of the Act for evading payment of duty in respect of certain goods, namely, enamel, varnish, lead and paint, imported into the Commonwealth at Port Kembla on or about 7th September 1922 … .”

30 How did counsel approach that inquiry? E M Mitchell KC for the appellant (i.e. the Crown) argued (at 133): “What the Company did amounted to an evasion of payment of duty under sec. 234.” That argument evidently assumed that duty was payable despite the failure to enter the goods. Flannery KC for the Company and Lawrence Chambers submitted in answer to the s 234 charges (at 133): “Sec. 132 shows that duty is not payable until goods are entered for home consumption, and the person who so enters them imports them.” In short, Flannery KC was propounding the very argument being employed by the defendant in the appeal to this Court, though doubtless in a cruder form.

31 The response of Knox CJ to that argument was (at 136):

“The second charge was that of evading payment of duty (sec. 234). The distinction in meaning between the words ‘evade’ and ‘avoid’ is well established, and a charge of evading payment is not made out by evidence which proves no more than that the person charged failed or omitted to pay an amount payable by him. There was nothing to suggest that the agreement to sell the paint to the ship was other than a genuine agreement, nor did the evidence tend to show that the respondents did not honestly believe that in the circumstances it was not necessary to enter the goods or to pay duty in respect of them, or that their intention in selling the goods was to escape payment of duty. In fact the evidence proved no more than an omission to pay duty which was legally payable. In my opinion the Magistrate was right in dismissing the informations founded on sec. 234.”

32 That passage, in explicitly stating that duty was legally payable, was rejecting Flannery KC’s argument based on s 132. Knox CJ held that the charge had been rightly dismissed for an entirely different reason, namely that there was no proof of a mental state necessary to support a conclusion of evasion.

33 Isaacs J, after concluding that the goods were imported goods, said that the goods should have been entered by the Company under s 68, and as they were intended to be sold to the shipowner for use as ships’ stores, should have been entered as for warehousing. He then said (at 140-141):

Customs Act

ex necessitate

Hamel on the Laws of Customs

Com. Dig. ‘Debt,’

Leaper v. Smith

Anonymous

Salter v. Malapert

Attorney-General v. Weeks

Attorney-General v. Ansted

Parke

Abinger

Warehousing Act

Customs Act

George Stephens

Commerce and Commercial Law

et seqq

34 Isaacs J’s conclusion that “the time for payment had arrived” can only have been reached as a result of a rejection by him of Flannery KC’s s 132 argument.

35 Isaacs J then turned to the distinct issue of evasion. However, in the course of discussing it, he made statements relevant to the present issue. At 142-3 he said:

instanter

36 Higgins J said (at 147):

“Another charge against the Chambers Company is that it evaded at Port Kembla payment of duty which was payable in respect of these goods. There is no doubt that the duty payable was not paid at Port Kembla (though it was paid afterwards) ….”

37 Rich J said (at 149):

a

38 Starke J said (at 149): “Duties of Customs are imposed upon goods imported into Australia ….” So general an observation standing alone is not a sound guide to his opinion on the question in controversy. However, he said in relation to the s 234(a) charge (at 150-1):

Customs Tariff

Attorney-General v. Ansted

Wing On and Co Ltd v The Collector of Customs for New South Wales

39 What can be said against the proposition that Wilson v Chambers and Co Pty Ltd is a decision of five justices of the High Court turning, as part of the ratio decidendi, on a distinct rejection of the argument based on s 132 expressly advanced to the court? It might be argued that what was said and done in rejecting that argument was not crucial to the outcome, because the upholding by the High Court of the Magistrate’s dismissal of the s 234(a) charges turned on the conclusion that there was no evasion. To say that would depend on a very narrow approach to determining the ratio decidendi of the case. The High Court held that but for the Crown’s failure to prove a mental element required by the word “evade”, the s 234(a) offence would have been made out, because importation rendered duty “actually and presently payable”. And neither the primary judge nor the defendant in this appeal did in plain terms accept that what the High Court justices said was adverse to the defendant’s construction, but could be put on one side because what they said amounted only to obiter dicta. In any event, even if, contrary to my opinion, the remarks of the justices were only obiter dicta, they were nonetheless propounded in a case where the precise point now under debate was isolated by counsel for decision. They are not dicta of a character which it is open to an intermediate appellate court now to refuse to apply unless either a later High Court has departed from them or a relevant statutory change has taken place: neither of these events has happened.

40 What the primary judge did say about Wilson’s case was as follows:

“Knox CJ, dealing with the evasion offence charged against the defendants, drew the distinction between ‘evade’ and ‘avoid’ and having determined the evidence proved no more than an omission to pay duty which was legally payable, that the information was rightly dismissed (38 CLR at 136). I do not consider that his Honour’s judgment deals in substance with the point before me. The same, I think, may be said of the judgments of Higgins and Rich JJ.”

41 The primary judge said the following about Starke J’s judgment:

“Starke J said (38 CLR at 150-151) -

‘A duty was imposed on the goods mentioned in the information … upon importation into Australia and that duty was payable, in this case, upon the arrival of the ship in Port Kembla’,

Attorney-General v Ansted

This, however, does not deal with the question of calculation, which was unnecessary having regard to the nature of the proceedings, his Honour disposing of the point by concluding that a mere omission or negligence to pay duty could not satisfy the statutory prerequisites for the commission of the offence.”

42 The primary judge dealt with Isaacs J’s reasoning as follows:

Ansted

instanter

43 The defendant’s written argument in this Court in relation to Wilson’s case was:

Ansted

44 The defendant in oral argument dealt with Wilson’s case on an entirely different basis. The argument said that the case:

“is explained in terms of the court simply not dealing with Mr Flannery’s submission …

The Court certainly in dealing with the argument can be taken to have assumed s 132 to have been inapplicable. Their Honours did not decide that point and indeed decided the relevant issue in the case by reference to an absence of intention.”

45 The submission made by Flannery KC was not examined elaborately, but it was rejected quite distinctly, and the only available conclusion is that it was examined sufficiently by the justices sufficiently to satisfy them that it ought to be rejected. If it had been the case that “Their Honours did not decide that point”, they would have said words to the effect that it was not necessary to decide whether or not duty was payable because the existence of intention had not been proved. Not only did none of them say this, but Isaacs J commenced the relevant part of his judgment at 138 by saying that the “first inquiry” was whether “duty is actually and presently payable”. He did not say that it was an inquiry which it was not necessary to answer; rather he answered the inquiry by saying that “the time for payment had arrived” and that the payment was due on importation of the goods at Port Kembla “instanter”.

46 The defendant also supported the submission that Wilson’s case had not decided the s 132 argument by saying that when the s 132 argument was put to Starke J in Wing On & Co Ltd v The Collector of Customs for New South Wales (1937) 60 CLR 97, he:

“significantly did not reject the argument simply by saying that the point had been decided in Wilson v Chambers, a case that had been decided some years before. On our learned friend’s argument he could have said that but he did not and in our submission correctly because Wilson v Chambers simply did not decide the point.”

Wing On’s

Wilson’s

Wing On’s

47 Three attempts to explain Wilson’s case away are to be found in the reasons for judgment of the primary judge, the defendant’s written submissions, and the defendant’s oral submissions. It is not without significance that there is only limited consistency between them.

Wing On & Co Ltd v The Collector of Customs for New South Wales: Starke J

48 The next relevant High Court case is Starke J’s decision in the original jurisdiction in Wing On and Co Ltd v The Collector of Customs for New South Wales (1937) 60 CLR 97. On 6 September 1937 Starke J heard argument and gave judgment for the plaintiff (the Collector) for £345 15s. On 17 September 1937 he gave reasons for that judgment. He found the following facts (at 98-99):

Marella

… The defendant knew that the cigarette papers had not been entered at the customs and that no duty had been paid in respect of them.”

49 Starke J said the question was whether the defendant was liable to pay the relevant duty of £345 15s.

50 After summarising parts of the legislation, in particular s 153, Starke J said (at 99):

“Sec. 132 provides that all import duties shall be paid at the rate in force when the goods are entered for home consumption. The customs duties are charged upon the goods and become a debt due to the Crown immediately upon importation.”

“It was contended for the defendant that the owner of the goods liable for the duties is the person importing the same into Australia, and, further, that the duties only become payable upon the entry of the goods for home consumption.”

Attorney-General v Ansted

51 Starke J’s decision is a decision of a single justice of the High Court which, as part of the ratio decidendi, rejected the s 132 argument now being propounded by the defendant. It is true that it is not a decision which binds this Court. In Businessworld Computers Pty Ltd v Australian Telecommunications Commission (1988) 82 ALR 499 at 504 Gummow J, sitting as a primary judge, rejected a submission that the Federal Court of Australia either at first instance or on appeal “was bound by considered statements of principle in decisions of single justices of the High Court exercising its original jurisdiction”. He said:

Stare decisis

Bone v Commissioner of Stamp Duties

“That decision is naturally entitled to the greatest respect. It is of its nature a most persuasive precedent, but it is not a precedent which is binding upon this Court. It was not a decision given by Owen J when sitting as a member of a court in the framework of the appellate structure of which this Court is part.”

“A decision of a justice of the High Court sitting at first instance is of course of the greatest persuasive authority for this Court, but this Court is not bound to follow it, and since the decision is challenged, it becomes necessary to decide whether the construction placed upon the agreement by Owen J was the correct one.”

52 Even if Wilson v Chambers and Co Pty Ltd (1926) 38 CLR 131 had not been decided, the giving to Starke J’s decision in Wing On’s case of “the closest and most respectful consideration”, being a decision “naturally entitled to the greatest respect”, which is “of its nature a most persuasive precedent”, and indeed “of the greatest persuasive authority for this Court” would be likely to result in adherence to it. The case was argued by among the ablest counsel of the day. E M Mitchell KC appeared for the plaintiff. Spender KC - a future President of the International Court of Justice - and A R Taylor - a future High Court judge - appeared for the defendant. Judgment was reserved. The opinions stated in Starke J’s reasons for judgment were those of one of the ablest lawyers who ever sat on the High Court.

53 The primary judge in the present case said of Starke J’s opinion, after quoting the passage set out above:

Wing On and Co Ltd v The Collector of Customs for New South Wales

‘But it is sufficiently plain that under some understanding the goods were brought to the defendant company uncustomed and that they were at once resold, all with the intention of defeating the revenue.’

Prechelt

54 The observation of Dixon J was made in a passage concluding with the proposition that s 153 imposes a specific charge on goods which binds all persons taking the goods, subject to the possible exception of those who are “bona-fide purchasers for value”. Dixon J’s observation about the intent to defeat the revenue may be directed to exclude the operation of that possible exception. However that may be, the fact that the defendant was party to a scheme to evade duty was no part of Starke J’s reasoning in rejecting the argument based on s 132. That reasoning is operative both in cases involving evasive schemes and cases not involving evasive schemes. In cases involving evasive schemes, there cannot be a finding of evasion unless there is first an obligation to pay duty which is evaded. And in other cases duty cannot be claimed unless there is an obligation to pay it. Starke J’s approach identifies the obligation as arising at the same moment in each instance - the moment of importation.

55 The defendant’s written submission on Starke J’s decision, after quoting the passage quoted above, was:

Customs Act

56 This submission, which puts part of the defendant’s argument seeking to investigate the ill-effects of its preferred construction, confesses and seeks to avoid. It confesses that “Failure to enter the goods for home consumption cannot excuse the payment of appropriate customs duties.” The next sentence is not correct: “But of course the effect of the Customs Act is to specifically provide for such circumstances.” The Customs Act does not specifically provide for the payment of appropriate customs duties on goodswhich have not been entered for home consumption. Each of the other remedial sections mentioned - ss 33, 35A, 72, 229 and 233 - has limitations which make it less effective than the obligation to pay duty recognised by Starke J.

57 The defendant in oral submissions accepted that Starke J’s decision in Wing On’s case in terms rejected the s 132 argument advanced by the defendant. However, the defendant made three points.

58 The first point made by the defendant in oral submissions about Starke J’s decision in Wing On’s case was that Starke J rejected the argument by reference to Attorney-General v Ansted (1844) 12 M & W 520; 152 ER 1304. The defendant submitted that that case:

Brook’s Wharf and Bull Wharf Ltd v Goodman Bros

59 The second point made by the defendant in oral submissions about Starke J’s decision in Wing On’s case was that the form of the legislation under consideration did not include s 35A or s 132A; and it was the amended form of the Customs Act, containing those sections, which was incorporated by reference into the Customs Tariff Act 1982 and the Customs Tariff Act 1987. This argument, which is that Starke J was right at the time but wrong if the question is the construction of the modern legislation, rather cuts across the submission advanced by the defendant in writing that the introduction of the later sections “serves to clarify the original intention of the legislature”. If the argument under consideration is correct, then the later amendments cut back the reach of the taxing legislation as perceived by Starke J, and robbed the Customs authorities of a power to obtain revenue they previously had. This is behaviour by the Commonwealth Parliament of a type rarely seen in the first century of its existence.

60 The third point made by the defendant in oral submissions about Starke J’s decision in Wing On’s case is that the case is distinguishable. This adopts the primary judge’s view and is rejected for the reasons given in relation to it.

Wing On and Co Ltd v The Collector of Customs for New South Wales: the Full Court

61 In Wing On and Co Ltd v The Collector of Customs for New South Wales (1938) 60 CLR 97, counsel for the appellant, Clancy KC, whose interest it was to argue that duty was not payable, said at 101:

“the imposition of the duty is contemporaneous with the importation of the goods into the Commonwealth.”

62 However, because of the appellant’s concession, the dismissal by the High Court of the appeal against Starke J’s orders cannot be regarded as containing as part of its ratio decidendi a rejection of the s 132 argument: Baker v R [1975] AC 774 at 788. There are, however, dicta pointing strongly against that argument.

63 Thus at 105 Latham CJ said:

a

b

c

a

g

d

a

e

It is not disputed on behalf of the defendant that Jang Sang continued to be liable to pay the duties, whether or not he parted with the ownership or possession of the goods. This particular liability, which became attached to him by virtue of sec. 153, continues until it is discharged by payment or otherwise. It is admitted that he could not get rid of his liability to pay the duty by getting rid of the goods.”

64 Latham CJ then said (at 105-106):

“When the defendant purchased the goods from Jang Sang the legal position was as follows:- (1) The duties had not been paid and were still payable by some person or persons. The defendant admits that they were still payable by Jang Sang but contends that they were not payable by the defendant. (2) The goods were still charged with the duties. (3) The goods were still liable to forfeiture. (4) The goods were still subject to the control of the customs. (5) Both Jang Sang and (I think) the defendant could be called upon to make an entry of the goods.

a

e

65 Latham CJ then said (at 106-107):

b

e

a

Starke

This view is, I think, supported by an analysis to the effect of sec. 153 in relation to its operation in charging the duties on the goods as well as in imposing a personal liability to pay the duty upon the owner. The duties are declared to be Crown debts charged upon the goods ‘in respect of which the same are payable.’ The duties are so charged so long as they remain payable, that is, until they have been paid by some person. By whom then are the duties so charged to be paid? They are ‘payable by the owner of the goods’. The charge on the goods follows the goods until the duties are paid, and the liability of the owner to pay, if he becomes liable to pay at all, lasts until the duties are paid. So, also, a personal liability arises in the case of any person who becomes owner of the goods before the duties are paid. That liability continues to exist until it is discharged by some person satisfying the obligation to pay the duties. I can see nothing in this section to support a contention that the importer or any other person who becomes liable by virtue of the section can be freed from that liability in any other way. The liability to pay the duty follows the goods as a charge and also follows the ownership of the goods as a personal liability until the duty ceases to be payable.”

66 Rich J at 107 said that the effect of s 153 was:

cum onere

67 Dixon J said at 108-110:

“In support of the company’s appeal from that decision, it is contended that the dealings with the goods exposed the company to no civil liability to the Crown for the duty; at worst, it rendered itself liable for a penalty for having smuggled goods in its possession, an offence for which it has been convicted in respect of each of the three transactions ….

The appeal was argued as if its determination required us to decide as a general proposition whether a liability to pay customs duty falls upon a person who, having no part in the introduction into Australia of the goods, obtains property or possession by a transaction either with the smuggler or someone claiming under him taking place after the smuggling is complete.

because they had not been entered for home consumption

I think that the facts I have stated raise a narrower question. It is evidence that some connection existed between the defendant company and the importation of the goods. It is not possible to say exactly what the relation was. The defendant may have given a specific order for the goods, or it may be that the company had done no more than raise a reasonable expectation that if such goods were brought to them, having escaped duty, then they would buy them. But it is sufficiently plain that under some understanding the goods were brought to the defendant company uncustomed and that they were at once resold, all with the intention of defeating the revenue. The duties in respect of the goods so dealt with are declared by sec. 153 to be Crown debts charged upon the goods in respect of which the same are payable. The goods were still legally subject to the control of the customs, that is, liable in law to the exercise of physical control by the officers of the revenue and to be dealt with so as to insure payment of the duty. The goods were the subject of forfeiture and sale, and, in the event of any sale by the collector, the proceeds would have been applied in payment of the duty. When sec. 153 charges the duty upon the goods, it means, I think, to impose a specific charge upon the goods which shall bind all persons taking them, at all events unless they are bona-fide purchasers for value.”

68 The primary judge dealt with the Full Court’s reasoning in Wing On’s case thus:

“The argument on appeal proceeded on the basis that it was not disputed on behalf of the defendant that the importer continued to be liable to pay the duties and that by virtue of s 153 of the Act this liability continued until it was discharged by payment or otherwise.”

“I note that there is no allegation in the Statement of Claim, at all events, that the defendant neglected to make an entry for home consumption, let alone was party to an attempt at evasion.”

69 The defendant’s written submissions about the Full Court’s reasoning in Wing On’s case were:

“27. On appeal to the Full Court of the High Court, it is clear that the defendant conceded (improperly in our view) that the importer continued to be liable to pay the customs duty (see also Adams J at paragraph 22 and the Appellant’s Submissions at paragraph 10). Accordingly, the point raised by the Respondent in this case was not properly before the High Court on that occasion. The presumption by the High Court that duty was in fact payable on the goods, notwithstanding the goods not being entered for home consumption, is consistent with the Act, but not pursuant to section 153, but by virtue of section 233.”

“any importation, introduction or exportation or attempted importation, introduction or exportation of goods with intent to defraud the revenue.”

Wing On’s

70 In oral argument the defendant submitted that the Full Court’s observations were only dicta. That is strictly speaking correct. However, even if Wilson’s case is put on one side, this Court ought to apply the decision of Starke J and the statements of the Full Court, though perhaps not strictly bound to do so, because of the eminence of the justices and the clearness of their reasoning.

Forbes v Trader’s Finance Corporation Ltd

71 The plaintiff pointed out that in Forbes v Trader’s Finance Corporation Ltd (1971) 126 CLR 429 at 443-4 Windeyer J referred approvingly to Wilson v Chambers and Co Pty Ltd (1926) 38 CLR 131. But as Windeyer J himself acknowledged at 444, Wilson’s case did not directly bear on the case before him.

Malika Holdings Pty Ltd v Stretton

72 Malika Holdings Pty Ltd v Stretton (2001) 178 ALR 218 decided that s 167 of the Customs Act did not require an owner of goods sued by the collector for the recovery of a debt due and owing but unpaid duty to place that indebtedness in issue by payment “under protest” followed by institution of a recovery action against the collector under s 167.

73 The plaintiff submitted that the case was inconsistent with a submission by the defendant to the effect that its s 132 argument:

Customs Act

by writing on the entry of the goods the words ‘Paid under protest’ and adding a statement of the grounds upon which the protest is made

The mechanism for recovery provided by the section assumes that customs duty is payable and will be demanded only on entry.”

74 The plaintiff drew specific attention to an observation by McHugh J ((2001) 178 ALR 218 at [38]):

“Whether or not the owner or importer elected to take delivery of imported goods on which duty was payable, s 153 of the Act entitles the collector ‘at any time in any court of competent jurisdiction’ to sue for the duty as a debt owing to the Crown. The collector would be doing no more than enforcing his or her strict legal rights if he or she sued for the duty immediately the goods were imported.”

75 The plaintiff referred to the following statement of Gummow and Callinan JJ, which reveals no dissent from Wing On’s case (at [71]):

Wing On & Co Ltd v Collector of Customs (NSW)

76 The plaintiff also referred to the following statement of Kirby J at [113]:

“The legislative scheme, reflected in the Act, has therefore long favoured the exaction of the payment of duty as a precondition for the entry of the goods in question into this country.137 This is not a draconian invention of the Federal Parliament. It was the approach long followed in England in the 19th century.138 “

Attorney-General v Ansted

77 In general the remarks referred to are dicta favourable to the plaintiff’s contention, but no specific argument on the present point appears to have been addressed to the High Court.

78 The defendant, for its part, drew attention to other passages. It drew attention to a reference by Gummow and Callinan JJ in [66] in the following terms:

“The rate of import duty payable on the goods was the rate of duty in force when the goods were entered for home consumption: s 132(1).”

79 The defendant also drew attention to certain passages quoted by Gummow and Callinan JJ from R v Lyon (1906) 3 CLR 770 in [67]. It is convenient to quote them more fully as follows. First, Griffith CJ said at 777-778:

“Now, this Act contains general provisions as to the working of the Customs Department. But it does not introduce any new system. The system which it adopts has been in force as long as Customs duties have been imposed. The method adopted has always been that the value is to be declared and the duty paid at the time of passing the entry. In the case of goods imported for home consumption the course of procedure is first getting the goods passed and paying the duty, and then taking the goods out of the Customs into consumption.”

“The object of that provision [s 30], if it were necessary to give any reasons for its enactment, is obvious; if once goods go into home consumption, that is, into circulation, it becomes almost impossible to trace them. The only security the customs authorities could have in such a case for the payment of duty would be in most cases the personal security of the importer. Therefore it is, if the Act is to be effective, that all through the dealings with the goods, from the time they are first imported until duty is paid, they must be kept under customs control. In order to secure that end it is provided that no goods can be landed from the ship until the entry has been passed or a permit given by the collector. The entry must be passed before goods can be landed. Entry may be passed in one of three ways. It may be made for home consumption, that is to say, by passing an entry immediately, which, according to the Act, is a warrant for taking the goods away and dealing with them. Before they go out for consumption duty must be paid. For that purpose it is essential that there be a payment of duty contemporaneous with the entry. The other cases for which they may be entered are for warehousing, and for transhipment. Warehouses under the Act are of several kinds. There are some in which a manufacture may be carried on in bond. If goods are imported for the purpose of being manufactured, the manufacture is carried on in the warehouse in bond, and when the manufacture is completed, an entry for home consumption is made and duty is paid. It will be seen from these different kinds of entry that the time for valuation is different in different cases. In the case of an entry for home consumption, it must be made when the goods are landed. In the case of an entry for warehousing, it is not necessary to make a valuation until the time arrives for payment of duty. And if goods are entered for manufacture, matters may be arranged so that the manufacture may be carried out in a warehouse, and duty paid when the manufacture is complete. Thus the time for payment of duty arises only when all the elements necessary for making the valuation are in existence. But if we look at the entry in question here we see that it is an entry for home consumption. That entry cannot be made without payment of duty. Duty cannot be fixed without ascertainment of value, and according to the whole scheme of collection of duties under the Act, the time for payment of duty is the time for valuation.”

80 These passages do not assist the resolution of the present controversy. First, R v Lyon concerned the application of s 144, relating to the valuation of medicinal preparations. No counsel and no justice mentioned either s 132 or s 153, and the defendant’s present argument was not put to the court. Secondly, O’Connor J’s statement that the time for valuation, in the case of an entry for home consumption, is when the goods are landed, appears to favour the plaintiff rather than the defendant. Thirdly, both passages appear to contemplate that goods will be entered for home consumption, if that is the importer’s intention, as soon as possible after importation. There had in fact been an entry in that case. Usually there will be, because normally importers are law abiding, and they will comply with their obligations under ss 30, 36 and 68.

81 The defendant then drew attention, in the joint reasons for judgment of Gummow J and Callinan J in Malika Holdings Pty Ltd v Stretton, to [68], which contained a quotation from Gibbs J’s judgment in Carmody v F C Lovelock Pty Ltd (1970) 123 CLR 1 at 22-23. The sentence relied on was:

“Although the [Act] does not expressly so provide, the duty would normally be paid at the time of passing the entry.”

R v Lyon

82 The defendant then drew attention to the following observation of Gummow and Callinan JJ in [69]:

“The phrase [in s 153] ‘all duties’ is to be read in its natural sense ‘as meaning duties which have been imposed by law’. Read in this way, the debt spoken of in s 153 is not an arbitrary exaction but an obligation imposed by reference to criteria which, if the alleged debtor can show not to have been satisfied, provides a defence to the action.”

“the last sentence in particular supports our case in that the debt to which s 153 refers is an obligation imposed by reference to defined criteria, the defined criteria being the rate applicable at the time of entry for home consumption and the customs valuation of the goods as at that time.”

McCormick v Federal Commissioner of Taxation

Customs Act

83 Finally, the defendant relied on the following passage in the reasons for judgment of Gummow and Callinan JJ at [73]:

“There is some apparent disharmony between ss 165(1) and 153. Duties which are exigible upon the proper operation of the legislation constitute the Crown debts recoverable under s 153.”

“that is entirely consistent with the construction that we urge, that is before you get to s 153 what you need to find is duties that are exigible upon the proper operation of the legislation including s 132.”

However, the passage relied on is entirely neutral on the correctness of the s 132 argument.

Carter Holt Harvey Manufacturing Group Pty Ltd v Comptroller-General of Customs

84 This case concerned the construction of s 165 of the Customs Act. Section 165 deals with the obligation to pay duty which has been short levied or erroneously refunded. The following passage appears in the joint reasons for judgment of Fitzgerald P and Mackenzie J (1996) 128 FLR 96 at 97-98:

“So far as civil recovery is concerned, the primary section is s 153, which is in Div 1 - ‘The Payment and Computation of Duties Generally’ and provides:

‘Recovery of duties

153. All duties shall constitute Crown debts charged upon the goods in respect of which the same are payable and payable by the owner of the goods and recoverable at any time in any court of competent jurisdiction by proceedings in the name of the Collector.’

That provision is plainly applicable where an import entry has not been made, duty has not been paid, and an authority to deal with imported goods has not been obtained.”

85 The primary judge said:

Prechelt

86 The plaintiff’s written submission on this passage was:

Wing On & Co

Carter Holt Harvey

“part of the reasoning by which their Honours get to the proper construction of [s 165]. What their Honours are trying to do is to decide what the relationship is between [s 165] and [s 153] and for that purpose their Honours construe [s 153].”

87 The defendant submitted that the dictum of Fitzgerald P and Mackenzie J was wrong because in Malika Holdings Pty Ltd v Stretton (2001) 178 ALR 218 at [75]-[76] Gummow and Callinan JJ said that one of the arguments rejected by the Queensland Court of Appeal should be accepted. It does not follow, however, that the dictum relied on by the plaintiff is wrong.

88 The plaintiff was correct in saying that the dictum of Fitzgerald P and Mackenzie J “contains in a succinct form … the proposition about s 153 for which we contend”. But it was the barest dictum, and does little to advance the plaintiff’s case.

English cases

89 The defendant argued that Attorney-General v Ansted (1844) 12 M & W 520; 152 ER 1304 and Brook’s Wharf and Bull Wharf Ltd v Goodman Bros (1937) 1 KB 534 were not authorities against its construction of the Australian legislation, because the English legislation was different in form. This is an inquiry which it is not necessary to pursue. The High Court reasoning rejecting s 132 is quite independent of the existence of the English authorities. Attorney-General v Ansted in particular was relied on in Wilson’s case and Wing On’s case; it was referred to with approval by Kirby J in Malika Holdings Pty Ltd v Stretton; its correctness was assumed by Windeyer J in Forbes v Trader’s Finance Corporation Ltd; and the relevance of the English regime was alluded to by Griffith CJ in R v Lyon. But the fact, if it is a fact (which is debatable), that the English cases were decided on different legislation does not invalidate the High Court’s reasoning.

The defendant’s arguments of statutory construction

90 Most of the High Court cases support the plaintiff’s construction of the legislation, either directly or by reliance on English authorities. None of those discussed above support the defendant’s construction.

91 It is now necessary to consider the defendant’s arguments of statutory construction in order to see whether, notwithstanding the construction applied in Wilson’s case and Wing On’s case, the defendant’s construction should be adopted.

Universality of s 132

92 The defendant’s primary submission is that the language of s 132(1) is entirely general and should be read as having a universal reach. Section 132(1) provides:

“… the rate of any import duty payable on goods is the rate of the duty in force when the goods are entered for home consumption.”

any

not

Re Gregg Prechelt

Customs Tariff Act

Whelan v Kelly

Customs Act

93 The submission encounters the following difficulties. First, even though s 132 may be capable of being read as being the only source of duty and as the only guide to the time when duty is calculated, that is not the reading which the High Court has adopted. Secondly, the High Court cases, contrary to the approach of Muir J and the primary judge, do not assume that a duty imposed on importation can only be calculated pursuant to s 132: they do not distinguish between the creation of the debt and its quantification.

Assumptions as to meaning of s 132 in other provisions

94 The defendant’s next group of submissions turned on the existence of other sections in the Customs Act which were said to assume that duty is only payable on entry for home consumption, and hence to assume that the defendant’s construction of s 132 is correct.

95 The first of these provisions was s 132A. It provides:

“Where, before goods are entered for home consumption, an amount is paid to a Collector in respect of duty that may become payable in respect of the goods, the amount shall, upon the goods being entered for home consumption, be deemed, for the purposes of this Act, to be an amount of duty paid in respect of the goods.”

96 The submission does not follow. Section 132A may apply to the circumstances of an importer importing goods but being unsure what will be done to the goods, and hence being unsure whether the goods should be entered for home consumption, for warehousing or for transhipment under s 68(1). No doubt the circumstances of commercial life would ordinarily make importers desirous of dealing speedily with imported goods, which will ordinarily have been paid for in cash or financed by bankers’ confirmed credits. The motivation of importers will be to deal speedily with a view to making a profit. However, not every importer will be in that position all the time, and s 132A deals with the position of an importer who wishes to secure protection by paying duty before the goods are entered for home consumption.

97 The next section relied on was s 167. The submission was set out above. As indicated above, the underlying premise of the submission has been negated by the conclusion in Malika Holdings Pty Ltd v Stretton (2001) 178 ALR 218 that s 167 is not “an exclusive means for an owner of goods to contest the amount or rate of duty”.

98 Another section relied on was s 35A. Section 35A(1) provides:

“Where a person who has, or has been entrusted with, the possession, custody or control of dutiable goods which are subject to the control of the Customs

(a) fails to keep those goods safely; or

(b) when so requested by a Collector, does not account for those goods to the satisfaction of the Collector,

that person shall, on demand in writing made by a Collector, pay to the Commonwealth an amount equal to the amount of duty of Customs which would have been payable on those goods if they had been entered for home consumption on the day on which the demand was made.”

“shall be a debt due to the Commonwealth and may be sued for and recovered in a Court of competent jurisdiction by proceedings in the name of the Collector.”

99 In response the plaintiff drew attention to Collector of Customs for the State of New South Wales v Southern Shipping Co Ltd (1962) 107 CLR 279. The case concerned the construction of s 60 of the Excise Act 1901 (Cth). The terms of s 60 were materially the same as those of s 35A, save that s 60 applied to excise and s 35A to customs duty. Dixon CJ said at 288-9 that the liability under s 60 was:

Moore v The Commonwealth

“it is a provision which is designed to ensure that the excise revenue shall not suffer if excisable goods, by some irregular means, find their way into home consumption.”

“the ability of the collector to seek a person who has custody, care or control of the goods to account for those goods is founded on the hypothesis that goods which go into home consumption without being entered do not attract customs duty ….”

Southern Shipping

100 The defendant also relied on ss 233, 233AB and 234. It said:

Customs Act

L Vogel & Son v Anderson

the amount of the duty that

would have

been payable on smuggled goods to which the offence relates if those goods

had been

entered for home consumption

the amount of the duty that

would have

been evaded by the commission of the offence if the goods

had been

entered for home consumption’

The fact that s 233AB and s 234 select as a principle by reference to which the penalty is to be assessed the amount of duty which would have been payable if the goods had been entered for home consumption, does not cast light on whether, independently of what is recoverable by way of penalty, the importer is civilly liable for duty as at the date of importation or some other date.

Gaps left by s 132 remedied by other provisions

101 The defendant advanced a third group of submissions as follows:

Customs Act

102 The defendant submitted that once goods were imported they were under the control of Customs until exported or otherwise dealt with as provided in s 30(a). If goods subject to the control of Customs were moved, altered or interfered with, a penalty was payable (s 33(1)), and the goods were forfeited to the Crown (s 229(1)(g)). Where an entry was not made for imported goods, they could be removed if directed by the Collector and sold (s 72). An amount equal to the duty that would have been payable could be demanded under s 35A. There could be prosecutions for smuggling (ss 233 and 233AB) and evasion of duty (s 234).

103 These provisions do not completely stop up the gap left by s 132 in which an importer who does not enter goods for home consumption can manoeuvre. They do not overcome fully the practical difficulties raised by the defendant’s construction. Sections 33, 233 and 234 depend on proof of mens rea at the criminal standard of proof. Indeed, the defendant conceded that on its argument an importer who never intended to enter the goods for home consumption was not a smuggler acting in contravention of s 233, because the revenue was not defrauded unless there was an obligation to pay duty, and that obligation did not arise until entry of the goods for home consumption. By parity of reasoning, that importer would not offend s 234 because no duty would be payable, and it could not be said that the importer was evading it. This concession, if correct, significantly narrows the efficacy of s 233 and 234. Section 35A does not apply where it cannot be established that the importer who should have paid duty on importing the goods or (as the defendant would have it) on entry for home consumption retains possession, custody or control of dutiable goods. The remedy of forfeiture under s 229(1)(g) depends on the Crown being able to seize the goods. The removal and sale under s 72 depend on the Collector being able to identify and have access to the goods.

104 There is a further difficulty with the defendant’s argument based on s 35A. Section 35A applies to persons in a particular relationship with “dutiable goods”. Section 4 provides that the expression “dutiable goods” includes “all goods in respect of which any duty of Customs is payable.” On the defendant’s case, no duty of customs is payable until goods are entered for home consumption. If they have been entered for home consumption, then s 35A applies, but not before. In that event s 35A is not a means of blocking the gap left if the goods have not been entered for home consumption.

105 The plaintiff put a more general submission in answer to the defendant’s reliance on such provisions as ss 33, 35A, 229(1)(g), 233, 233AB and 234. The submission started from the proposition that these were underpinning provisions designed to reinforce the integrity of the Customs Act so far as it, and in particular s 30(a), sought to ensure that goods must remain under the control of Customs until duty is paid. The plaintiff relied on the following words of Gibbs J in Carmody v F C Lovelock Pty Ltd (1970) 123 CLR 1 at 23-24:

Customs Act

R v Lyon

Customs Act

106 The remedies are cumulative on the primary obligations to pay duty. They are not to be regarded as means of filling a hole left by a relatively narrow view of the primary obligation to pay duty. The construction propounded by the plaintiff is to be preferred because it permits civil recovery of duty on the importation of goods, rather than leaving the authorities to have recourse to substitutional remedies which are less easy to take advantage of and less wide in their operation.

Inference from transitional provisions in Customs Tariffs Acts

107 The defendant relied on s 18(2) of the Customs Tariff Act 1982 and s 21(1)(b) of the Customs Tariff Act 1987. Section 21(1) of the latter Act, for example, provided:

“Duties of Customs are imposed, in accordance with this Act, on:

(a) goods imported into Australia on or after the commencement day; and

(b) goods:

(i) imported into Australia before the commencement day;

and

(ii) entered, or again entered, for home consumption on or
after the commencement day.”

“The point about [s 21(1)(b)] is when one looks at sub para (ii) its very existence and certainly its language is consistent with the entry for home consumption being the relevant taxing point for imported goods.”

“if entry for home consumption were not material to the imposition of duty, s 21(1)(b) would not need to refer to it.”

“is enacted to ensure that if the goods have previously been imported but there was an entry after the [commencement day of the] 1987 Act then the Act would apply to those goods.”

The defendant’s argument is not without force, but the language of a transitional provision is not sufficient to overthrow the construction of the substantive provisions adopted by the High Court.

Views of Wollaston

108 The court was taken to the work of Dr H N P Wollaston, the first Comptroller-General of Customs, on the Customs Act, namely Customs Law and Regulations (1904). He said of s 132 (at p 78):

“This section disposes for many purposes of the question so often raised under other Acts, as to what constitutes the exact date of importation. Seeing that duties are leviable under the tariff on importation and become a debt due to the Crown immediately on importation, a change in the tariff after importation, but before payment of duty, frequently raised the question under the State laws, as to what duties were payable.

The above section settles the point as regards the rate of duty. Liability to or freedom from duty is determined by the law in force at the date of entry for home consumption, not the date of importation.”

The defendant relied on the first, third and fourth sentences. The plaintiff relied on the second sentence, and submitted that Dr Wollaston was only dealing with the position where an entry had been made, not the position where it had not been made. The better reading is that s 132 is limited to the instance described by Dr Wollaston in the second sentence, namely where there is a change in tariff between the date of importation and the date of payment, and the goods have been entered for home consumption. That construction is not inconsistent with the High Court cases.

Remedial legislation

109 The final argument advanced by the defendant was that in response to Re Prechelt (1999) 149 FLR 334:

Customs Amendment Act (No 1)

“it doesn’t assume the correctness of it except in the sense that it, by legislation, overturns it. To that extent I suppose it can be said it assumes the correctness of it, but not otherwise.”

“(4) The rate of any import duty on goods whose owner is required by section 71 to provide information about them is the rate of the duty in force at the later of the following times (or either of them if they are the same):

(a) the time when the information is provided;

(b) the time when the goods arrive in Australia.”

The amendment does not cast light on the controversy between the parties in this case. In the circumstances it is not necessary to examine the submission further beyond rejecting it.

The statutory scheme considered

110 Goods are imported when a ship comes to an Australian port, or an aircraft lands in Australia, with goods on board for the purpose of being there discharged and delivered to a consignee: Wilson v Chambers and Co Pty Ltd (1926) 38 CLR 131; Forbes v Trader’s Finance Corporation Ltd (1971) 126 CLR 429 at 443-444; R v Bull (1974) 131 CLR 203, 215 and 254-5.

111 When goods were imported, under the legislation in force at the relevant time, s 68 required that they be entered for home consumption, for warehousing, or for transhipment.

112 If goods were entered for home consumption, s 132 applied.

113 If goods were entered for warehousing, they were “warehoused goods” by reason of the definition of that expression in s 4. Wollaston, p 45, states: “The warehousing is the placing of goods in a bonding warehouse … until the duty thereon is paid.” Part V dealt with warehouses. Warehouses were places licensed by the Comptroller for warehousing goods (s 79) which were intended to be secure both from the point of view of the moral quality of licensees and the physical security of the places (ss 81, 82, 86 and 87). A warehouse licence was to be subject to “such … conditions … for the protection of the revenue, for the purpose of ensuring compliance with the customs Acts or otherwise as are prescribed.” The holder of a warehouse licence was to arrange the warehouse and the goods in it in such a manner as to permit Customs officers to carry out their duties: s 90. Goods in warehouses might be sorted, bottled or repacked (s 92). They might be blended or packaged and then delivered for home consumption (s 98). By s 99(1) warehoused goods might be entered for home consumption or for export. If they were entered for home consumption, s 132 applied. If the goods were entered for export, Part VI Div 2 had to be complied with. An export entry was a communication to Customs of information concerning goods intended for export that was effected either by document or by computer: s 114(1). By s 113(1), the owner of goods intended for export had to enter the goods for export and was prohibited from allowing them to leave the place of exportation or to be loaded on the ship or aircraft in which they were to be exported unless an authority to deal with them had been given by Customs under s 114C.

114 Turning to the entry of imported goods for transhipment, the first issue is the meaning of transhipment. The only light cast on the matter by the Customs Act comes from s 128, particularly s 128(c). Section 128 provided:

“Ships’ stores and aircraft’s stores which are unshipped or unloaded with the consent of the Collector shall be entered:

(a) for home consumption;

(b) for warehousing; or

(c) for transhipment to another ship or aircraft.”

“The transhipment is the transfer of the goods from the importing vessel without payment of duty, for the purposes of being conveyed elsewhere outside Australia. The goods must be transferred direct from the importing to the exporting ship. Such goods remain under the control of the Customs.”

“Goods are not ‘imported’ until brought within a port of entry with the intention of landing them there. Consequently goods which are not intended to be discharged at that port need not be dealt with in manner directed by [s 68]. They need not even be reported …. It is clear, however, from the context that for the purposes of [s 68], goods intended to be transhipped, as distinguished from goods to be carried on without transhipment, are ‘imported’ and must be reported and entered.”

115 The principal reasons for favouring the plaintiff’s contention that duty is payable on all goods imported whether or not they have been entered for home consumption are that it is favoured by High Court authority and that it reduces opportunities for escaping duty.

116 There is one difficulty in the plaintiff’s construction. It operates satisfactorily where goods were imported for home consumption. If they were entered for home consumption immediately, as they should have been (s 68(a)), duty was payable at the s 132 rate. If they were not entered, duty was payable at the rates operating at the time of the importation. However, if the debt flowing from the obligation to pay customs duty arose on importation, and the goods were entered for warehousing or transhipment (i.e. export), or, having been warehoused, were entered for export, what happened to the debt? Was it still exigible, and if not why not? The plaintiff’s construction offered no clear answer to these questions. The plaintiff submitted that the legislation operated on the assumption that the debt was no longer exigible. When a s 36 entry had been made, s 39 gave the Customs power to give authority for the goods to be dealt with accordingly. If warehoused goods were entered for home consumption, the owner or importer would not be able to deal with the goods without paying the duty. If goods were entered for export, then in practice authority to deal with the goods would be given without the need to pay duty. The plaintiff was not able to point to a specific provision explicitly absolving the importer from the obligation to make payment of duty where goods were imported, warehoused and then exported. The plaintiff did not refer to ss 162, 162A and 163, but the answer to that difficulty may lie in them. Sections 162 and 162A provided that where goods were imported, the Collector might accept a security or an undertaking for the payment of duty; if the goods were then exported within twelve months, the duty was not payable. Section 163 provided:

“(1) Refunds, rebates and remissions of duty may be made:

(a) in respect of goods generally or in respect of the goods included in a class of goods; and

(b) in such circumstances, and subject to such conditions and restrictions (if any), as are prescribed, being circumstances, and conditions and restrictions, that relate to goods generally or to the goods included in the class of goods.

(1A) The regulations may prescribe the amount, or the means of determining the amount, of any refund, rebate or remission of duty that may be made or the purposes of subsection (1).”

Customs Act

117 On the other hand, the defendant’s contention that dutiability depends on s 132 has the advantage of explaining why goods entered for transhipment or export were not dutiable, but has the disadvantage of permitting importers to escape duty and the difficulty of being inconsistent with High Court authority.

Conclusion

118 The authority on which the defendant and the primary judge relied, Re Prechelt (1999) 149 FLR 334, cannot stand with the High Court cases, which were apparently not cited to Muir J. The defendant’s construction has no other support in authority, and there is High Court authority against it. Whatever the merits of the defendant’s arguments on construction without regard to authority, they do not justify this Court making a departure from the settled construction of the legislation in the High Court. If that is to be done, it must be done by the High Court.

119 Accordingly the primary judge was wrong to strike out the Statement of Claim. The authorities binding on him either in a technical sense or in a practical sense compelled a different result if the matter was viewed, as the parties treated it, as the decision of a Part 31 rule 2 question. The appeal should be allowed. If the matter were viewed as a strike out application to be considered on the General Steels test, it follows a fortiori that the appeal must be allowed.

Orders

120 The appropriate orders are:

1. The appeal is allowed.

2. Orders of Adams J of 6 December 1999 be set aside.

3. Remit the matter to the Common Law Division for directions.

4. The respondent is to pay the appellant’s costs of the hearing before
Adams J and the appellant’s costs of the appeal.

Suitors Fund Act

121 ROLFE AJA: I agree with Heydon JA.

**********

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Citations

Chief Executive Officer of Customs v Tony Longo Pty Ltd [2001] NSWCA 147

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CITATION:	Chief Executive Officer of Customs v Tony Longo Pty Ltd [2001] NSWCA 147
FILE NUMBER(S):	CA 41037/99
HEARING DATE(S):	07/05/01
JUDGMENT DATE:	23 May 2001
PARTIES :	Chief Executive Officer of Customs (Appellant) Tony Longo Pty Ltd trading as Aquila Shoes (Respondent)
JUDGMENT OF:	Mason P at 1; Heydon JA at 2; Rolfe AJA at 121

LOWER COURT JURISDICTION :	Supreme Court
LOWER COURT FILE NUMBER(S) :	CL 11069/98
LOWER COURT JUDICIAL OFFICER :	Adams J

COUNSEL:	Mr A Robertson SC/Dr A Gelbart (Appellant) Mr S J Gageler SC/Mr J R Clarke (Respondent)
SOLICITORS:	Australian Government Solicitor (Appellant) KPMG Legal (Respondent)
CATCHWORDS:	Customs - Imported Goods - Non-entry of goods for home consumption - Whether duty payable despite lack of entry for home consumption - Customs Act 1901 (Cth), ss 30, 36, 68, 132, 153 - Customs Tariff Act 1982 (Cth), ss 11, 18 and 19 - Customs Tariff Act 1987 (Cth), ss 13, 21 and 22. - Statutory Construction - Customs legislation - Non-entry of imported goods for home consumption - Whether duty payable despite lack of entry for home consumption - Customs Act 1901 (Cth), ss 30, 36, 68, 132, 153 - Customs Tariff Act 1982 (Cth), ss 11, 18 and 19 - Customs Tariff Act 1987 (Cth), s 13, 21 and 22 - D
LEGISLATION CITED:	Customs Act 1901(Cth) Customs Tariff Act 1982 (Cth) Customs Tariff Act 1987 (Cth) Customs Tariff Act 1995 (Cth)
CASES CITED:	Attorney-General v Ansted (1844) 12 M & W 520; 152 ER 1304 Brook's Wharf & Bull Wharf Ltd v Goodman Brothers [1937] 1 KB 534 Businessworld Computers Pty Ltd v Australian Telecommunications Commission (1988) 82 ALR 499 Carmody v F C Lovelock Pty Ltd (1970) 123 CLR 1 Carter Holt Harvey Manufacturing Group Pty Ltd v Comptroller-General of Customs (1996) 128 FLR 96 Collector of Customs for the State of New South Wales v Southern Shipping Co Ltd (1962) 107 CLR 279 Forbes v Trader's Finance Corporation Ltd (1971) 126 CLR 429 General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 129 McCormick v Federal Commissioner of Taxation (1984) 158 CLR 622 Malika Holdings Pty Ltd v Stretton (2001) 178 ALR 218 R v Bull (1974) 131 CLR 203 R v Lyon (1906) 3 CLR 770 Re Prechelt (1999) 149 FLR 334 Wilson v Chambers and Co Pty Ltd (1926) 38 CLR 131 Wing On and Co Ltd v The Collector of Customs for New South Wales 91937) 60 CLR 97
DECISION:	See para 120