Collector of Customs v Johnson & Johnson Medical Pty Ltd
[1997] FCA 775
•15 AUGUST 1997
FEDERAL COURT OF AUSTRALIA
CUSTOMS TARIFF - whether “aseptic paper” under item 4823.90.10 includes articles made out of aseptic paper - noscitur a sociis - effect of note eliminating consideration of Chapter 63 where Chapter 48 applied - principle that it is a question of law whether a given description of goods falls within a particular part of the Tariff.
Customs Tariff Act 1987, Sched. 2, General Rules for the Interpretation of the Harmonized System, 3(b); Sched. 3, Heading 4823; Section XI, note 1(m)
Re Gissing and Collector of Customs (1977)1 ALD 144
Liebert Corporation Australia Pty Ltd v Collector of Customs (1993) 23 AAR 287
Vernon-Carus Australia Pty Ltd v Collector of Customs (1995) 21 AAR 450
Peacock v Zyfert (1983) 48 ALR 549
COLLECTOR OF CUSTOMS v JOHNSON & JOHNSON MEDICAL PTY LIMITED
NG 784 of 1996
Burchett, Tamberlin and Lehane JJ
Sydney
15 August 1997
IN THE FEDERAL COURT OF AUSTRALIA ) ) NEW SOUTH WALES DISTRICT REGISTRY ) G784 of 1996 ) GENERAL DIVISION )
BETWEEN: COLLECTOR OF CUSTOMS
AppellantAND: JOHNSON & JOHNSON MEDICAL PTY LIMITED
Respondent
JUDGES: BURCHETT, TAMBERLIN and LEHANE JJ PLACE: SYDNEY DATED: 15 AUGUST 1997
MINUTES OF ORDER
THE COURT ORDERS THAT:
The appeal be allowed.
The order made below be set aside; and in lieu of that order, the decision of the Administrative Appeals Tribunal be varied so as to substitute, for so much of the direction contained therein as would require the goods to be classified under item 4823.90.10, a direction that they be classified under item 4823.90.90.
The costs of the proceedings below and of the appeal be reserved for determination, unless the parties can agree, after the receipt of further written submissions directed to the appropriate costs orders.
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA ) ) NEW SOUTH WALES DISTRICT REGISTRY ) G784 of 1996 ) GENERAL DIVISION )
ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA
BETWEEN: COLLECTOR OF CUSTOMS
AppellantAND: JOHNSON & JOHNSON MEDICAL PTY LIMITED
Respondent
JUDGES: BURCHETT, TAMBERLIN and LEHANE JJ PLACE: SYDNEY DATED: 15 AUGUST 1997
REASONS FOR JUDGMENT
THE COURT
Although a number of issues were debated at earlier stages of the litigation, this appeal has come down to a quite short point concerning the correct classification under the Customs Tariff Act 1987 of certain imported goods. In the decision of the Administrative Appeals Tribunal from which, by way of an appeal on a point of law to a judge of this Court, the matter now comes to the Full Court, the goods were identified as of two related kinds: surgical drapes, and surgical packs, in each case made predominantly of an aseptic paper. The surgical packs contain surgical gowns together with drapes so cut as to be suitable for use in particular surgical procedures, put up in sets. The function of all these things, the Tribunal found, was “to provide sterile covering materials for patients, theatre staff and equipment, in order to prevent a cross flow of infection between equipment, theatre staff and the patient, particularly with regard to body fluids”. Disposable paper drapes and gowns have obvious advantages for such a purpose.
When the Tribunal identified the goods, it performed the first task required of it. As Brennan J (speaking for the Tribunal) said in Re Gissing and Collector of Customs (1977) 1 ALD 144 at 145:
“The question raised by the application is one of classification. In order to answer the question, it is necessary to identify the goods, and by construing the Tariff, to determine which provision of the Tariff includes the goods so identified. Identification of goods to be classified is often a simple exercise. When goods are separate units, each identical with the others, and possessing no distinctive feature by reason of their association, each unit may be identified self-evidently as the relevant entity for classification.
On the other hand, there is sometimes a relationship between or among various units of such a kind as to identify them as a combination rather than as separate units. The test to be applied is whether the identity of the units is subordinated to the identity of the combination.”
In the present case, the task was not so simple, for there was much debate whether the goods did in fact consist of paper. Their composition included 45% polyester with 55% paper pulp, a hydroentanglement process having been employed to produce a mingling of the materials, which were then treated to make them repel fluids, and to render them sterile. The appellant originally contended that the drapes and gowns were made, not of paper, but of a fabric which should be identified as a “non-woven” falling within Chapter 63 of the Tariff.
An insuperable obstacle in the Collector’s way, so far as he argued for classification under Chapter 63, was the finding of the Tribunal that the items were made of paper. Whether or not they could otherwise have been properly described as “non-wovens”, they could not be so described once they were found to be of paper. That is because paper products fall within Chapter 48 of the Tariff, and Section XI of Schedule 3 of the Customs Tariff Act contains a note (1)(m) specifically providing that the Section including Chapter 56 “does not cover ... [p]roducts or articles of Chapter 48”. In Liebert Corporation Australia Pty Ltd v Collector of Customs (1993) 23 AAR 287 at 290, a Full Court affirmed the view of Foster J that such a note “otherwise require[s]” within the meaning of what is now rule 1 of the General Rules for the Interpretation of the Harmonized System contained in Schedule 2 to the Act, so as to produce “the result ... that whenever there is competition in the classification of goods between the headings of [the one chapter] and the headings of [the other chapter], it is necessary before entering upon the question whether the goods may be appropriately classified under a heading or subheading of those Chapters, to positively exclude their classification under some heading of [in this case, Chapter 48].” See also Vernon-Carus Australia Pty Ltd v Collector of Customs (1995) 21 AAR 450.
What the trial judge described as the appellant’s “principal contention” before him, that the goods fell within Chapter 63 in Section XI, was thus bound to fail once the articles were identified as made of paper. This contention was abandoned upon the appeal. The question now raised is whether, having found that the goods fell within Chapter 48, the Tribunal was able, without error of law, to classify them as “aseptic paper” as described in item 4823.90.10.
Chapter 48 contains two headings upon which the argument centred. Heading 4818 reads:
“TOILET PAPER, HANDKERCHIEFS, CLEANSING TISSUES, TOWELS, TABLECLOTHS, SERVIETTES, NAPKINS FOR BABIES, TAMPONS, BED SHEETS AND SIMILAR HOUSEHOLD, SANITARY OR HOSPITAL ARTICLES, ARTICLES OF APPAREL AND CLOTHING ACCESSORIES, OF PAPER PULP, PAPER, CELLULOSE WADDING OR WEBS OF CELLULOSE FIBRES”.
Heading 4823 reads:
“OTHER PAPER, PAPERBOARD, CELLULOSE WADDING AND WEBS OF CELLULOSE FIBRES, CUT TO SIZE OR SHAPE; OTHER ARTICLES OF PAPER PULP, PAPER, PAPERBOARD, CELLULOSE WADDING OR WEBS OF CELLULOSE FIBRES”.
We can see no error of law in the Tribunal’s decision that the surgical drapes and packs which it had identified were not bedsheets or similar to bedsheets, were not articles of apparel, and did not fall within any of the other descriptions in heading 4818. But they were, plainly enough, accurately described by the words “ARTICLES OF ... PAPER” in heading 4823. Having reached this conclusion, the Tribunal looked at the subheadings of 4823, which included the following:
“4823.90 - Other:
4823.90.10 --- Articles, as follows:
(a) aseptic paper;
(b) filters wholly of filter paper;
(c) indicator paper and paperboard, not being diagnostic reagent paper and paperboard;
(d) monotype paper;
(e) paper for use in wrapping fruit;
(f) perforated cards for Jacquard and similar machines
4823.90.90 --- Other”.
The Tribunal’s reasoning (following the course suggested by Brennan J in the passage we have cited from Re Gissing) identified the surgical packs as consisting of a combination rather than of separate units. When the packs were so considered, it became necessary, by virtue of rule 3(b) of the General Rules for the Interpretation of the Harmonized System, and since no one suggested rule 3(a) applied, to consider whether a particular component of the goods “[gave] them their essential character”. The Tribunal, implicitly discounting the surgical gowns, found that “it is the surgical drapes that give to them their essential character”. It emphasized the function of protection against bacteria. Having regard to that function, it considered both the drapes and the packs should be classified as “aseptic paper” within item 4823.90.10. The learned Judge at first instance found no error of law in this solution to the problem. His Honour said:
“Heading 4823 refers both to paper and to articles ‘of ... paper’. It seems to me that the cryptic language of sub-heading 4823.90.10 is capable of encompassing both categories. There is no obvious reason why a narrow construction of the sub-heading should be adopted and Mr Roberts [counsel for the applicant, the present appellant] did not suggest one.”
The vital question thrown up by the case is thus purely a question of construction. Do the words “aseptic paper”, taken in their context, actually refer, not merely to the described type of paper, but also to articles, such as surgical drapes, manufactured out of paper of that type? The answer must be found as a matter of law, not fact, for problems of construction raise issues of law.
The orthodox approach to statutory construction requires the Court to examine the context. It is by reference to context that language is generally understood. But the exactitude required of the draftsman of a statute, and the multitude of situations it needs to cover, introduce special difficulties. The result is that what in the case of less technical communications would be a natural process of apprehension of the meaning of expressions in a particular context becomes an artificial process of the application of rules of interpretation. An important one of these for present purposes, insisting that we should look to contextual associations, is usually expressed in Latin: noscitur a sociis.
In this case, “aseptic paper” is only the first of six specified types of articles falling within 4823.90.10. Four of them refer to kinds of paper, while two refer to articles made or fashioned out of paper. The first class includes, as well as aseptic paper, indicator paper, monotype paper and paper for use in wrapping fruit. The second class consists of filters wholly of filter paper and perforated cards for Jacquard and similar machines. The distinction between these classes of items is emphasized when it is appreciated that there is also a sub-heading under Heading 4823 which refers to “Filter paper and paperboard” - sub-heading 4823.20.00. The existence of separate provision for filter paper, on the one hand, and for filters wholly of filter paper, on the other, clearly shows that the draftsman distinguished between an article consisting simply of a kind of paper and an article made of that kind of paper. Similarly, a perforated card for a Jacquard machine has had something done to it (being cut to size and perforated) to convert it from simply a card into an identifiable item which will be acquired in commerce, not as a card, but to perform a specific task for which it has been produced, namely, to function in a loom for the weaving of patterned fabrics, its perforations being in the required pattern.
By contrast, paper for use in wrapping fruit, monotype paper and indicator paper, although they would be expected to be in suitable sizes for their respective uses, have not been converted into a new article, as by the fabrication of a cone of filter paper to fit a coffee machine, or the patterned perforation of cards for use in a Jacquard machine. Monotype paper will be perforated when it is used by a printer (he will perforate it to perform a controlling function upon the principle of the pianola), but the article traded in commerce and with which the tariff deals is simply the unused paper.
Having regard to the context, we respectfully disagree with the view that to confine “aseptic paper” to the paper itself, as distinct from gowns or even simple drapes made of it, would be a “narrow construction”. It is the only meaning the words convey in such a context. Nor does it suggest otherwise that Heading 4823 refers both to “PAPER” and to “ARTICLES OF ... PAPER”. Indeed, this underlines the distinction. When the “[a]rticles” referred to in item 4823.90.10 are listed, they include, as we have said, some articles which are simply special papers, and other articles which are made of special papers. The word “articles” is not in itself inapposite to refer to papers in their pristine state. In Vernon-Carus (supra, at 453), Northrop J said: “In Sch 3 the word ‘articles’ appears to be used as synonymous with the word ‘goods’.”
Accepting that it was open to the Tribunal to equate the surgical packs with the surgical drapes, on the basis that the drapes gave the packs their “essential character”, the drapes themselves could not fall within the statutory expression “aseptic paper”. They were made of it, but they were more than aseptic paper. They were, as the Tribunal found, “specifically cut drapes for particular surgical procedures”, and, as it also found, “cut so as to conform to the contours of the body”. They were designed to “maintain a sterile field during a surgical operation”. Once these findings were made, it could not have been open to the Tribunal, upon the correct construction of the Customs Tariff Act, to hold that the goods were simply “aseptic paper”.
Since the facts have been found by the Tribunal, the case illustrates the proposition for which Peacock v Zyfert (1983) 48 ALR 549 is authority, that, as Lockhart J put it at 564: “It must be a question of law whether a given description of goods falls within a particular part of the Tariff.” See also Rheem Australia Ltd v Collector of Customs (NSW) (1988) 78 ALR 285 at 293, per Wilcox J, 306, per Burchett J. The Tribunal has here found, without error, that the goods fall within Heading 4823 and sub-heading 4823.90; they cannot, as a matter of law, fall within item 4823.90.10; and it follows that they must fall within item 4823.90.90, “Other”.
The appeal should therefore be allowed; the order made below should be set aside; and in lieu of that order, it should be ordered that the decision of the Administrative Appeals Tribunal should be varied so as to substitute, for so much of the direction contained therein as would require the goods to be classified under item 4823.90.10, a direction that they be classified under item 4823.90.90. However, as it seems uncertain (owing to changes in tariff rates) what the practical consequences of this conclusion will be, the costs of the proceedings below and of the appeal should be reserved for determination, unless the parties can agree, after the receipt of further written submissions directed to the appropriate costs orders. It should not be overlooked that the appellant’s preferred arguments have all failed, and he has succeeded only upon a final alternative submission.
I certify that this and the preceding six (6) pages are a true copy of the Reasons for Judgment herein of the Court
Associate:
Dated: 15 August 1997
Counsel for the Appellant: Mr P Roberts Solicitor for the Appellant: Australian Government Solicitor Counsel for the Respondent: Mr J T Svehla Solicitors for the Respondent: Michell Sillar Date of Hearing: 11 February 1997
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