Elderstone Nominees Pty Ltd and Australian Trade Commission
[2007] AATA 1265
•27 April 2007
Administrative Appeals Tribunal
DECISION AND REASONS FOR DECISION [2007] AATA 1265
ADMINISTRATIVE APPEALS TRIBUNAL )
) No W 2006/244
GENERAL ADMINISTRATION DIVISION ) Re ELDERSTONE NOMINEES PTY LTD Applicant
And
AUSTRALIAN TRADE COMMISSION
Respondent
DECISION
Tribunal Mr S Penglis, Senior Member
Mr W Evans, MemberDate27 April 2007
PlacePerth
Decision The Tribunal affirms the decisions under review.
.............(Sgd. Mr S Penglis).....................
Senior Member
CATCHWORDS
Export Market Development Grants Scheme – Stickers attached to plastic wrapping of exported meat products not promotional literature or other advertising material.
LEGISLATION
Export Development Grants Act 1997 (Cth) – Sections, 31, 33, 36 and 37
REASONS FOR DECISION
27 April 2007 Mr S Penglis, Senior Member
Mr W Evans, Member1. The applicant is the trustee for the Hillside Abattoirs Trust which trades as Hillside Meats, Hillside Abattoirs and Hillside Tender Meats.
2. The applicant’s business is based in Narrogin, Western Australia. It is a leading supplier of chilled and frozen lamb and sheep meat and offal to the domestic and export markets.
3. The applicant has developed significant export sales into various overseas markets, mainly in Asia and Mauritius.
4. In 2004 and 2005, the applicant had export sales in Singapore, Hong Kong, Thailand, Malaysia, Mauritius, Mexico, Sri Lanka, Vietnam, Taiwan, Japan and China.
5. As part of its export market development strategy, the applicant developed a range of promotional material in conjunction with its overseas customers. These included point of sale material such as posters, brochures and “shelf talkers”.
6. The applicant also developed various stickers. It is these stickers that are the subject of this application.
7. Mr Peter Trefort, Chief Executive Officer of the applicant, gave evidence in the following terms:
“These promotional stickers are usually affixed to the chilled and frozen meat packs in the refrigerated showcases in the supermarkets. For some of our customers the promotional stickers are attached to the outer packaging by (the applicant) when the meat is packed for export; for other customers we supply the promotional stickers in bulk and the customer attaches the stickers on site in the supermarkets. In both cases (the applicant) provides the promotional stickers free of charge to our overseas buyers to support their in-market promotional efforts. The export price of our products are the same, irrespective of whether the promotional stickers are provided by (the applicant) or not.”
8. Mr Trefort also stated:
“Quite apart from the promotional stickers, we also supply our meat products fully labelled and packaged in accordance with the requirements of the respective overseas buyer, the regulatory authorities in the particular market, and the Australian Quarantine and Export Service (AQIS), which is responsible for the certification of export meat products. The regulatory requirements of these labels vary from market to market but usually contain information such as name and address of supplier, name and address of importer, product, weight, processing date, use by date, handling and storage instructions, etc. The labels are therefore in no way similar to the promotional stickers which we also provide in some markets.”
9. The applicant applied for two grants available under the respondent’s Export Market Development Grants Scheme (the Scheme) for expenses incurred in 2004 and 2005. These applications were lodged on 28 November 2004 and 29 November 2005 respectively.
10. Part of the grant application included expenses for the design and production of the applicant’s stickers.
11. Insofar as the grant application included such expenses, they were refused by the respondent.
12. They are the decisions which the applicant seeks this Tribunal to review.
The Act
13. Section 31 of the Act provides that Division 2 of Part 5 of the Act explains what is an eligible promotional activity and what are claimable expenses for an activity.
14. Section 33 (1) of the Act provides that “the activity specified in Column 2 of an item in the following table is an eligible promotional activity in relation to an applicant”.
15. For the purposes of this application, the relevant item in the table which follows is item 6 in respect of which the “activity” described under Column 2 of the table is as follows:
“Provision by the applicant or its agent of promotional literature or other advertising material to the extent to which this is done for an approved promotional purpose”.
16. Section 37 (1) of the Act relevantly provides as follows:
“For the purposes of section 33, an eligible promotional activity in relation to an applicant is for an approved promotional purpose if it is carried out for the purpose of creating, seeking or increasing demand or opportunity in a foreign country for any of the following:
… “eligible goods owned by the applicant and that the applicant intends to sell for export or to export and sell” …”
17. The central issue that falls to be determined in this application is whether or not the applicant’s stickers constitute “promotional literature” or “other advertising material” within the meaning of s 33 of the Act (neither being defined terms) and, if so, whether they are provided “for an approved promotional purpose” as defined in section 37.
The Stickers
18. Black and white copies of the stickers are attached to these reasons for decision. (Annexure “A”)
19. With respect to the stickers that include the words “Hillside Tender Meats”, Mr Trefort’s evidence was that the Hillside logo was used in “the food service sector” (eg chefs).
20. With respect to the stickers that bear the “WA Q Lamb” words, Mr Trefort’s evidence was that the “Q Lamb brand” went to the “retail sector” (e.g. supermarkets). Accordingly, and unlike “the Hillside Tender Meats” stickers, the “Q Lamb brand” was the subject of considerable advertising material in the form of posters, brochures and “shelf-talkers”.
21. With respect to the “Australia 83 Inspected” sticker, Mr Trefort’s evidence was that many people in Hindu countries,
“build an allegiance to a particular establishment number, and we have regular shipments each week that go to Singapore and specifically people ask for establishment number 83 in the wet markets in Singapore”.
22. Mr Trefort said that by affixing the sticker to the product, as opposed to just the box in which the product is exported, consumers could identify “from the shelf” that such are the products of “establishment number 83”. Mr Trefort said that the 83 is the export number given to the applicant by AQUIS in Australia. Mr Trefort said that he put in the sticker on the individual products to build a “knowledge of our product”.
23. With respect to the “Halal” sticker, Mr Trefort’s evidence was that “it further promotes the “Halal” status of the individual product once it comes out of the cartons”, and that it allows a Muslim customer that wants Halal meat to know that the product bearing the sticker has been slaughtered ritually by Muslim slaughtermen. He said the sticker is only available to persons approved by the Islamic Council of Western Australia.
24. In the course of his evidence Mr Trefort said:
“I confirm that the promotional stickers were produced solely for promotional and marketing purposes in overseas markets. I confirm that they are not labels or packaging and that there is no legislative or regulatory requirement in any of our overseas markets for these promotional stickers to be provided. I therefore believe that the promotional stickers clearly fall within the definition of “promotional literature and other advertising material”, the costs of which are eligible expenditure under s 33 (2)(6) of the EMDG Act”.
25. In addition to the evidence of Mr Trefort, two statements were tendered on behalf of the applicant and received into evidence. The first statement was that of Mr Marc Hofstein, General Manager of Silco International in Hong Kong. In his statement Mr Hofstein said as follows:
“1. My name is Marc Hofstein. My Role/Position is General Manager of Silco International Hong Kong.
2.Silco International has been importing Q Lamb Chilled lamb Cuts from Hillside Abattoirs for the last 4 years.
3.An important part of our marketing strategy to develop sales of Hillside’s Q Lamb in the Hong Kong market is to be able to differentiate Q Lamb from other frozen and chilled meat products available in the market. We utilize various promotional methods including press, in store promotions and tastings, brochures, point of sale material, etc. The promotional stickers provided by Hillside are an important element in this promotional mix.
4.Hillside is a premium product and has managed to successfully differentiate itself in this market through development of the Hillside and Q Lamb brands.
5.I am aware of the types of promotional stickers which Hillside has claimed through the Export Market Development Grants scheme in Australia and can confirm that:
a.government regulations in Hong Kong have certain requirements relating to the labelling and packaging of imported food products
b.none of Hillside’s promotional stickers are required to be affixed to the product under any law or regulation in Hong Kong
c.the promotional stickers are provided by Hillside solely for promotional purposes and are a key element of our marketing strategy to develop sales of Hillside’s Q Lamb in Hong Kong
6.I would be pleased to confirm this statement, and to respond to any queries the AAT may have relating to the sales and promotion of Hillside Q Lamb in Hong Kong, by telephone.”
26. The second statement was that of Mr Peter Lee of Cold Storage Supermarket Singapore. Mr Lee’s statement was in the following terms:
“1.My name is Mr Peter Lee. My role/position is Meat Category Manager for Cold Storage Supermarket Singapore.
2.Cold Storage Singapore has been importing Q Lamb Chilled Cuts from Hillside Abattoirs for the last 4 years.
3.An important part of our marketing strategy to develop sales of Hillside’s Q Lamb in the Singapore market is to be able to differentiate Q Lamb from other frozen and chilled meat products available in the market. We utilize various promotional methods including press, in store promotions and tastings, brochures, point of sale material, etc. The promotional stickers provided by Hillside are an important element in this promotional mix.
4.Hillside is a premium product and has managed to successfully differentiate itself in this market through development of the Hillside and Q Lamb brands.
5.I am aware of the types of promotional stickers which Hillside has claimed through the Export Market Development Grants scheme in Australia and can confirm that:
a.Government regulations in Singapore have certain requirements relating to the labelling and packaging of imported food products
b.None of Hillside’s promotional stickers are required to be affixed to the product under any law or regulation in Singapore
c.The promotional stickers are provided by Hillside solely for promotional purposes and are a key element of our marketing strategy to develop sales of Hillside’s Q Lamb in Singapore
d.The Q Lamb usage (cooking method) stickers that are attached to individual product packs are also of high importance to the promotion of the Q Lamb products. It has helped to educate the consumer and encourage the purchase of products that they would not have thought of buying before.
6.It is the opinion of Cold Storage Singapore that the use of the WA Q Lamb stickers attached to the individual meat product packs has been of significant benefit to the sales growth of the WA Q Lamb rage sold by Cold Storage Singapore. The growth of sales volumes and increased sales margin has been directly due to the consumer been able to identify easily the Q Lamb symbol on all products purchased from Hillside.
7.It is proven that the consumer knows that if the product carries the Q Lamb symbol that the quality is reliable and there will be no bad eating experience.”
Findings
27. It was submitted by Mr Burrows, Counsel of the respondent, that whilst, depending upon their nature, stickers could constitute “promotional literature or other advertised material”, stickers which are affixed to a product for sale cannot come within the meaning of those words in s 33 of the Act.
28. The Tribunal disagrees. During the course of the hearing on behalf of the applicant examples of what was said to be “packaged promotional items” were tendered. One was a sticker affixed to a container of fruit juice which informed of a competition to win one of fifteen island resort holidays. Such a sticker is clearly of a “promotional” nature and it cannot loose that quality simply by reason of it being affixed to the product itself (as opposed, for example, to a supermarket shelf).
29. On behalf of the applicant it was submitted that the stickers are promotional given that:
(i)there are no regulations that require the particular stickers to be attached to the applicant’s products for export;
(ii)they differentiate the applicant’s meat products from other meat products sold in that particular market;
(iii)they promote the quality of the applicant’s produce.
30. The fact that the stickers are not required by any law to be attached to the product does not of itself give the stickers the quality of “promotional literature or other advertising material”. Nor does the fact that they differentiate the applicant’s meat products from other meat products sold in the same market give them such quality. The fact that the sticker promotes the quality of a product or its supplier may give it the necessary quality, but not necessarily so. Whether it does so would depend upon the exact nature of the particular sticker.
31. The true issue for determination is whether any or all of the stickers constitute “promotional literature” or “other advertising material” (giving those words their natural and ordinary meanings).
32. On its face, the “Hillside” Tender Meats” sticker identifies the products on which it is affixed as being those of “Hillside” (ie, the applicant) and bearing the “Hillside” logo. The evidence adduced before the Tribunal confirms this.
33. On their face, the stickers which incorporate the words “WA Q Lamb” indicate that the product on which they are affixed is a lamb product from Western Australia produced by the proprietor of the “Q” logo. The Tribunal finds on the evidence that the stickers enable a consumer to identify the product on which they are placed as being the product to which the “WA Q Lamb” in-store advertising relates.
34. On its face, it is not clear what the “Australia 83 Inspected” sticker conveys. The Tribunal finds on the evidence that the sticker identifies the products on which it is affixed as emanating from Australian establishment number 83.
35. On its face, it is not clear what the “Halal” sticker conveys. The Tribunal finds on the evidence that the “Halal” sticker identifies the product on which it is affixed as having been produced in a particular way, namely by being slaughtered ritually by Muslim slaughtermen..
36. The Tribunal concludes that on taking each sticker in isolation, they serve the purpose of identification and, in the case of the Halal sticker, certification that the product to which it is affixed possesses a particular quality. The evidence which was tendered on behalf of the applicant confirms those findings and does not warrant any alternate or additional findings.
37. Something that is produced for the purpose of affixing to a product for sale and which merely identifies the product, identifies it has having a particular origin, identifies it as having come from a particular manufacturer or supplier or identifies it has having a particular characteristic, cannot be properly described as “promotional” or “advertising”.
38. Accordingly, there is nothing about the stickers themselves which could properly be described as “promotional” or “advertising”, and the evidence adduced on behalf the applicant does not establish otherwise.
39. The Tribunal therefore finds that on no fair reading of the relevant words could it be said that the stickers, the subject of this application, comprise “promotional literature or other advertising material” within the meaning of Item 6 of the Table in section 33 of the Act.
40. Although it is unnecessary for the Tribunal to do so, the Tribunal notes that the applicant’s own conduct is consistent with such a finding.
41. The first matter to which the Tribunal refers is the fact that, in his evidence to the Tribunal, Mr Trefort stated that, after 2005, the stickers were discontinued as the relevant markings were incorporated as part of the wrapping medium used to wrap its export products.
42. The second matter to which the Tribunal refers is the fact that the costs of the stickers were not included under the item “advertising and promotion” in the applicant’s financial statements for the financial years ended 30 June 2004 and 30 June 2005.
CONCLUSION
43. For the reasons given, the Tribunal concludes that the decisions under review should be affirmed.
I certify that the 43 preceding paragraphs are a true copy of the reasons for the decision herein of Mr S Penglis, Senior Member and Mr W Evans, Member
Signed: ......................(Sgd. Ms R Riberi).............................
AssociateDate/s of Hearing 9 March 2007
Date of Decision 27 April 2007
Advocate for the Applicant Mr M McGrath
Counsel for the Respondent Mr T Burrows
Solicitor for the Respondent Australian Government Solicitor
Annexure “A”
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