Fernz Specialty Chemicals and CEO of Customs
[2001] AATA 537
•15 June 2001
DECISION AND REASONS FOR DECISION [2001] AATA 537
ADMINISTRATIVE APPEALS TRIBUNAL ) No N2000/1239-1290 &
) N2001/146
GENERAL ADMINISTRATIVE DIVISION )
Re FERNZ SPECIALTY CHEMICALS
Applicant
And CHIEF EXECUTIVE OFFICER OF CUSTOMS
Respondent
DECISION
Tribunal Senior Member M D Allen
Date15 June 2001
PlaceSydney
Decision The decisions under review are affirmed.
(Sgd) M D ALLEN
..............................................
Senior Member
CATCHWORDS
CUSTOMS TARIFF - Goods imported were fruit pulps in large containers intended for further manufacturing into jams, toppings etc. Whether, as imported, goods unsuitable for immediate consumption.
Customs Tariff Act 1995 – Sch3, Chpts8 and 20
Chinese Food and Wine Supplies Pty Ltd v Collector of Customs (Vic) 72 ALR 591
Collector of Customs v Chemark Services Pty Ltd 114 ALR 531
Times Consultants Pty Ltd v Collector of Customs (Qld) 76 ALR 313
Toyota Tsusho Australia Pty Ltd and Anor v Collector of Customs (unreported V G113 of 1991 Fed No 282)
Re Clements and Marshall Pty Ltd and Collector of Customs (unreported AAT 2358, 16 October 1985)
Sharp Corporation of Australia Pty Ltd v Collector of Customs 59 FCR 6
Chemark Services v Collector of Customs (unreported No V G87 of 1991 FED No 331)
REASONS FOR DECISION
15 June 2001 Senior Member M D Allen
This series of applications for review concerned the classification of various fruit pulps imported by the Applicant and on sold to manufacturers of jams and other like products.
The matter came on for hearing before me at Sydney on 25 May 2001 and at that hearing the following documents were taken in as exhibits and marked as follows, namely:
T1 – T55: Documents prepared for the Tribunal pursuant to section 37 of the Administrative Appeals Tribunal Act 1975
Exhibit A1: Applicant's Statement of Facts and Contentions
Exhibit A2: Photographs of a jam manufacturing process
Exhibit A3: Video film of a jam manufacturing process
Exhibit A4: Product Specification issued by SVZ International B.V.
Exhibit A5: Product Specification for Plum Puree issued by Fernz Specialty Chemicals
Exhibit A6: Specification for Apricot puree Concentrate issued by J R Wood Inc
Exhibit A7: Copy document headed "Aseptic Production"
Exhibit A8: Extract from "Aseptic Processing of Foods" edited by H. Reuter, Technomic Publishing Co., Inc.
Exhibit A9: Flow diagram for the production of aseptic fruit puree issued by SVZ
Exhibit A10 : Copy statement by N.J.M. IJsseldijk of SVZ International B.V.
Exhibit A11 : Copy Statement by Shane Bukovinsky of Applicant company
Exhibit A12 : Copy Statement by Henriette de Koning of SVZ International B.V.
Exhibit R1: Respondent's Statement of Facts and Contentions.
There was also presented to me a sample of the subject goods, being a bowl of aseptic blackberry puree. That test or demonstration was, I understand it, to be indicative of all of the subject goods and the hearing proceeded with particular reference to the sample proffered. A cross reference can be made to Exhibit A4 for the specification pertinent to the said sample.
No issue arose in this matter as to the jurisdiction of the Tribunal or that all necessary objections, etc had been complied with by the Applicant.
The classification contended for by the Applicant is subheading 0812.90.00 which has a duty rate of nil whereas the Respondent entered the goods under subheading 2008.99.00 for which the rate of duty is 5%.
The particular headings and subheadings in contention read:
0812.10.00 0812.20.00 0812.90.00 … 2008 2008.1 2008.11.0 2008.19.00 2008.20.00 2008.30.00 2008.40.00 2008.50.00 2008.60.00 2008.70.00 2008.80.00 2008.9 2008.91.0 2008.92.00 2008.99.00 FRUIT AND NUTS, PROVISIONALLY PRESERVED (FOR EXAMPLE, BY SULPHUR DIOXIDE GAS, IN BRINE, IN SULPHUR WATER OR IN OTHER PRESERVATIVE SOLUTIONS), BUT UNSUITABLE IN THAT STATE FOR IMMEDIATE CONSUMPTION: -Cherries -Strawberries -Other FRUIT, NUTS AND OTHER EDIBLE PARTS OF PLANTS, OTHERWISE PREPARED OR PRESERVED, WHETHER OR NOT CONTAINING ADDED SUGAR OR OTHER SWEETENING MATTER OR SPIRIT, NOT ELSEWHERE SPECIFIED OR INCLUDED: -Nuts, ground-nuts and other seeds, whether or not mixed together: --Ground-nuts --Other, including mixtures -Pineapples -Citrus fruit -Pears -Apricots -Cherries -Peaches -Strawberries -Other, including mixtures other than those of 2008.19.00: --Palm hearts From 1 January 1997 --Mixtures --Other Free Free Free 5% DCS:Free 5% 5% 5% 5% 5% 5% CAN:2% 5% 5% CAN:Free 5% DCS:Free 4% DCS:Free 5% 5% DCS:Free CAN:Free"
Note 1 to Chapter 20 of the Third Schedule to the Customs Tariff Act 1995 reads:
"1.- This Chapter does not cover:
(a)Vegetables, fruit or nuts, prepared or preserved by the processes specified in Chapter 7, 8 or 11;"
It was common ground between the parties that the goods were aseptically packed and that the fruit had been reduced to a pulp or puree and then pasteurised and packed in various sealed containers. Nothing had been added to the fruit.
An example of what was required can be seen by reading the specification for "aseptically filled sieved blackberries, seedless" which is contained in Exhibit A4. The product description is:
"Made of sound and mature blackberries (Rubus fruticosus), which have been selected, sieved, pasteurized and packed."
The first duty of the classifier is to objectively identify the goods in their condition as imported – cf Chinese Food and Wine Supplies Pty Ltd v Collector of Customs (Vic) 72 ALR 591; Collector of Customs v Chemark Services Pty Ltd 114 ALR 531. Further, as was pointed out by the Federal Court in Times Consultants Pty Ltd v Collector of Customs (Qld) 76 ALR 313 at 327, it is not the purpose of the importer of the goods which determines identification but:
"Regard must be had to the characteristics of the goods themselves, as they would present themselves to an informed observer: …"
Notwithstanding that in Times Consultants Pty Ltd supra it was said that the classification of goods for tariff purposes is a practical wharf-side test, as was pointed out in Chinese Food and Wine Supplies Pty Ltd supra, the characteristics of the goods, their get-up, colour, decoration, labelling and packaging are all relevant considerations and tests may have to be carried out and enquiries made to ascertain the relevant characteristics of the goods.
Note 1 to Chapter 20 has the result that if the subject goods are properly classified under a heading in Chapter 8 then they cannot be considered for classification under a heading in Chapter 20. In this matter the practical effect is that if the subject goods come within the terms of heading 0812 in Chapter 8, then that is the end of the matter even if the said goods would also be classifiable under heading 2008 in Chapter 20.
I was referred by the Applicant to the Explanatory Notes to the Harmonized Commodity Description and Coding System (the Brussels Notes). As to the part reference to those notes can play in the classification of goods, I refer to the decision of the Full Court of the Federal Court in Toyota Tsusho Australia Pty Ltd and Anor v Collector of Customs (unreported Federal Court decision No V G113 of 1991 Fed No 282 of 14.5.1992). Commencing at paragraph 23 of its judgment the Court said:
"23. The Customs Tariff Act 1987 was intended to give effect to the International Convention on the Harmonized Commodity Description and Coding System (Brussels, 14 June 1983) which entered into force for Australia on 1 January 1988. The Explanatory Notes are prepared as an aid to the interpretation of the Harmonized System by the Harmonized System Committee under the authority of Article 7(1)(b) of the Convention and are approved, or are deemed to be approved, by the Customs Co-Operation Council in accordance with the terms of Article 8. …
24. It is established by decisions of Full Courts of this court that s.15AB of the Acts Interpretation Act 1901 permits, in the manner allowed by s.15AB(1), reference to be made to the Explanatory Notes to assist in the interpretation of the Customs Tariff Act: Barry R. Liggins Pty. Ltd. v Comptroller-General of Customs and Ors., (1991) 103 ALR 565. In Gardner Smith Pty. Ltd. v Collector of Customs, Victoria (1986) 66 ALR 377, the Full Court of the Federal Court approved the use of the Explanatory Notes to the Brussels nomenclature as an aid to the interpretation of Schedule 3 to the Customs Tariff Act 1982, to which the same principles apply.
25. The limitations on the use of extrinsic materials must of course be kept in mind. In Barry R. Liggins Pty. Ltd. v Comptroller-General of Customs at 573, Beaumont J., with whom Lockhart and Gummow JJ. agreed, quoted with approval a passage from E.J. Cooper, Customs and Excise Law, (Cumulative Supplement to 30 June 1985 at 9) where it is said:
'… (The Brussels Notes) are a secondary guide only and cannot displace the plain words of the statute … or be used when there is no ambiguity in the legislation, eg a doubt cannot be created by the use of the explanatory notes and then have the doubt settled by reference to the same notes.'
…
28. In our view, the Explanatory Notes are of assistance in confirming that the meaning of heading 8419 and the relevant sub-heading is the ordinary meaning conveyed by the text of the provision taking into account its context."
The note applicable to heading 08.12 of Chapter 8 of the Harmonized System, which heading is in identical terms to heading 0812 of Chapter 8 to the Third Schedule of the Customs Tariff Act 1995, reads:
"Provided they remain unsuitable for immediate consumption in that state, this heading applies to fruit and nuts (whether or not blanched or scalded) which have been treated solely to ensure their provisional preservation during transport or storage prior to use (e.g., by sulphur dioxide gas, in brine, in sulphur water or in other preservative solutions).
Such products are used mainly in the food industry (manufacture of jam, preparation of candied fruits, etc.). The products most commonly presented in this state are cherries, strawberries, oranges, citrons, apricots and greengages. They are usually packed in casks, trays or open-lath type containers."
The said note does not help to explain what the term "provisional preservation" means. In Re Clements and Marshall Pty Ltd and Collector of Customs (unreported AAT 2358, 16 October 1985) the Tribunal said at page 5 of its unreported decision:
"Thus fruit is preserved provisionally if the method of preservation renders it unsuitable for immediate consumption."
With respect to the Tribunal who decided that matter, I cannot accept that definition of the term "provisional preservation". I cannot see how, whether the fruit can be immediately consumed or not, can in any way determine whether it is provisionally preserved.
To my mind all the words "provisional preservation" mean is that the fruit or nuts are preserved provisionally, ie temporarily – see the definition of "provisional" in the Shorter Oxford English Dictionary Third Edition:
"1. Of, belonging to, or of the nature of a temporary provision or arrangement; provided or adopted for present needs or for the time being; also, accepted or used in default of something better."
The comment in the note, as to the main use of such goods, cannot be used to influence the interpretation of the plain words of the tariff heading 0812 in Chapter 8 to the Third Schedule to the Customs Tariff Act 1995.
Likewise, the words in parenthesis, namely "e.g., by sulphur dioxide gas…" are no more than that, namely examples, and cannot be used to qualify or alter the meaning of the words "unsuitable for immediate consumption".
The sole question in this matter therefore devolved into answering the question of whether the purees of fruits the subject of the various applications were, at the time of entry for home consumption, unsuitable for immediate consumption in the state in which they were received.
If I understand the Applicant's case correctly, it maintains that the goods are not suitable for immediate consumption because of the manner in which they were packaged and received and this was further illustrated by the fact they were then used in the manufacture of other goods such as jams (for uses, see Exhibit A11).
Certainly the subject goods are received in 200 litre drums or 20 kilogram packs and the labelling is basic. The labels on the drums/packs would not be sufficient if the subject goods were then offered for sale for immediate consumption. The labelling is clearly what could be termed "industrial labelling". Once opened the drums require repacking or refreezing if not wholly used and their very size mitigates against a non manufacturing use. On these grounds the Applicant submitted that the goods are not suitable for immediate consumption but are an intermediate product put up for use in the food processing industry.
As stated above, the first task of the classifier is to objectively identify the goods and this is a practical wharf-side task. Furthermore, it is an objective test and the intention or purpose of the importer or the purchaser is irrelevant to that enquiry – cf Chinese Food and Wine Supplies supra. Nor is it usually permissible to have regard to the importer's use of the goods – Chemark Services v Collector of Customs (unreported Federal Court, Ryan J, FED No 331). As was said in Sharp Corporation of Australia Pty Ltd v Collector of Customs 59 FCR 6 at p14:
"The expression 'essential character' directs the attention of the decision-maker to the essence of the goods, to what they really are, and away from issues such as subjective purpose or how a particular person intends to use the goods in certain circumstances. …"
In Chinese Food and Wine Supplies supra at p599 the Court pointed out that:
"The characteristics of the goods, their get-up, colour, decoration, labelling and packaging are all relevant considerations. In some cases, a visual inspection of the goods and their packaging will disclose characteristics of the goods and enable a judgment to be made as to whether they are for therapeutic or prophylactic use. But visual inspection will not necessarily provide the answer in each case. Tests may have to be carried out and inquiries made to ascertain the relevant characteristics of the goods. In the present case, samples were taken and sent for chemical analysis.
I accept that the subject goods are not imported in a state that would permit or even render viable their immediate sale to the public. But, as pointed out by the solicitor for the Respondent, in the Third Schedule to the Customs Tariff Act 1995 no distinction is made between goods on the basis of quantity.
Although depreciated by the Applicant's solicitor, I am ultimately forced to the practical test of asking whether the goods in question, namely the fruits pulps, are unsuitable for immediate consumption, that is to say can the pulp be eaten as is? The packaging in which it is contained may point to its use but the words "unsuitable in that state" refer back to the words "fruit and nuts provisionally preserved", that is to say in their state of provisional preservation, not to container size. Likewise the word "consumption" in the context in which it occurs refers, in my opinion, to eat. Cf meaning 3 in the Shorter Oxford English Dictionary Third Edition of the word "consume", namely:
"3. To use up …; to eat up, drink up …"
Having tasted the blackberry pulp as a representative sample, all I can say is that I found it tart and unpleasant but it was not inedible. Although Mr Northcote, for the Respondent tried manfully to convince me of its suitability for consumption by devouring a bowl of the puree during the course of the hearing, I did not need such an enthusiastic advancement of his case to persuade me that the puree could not be said to be unsuitable (as opposed to not being to my taste) for immediate consumption in the state in which it was received.
I am satisfied therefore that the subject goods are more properly classified to heading 2008 and that the decisions under review should be affirmed.
I certify that the 27 preceding paragraphs are a true copy of the reasons for the decision herein of:
Senior Member M D Allen
Signed: Kwai-Ling Wong .....................................................................................
AssociateDate of Hearing 25 May 2001
Date of Decision 15 June 2001
Solicitor for the Applicant Mr G Short,
Tanda International Pty Ltd
Solicitor for the Respondent Mr R Northcote,
Customs Legal Unit,
Australian Government Solicitor
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