Filter-Tex Media Pty Ltd v The Chief Executive Officer of Customs
[1998] FCA 720
•12 JUNE 1998
FEDERAL COURT OF AUSTRALIA
CUSTOMS AND EXCISE - Customs tariff classification decision - appeal from Administrative Appeals Tribunal - whether correct Customs Classification for “Ryton filter sleeves” - Errors of law - whether irrelevant considerations taken into account - whether a failure to take relevant considerations into account - whether legislation misconstrued and wrong test applied - Failure to give reasons - whether s 43 of the Administrative Appeals Tribunal Act 1975 (Cth) was complied with.
Administrative Appeals Tribunal Act 1975 (Cth) - ss 37, 43, 44
Customs Tariff Act 1987 (Cth) - Sch 2, para 3(a); Sch 3, Ch 59, Note 7; Headings 5909, 5909.00.10, 5909.00.90, 5911, 5911.90.10
Re Tridon Pty Ltd and Collector of Customs (1982) 4 ALD 615 - considered
Chinese Food and Wine Supplies v Collector of Customs (Vic) (1987) 72 ALR 591 - considered
Times Consultants Pty Ltd v Collector of Customs (Qld) (1987) 76 ALR 313 - considered
FILTER-TEX MEDIA PTY LIMITED v THE CHIEF EXECUTIVE OFFICER OF CUSTOMS
NG 1088 OF 1997
FOSTER J 12 JUNE 1998 SYDNEY
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
NG 1088 of 1997
ON APPEAL FROM THE ADMINISTRATIVE APPEALS TRIBUNAL
BETWEEN:
FILTER-TEX MEDIA PTY LIMITED
APPLICANTAND:
THE CHIEF EXECUTIVE OFFICER OF CUSTOMS
RESPONDENTJUDGE:
FOSTER J
DATE OF ORDER:
12 JUNE 1998
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
The appeal be dismissed with costs.
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
NG 1088 of 1997
ON APPEAL FROM THE ADMINISTRATIVE APPEALS TRIBUNAL
BETWEEN:
FILTER-TEX MEDIA PTY LIMITED
APPLICANTAND:
THE CHIEF EXECUTIVE OFFICER OF CUSTOMS
RESPONDENTJUDGE:
FOSTER J
DATE:
12 JUNE 1998
PLACE:
SYDNEY
REASONS FOR JUDGMENT
(Extempore)
This is an appeal from the decision given by the Administrative Appeals Tribunal (“the Tribunal”) on 21 November 1997 in which Senior Member Allen affirmed a decision of the respondent to classify certain goods imported by the applicant to subheading 5911.90.10 of Sch 3 to the Customs Tariff Act 1987 (Cth) (“the Act”). The appeal is brought pursuant to s 44 of the Administrative Appeals Tribunal Act 1975 (Cth) (“the AAT Act”) and is on questions of law only.
Although it appears that the applicant, in seeking review by the Tribunal, had anticipated that the review would cover a wider area, the extent of which is not apparent to me, it is quite clear that the Tribunal properly confined its deliberations to the goods, the subject of the particular importation in respect of which the dispute has arisen. As appears from the relevant invoice which is in evidence and from the reference to them in the statement provided by the respondent pursuant to s 37 of the AAT Act, the goods were described as “Ryton Filter Sleeves” of dimensions 650 millimetres by 127 millimetres internal diameter.
The dispute between the applicant and the respondent was and is as to whether the goods fell within Tariff subheading 5909.00.90 as asserted by the applicant or subheading 5911.90.10 as applied by the respondent. The first attracted no duty, the latter duty of 15 per cent. I now refer to these provisions.
The heading to Ch 59 of Sch 3 to the Act reads:-
“Impregnated, coated, covered or laminated textile fabrics; textile articles of a kind suitable for industrial use.”
Note 7 to Ch 59, so far as relevant, reads:-
“5911 applies to the following goods, which do not fall in any other heading of Section XI: ...
(b) Textile articles ... of a kind used for technical purposes...”
Within Ch 59, heading 5909 reads:
“TEXTILE HOSE PIPING AND SIMILAR TEXTILE TUBING WITH OR WITHOUT LINING, ARMOUR OR ACCESSORIES OF OTHER MATERIALS:
5909.00.10 --- Having an internal diameter not exceeding 110 mm,
5909.00.90 --- Other.”
And heading 5911 reads:
“TEXTILE PRODUCTS AND ARTICLES, FOR TECHNICAL USES, SPECIFIED IN NOTE 7 TO THIS CHAPTER:
5911.90 - Other
5911.90.10 --- Goods as follows:
(a) articles; ....”
In order to perform its task of customs classification it was necessary for the Tribunal, as for the respondent, to identify objectively the goods in question and then to match that identification to an appropriate tariff classification. In undertaking the identification process it was obliged to conform with principles established by judicial decision. In his reasons the learned Senior Member set out the task and the appropriate principles in the following passage:-
“7. The point in issue between the parties is the identification of the goods in their condition as imported. As was pointed out in Re Tridon Pty Ltd and Collector of Customs 4 ALD 615 at 620, the identification must be objective having regard to the characteristics which the goods on informed inspection present. Or, as was pointed out in Chinese Food and Wine Supplies Pty Ltd v Collector of Customs (Vic) 72 ALR 591 at 599, it is the goods themselves in the condition in which they are imported to which it is necessary to look to determine identification for purpose of customs duty. This, however, is not to deny that a particular tariff heading or subheading may make reference to use by employing phrases such as ‘of a kind used for’ or ‘of the type used’.”
I pause to remark that the phrase “of a kind used for’, indeed, appears in the portion of Note 7 which I have already quoted. The Tribunal continued:-
“8. As the Federal Court stated in Times Consultants Pty Limited 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:’.
9. Thus, although the goods were described in the invoice by the exporter and in the entry for home consumption as ‘filter sleeves”, this nomination by the exporter and the importer’s agent is not conclusive as to the questions of identification.”
No exception was taken to this statement of the law in argument before me. I was referred to a number of additional authorities which were really only illustrative of these principles. It is appropriate in my view, however, to refer to the following statements from the well known case of Re Tridon Pty Ltd and Collector of Customs (1982) 4 ALD 615 at 620-621:-
“(iv) In the identification of goods, knowledge of how those who trade in the goods describe them will usually be relevant, but not necessarily conclusive: Markell v Wollaston (1906) 4 CLR 141 at 150; Whitton v Falkiner (1915) 20 CLR 118 at 127; cf D & R Henderson v Collector of Customs for the State of NSW (1974) 48 ALJR 132; and see generally Re Pacific Films Laboratories Pty Ltd and Collector of Customs (1979) 2 ALD 144 at 155-6; Re Finnwad Australia Pty Ltd and Collector of Customs (1979) 2 ALN No 44; Re Mayer Kreig & Co and Collector of Customs (1979) 2 ALN No 101; Re Sterns Playland Pty Ltd (1982) 4 ALD 562; Re Termolst (Australia) Pty Ltd and Department of Business and Consumer Affairs (1978) 1 ALN No 16;
...
(vii) Identification will frequently extend to characterisation of goods by reference to their design features cf Re Virgo Manufacturing Co Pty Ltd and Collector of Customs (Vic) (1981) 3 ALN No 15, or by reference to their suitability for a particular use where those characteristics emerge from informed inspection of the goods as imported: Re Transactions Aust Pty Ltd and Collector of Customs (1981) 4 ALN No 54; Re Holstar Agencies Pty Ltd and Collector of Customs (1981) 4 ALD 308; Re Koolatron Industries Pty Ltd and Collector of Customs (1982) 4 ALN No 45; Re Unibuilt Pty Ltd and Collector of Customs (1981) 4 ALN No 55; Re Tubemakers of Australia Pty Ltd and Collector of Customs (1980) 3 ALD 199: cf Re J S Levy Corporation Pty Ltd and Collector of Customs (1982) 4 ALN No 38 and Frank McKenna’s Shoe Stores and Collector of Customs (1982) 4 ALN No 60. ...”
Oral testimony was called by the applicant and the respondent to assist in the identification of the goods by the Tribunal. This evidence related to the suitability of the goods for particular uses having regard to the characteristic of the goods as perceived on informed observation. I have been taken by counsel for both sides to various parts of this evidence. The witnesses called for the applicant stressed the potential uses of the Ryton tube material for purposes consistent with the description “Textile Hosepiping and Similar Textile Tubing” while those called for the respondent gave evidence connected with the goods being “Textile articles ... of a kind used for technical purposes”. Specifically, it was contended that they were suitable as filtration medium.
The Tribunal preferred the evidence of the respondent’s witnesses, Messrs Halliwell and Gerakios to that of Mr Gerzamics and Mr Purvis who were called by the applicant. It has been submitted by counsel for the applicant that, in assessing the evidence, the learned Senior Member misdirected himself in law. I shall refer to this submission later.
After discussing the evidence of the witnesses and indicating the parts which he accepted, the Tribunal made the following findings:-
“19. Whilst I accept evidence that the subject goods could be used for other than manufacture into filtration bags, I find that such a use is unlikely and secondary to their main use, namely that of a filtration media.
20. Further, as I accept evidence that Ryton tubes at 127mm diameter are universally used as filtration bags and that products are imported for particular uses it is abundantly clear, and I so find, that the subject goods were imported for use, albeit with some value-added work to be done, as filtration media.
...
22. Applying a practical wharfside test the goods are not hosepiping or similar textile tubing. This is so even though I consider the words ‘hosepiping and similar textile tubing’ has an extended meaning beyond that in the 1970 reprint of the Oxford Dictionary of ‘hose’, namely ‘A flexible tube or pipe for the conveyance of water or other liquid to a place where it is wanted’. Their principle or predominant use is as filter bags or a filter medium and thus the most specific description of them falls within the prescription of Note 7 to Chapter 59 of the 3rd Schedule to the Customs Tariff Act 1987 (as amended), namely textile products, not falling in any other heading of Section XI and being textile articles of a kind used for technical purposes. Of Heading 5911, the most appropriate Subheading is 5911.90.10, namely:
‘--- Goods, as follows:
(a) articles’;”
He accordingly affirmed the decision under review.
The decision has been attacked on the basis that, in reaching it, the Tribunal committed errors of law which I shall consider in order.
It was submitted that the Tribunal had accepted evidence which went beyond "wharfside" assessment of the goods and trespassed into the forbidden area of identifying them through considerations of their likely or intended future use.
It was said that there had been infringement of the principles which the Tribunal had set out in its reasons. Reference was made to the often quoted passage from Chinese Food and Wine Supplies v Collector of Customs (Vic) (1987) 72 ALR 591 where Lockhart J said at 599:-
“Whether the goods in suit properly fall within Item 30.03 of the Customs tariff is determined by an objective test, not by the intentions of the manufacturer in China or the exporter or the importer. The test is applied at the port of entry of the goods and at the time of entry.”
Reference may also be made to Times Consultants Pty Ltd v Collector of Customs (Qld) (1987) 76 ALR 313 where Morling and Wilcox JJ said at 327, that it was:-
“... wrong to classify goods or to determine their essential character by reference to the purpose of the importer or of the purchaser. Regard must be had to the characteristics of the goods themselves, as they would present themselves to an informed observer...”
I omit references to authority. It is worth remembering that in the same case it was said at 328:-
“It must always be remembered that the classification of goods for tariff purposes is a practical ‘wharf-side’ task. Upon some occasions it will be necessary for the classifier to obtain information to enable identification of the goods but it is entirely inappropriate that he or she should enter into inquiries upon matters such as cost, commercial advantage and purchaser of preference which the tribunal undertook. It ought normally be possible to classify goods merely by looking at them and by considering their nature and the function which they were designed to serve.”
I have considered the evidence upon which the Tribunal relied. It is not evidence that goes to the intention of the manufacturer, the exporter, the importer or the purchaser of the goods in suit. In my opinion, it is in fact “wharfside” type evidence given by persons well qualified to provide authoritative identification of the goods. The portions set out in the Tribunal’s reasons for judgment upon which it relied, illustrate this point.
In paragraph 16 of his judgment the Tribunal cites a statement by Mr Halliwell in his evidence where he said:-
“I would describe the Ryton products in tubular form as being a filter bag as is, or with the addition of a base or cuff depending upon the particular equipment for which it is to be adapted. My identification is based on the design characteristics of this particular textile product in the state in which it is imported.”
Mr Halliwell also said:-
“I am aware of a textile product known as Ryton needlefelt or woven cloth which is imported by Filter-Tex Media in tube form. In its imported state these textile tubes are specifically designed for use as filter bags in industrial applications ...”
And he gave some examples of such applications. He continued:-
“I would describe the Ryton products in tubes of filtration media as being filter bags [sic] as is, or with the addition of a base and/or cuff depending upon the particular dust control baghouse equipment which it is to be adapted. The design characteristics, specifications and diameter of this particular textile tube, I immediately identify as filter bags made of Ryton.”
I refer also to the evidence of Mr Gerakios relied upon by the Tribunal and included in its reasons. Mr Gerakios was clearly a highly-qualified observer for the purpose of the application of the principles. He said in examination in chief:-
“When I hear the word Ryton, and needlefelt and 127 mm diameter there can only be one question in my mind as to what that means and that means a filtration bag for a high temperature application.”
I am satisfied that in accepting this evidence and using it the Tribunal was not departing in any sense from the wharfside test.
Reliance was also placed by the applicant on some expressions in the Senior Member’s reasons as indicating that he was not confining himself to appropriate “wharfside” considerations. The best example was the interpolated phrase “albeit with some value-added work to be done” in the passage already cited. I think that this expression should be viewed benevolently in accordance with accepted principles that this court applies in assessing the reasons given by administrative tribunals. In my view, the passage does no more than indicate that the goods were properly to be regarded as “filtration media”. The fact that further work might be done upon the fabric to produce particular industrial applications was nothing to the point. The basic finding being expressed was that the essential character of the Ryton tubes was that they were filters.
Accordingly, I consider that this submission must be rejected. The Tribunal did not, in my view, take into account irrelevant considerations. The second submission that is made is that the Tribunal failed to take into account relevant considerations. This submission appears, on analysis, to be no more than an assertion that it should have accepted the applicant’s evidence that the Ryton tubes should relevantly be regarded as hosepiping or similar tubing. Much evidence was given as to tubing being used in industrial chutes and couplings. It is clear that the evidence did not relate to Ryton tubing or that, in any event, the Tribunal was clearly entitled to regard it as having this deficiency. It was a question of fact for the Tribunal which was quite justified in accepting the countervailing evidence called by the respondent. In short, on the evidence, the Tribunal, in my opinion, was justified in concluding that the use which gave the goods their defining characteristics was use as a filtration medium or bag. Accordingly this submission is rejected.
The next submission on behalf of the applicant is that the Tribunal misconstrued the legislation. This depends upon the use by the Tribunal of the words “the most specific description” in the passage cited above. It is said that the use of these words indicates that the Tribunal was wrongly applying paragraph 3(a) of Sch 2 to the Act in circumstances when, as a result of the opening words of Note 7 of Ch 59, the goods could not fall within both headings 5909 and 5911. I do not need to consider the detail of this submission. In my view, the Tribunal was clearly determining whether the goods fell within the heading 5909 or heading 5911. For the reasons that it gave, it found that they fell within subheading 5911.90.10 as further explained in Note 7 to Ch 59. The words “most specific description” were not intended to be used in any specific statutory sense. They should be given, in any event, a benevolent construction. I reject this submission.
The final submission is that the Tribunal has breached s 43 of the AAT Act by failing to give reasons. I have considered this submission in detail. In my opinion, the Tribunal has not relevantly failed to supply reasons for its decision sufficient to acquaint the applicant with the basis of dismissal of its case. It clearly found that the articles fell within heading 5911 and has given quite ample indication of why it so found. This submission should also be rejected.
In the result the appeal is dismissed with costs.
I certify that this and the preceding seven (7) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Foster
Associate:
Dated: 12 June 1998
Counsel for the Applicant: Mr G.T. Johnson Solicitor for the Applicant: Reg Benson Counsel for the Respondent: Mr S.J. Gageler Solicitor for the Respondent: Australian Government Solicitor Date of Hearing: 12 June 1998 Date of Judgment: 12 June 1998
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