Goold v Commonwealth

[1993] FCA 157

Re: STAINLESS TUBE MILLS PTY LIMITED and AUSTRALIAN STAINLESS TUBE
MANUFACTURERS ASSOCIATION
And: THE COMPTROLLER-GENERAL OF CUSTOMS; THE ANTI-DUMPING AUTHORITY and THE
MINISTER FOR SMALL BUSINESS, CONSTRUCTION AND CUSTOMS
Nos. G209 and 517 of 1992
FED No. 157
Number of pages - 13
Administrative Law
(1993) 113 ALR 481

COURT

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Morling J.(1)

CATCHWORDS

Administrative Law - Customs - anti-dumping - whether finding of "like goods" - whether "normal value" properly adjusted - alleged different levels of trade - applications dismissed

Customs Act 1901 (Cth) ss 269T, 269TAC

Anti-Dumping Authority Act 1988 (Cth) s8

HEARING

SYDNEY, 14 December 1992

#DATE 25:3:1993

Counsel for the appellant: M.H. Tobias QC with B.W. Walker

Instructed by: C.G. Gillis and Co.

Counsel for the respondent: A. Robertson and S.J. Gageler

Instructed by: Australian Government Solicitor

ORDER

THE COURT ORDERS AS FOLLOWS:

1. Application dismissed.

2. Applicants to pay respondents' costs.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

JUDGE1

MORLING J. These proceedings have been brought under the Administrative Decisions (Judicial Review) Act 1977 ("the Judicial Review Act") for orders of review of decisions made by the respondents with respect to applications for the imposition of anti-dumping duties. The applicants sought to have anti-dumping duties imposed in respect of exports of stainless steel welded tube and pipe from Korea and Taiwan. Their applications failed, and they claim in these proceedings that errors of law were made when their applications were considered.

1. The first applicant produces and sells, and the second applicant represents producers and sellers of, stainless steel tube and piping. The first respondent is empowered to consider applications for the publication by the Minister of State for Small Business and Customs of dumping duty notices or countervailing duty notices in respect of, inter alia, stainless steel tube and pipe pursuant to s 269TB of the Customs Act 1901 ("the Customs Act"). The second respondent ("the Authority") is empowered, pursuant to s 8(2) of the Anti-Dumping Authority Act 1988 to review preliminary findings made by the Comptroller-General.

2. In July 1991 the first applicant, through its trade association, the second applicant, lodged an application pursuant to s 269TB of the Customs Act for the imposition of anti-dumping duties against exports of stainless steel tubular and pipe products from Taiwan and Korea. On 24 December 1991 the Australian Customs Service (which is under the control of the Comptroller-General) issued a Report and Preliminary Finding No 92/1 ("the 1991 Preliminary Finding") on this application. The report was entitled "Certain Longitudinally Welded Stainless Steel Tubular Products from Taiwan Province and The Republic of Korea". In this report the Australian Customs Service made a negative preliminary finding under s 269TD(3) of the Customs Act with respect to all pipe products and with respect to certain tube products. It also made a positive preliminary finding under s 269TD(2) with respect to ten kinds of tube products.

3. The applicants thereupon applied to the Authority pursuant to s 269TF of the Customs Act for a review of the negative preliminary finding. The Authority delivered its Report No 65 with respect to this review on 24 March 1992. The Authority confirmed the negative preliminary finding made by the Australian Customs Service.

4. The Australian Customs Service's positive finding in its 1991 Preliminary Finding was referred to the Authority pursuant to s 269TB(2)(b) of the Customs Act to consider the question whether the imposition of dumping duty was justified. On 3 June 1992 the Authority delivered its Report No 73 pursuant to s 269TF(3) recommending against the imposition of anti-dumping measures. It disagreed with the Australian Custom Service's view that eight of the ten kinds of tube products had been dumped. With respect to the two kinds of products which it agreed had been dumped, the Authority thought that the dumping was not sufficiently serious to justify any action. The Minister accepted the Authority's recommendation and decided accordingly.

5. In matter No. G209 of 1992 the applicants seek to have reviewed the Comptroller-General's 1991 Preliminary Finding and the decision of the Authority constituted by its Report No 65 dated March 19, 1992. It is claimed that the respondents committed errors of law and failed to take into account relevant considerations in reaching those decisions.

6. In matter No. NG517 of 1992 the applicants seek orders of review in respect of the 1991 Preliminary Finding and the Authority's decision constituted by its report No 73.

7. The products which were the subject of the Authority's reports and decisions can be described as 304 grade tube and 316 grade tube. These products are manufactured in Taiwan by Jaung Yuann Enterprise Pty Ltd ("JY"). It exports both 304 and 316 grade tube to Australia. However, it sells only 304 grade tube on the Taiwanese domestic market.

8. Consideration of the question whether goods have been dumped in Australia requires a comparison to be made of the export price of goods exported to Australia and the normal value of those goods. Section 269TAC(1) of the Customs Act provides, relevantly, that:
   

"... the normal value of any goods exported to Australia is the price paid for like goods sold in the ordinary course of trade for home consumption in the country of export in sales that are arms length transactions by the exporter, or if like goods are not so sold by the exporter, by other sellers of like goods."

1. The term "like goods" is defined in s 269T as follows:
   

"'like goods', in relation to goods under consideration, means goods that are identical in all respects to the goods under consideration or that, although not alike in all respects to the goods under consideration, have characteristics closely resembling those of the goods under consideration."

1. To succeed in these proceedings the applicants must demonstrate that the decisions under challenge are reviewable under the Judicial Review Act and are flawed by error of law. I shall assume in favour of the applicants that all the decisions under challenge are reviewable under that Act, although it is a serious question whether all of them have the characteristics necessary to qualify them as such: see Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 especially at 336 et seq per Mason C.J.

2. Mr Tobias QC, senior counsel for the applicants, identified two errors of law which, so he submitted, were made by the respondents in arriving at the decisions under review.

3. The first error was said to be that having satisfied itself that 304 and 316 grade tube were not "like goods", the Authority proceeded to determine the normal value of 316 grade tube by making an inappropriate "specification adjustment" to the price of 304 grade tube, relying on s 269AC(8) to permit the adjustment.

4. The necessary foundation of this argument is the proposition that the Authority did not treat 304 grade tube and 316 grade tube as "like goods". Mr Tobias sought to make good this argument by reference to the Authority's records. He claimed that its records disclosed that Messrs Sawczuk and Rux (two officers who went to Taiwan to investigate the normal value of tube) reported that 304 grade and 316 grade tube were not similar goods. Paragraph 10(1) of their report is in the following terms:
   

"10.1 Normal values for the type 304 tube which is sold domestically, has been assessed under s.s.269TAC(1) using the JY reference distributor price list and percentages to that list for distributor Shin Gi Sang in respective quarterly periods. Normal values for type 316 tube, which is not sold domestically, has been assessed on a constructed value basis under s.s.269TAC(2)(c). The ACS has decided that the type 316 tube is sufficiently different in composition and end-use to that of the type 304 tube to render domestic sales of that type as unsuitable for normal value purposes in this case." (emphasis added)

1. It was submitted that the fact that normal values were assessed by these officers under para (c) of s 269TAC(2) of the Customs Act was an explicit indication that they were not assessed under s 269TAC(1) on the basis of the price paid for like goods.

2. However, in a report made by Mr Tatham on 19 December 1991 a revised determination of the normal value for type 316 tube was made. This revised determination was made under s 269TAC(1) and s 269TAC(8). Mr Tobias correctly pointed out that there was no specific statement in Mr Tatham's report that 316 grade and 304 grade tube were "like goods". Nevertheless, it seems to me that the report proceeded on the basis that it was at least open to find that the two grades of tube were "like goods".

3. The Authority's decision on this matter appears in its Report No 65. At para 2.5 of the report, under the heading "Goods under Review" there is a discussion of stainless steel tubular products. It is not explicitly stated in this discussion that 304 grade and 316 grade tube are "like goods". However, I think it is apparent from the document that the Authority treated the two grades of tube as "like goods". The critical portion of the Authority's decision reads as follows:
   

"JY (ie Jaung Yuann Enterprises Pty Limited, the exporter) exports two grades of tube to Australia: 304 and 316. Only 304 is sold on the domestic market.

Customs was satisfied that domestic sales by JY were in the ordinary course of trade and at arms length. It therefore determined normal values for 304 and 316 under subsection 269TAC(1) of the Act, based on a 'discounted' price list.

In assessing normal values for 316 tube, Customs made a specific adjustment to the domestic selling price of 304 tube, based on differences in the costs of 'feed stock' used in the manufacture of the 304 tube and the 316 tube. The Authority, unlike Customs, has included a mark-up in this adjustment.

To compare normal values with export prices Customs made due allowances for the following:

. differences between domestic and export credit terms; . differences between domestic and export packing; . domestic sales taxes;

. domestic delivery;

. duty drawback (all tube is produced from imported source material); . the inventory cost of holding stocks for the domestic market; . specification differences, to take account of differences in tube finishes (annealing, polishing and pickling); . export inland freight; and

. harbour charges and Customs charges.

Customs determined 67 normal values for tube. These normal values covered 23 sizes of 304 tube and 7 sizes of 316 tube. The Authority, using information available to Customs, determined 191 normal values, covering 44 sizes of 304 tube and 12 sizes of 316 tube. The Authority agrees with Customs that normal values for JY should be assessed under subsection 269TAC(1) of the Act. The Authority made the same due allowances under subsection 269TAC(8) as Customs. For a few tube sizes, where there were no specific selling price data, the Authority determined normal values under subsection 269TAC(6)."

1. I think it is clear from the Authority's decision that it treated 304 grade and 316 grade tube as "like goods". The specific references to s 269TAC(1) and s 269TAC(8) make it plain to my mind that normal values for 316 grade tube were determined by reference to sales of 304 grade tube on the basis that these last-mentioned sales were of "like goods". The necessary foundation of Mr Tobias' first argument is therefore not established and accordingly the argument must fail.

2. It was argued in the alternative that even if a finding had been made that 304 grade tube and 316 grade tube were like goods, there was still no statutory warrant under s 269TAC(8) to adjust the normal value so as to allow for the specification differences between the two grades of tube. It was submitted that the only permissible specification adjustment under s 269TAC(8) would relate to a comparison between the notional 316 grade tube used in making the determination of like goods and the actual 316 grade tube exported.

3. I do not accept this argument. It is based on a construction of s 269TAC(8) which does not conform with its plain meaning. Section 269TAC(8)(b) provides for an adjustment where the price paid for like goods and the export price of the goods exported are not in respect of identical goods. Here the price paid for like goods is the domestic sale price of 304 grade tube, which is a price in respect of goods that are not identical to 316 tube exported to Australia. In these circumstances the adjustment made for specification differences between the 304 grade tube and the 316 grade tube was permissible.

4. Mr Tobias submitted that the second error of law made by the respondents was that, when making adjustments to normal value for comparison with export price under s 269TAC(8) of the Customs Act, the respondents failed to take into account that the domestic price in Taiwan and the export price were modified by the circumstance that the domestic and export sales occurred at different "levels of trade". Section 269TAC(8) relevantly provides as follows:
   

"Where the normal value of goods exported to Australia is the price paid for like goods and that price and the export price of the goods exported are modified in different ways by ... the terms or circumstances of the sales to which they relate that price paid for like goods is to be taken to be that price paid adjusted in accordance with directions by the Minister so that those differences would not affect its comparison with that export price."

1. The evidence establishes that the respondents determined normal value by reference to sales by the Taiwanese manufacturer JY to a Taiwanese distributor Shin Gi Sang. They determined export price by reference to various sales including sales by Taiwanese trading houses who had themselves purchased the products from the manufacturer.

2. It was submitted that a comparison of prices determined in this manner was a comparison between prices set on the first sale by the manufacturer and prices set on a second sale, that is, a sale by a purchaser from the manufacturer. It was claimed that, in the nature of things, these different levels of trade raised the likelihood of different effects on price level, given the need for a mark-up by the first purchaser from the manufacturer on its on-sales to Australia.

3. It was submitted that by failing to have regard to the different levels of trade the Authority had failed to comply with s 269TAC(8) and had failed to take into account a relevant consideration. Thus, so it was submitted, it had committed an error of law. If the Authority erred in this respect, the Minister similarly erred since he adopted the Authority's report.

4. I do not accept that any error of law of this kind was made. The sales relied upon to establish normal value were sales made by the manufacturer to a distributor. The sales relied upon to establish export value were sales made by the manufacturer and by Taiwanese trading houses to Australian distributors. The sales were thus at the same "level of trade". In the case of both domestic and export sales, the price paid was the price paid by the distributor.

5. As Mr Robertson, counsel for the respondents, submitted there is no evidence that the existence of trading houses as "middle men" in relation to sales made to Australian purchasers had the effect of raising the prices of those sales above the prices that would have been charged by the manufacturer if it had exported tube direct to Australia. I agree with his submission that it is by no means obvious or in the nature of things that the existence of "middle men" would have had such an effect on price. For all that appears from the evidence, these might be commercial considerations that lead to the result that prices which the manufacturer charges on sales by it are not significantly different from prices which traders charge on sales by them. Thus traders may sell at the same prices as those charged by the manufacturer because they have greater marketing skills and hence lower selling costs.

6. As Mr Robertson pointed out, the fact that both the manufacturer and trading houses were competing in sales to Australian distributors tends to suggest that prices paid in the sales by the trading houses were not higher than prices paid in the sales by the manufacturer. Otherwise, Australian buyers would have made purchases only from the manufacturer.

7. I do not think it has been shown that any error of law was made by the respondents in determining the applications for the imposition of anti-dumping duties. Accordingly, both applications must be dismissed with costs.