Grundfos Pumps Pty Ltd v Collector of Customs
[1997] FCA 234
•8 APRIL 1997
CATCHWORDS
JUDICIAL REVIEW - appeal from decision of Administrative Appeals Tribunal refusing to classify particular goods under sub-heading of Schedule 3 of Customs Tariff Act 1987 (Cth) - automatic regulating or controlling instruments and apparatus - identification of goods - construction of sub-headings of heading 9032 - whether “electrically powered centrifugal pump with an automatic floating level switch attached” can be identified as “automatic regulating or controlling instrument or apparatus” - consideration of decision of Full Court in Liebert
WORDS AND PHRASES - “automatic”, “regulate”, “instrument”, “apparatus”
Administrative Appeals Tribunal Act 1975 (Cth), s44
Customs Tariff Act 1987 (Cth), Schedule 3
Australian Trade Commission v Richard Shrapnel Consulting Services Pty Ltd (1988) 85 ALR 287
Byrne v Australian Airlines Ltd (1994) 47 FCR 300
Chamberlain v The Queen (1983) 72 FLR 1
Chandler & Co v Collector of Customs (1907) 4 CLR 1719
Chinese Food and Wine Supplies Pty Ltd v Collector of Customs (Vic) (1987) 72 ALR 591
Collector of Customs v Chemark Services Pty Ltd (1993) 114 ALR 531
Collector of Customs v Pozzolanic Enterprises Pty Ltd (1993) 115 ALR 1
Collector of Customs v Savage River Mines (1988) 79 ALR 258
Collector of Customs v AGFA-Gevaert Ltd (1996) 141 ALR 59
Collector of Customs v Marym (Australia) Pty Ltd (1992) 15 AAR 436
Commonwealth Banking Corporation v Percival (1988) 20 FCR 176
D & R Henderson (Mfg) Pty Ltd v Collector of Customs for NSW (1974) 48 ALJR 132
Exxon Corporation v Exxon Insurance Consultants International Ltd [1982] Ch 119
Federal Commissioner of Taxation v Inkster (1989) 89 ALR 137
Gardner Smith Pty Ltd v Collector of Customs, Victoria (1986) 66 ALR 377 at 384
Gissing v Collector of Customs (1977) 1 ALD 144
H R Products Pty Ltd v Collector of Customs (1990) 20 ALD 340 Hope v Bathurst City Council (1980) 144 CLR 1
Liebert Corporation Australia Pty Ltd v Collector of Customs (Wilcox, O'Connor and Drummond JJ, 1 November 1993, unreported)
Mersey Docks & Harbour Board v Henderson Bros (1888) 13 App Cas 595
Nguyen v Nguyen (1990) 169 CLR 245
Perrett v Commissioner for Superannuation (1991) 29 FCR 581
Putnin v Commissioner of Taxation (1991) 27 FCR 508
Rheem Australia Ltd v Collector of Customs (NSW) (1988) 78 ALR 285
Times Consultants Pty Ltd v Collector of Customs(Qld) (1987) 76 ALR 313
Tridon Pty Ltd and Collector of Customs (1982) 4 ALD 615
Vernon-Carus Australia Pty Ltd & Thomas Creevey & Associates v Collector of Customs (1995) 21 AAR 450
Whitton v Falkiner (1915) 20 CLR 118
GRUNDFOS PUMPS PTY LTD v COLLECTOR OF CUSTOMS
NO VG 371 OF 1996
SPENDER, DRUMMOND and R D NICHOLSON JJ
BRISBANE (heard in Melbourne)
8 APRIL 1997
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY No VG 371 of 1996
GENERAL DIVISION
ON APPEAL FROM A JUDGE
OF THE FEDERAL COURT OF AUSTRALIA
BETWEEN:GRUNDFOS PUMPS PTY LTD
Appellant
AND:COLLECTOR OF CUSTOMS
Respondent
CORAM: SPENDER, DRUMMOND and R D NICHOLSON JJ
PLACE: BRISBANE (heard in Melbourne)
DATE: 8 APRIL 1997
MINUTES OF ORDER
The appeal be dismissed.
The appellant pay the respondent’s costs of the appeal, to be taxed if not agreed.
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY No VG 371 of 1996
GENERAL DIVISION
ON APPEAL FROM A JUDGE
OF THE FEDERAL COURT OF AUSTRALIA
BETWEEN:GRUNDFOS PUMPS PTY LTD
Appellant
AND:COLLECTOR OF CUSTOMS
Respondent
CORAM: SPENDER, DRUMMOND and R D NICHOLSON JJ
PLACE: BRISBANE (heard in Melbourne)
DATE: 8 APRIL 1997
REASONS FOR JUDGMENT
SPENDER J:
The facts in relation to this appeal are set out in the reasons for judgment of R D Nicholson J, which I have had the benefit of reading. I can as a consequence be terse in my reasons for concluding that the appeal from the decision of Heerey J should be dismissed with costs.
Heerey J dismissed an appeal from a decision of the Administrative Appeals Tribunal (‘the Tribunal’) which refused to classify particular models of Grundfos KP Series Automatic Drainage Pumps to sub-heading 9032.89.90 of Schedule 3 to the Customs Tariff Act 1987 (Cth), classifying the subject goods to sub-heading 8413.
As the Full Court (Wilcox, O’Connor and Drummond JJ) observed in Liebert Corporation Australia Pty Ltd v Collector of Customs (Unreported, Full Court 1 November 1993) at p 5:
“ ...the appropriate procedure for determining the proper classification of goods that might seem to fall within any of the sub-headings in Section XVI and Chapter 90 is first, to determine whether the goods can appropriately be classified under any of the headings in Chapter 90. If they can be, they are to be so classified and it is irrelevant that the goods might also fall within the terms of any of the headings in any of the Chapters of Section XVI or that they might be more appropriately classified under Section XVI than Chapter 90. The goods may be classified under Section XVI only if none of the headings in Chapter 90 is applicable.”
In the present case, there was a statement of agreed facts before the Tribunal which contained the following:
“ The unit is properly identified as electrically powered centrifugal pump with an automatic ‘floating level switch’ or a controlling device attached.”
In its reasons the Tribunal said:
“ ...the Tribunal finds that the goods are objectively identified as an electrically powered centrifugal pump with an automatic floating level switch attached. The Tribunal further finds that the characteristics of the subject goods are such that they are suitable for use in draining water from buildings, cellars, sumps and septic tanks. The goods can also be used in fountains on a continuous basis or can be used to transfer liquid or circulate liquid on a continuous basis from one tank to another. The goods themselves fall to be described in the simplest of terms as a pump.”
The parties before Heerey J accepted the correctness of that identification. Heerey J said in his reasons for judgment:
“ Counsel for the applicant contended, again correctly in my view, that the first step in classification was to decide whether the goods fell within heading 9032. If there was an affirmative answer to that enquiry, the goods had to come somewhere within the sub-headings under 9032 and the only available item was 9032.89.90.”
His Honour referred to the submission made by the Collector to the Tribunal, namely:
“ ...the purpose or function of the subject goods is to pump liquids and the fact that the goods may have a feature which permits the pump to be turned on automatically is an extra feature which does not detract from the principal purpose and function of the goods which is to pump liquids from an environment. It was the case of the respondent that an incidental purpose or function cannot govern the classification of goods...”
which contention, his Honour said, “is unanswerable”.
The primary reason for Heerey J’s decision was:
“ The goods were, and it is conceded properly identified as, a pump. They were not an automatic regulating or controlling instrument or apparatus.”
If his Honour was correct in that conclusion, the goods are not within 9032 and a fortiori within 9032.89.90.
Counsel for the appellant submitted, and it is accepted, that the phrase constituting heading 9032, “automatic regulating or controlling instruments and apparatus” has the meaning it bears in ordinary speech.
The phrase constituting the heading has to be considered as a whole. The High Court (Brennan CJ, Dawson, Toohey, Gaudron and McHugh JJ) in Collector of Customs v AGFA-Gevaert Ltd (1996) 141 ALR 59 at 67 quoted with approval the observation of Oliver LJ in Exxon Corporation v Exxon Insurance Consultants International Ltd [1982] Ch 119 at 144:
“ But ‘original literary work’ as used in the statute is a composite expression, and for my part I do not think that the right way to apply a composite expression is, or at any rate is necessarily, to ascertain whether a particular subject matter falls within the meaning of each of the constituent parts, and then to say that the whole expression is merely the sum total of the constituent parts. In my judgment it is not necessary, in construing a statutory expression, to take leave of one’s common sense.”
In that case, the English Court of Appeal was concerned whether the made up trade name ”Exxon” was an “original literary work” for the purposes of the Copyright Act 1956 (UK). The Court accepted that it was original, that it was literary in the sense that it was composed of letters and had a written form, and that it was a work because much time and effort had been expended in inventing it. Nevertheless, the Court held that it was not an “original literary work”.
In this context, it is perhaps of marginal utility, but pleasant nonetheless, to recall the remark of the British politician occupying the office of Lord Privy Seal, who pronounced that while he was Lord Privy Seal, he was neither a lord nor a privy nor a seal.
In my opinion, the fact that the pumps in question, because they incorporate as an integral element the floating switch which enables the goods to be used to regulate the level of water or other fluid in the environment in which it is located, could be used to regulate the fluid level, does not mean that the subject goods are to be regarded in ordinary speech as an automatic regulating or controlling instrument or apparatus. The purpose or the function of the subject goods is to move liquid or gas from one place to another. Any regulatory function as to the level of fluid in the environment in which the subject goods are set up is subsidiary to that primary function of the subject goods. It is not sufficient to come within the heading 9032 that the subject goods might be used as a means by which the level of a fluid might be automatically regulated or controlled. That is to say, it is not whether the subject goods might possibly be used for the purpose of regulating the level of fluid, that requires the goods to be classified to heading 9032 (and more particularly to 9032.89.90), but whether “the nature (of the goods) and the function which they were designed to serve” requires that classification, adopting the words of Morling and Wilcox JJ in Times Consultants Pty Ltd v Collector of Customs (Qld) (1987) 76 ALR 313 at 328.
The automatic floating switch means that the pump does not need to operate continuously, but only operates when there is a need for it to fulfil its primary function. That is to say, regulation and control of a level of fluid is not the purpose or function of the subject goods; operation of the pump on as “as needed” basis is.
I agree with Drummond J that the conclusion of the primary judge as to the classification of the subject goods was not only correct, but was the only one open to the Tribunal.
The second basis on which Heerey J dismissed the application was founded on a decision of the Full Court in Liebert (supra). His Honour found the reasoning in that case not distinguishable. The criticism of Liebert by counsel for the appellant focuses on the “other devices” requirement. The Full Court in Liebert said at 16:
“ Item 9032.89.90 is the fourth sub-heading into which the sub-heading item 9032.89 is subdivided. The three preceding sub-headings of item 9032.89 all refer to items of automatic regulating or controlling instruments and apparatus that are used in conjunction with, and which regulate operational features of, other items. This in our opinion indicates that sub-heading 9032.89 applies, on its proper construction, only to devices that perform a regulatory or controlling function within systems or other devices of which they are but component parts.”
This is an alternative basis on which the Full Court reached its decision: it is not, in my respectful opinion, obiter dicta.
For myself, I have difficulty in agreeing with the correctness of this conclusion.
It is necessary to move in descending order from the heading through the various sub-heading levels. See Rheern Australia Ltd v Collector of Customs (NSW) (1988) 78 ALR 285 at 297; Collector of Customs v Savage River Mines (1988) 79 ALR 258 at 265.
To attempt to illuminate my differing view, it is helpful first to set out the full provisions of heading 9032:
“9032 AUTOMATIC REGULATING OR CONTROLLING INSTRUMENTS AND APPARATUS:
9032.10- Thermostats:
9032.10.10- - - Of a kind used with electrically operated domestic appliances
9032.10.90- - - Other
9032.20.00- Manostats
9032.8- Other instruments and apparatus:
9032.81.00- - Hydraulic or pneumatic
9032.89- - Other
9032.89.10- - - Automatic voltage regulators of a kind commonly used with motor vehicles, for 6 V or 12 V systems
9032.89.20- - - Of a kind commonly used with dies or moulds to automatically control their temperature, being apparatus the control function of which is achieved by the temperature of the circulating fluid responding to changes in the temperature of the goods being controlled
9032.89.30- - -Goods incorporating, or designed to incorporate, thyristors, power transistors or the like, of a kind used for controlling electric motors
9032.89.90- - -Other
9032.90- Parts and accessories:
9032.90.10- - - For programmable controllers
9032.90.90- - - Other.”
As one descends the hierarchy, heading 9032 is the set of “Automatic Regulating or Controlling Instruments and Apparatus” (the ‘head set’).
The sub-heading 9032.10 “Thermostats”, with its two sub-headings 9032.10.10 and 9032.10.90 comprehends one subset of the head set, being all thermostats.
The sub-heading 9032.20.00 “Manostats” comprehends another subset of the head set, being all manostats.
Sub-heading 9032.8 comprises the subset of all hydraulic or pneumatic members of the head set that are not thermostats or manostats (comprehended by the elements in sub-heading 9032.81.00), and the subset of all remaining members of the head set, the elements of which subsets are not included in the previous three subsets.
This fourth subset (i.e. those elements in 9032.89) consists of those elements comprehended by:
(a)the three sub-headings 9032.89.10, 9032.89.20 and 9032.89.30 (each of which share the characteristic identified by the Full Court in Liebert of performing a regulatory or controlling function within systems or other devices of which they are controlling parts), and
(b)those elements in heading 9032.89.90, which (contrary to the view of the Full Court) do not necessarily share that characteristic, but which consist of all elements of the head set, which are not contained in the earlier subsets, and which are not comprehended by sub-headings 9032.89.10, 9032.89.20 and 9032.89.30.
However, it is not necessary to found my judgment on this view and in my respectful opinion the question whether the conclusion by the Full Court on the “other devices” aspect of its judgment in Liebert is correct, ought properly to await determination on another day.
For these reasons, in my opinion the appeal should be dismissed with costs.
I certify that this and the preceding eight (8) pages are a true copy of the reasons for judgment herein of the Honourable Justice Spender.
Associate
Date: 8 April 1997
IN THE FEDERAL COURT OF AUSTRALIA No VG 371 of 1996
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION
ON APPEAL FROM A JUDGE
OF THE FEDERAL COURT OF AUSTRALIA
BETWEEN:GRUNDFOS PUMPS PTY LTD
Appellant
AND:COLLECTOR OF CUSTOMS
Respondent
CORAM:Spender, Drummond and R D Nicholson JJ
DATE:8 April 1997
PLACE:Brisbane (Heard in Melbourne)
REASONS FOR JUDGMENT
DRUMMOND J:
This is an appeal from a decision of Heerey J dismissing an appeal under the Administrative Appeals Tribunal Act 1975 (Cth) from a decision of the Administrative Appeals Tribunal refusing to classify a device to sub-heading 9032.89.90 of Schedule 3 to the Customs Tariff Act 1987 (Cth) and classifying it, instead, to sub-heading 8413. The facts are set out in the judgment of R D Nicholson J, which I have had the benefit of reading in draft.
The AAT made a finding of fact that “the goods are objectively identified as an electrically powered centrifugal pump with an automatic floating level switch attached … The goods themselves fall to be described in the simplest of terms as a pump”. The AAT did not attempt to interpret for itself sub-heading 9032.89.90 of the Tariff but held it was bound to conclude that that device was not an automatic regulating or controlling instrument or apparatus by that part of the decision of this Court in Liebert Corporation Ltd v Collector of Customs (Full Court, Wilcox O’Connor and Drummond JJ, 1 November 1993) in which it was said that sub-heading 9032.89 (which includes sub-heading 9032.89.90) only applies, on its proper construction, to devices that perform a regulatory or controlling function within systems, or within other devices, of which they are but component parts. The AAT therefore held that the appellant’s device was not classifiable under sub-paragraph 9032.89.90 of the tariff and that, in view of the agreement between the parties, it should be classified under paragraph 8413.
Heerey J was invited not to apply this statement in Liebert on the ground that it was wrong. He declined that invitation and held, as the second basis for his decision to dismiss the appeal, that the Tribunal correctly regarded Liebert as decisive of the result. However, the first basis upon which his Honour decided the case was to take up the finding of fact made by the AAT in identifying the device as a pump; he said that the device was “identified as a pump, that is to say a mechanical device for moving liquid or gas from one place to another, and [was] designed to perform that function”; he considered that, although the device incorporated a switch activated by a float, which permitted the pump to be turned on and off automatically as the level of liquid in the place in which the pump was set up rose and fell, this was only a purpose or function incidental to the device’s principal purpose or function and so could not govern its tariff classification. His Honour observed that the appellant relied on Note 6(a); by Note 6 to Chapter 90, “9032 applies only to” two classes of “automatic regulating or controlling instruments and apparatus”, viz:
(a)Instruments and apparatus for automatically controlling the flow, level, pressure or other variables of liquids or gases, or for automatically controlling temperature, whether or not their operation depends on an electrical phenomenon which varies according to the factor to be automatically controlled; and
(b)Automatic regulators of electrical quantities, and instruments or apparatus for automatically controlling non-electrical quantities the operation of which depends on an electrical phenomenon varying according to the factor to be controlled.
His Honour said that the note was of no assistance to the appellant: it restricted the reach of heading 9032. He concluded that, the device having been identified as a pump, it could not be any sort of automatic regulating or controlling instrument or apparatus. His Honour did not consider it necessary to attempt any further explication of the phrase “automatic regulating or controlling instruments and apparatus”.
Since the Tariff is a schedule to an Act of Parliament, ordinary principles of statutory construction apply: Chandler & Co v Collector of Customs (1907) 4 CLR 1719 at 1724, 1728; Customs and Excise Law, Cooper, para 401 and Statutory Interpretation in Australia, 4th Ed, Pearce and Geddes, para 4.36, Statutory Interpretation, 2nd Ed, Bennion, pp 490-492. It is an established principle of construction that: “The language of a Tariff Act, like that of every other Act, is to be taken in its ordinary signification, unless some secondary meaning is proved”: Whitton v Falkiner (1915) 20 CLR 118 at 127; Liebert, at 17-18. In D & R Henderson (Mfg) Pty Ltd v Collector of Customs for NSW (1974) 48 ALJR 132 at 135, Mason J said: “in a statute such as the Customs Tariff, the Court will the more readily conclude that items have been described according to common commercial or trade usage and that the words have not been used in the natural and ordinary sense” and the readiness with which the courts will find that words are used, not in their ordinary meaning, but in a special trade or commercial meaning in statutes such as the Customs Tariff Act must be increased by what was said by the High Court in Collector of Customs v Agfa-Gevaert Ltd (1996) 141 ALR 59 at 65-66. But it was not suggested in the proceedings before the Tribunal or the learned primary judge or this Court that the phrase “Automatic Regulating or Controlling Instruments and Apparatus” that constitutes heading 9032 is there used in a technical sense and counsel for the appellant presented his argument on the assumption that these words had their ordinary meaning. There is, in my opinion, no reason to doubt that this phrase in the Tariff has the meaning that it bears in ordinary speech.
Whatever be its precise connotations, the phrase “Automatic Regulating or Controlling Instruments and Apparatus” would not be regarded in ordinary speech as covering a pump, even though the pump may, as here, incorporate as an integral element a floating switch which enables the pump to be used to regulate the level of water or other fluid in the environment in which it is set up.
It is possible, as Nicholson J demonstrates, to select from the range of dictionary meanings for each of the words “automatic”, “regulating”, controlling”, “instrument” and “apparatus”, particular expressions capable of describing a feature of the appellant’s pump; it can then be said to follow that the pump can be described as an “Automatic Regulating or Controlling Apparatus”, even if it is not an instrument. That was the approach to construction which the appellant in effect urged on this Court.
There is some substance in the respondent’s contention that, on this approach, any device that possesses an element of automatic operation can be classified under heading 9032. There is, eg, an analogy between the ball-valve in the cistern of an ordinary water-closet and the appellant’s pump and between an automatic toaster and the pump. Once the tap between the cistern and the mains water supply is opened and once the setting governing the period during which electrical current is to flow through the toasting element is manually selected, the ball-value can be said to be an apparatus for automatically controlling the level of water in the cistern and the toaster can be said to be an apparatus for automatically controlling the flow of electrical current through the element, just as the appellant’s pump, with incorporated switch, can be said to be an apparatus for automatically controlling, at the manually selected level, the level of water where the pump is placed. A toilet cistern ball-valve and a pop-up toaster are, in my opinion, as much out of place in Chapter 90 as is the appellant’s pump. But on the appellant’s approach, the ball-value and the toaster would be capable of falling within heading 9032, properly construed, even though they would not, in fact, be classified to that heading: r 3(a) of Schedule 2 to the Customs Tariff Act would require the ball-valve and the toaster to be classified to headings 3922 (if the ball-value is of plastic) and 7324 (if it is of steel) and 8516 respectively, rather than to heading 9032. That result cannot, however, affect the proper interpretation of the heading. The process of interpretation of the various parts of the Tariff of possible relevance in a given case precedes the process of classification and the Rules in this Schedule, although described in the heading to the Schedule as rules of interpretation, are, in my respectful opinion, correctly characterised by Burchett J in Rheem Australia Ltd v Collector of Customs (NSW) (1988) 78 ALR 285 at 300:
“Rule 1(2) makes it clear that the succeeding rules are to be utilised ‘for the purpose of ascertaining whether goods fall within’ an item etc, which is quite a different purpose from using the rules to construe the meaning of an item. Section 17 of the Act does not give the rules any general effect beyond that asserted by r 1(2); indeed, it limits their effect in the same way as does that rule. The rules are not rules of construction, but are rules extending or governing the application of the tariff provisions in particular situations.”
In order to identify the meaning of a phrase used in a statute in the ordinary sense of the words, it is appropriate to go to the dictionary for guidance as to the range of meanings each word in the phrase is capable of bearing. But it is not permissible for a party to focus on that portion of the dictionary meaning of each of the words in the phrase that is most favourable to its case and, by such a process, seek to demonstrate that the phrase has the meaning for which that party contends. That has long been identified as an inappropriate method of construing a composite phrase in a statute: see, eg, Mersey Docks & Harbour Board v Henderson Bros (1888) 13 App Cas 595 at 599-560 and Vernon-Carus Australia Pty Ltd v Collector of Customs (1995) 21 AAR 450 at 458 and 459. In order to interpret such a phrase, it is essential to consider the phrase as a whole because the significance of the individual words is affected by both the other words accompanying them and by the syntax of the whole phrase. See Collector of Customs v Agfa-Gevaert Ltd (1996) 141 ALR 59 at 64 and at 67 where the High Court quoted, with approval, the dictum of Oliver LJ in Exxon Corporation v Exxon Insurance Consultants International Ltd [1982] Ch 109 at 114:
“But ‘original literary work’ as used in the statute is a composite expression, and for my part I do not think that the right way to apply a composite expression is, or at any rate is necessarily, to ascertain whether a particular subject matter falls within the meaning of each of the constituent parts, and then to say that the whole expression is merely the sum total of the constituent parts. In my judgment it is not necessary, in construing a statutory expression, to take leave of one’s common sense.”
It is also essential in seeking the true meaning of a provision of the Tariff, just as when construing any other statutory provision, to have regard to the statutory context in which the phrase is found: Gardner Smith Pty Ltd v Collector of Customs, Victoria (1986) 66 ALR 377 at 384.
In contending that this pump comes within heading 9032, the appellant ignores the fact that heading 9032 is a composite expression that appears in the statutory context of Chapter 90 of the Customs Tariff.
Heading 9032 is only one of the 33 headings of Chapter 90, which is, in turn, part of Section XVIII of the Tariff. If heading 9032 comprised a separate section of the Tariff, it might well be appropriate to give it a wider meaning than is, in my opinion, required by the context in which it is found. That context includes, at the very least, the other headings in that Chapter. They cover optical, medical, photographic, cinematographic and other scientific or technical instruments and devices; devices and materials whose function depends on optical phenomena and certain therapeutic devices. In particular, these headings cover optical materials, including optical fibres and polarising materials and unmounted optical elements, including lenses (9001); mounted optical elements, including lenses (9002); frames for eye wear (9003); corrective and protective eye wear (9004); optical telescopes (9005); cameras and other photographic apparatus (9006); cinematographic cameras and projectors (9007); other image projectors and photographic equipment (9008); various kinds of photocopiers (9009); certain apparatus for photographic laboratories (9010); various kinds of microscopes (9011 and 9012); certain liquid crystal devices and lasers (9013, a heading which also includes “other optical appliances and instruments, not specified or included elsewhere in this Chapter”); various kinds of navigational instrument (9014); various kinds of surveying and meteorological instruments (9015); sensitive balances (9016.00.00); various kinds of drawing, calculating and measuring instruments (9017); various medical diagnostic and treatment instruments, appliances and aids (9018, 9019, 9021 and 9022); certain breathing appliances (9020.00.00); various testing, measuring, checking and analysing instruments (9024, 9025, 9026, 9027, 9028, 9029, 9030 and 9031); and instruments, apparatus and models designed for demonstrational purposes (9023.00.00).
This context suggests that the phrase “automatic regulating or controlling instruments and apparatus” is intended to describe only “instruments”, ie, measuring, testing and checking devices, and “apparatus”, ie, assemblages of such devices, that are pre-set and perform thereafter, without further human intervention, ie, “automatically”, the function of adjusting some variable to a particular standard, ie, the function of regulation, or the function of keeping the variable, once adjusted to it, at that standard, ie, the function of controlling. That phrase is well capable of conveying this meaning, as a reading of the meanings of the various words making up the phrase in the Macquarie Dictionary, 2nd Ed, and the Oxford English Dictionary, 2nd Ed, shows. The appellant’s device is a pump, ie, a device for moving liquid from one place to another. It does not fall within the phrase constituting that heading, as I think that phrase should be construed.
There is a further consideration that supports the conclusion that heading 9032 is not to be given the wide construction that it would have to have if the appellant’s pump were to come within it. The provision in question is merely one of many headings in a chapter of the Tariff and not, eg, the provision that concludes the Tariff or a Section of the Tariff or even a Chapter of the Tariff; moreover, Note 6 to Chapter 90 indicates that devices within the meaning of the phrase constituting heading 9032 will not be classifiable to that heading unless they also possess an additional characteristic, viz, at least one of those referred to in Note 6(a) or (b). This all shows that heading 9032 is not intended to be the classification repository for a residuum of devices with automatic features not specifically covered elsewhere in the Tariff. This, in turn, suggests that that heading is not intended to cover comprehensively all devices which would come within the widest meaning capable of being given, according to ordinary English usage, to the words of that heading. It follows that there is no justification for classifying goods to this heading which are of a kind quite foreign to the kinds of goods covered by other headings of Chapter 90.
The appellant also relied on Note 1(f) to Chapter 90, which provides that that Chapter “does not cover”, among other things, “Pumps incorporating measuring devices, of 8413”. That heading in Chapter 84 of Section XVI is in these words: “Pumps for liquids, whether or not fitted with a measuring device; liquid elevators”. The appellant submitted that Note 1(f) showed that, but for it, pumps of 8413 would be within Chapter 90 and thus within heading 9032. The more likely explanation for Note 1(f) is that identified by Heerey J, viz, that this note is intended to make clear that pumps, which are, in general, not within Chapter 90, cannot be brought within that chapter just because they happen to incorporate measuring devices within heading 9026 of Chapter 90, as would pumps of the kind covered by sub-headings 8413.1 and 8413.11.00.
I think the approach taken by Heerey J, in so far as the first basis for his decision is concerned, was one which his Honour was entitled to take in the circumstances of this case. In this case there is no relevant dispute of fact: the Tribunal’s identification of the device was not challenged. The only question is therefore whether the facts as found require the device to be classified to sub-heading 9032.89.90, properly construed. Whether the answer to that question involves a determination of a matter of law or a matter of fact, given the unchallenged finding of the Tribunal as to the identification of the device as a pump, albeit one which incorporated an automatic switch, the conclusion is inescapable that the device cannot come within heading 9032, properly construed, and thus within the only sub-heading of that heading suggested to be of possible relevance, viz, 9032.89.90. His Honour was therefore entitled, in the exercise of his power under s 44(4) and (5) the Administrative Appeals Tribunal Act 1975 (Cth) to finally dispose of the action on the first basis upon which he acted, rather than to remit the proceeding to the AAT for reconsideration, even if he had been prepared to hold that the AAT decision was infected with a reviewable error of law because it applied the contentious dictum in Liebert: see Federal Commissioner of Taxation v Inkster (1989) 89 ALR 137 at 160; Putnin v Commissioner of Taxation (1991) 27 FCR 508 at 514; Collector of Customs v Marym (Australia) Pty Ltd (1992) 15 AAR 436 at 443-445; Australian Trade Commission v Richard Shrapnel Consulting Services Pty Ltd (1988) 85 ALR 287 at 290 and cf Commonwealth Banking Corporation v Percival (1988) 20 FCR 176 at 183-184. Indeed, counsel for the appellant invited this Court, in the event that it upheld the appeal, not to remit the matter to the Tribunal but instead, to deal with the entire matter and rule that its pump should be classified to sub-heading 9032.89.90 because the case did not involve any disputed question of fact. Counsel for the respondent submitted, for much the same reasons, that Heerey J was entitled to reach the conclusion he did and to dismiss the appeal.
It is therefore unnecessary, in order to dispose of this appeal, to deal with the appellant’s contention that the statement in Liebert upon which both the Tribunal and Heerey J relied wrongly identifies the true meaning of sub-heading 9032.89, a contention which could only be accepted if this Court were convinced that the dictum in Liebert were wrong: Byrne v Australian Airlines Ltd (1994) 47 FCR 300 at 304.
It should, however, be said that there is no reason to doubt the correctness of the decision of the Court in Liebert to dismiss Liebert’s appeal. As appears from p 2 of the judgment, the only issue in Liebert was whether the UPS device could be classified to sub-heading 9032.89.90, it being common ground that if not so classifiable, then its correct classification was to sub-heading 8504.40.00, as a “static converter”. The AAT concluded that the UPS could not be classified to sub-heading 9032.89.90 for a number of reasons. Its first basis for deciding that the UPS could not be classified to sub-heading 9032.89.90 was that, since the principal purpose or function of the UPS was to ensure continuity of supply in case of a failure in the commercial supply, it could not come within sub-heading 9032.89.90 even though “an extra feature” of the UPS was the improvement or regulation of the commercial supply of electrical power. The Full Court dealt with the attack on this conclusion by holding that the AAT’s identification of the device as one whose function was to maintain supply, rather than to regulate supply, was a determination only of fact and any error on the part of the AAT in that respect was therefore non-reviewable under s 44. It was in dealing with the Tribunal’s second ground for refusing to classify the UPS to sub-heading 9032.89.90 that the appellant submitted that the Court in Liebert fell into error. But irrespective of the correctness of what the Court there said, the position was, as the Court observed at p 18:
“… the applicant cannot succeed merely by showing that the Tribunal fell into error in respect of its second ground of decision. The applicant has to show error in respect of all the grounds.”
I agree that the appeal be dismissed with costs.
I certify that this and the preceding 12
pages are a true copy of the reasons
for judgment herein of the Honourable
Justice Drummond.
Associate:
Date: 8 April 1997
IN THE FEDERAL COURT OF AUSTRALIA )
VICTORIA DISTRICT REGISTRY )
GENERAL DIVISION ) NO VG 371 OF 1996
On appeal from a single judge of the Federal Court of Australia
B E T W E E N GRUNDFOS PUMPS PTY LTD
Appellant
and
COLLECTOR OF CUSTOMS
Respondent
CORAM:SPENDER, DRUMMOND and R D NICHOLSON JJ
DATE:8 April 1997
PLACE:BRISBANE (heard in Melbourne)
REASONS FOR JUDGMENT
R D NICHOLSON J: This is an appeal from the decision of a single judge (Heerey J) dismissing an "appeal" from the Administrative Appeals Tribunal. At issue before the Tribunal and the learned primary judge was a question of classification of the applicant's goods under the Customs Tariff Act 1987 (Cth) ("the Act").
The applicant claimed before the Tribunal and on the "appeal" that the goods in question ("the goods") should have been classified to a heading 9032.89.90 reading as follows:
"9032 AUTOMATIC REGULATING OR CONTROLLING INSTRUMENTS AND APPARATUS:
9032.8- Other instruments and apparatus
9032.89-- Other
9032.89.90--- Other."
The Tribunal affirmed the decision of the primary decision‑maker that the goods as imported fell to be classified within heading 8413.70.90 which appears as follows:
"8413 PUMPS FOR LIQUIDS, WHETHER OR NOT FITTED WITH A MEASURING DEVICE; LIQUID ELEVATORS:
8413.70- Other centrifugal pumps:
8413.70.90-- Other."
The effect of the primary decision as affirmed by the Tribunal and in respect of which the judge dismissed the "appeal" is that the rate of duty applicable to the goods is 12 per cent. However, if the applicant succeeds on this appeal in establishing that the goods should have been classified under heading 9032, the rate of duty is free.
The Goods
The Tribunal accepted the following statement of agreed facts concerning the goods:
"· The unit is properly identified as electrically powered centrifugal pump with an automatic "floating level switch" of a controlling device attached.
·The unit operates as follows:
(a)in the usual case the unit is submerged in a confined area ...
(b)the switch for the unit (the thing that "automatically" activates the unit) is the so called "float switch" which protrudes from the uppermost surface of the steel casing and is attached to the pump by means of a cable
(c)the float switch consists of a micro-switch assembly encased in a moulded plastic shell
(d)when water flows into the confined area, the unit "float switch" floats upward, rolling a metal ball onto the micro switch. This starts the impellers contained in the unit
(e)impellers are blades which create a centrifugal force, forcing the water through stainless steel unit and out via a hose attached at the top of the unit
(f)water can be pumped out to a pre-determined level. ...."
Figure 2 referred to in the agreed statement is as follows:
Having referred to each of these descriptions the trial judge said:
"The goods are a cylindrical shaped object weighing about 8kg. I was told that the dimensions were approximately 500mm in height and 200mm in diameter. The Tribunal made the following identification, which the parties accepted as correct:
...the Tribunal finds that the goods are objectively identified as an electrically powered centrifugal pump with an automatic floating level switch attached. The Tribunal further finds that the characteristics of the subject goods are such that they are suitable for use in draining water from buildings, cellars, sumps and septic tanks. The goods can also be used in fountains on a continuous basis or can be used to transfer liquid or circulate liquid on a continuous basis from one tank to another. The goods themselves fall to be described in the simplest of terms as a pump."
It will be observed the identification made by the Tribunal and, importantly, accepted by the parties, contains two notions:
(1)The floating level switch is "attached" to the electrically powered centrifugal pump;
(2)It is the floating level switch which is identified as being "automatic" and the pump is not so identified.
Decision of Full Court in Liebert
The issue before the Tribunal was a re-classification of the goods. That had come about in the following circumstances. On 20 July 1993 a Tribunal set aside a decision under review that the goods be classified to heading 8413.70.90 and in substitution decided the goods be classified to heading 9032.89.90. However, on 1 November 1993 the decision in Liebert Corporation Australia Pty Ltd v Collector of Customs (Federal Court, Wilcox, O'Connor and Drummond JJ, 1 November 1993, unreported) was handed down. The Full Court considered an appeal from a decision of a Tribunal affirming the decision of the Collector of Customs to classify that applicant's "uninterruptable power systems" ("UPS") as a "static converter" under subheading 8504.40.00 of Schedule 3 to the Act. That applicant sought an order setting aside the Tribunal's decision and a declaration that the proper tariff classification of the UPS was pursuant to heading 9032.89.90. The Tribunal reached its conclusion that the UPS was not classifiable to heading 9032.89.90 because the goods could not properly be described as "an automatic regulating apparatus", being "an automatic regulator of electrical quantities". That was supported by three reasons, namely: (1) the principal purpose and function of the UPS was to ensure continuity of supply; (2) there was no dispute the goods functioned automatically, the goods themselves were not regulators of electrical quantities - rather they were a regulated apparatus; (3) the UPS could not be regarded as a regulator because it did not regulate any external equipment.
The Full Court, in turning to Schedule 3 of the Act accepted the tariff classification is to be determined according to the headings (including sub‑headings) and any relevant Section or Chapter notes and, "provided such headings or notes do not otherwise require", by the principles contained in Rules 2 to 6 in Schedule 2: see s10(1) of the Act and Schedule 2 Rule 1.
The Court referred to the notes to Section XVI, which included sub‑heading 8504.40.00 where it is provided:
"1. - This Section does not cover:
...
(m)Articles of Chapter 90;
..."
The Court accepted it followed the appropriate procedure for determining the proper classification of goods which might seem to fall within any of the sub‑headings in Section XVI and Chapter 90 is, first, to determine whether the goods can appropriately be classified under any of the headings in Chapter 90. It accepted the goods may be classified under another section only if none of the headings in Chapter 90 are applicable. The Full Court accepted the determination that the goods are classifiable to a heading in Chapter 90 is a final and not a prima facie determination.
The Full Court then set out the full provisions of heading 9032 which, as they are relevant to the present appeal, it is appropriate to repeat:
"9032 AUTOMATIC REGULATING OR CONTROLLING INSTRUMENTS AND APPARATUS:
9032.10- Thermostats:
9032.10.10--- Of a kind used with electrically operated domestic appliances
9032.10.90--- Other
9032.20.00- Manostats
9032.8- Other instruments and apparatus:
9032.81.00-- Hydraulic or pneumatic
9032.89-- Other
9032.89.10--- Automatic voltage regulators of a kind commonly used with motor vehicles, for 6 V or 12 V systems
9032.89.20--- Of a kind commonly used with dies or moulds to automatically control their temperature, being apparatus the control function of which is achieved by the temperature of the circulating fluid responding to changes in the temperature of the goods being controlled
9032.89.30--- Goods incorporating, or designed to incorporate, thyristors, power transistors or the like, of a kind commonly used for controlling electric motors
9032.89.90--- Other
9032.90- Parts and accessories
9032.90.10--- For programmable controllers
9032.90.90--- Other."
In relation to the reliance by the Tribunal on the "principal purpose and function" of the UPS, the Full Court rejected a submission the Tribunal had impermissibly relied on note 3 to Section XVI of Schedule 3, which provides:
"Unless the context otherwise requires, composite machines consisting of two or more machines fitted together to form a whole and other machines adapted for the purpose of performing two or more complimentary or alternative functions are to be classified as if consisting only of that component or as being that machine which performs the principal function."
The Court said the Tribunal did not have to go beyond applying Rule 1 of Schedule 2, which reads:
"The titles of Sections, Chapters and sub-Chapters are provided for ease of reference only; for legal purposes, classification shall be determined according to the terms of the headings and any relative Section or Chapter Notes and, provided such headings or Notes do not otherwise require, according to the following provisions."
In deciding whether the UPS should be classified to heading 9032, the Tribunal first had to identify it. The Court said "in doing this, it was entitled to have regard to the nature and function which the UPS was designed to serve". The Court referred to Times Consultants Pty Ltd v Collector of Customs(Qld) (1987) 76 ALR 313 at 328 where Morling and Wilcox JJ stated "it ought normally be possible to classify goods merely by looking at them and by considering their nature and function which they are designed to serve". However, the Court accepted this "practical wharf-side test" would sometimes require more than visual inspection: Chinese Food and Wine Supplies Pty Ltd v Collector of Customs (Vic) (1987) 72 ALR 591. In the case of the UPS, a complex piece of electrical machinery, the Full Court said the Tribunal was not confined to a visual examination and was entitled to receive evidence explanatory of its nature and function.
In Liebert it was common ground the UPS was automatic in its operation but there was "voluminous" evidence concerning the nature and function of it. The Tribunal had found the principal function was the maintenance of uninterruptable power so that the continuity of supply was the principal function and any regulatory function was subsidiary to the primary task. This being a conclusion of fact, the Full Court accepted it was not reviewable under s44 of the Administrative Appeals Tribunal Act 1975 (Cth).
It was not an issue before the Full Court in Liebert that heading 9032 was to be understood by reference to the ordinary English meaning of the words used in it and that they should not be taken to have a special technical meaning: Cf Collector of Customs v Pozzolanic Enterprises Pty Ltd (1993) 115 ALR 1 at 9-10.
The Full Court rejected the submission the Tribunal's identification of the goods did not resolve the question of classification to subheading 9032.89.90. It considered any failure to properly identify could "amount only to a non‑reviewable error of fact". Alternatively, if it was accepted the Tribunal had properly identified the UPS, different views were reasonably open as to whether the UPS was within the ordinary meaning of the words in sub‑heading 9032.89.90. That was a conclusion of fact within the province of the Tribunal.
It is the second reason of the Full Court and of the Tribunal which is of particular relevance to this present appeal. In concluding the UPS should be regarded as a regulated piece of apparatus rather than a regulator, the Tribunal said:
"There is a thread linking the sub-headings of heading 9032 which indicate what are regarded as regulators for the purposes of Chapter 90. In our view, a controller, within a controlled system, that measures the variable to be controlled, compares that variable with an ideal value, and then signals the controlled equipment to take corrective steps. The controlled equipment (in this case the UPS) is not part of the regulator. The UPS contains a regulating apparatus in the form of certain circuits and it is therefore a regulated apparatus and is not itself a regulator."
The Full Court accepted the primary basis for this conclusion was construction by the Tribunal of the sub‑headings of heading 9032. That was a question of law: Cf H R Products Pty Ltd v Collector of Customs (1990) 20 ALD 340, 342; Hope v Bathurst City Council (1980) 144 CLR 1 at 7-8. The Full Court then said:
"Section 10(1) of the Act and Rule 1 of Schedule 2, so far as is presently relevant, require classification for tariff purposes to be "determined according to the terms of the headings" (which includes sub-headings). It is difficult to draw from sub‑headings 9032.10 ("Thermostats") and 9032.89 ("Other") the conclusion that the items of automatic regulating or controlling instruments and apparatus they describe are regulating components of a larger system. Assuming that these particular items should be understood to bear their ordinary meanings, a perusal of the Oxford English Dictionary, 2nd ed, 1989, shows, for example, that the term "thermostat" can properly be used to refer to a stand‑alone apparatus. We therefore think that the Tribunal erred in construing the expression "Automatic Regulating or Controlling Instruments and Apparatus" as having the particular meaning it referred to, in all of the sub‑headings of heading 9032."
The Full Court continued:
"However, it does not follow that the Tribunal erred in regarding the items covered by sub‑heading 9032.89 as regulating components of a larger system. Although in determining classification, regard must, by s10(1) of the Act, be had to the wording of this heading, it, like any heading in a statute, "can only be an approximation and may not cover all the detailed matters falling within the provision to which it is attached": Bennion, Statutory Interpretation, 1984, page 590. There is thus nothing odd in finding that all the items in one sub‑heading may form a class possessing a common feature, while the items grouped in other sub‑headings do not. Item 9032.89.90 is the fourth sub‑heading into which the sub‑heading item 9032.89 is subdivided. The three preceding sub‑headings of item 9032.89 all refer to items of automatic regulating or controlling instruments and apparatus that are used in conjunction with, and which regulate operational features of, other items. This in our opinion indicates that sub‑heading 9032.89 applies, on its proper construction, only to devices that perform a regulatory or controlling function within systems or other devices of which they are but component parts. The Tribunal's error does not therefore assist the applicant."
I will refer to this portion of the Full Court's reasoning as the "other devices requirement".
In finding the third reason for the Tribunal's decision was not in error the Full Court also stated the construction which it had placed on sub‑heading 9032.89 "means that a device is classifiable to the items in sub‑heading 9032.89, including item 9032.89.90 only if it regulates another device".
Re-classification
The applicant's goods on first importation were classified on 8 April 1991 to sub‑heading 8413.81.90. On 20 July 1993 the Administrative Appeals Tribunal set aside a decision to that effect and substituted a decision that the goods be classified to sub‑heading 9032.89.90. However, following the decision of the Full Court in Liebert that classification was voided and the goods were re-classified to heading 8413. The decision to re‑classify was taken for review to the Administrative Appeals Tribunal.
Tribunal's Reasons
A statement of agreed facts before the Tribunal on this present application contained the description previously set out. The Tribunal accepted the statement did not relieve it in the circumstances of the obligation of identifying the goods. The Tribunal proceeded to make the identification previously set out.
It should be added the evidence before the Tribunal included evidence that the floats could not be detached from the pump and could only be replaced by removing the entire head of the unit and replacing it with a new one so that the floating level switch was an integral part of the unit. The findings of the Tribunal are therefore to be understood as conveying that, while the automatic floating level switch is attached, it is not a detachable attachment.
Turning to the question of classification, the Tribunal accepted the dicta of the Full Court in Liebert that, as a consequence of note 1(M) to Section XVI, it was necessary first to determine whether the goods could appropriately be classified under any of the headings in Chapter 90, which could be conclusive of the matter.
As was stated by the trial judge, the Tribunal dealt with submissions based on two notes to Chapter 90. The first was note 1(f) which provides:
"1. This Chapter does not cover:
(f)pumps incorporating measuring devices, of 8413."
The second was note 6(a) which provides:
"6. 9032 applies only to:
(a)Instruments and apparatus for automatically controlling the flow, level, pressure or other variables of liquids or gases, or for automatically controlling temperature, whether or not their operation depends on an electrical phenomenon which varies according to the factor to be automatically controlled."
The conclusions of the Tribunal were summarised by the trial judge as follows:
"The Tribunal found the decision of the Full Court in Liebert to be determinative. That case also concerned sub‑heading 9032.89.90, the goods in question being an uninterruptable power system. The Full Court held that all the items under sub‑heading 9032.89 applied to devices "that perform a regulatory or controlling function within systems or other devices of which they are but component parts". In the present case the Tribunal held that the goods in question did not satisfy that requirement and accordingly could not be classified within 9032.89.90. There being no other available classification within heading 9032, the appeal failed."
Reasons of Trial Judge
After recounting aspects of the Tribunal decision, the trial judge expressed his agreement with the view that the Tribunal had to move in a descending order through the various levels of headings and sub‑headings in 9032: Collector of Customs v Savage River Mines (1988) 79 ALR 258 at 265 and Rheem Australia Ltd v Collector of Customs (NSW) (1988) 78 ALR 285 at 297.
He then accepted the first step in classification was to decide whether the goods fell within heading 9032. In his view, if there was an affirmative answer to that inquiry, the goods had to come somewhere within the sub‑headings under 9032 and the only available item was 9032.89.90.
So far as the reasoning of the Tribunal was concerned he said there may be ground for thinking it had not adopted this approach. In his opinion it had "tacitly assumed" that the goods fell within the heading 9032 but applied the reasoning of Liebert and held that the "component part" requirement applied. As his Honour expressed it "the Tribunal, as it were, passed through the gateway of heading 9032 and the further gateway of 9032.89 but found all the gates beyond were closed".
The trial judge then said:
"While I agree that the Tribunal should have considered first whether heading 9032 applied, I conclude that the answer to that enquiry to be the opposite to that for which the applicant contends. This was "a practical `wharf-side' task": Times Consultants Pty Ltd v Collector of Customs (Qld) (1987) 76 ALR 313 at 328. In the Tribunal's reasons the following summary of the respondent's case was noted:
It was the respondent's case that similarly a cellar drainage pump, identified thus, which was designed to pump liquids, could not be prima facie classifiable to Chapter 90. That is, the purpose or function of the subject goods is to pump liquids and the fact that the goods may have a feature which permits the pump to be turned on automatically is an extra feature which does not detract from the principal purpose and function of the goods which is to pump liquids from an environment. It was the case of the respondent that an incidental purpose or function cannot govern the classification of goods.
In my opinion that contention is unanswerable. The goods were, and it is conceded properly identified as, a pump. They were not an automatic regulating or controlling instrument or apparatus.
The applicant's argument was that the float switch could be pre‑set so that the goods ceased operation when the liquid reached a desired level. Hence, so the argument went, the goods operated to regulate and control the liquid.
I accept the possibility that a hypothetical user might have such an objective in mind, but goods "are not identified by reference to the use to which (they) may be put in the future, though their present suitability for that use may be a relevant factor": Re Gissing v Collector of Customs (1977) 14 ALR 555 at 557, Times Consultants Pty Ltd v Collector of Customs (1987) 76 ALR 313 at 327. The goods were identified as a pump, that is to say a mechanical device for moving liquid or gas from one place to another, and were designed to perform that function."
The trial judge then expressed the view that he was bound by the decision of the Full Court in Liebert. In his opinion its reasoning was not distinguishable.
In relation to note 1(f) the trial judge concluded it:
"does not in my opinion assist the applicant. If anything, it discloses an intention that pumps of whatever kind should not come within Chapter 90, even if they happen to incorporate a measuring device and thus might otherwise have been thought to fall within the heading of Chapter 90 (optical, photographic, cinematographic, measuring, checking, precision, medical and surgical instruments and apparatus; parts and accessories thereof)."
As for note 6(a) he concluded it was not:
"of any assistance. It is restrictive, not expansive, of the reach of heading 9032. What might otherwise be an automatic regulating or controlling instrument apparatus will be excluded if it is not "for" (ie designed to fulfil the function of) automatically controlling the flow level, pressure or other variables of liquids or gasses, or for automatically controlling temperature. Being identified as a pump, the goods in question are not any sort of automatically regulating or controlling instrument or apparatus."
Accordingly, the trial judge dismissed the application.
Grounds of Appeal
The grounds of appeal seek to challenge the authority of Liebert, the manner in which the trial judge and the Tribunal classified the identified goods, the use made of the notes to the Schedule or to distinguish Liebert. It is appropriate to deal with the grounds in those broad categories.
Whether Liebert Wrong
In his reasons the trial judge acknowledged that it was not appropriate for him to canvas the correctness of the Full Court's decision in Liebert but that it was open to another Full Court to do so. He referred to the circumstances in which a Full Court should depart from a previous decision of another Full Court as referred to in Byrne v Australian Airlines Ltd (1994) 47 FCR 300 at 304-5. There it was stated by Black CJ that the Court, while not bound by its previous decisions, will normally follow an earlier decision unless convinced it is wrong: Chamberlain v The Queen (1983) 72 FLR 1 at 8-9 and Perrett v Commissioner for Superannuation (1991) 29 FCR 581 at 592. The occasions upon which the Court will depart from one of its previous decisions will be rare: Nguyen v Nguyen (1990) 169 CLR 245 at 268-9, where it was said by Dawson, Toohey and McHugh JJ:
"Where a court of appeal holds itself free to depart from an earlier decision it should do so cautiously and only when compelled to the conclusion that the earlier decision is wrong. The occasions upon which the departure from previous authority is warranted are infrequent and exceptional and pose no real threat to the doctrine of precedent and the predicability of the law: see Queensland v Commonwealth (1977) 139 CLR 585 at 620 et seq, per Aickin J."
It is said that the "other devices requirement" in Liebert was erroneous because, in identifying the alleged common features in the class of items in subheading 9032.89, the Full Court incorrectly identified the class with which it was dealing. The submission is that the class was in fact made up of the items included under the broad "other" category in subheading 9032.8 (ie 9032.81.00 and 9032.89), not those made up of the items included under the more narrow "other" category in subheading 9032.89. It is submitted that the items in 9032.8, viewed as a class, do not support the Full Court's analysis. Alternatively it is said that "one is ultimately driven out of such a class analysis to the provisions of the heading as a whole", but I take that submission as a matter going to the mode of classification to which I will return.
In my opinion the Full Court was not in error. What it did was to find that all the items in subheading 9032.89 formed a class possessing a common feature "while the items grouped in other subheadings do not". The Court was concerned with the interpretation of that subheading and such interpretation is open on a reading of the subheading and the four categories of items within it. That is not an interpretation which is in error because of the absence of any express reference to 9032.8 or 9032.81.00. The contents of 9032.89 are delineated by being described as "other". They are therefore demarked by the use of that word from 9032.8 and 9032.81.00. The words in the subheadings of 9032.89 speak for themselves and are not qualified or moderated even if reference is made to those other headings. In my opinion the Full Court was not in error in the manner in which it construed subheading 9032.89.
It is also contended the other devices requirement is inconsistent with 9032.10 (thermostats) and 9032.20.00 (manostats). I have already said that such inconsistency would not necessarily limit an interpretation of the subheadings in 9032.89 which are demarked. However, thermostat is defined as "an apparatus which maintains a system at a constant temperature which may be preselected" (Chambers, Science and Technology Dictionary, 1984, at 899) and as "an instrument which measures changes in temperature and directly or indirectly controls sources of heating and cooling to maintain a desired temperature" (McGraw-Hill Dictionary of Scientific and Technical Terms, 4th ed, 1920). A manostat is defined as a "device for keeping the pressure in an enclosure at a constant level" (Chambers, supra 552) and as a "fluid‑filled, upside-down manometer-type device used to control pressures within an enclosure, as for laboratory analytical distillations systems" (McGraw-Hill at 1145). A manometer is defined as "a double-leg liquid-column gauge" used to measure the difference between two fluid pressures (McGraw‑Hill at 1145). These definitions show that both a thermostat and a manostat may be devices performing a regulatory or controlling function within systems or other devices.
I therefore conclude that no case has been made out for departing from the decision of the Full Court in Liebert.
Whether Liebert Distinguishable
As has been seen, the trial judge found the reasoning in Liebert to be indistinguishable. The grounds of appeal do not expressly contend that his Honour was in error in failing to distinguishing the reasoning in Liebert. However, as the case was put for the applicant it was contended Liebert is distinguishable, firstly, because it was found there that the UPS did not perform a regulatory function; secondly, considerations relating to note 6(b), not applicable here, were there in issue; and thirdly, the instant case requires a consideration of note 1(f) whereas Liebert did not. Furthermore, it is contended that in relation to the "other devices requirement" the comments of the Full Court in Liebert were obiter dicta and not binding on either the Tribunal or the trial judge.
In my opinion, it is correct that the trial judge was not bound as a matter of law to follow Liebert. The latter was a case which concerned different subject goods and raised other considerations to the present subject goods.
However, I do not consider that the reasons of the Full Court in relation to the other devices requirement were obiter dicta and not binding on the trial judge so far as they related to the construction of sub‑heading 9032.89. Furthermore, examination of the reasons of the Full Court does not support the contention put for the applicant that the ratio decidendi of the Full Court decision was the Tribunal committed no error of law in deciding that the UPS did not satisfy note 6(b) and therefore did not come within heading 9032. It follows that while the trial judge may have been able to distinguish Liebert on the facts, it was not open to him to distinguish the reasoning of the Full Court in relation to the construction to be placed on sub‑heading 9032.89.
Mode of Classification
The applicant contends the proper approach to the classification of the goods should have been as follows:
"(a) It should have decided whether the goods fell within the ordinary meaning of the words used in heading 9032. It properly considered that they did.
(b)It should then have classified the goods according to the terms of the relevant one‑dash subheading of the heading 9032 (ie subheading 9032.1, 9032.20.00 or 9032.8). The correct subheading was clearly 9032.8.
(c)It should then have classified the goods according to the terms of the relevant two‑dash subheading of subheading 9032.8 (ie 9032.81.00 or 9032.89). The correct subheading was clearly 9032.89.
(d)It should then have classified the goods according to the terms of the relevant three‑dash subheading of subheading 9032.89 (98032.89.10, 9032.89.20, 9i032.89.30 or 9032.89.90). The correct subheading was clearly 9032.89.90."
It is said for the applicant this approach is consistent with rule 1 of Schedule 2 of the Act, rule 6; which received authority in Rheem Australia Ltd v Collector of Customs (1988) 78 ALR 285 at 297; Collector of Customs v Savage River Mines (1988) 79 ALR 258 at 265; Re Gissing v Collector of Customs (1977) 1 ALD 144 at 146, 147 and 149; ss9, 21 and 22 of the Act and s6 of the Act.
It is accepted for the applicant that the trial judge correctly accepted these submissions.
In the reasons of the Full Court in Liebert previously quoted, it was accepted that a thermostat could be a reference to a stand alone apparatus. That is supported by reference to the Shorter Oxford English Dictionary, 4th ed, 1993 at 3277 where the secondary meaning of the word thermostat is given as "a device which gives notice of undue increase of temperature; an automatic fire alarm". It does not appear the Full Court examined the scientific definitions of the term nor received evidence on the point. If it is the case that thermostat can be correctly used as a reference to a stand alone apparatus, I do not consider, for the reasons previously given, that has any effect upon the interpretation given by the Full Court in Liebert to subheading 9032.89.
It is then said in the case for the applicant that the trial judge was in error in concluding heading 9032 did not apply to the goods. Further, it is contended he was in error because it is not clear whether, before deciding the goods could not be classified under the heading, he failed to construe it as he was required to do: Collector of Customs v Chemark Services Pty Ltd (1993) 114 ALR 531 at 534 and Collector of Customs v Savage River Mines at 264-5.
Turning to the construction of the words in heading 9032, the word "automatic" means "self-acting, working of itself" (Shorter Oxford, p145; MacQuarie Dictionary, 2nd ed, 1991, p113).
The Shorter Oxford at 2530 defines "regulate" to mean inter alia: "alter or control with relevance to some standard or purpose," (also see MacQuarie Dictionary, p1483).
"Instrument" is defined as "a thing used in or for performing an action" (Shorter Oxford, p1383). It is "a mechanical device or contrivance" (MacQuarie Dictionary, p921).
"Apparatus" is defined as "machinery" (Oxford Dictionary, p96) and as "machinery, appliances... any complex appliance for a particular purpose" (MacQuarie Dictionary, p78).
Returning to the uncontested identification of the goods it was necessary for the trial judge to fit the goods identified as "an electrically powered centrifugal pump with an automatic floating level switch attached" into the words "automatic regulating or controlling instruments and apparatus" as so defined. As an item of machinery the pump was capable of falling within the description of "instruments and apparatus".
It was also capable of falling within the words "regulating or controlling" in that its purpose or function was to regulate or control the level of fluids.
However, in my opinion: (1) the goods could not fall within the description "automatic" because the agreed identification of the goods confined the conception of automatism to the attachment; (2) it was not open to the trial judge to identify the pump itself as automatic without making a fresh finding of fact as to the identification of the goods, a step he was not entitled to take; and (3) it is not open to this Court to take that step and to re-identify the goods.
The grounds of appeal complain the trial judge erred in law in treating the task of identification as equivalent to and not separate from the task of classification. In my opinion, the nature of the goods and the identification given to them has that seeming effect in this particular case. The identification is fundamental to the ability of the goods to fall within heading 9032 in this case. In my opinion, that is precisely what the trial judge meant in his reasons and he was correct in so concluding given the identification which was before him.
It follows, even if the trial judge was in error in not having regard to the dictionary meaning of the words in heading 9032, he did not fall into error in concluding the subject goods could not fall within that heading.
It is contended, however, that the trial judge erred in himself making the classification and in failing to remit the matter to the Tribunal for consideration. I am unable to agree. He was called upon to examine the reasons of the Tribunal for error. The identification of the goods made by the Tribunal was not in dispute before the trial judge. He was as capable as the Tribunal of bringing that identification to the door of heading 9032 and of considering whether it could enter that door.
It was also contended for the applicant that the trial judge erred in failing to take an informed understanding of the goods and the nature of the heading into account. By this it was meant that the task of classification must be an "informed" one in which the terms of the tariff are to be taken into account: Re Tridon Pty Ltd and Collector of Customs (1982) 4 ALD 615 at 620 and 621 and Collector of Customs v Savage River Mines at 265. Reference was made to the need for regard to be had to evidence relating to the form or purpose of goods where a heading classification makes specific reference to a form or purpose: Vernon-Carus Australia Pty Ltd & Thomas Creevey & Associates v Collector of Customs (1995) 21 AAR 450 at 456 per Northrop J. If it is the case that heading 9032 makes specific reference to a form or purpose (that of regulating or controlling), the trial judge was not in a position where he could have received evidence or have remitted the matter to the Tribunal to receive evidence because the identification was both found and agreed between the parties. The identification before the trial judge was binding on him and not open to consideration in this manner.
It is further contended the trial judge's description of the goods did not accord fully with the evidence. This is addressed in respect of his reference to the goods in his conclusions. It is said the description there appearing overlooks the fact the pump was designed to operate automatically in a liquid environment by means of the preset switch and that the switch was structurally attached to the pump which could not be converted to any other use without it. On the analysis which I have previously given, neither of these factors would have led the trial judge to a different conclusion because he was not at liberty to embark upon fresh fact finding and identify that which had been found to be a pump to be an automatic regulating or controlling instrument or apparatus.
Use made of Notes
It is said that the trial judge erred in law in concluding notes 1(f) and 6(a) of Chapter 90 did not assist the applicant and he misconstrued note 6(a) by construing the word "for" so that it did not apply to the goods.
As to note 1(f), it is arguable the trial judge was in error in ascribing to the note an intention that pumps of whatever kind should not come within Chapter 90 even if they happen to incorporate a measuring device. The words of the note are capable of wider construction. However, even if that is the case, such an understanding does not assist the applicant because the primary question is whether the goods can fall within heading 9032, even if that heading admits of pumps, other than those in 8413, doing so.
As to note 6(a), it is operative only once the subject goods fall within heading 9032. The note is not expansive of the words of heading 9032. Any issue of construction of the note or of par(b) of the same note is otiose.
Conclusion
For these reasons I consider that the appeal should be dismissed.
I certify that this and the preceding 19 pages are a true copy of the Reasons for Judgment of his Honour Justice R D Nicholson.
Associate:
Date:
APPEARANCES
Counsel for the Applicant: Mr K Bell
Solicitors for the Applicant: Slonims
Counsel for the Respondent: Mr J Lenczner
Solicitors for the Respondent: Australian Government
Solicitor
Date of Hearing: 3 October 1996
Date of Judgment: 8 April 1997
1
33
0