H.A.G. Import Corporation (Australia) Pty Ltd and Chief Executive Officer of Customs
[2013] AATA 599
[2013] AATA 599
Division GENERAL ADMINISTRATIVE DIVISION File Number(s)
2012/3969
Re
H.A.G. Import Corporation (Australia) Pty Ltd
APPLICANT
And
Chief Executive Officer of Customs
RESPONDENT
DECISION
Tribunal Mr John Handley, Senior Member
Date 23 August 2013 Place Melbourne The Tribunal affirms the decision under review made on 15 August 2012 insofar as the Tariff Concession Orders existing at 14 June 2012 did not have a full description of the goods within the meaning of s 269F(3)(a) of the Customs Act 1901.
(sgd) John Handley
Senior Member
CUSTOMS – revocation of Tariff Classification Orders (TCOs) by the initiation of a delegate of the respondent ‑ section 269SD requires the delegate to have a belief on a particular day that if a TCO in force on that day was not in force and an application for it was lodged it would not have been made – process of revocation conditional on a TCO being in force and a belief having been held ‑ revocation of TCOs retrospective to the date of the belief – Tribunal entitled to examine the belief – belief confined to absence of full description of goods – delegate did not have a belief of substitutable goods being produced in Australia ‑ decision in part affirmed.
LEGISLATION
Customs Act 1901 ss 269C, 269B, 269D, 269F, 269FA, 269GA, 269H, 269K, 269P, 269SC, 269SD, 269SJ
CASES
Drake v Minister for Immigration and Ethnic Affairs (1979) 2 ALD 60
Shi v Migration Agents Registration Authority (2008) 235 CLR 286
Nguyen and Other v Minister for Immigration, Local Government and Ethnic Affairs and Another (No 2) (1996) 68 FCR 463
Collector of Customs (New South Wales) v Brian Lawlor Automotive Pty Ltd (1980) 2 ALD 1
SMS Autoparts and Chief Executive of Customs (1996) 41 ALD 615
REASONS FOR DECISION
Mr John Handley, Senior Member
23 August 2013
The applicant is an Australian company that owns the brand Maxwell & Williams and imports goods under that name. Those goods are supplied to and sold through major department stores and retail outlets. The applicant applied to review a decision made by the respondent concerning the revocation of five Tariff Classification Orders (TCOs) with effect from 14 June 2012. The goods imported by the applicant have been the subject of the TCOs the respondent has decided to revoke.
In a notice in the Gazette (s 269SD(1AA)(b) of the Customs Act 1901 (the Act)) on 20 June 2012, a delegate of the respondent announced an intention to revoke a series of TCOs and invited interested persons to provide written submissions by 18 July 2012, in response to the proposed revocation.
A total of 12 TCOs were the subject of the revocation decision. Only 5 TCOs remained in issue in this review, namely:
TCO NUMBER TARIFF TCO WORDING
CLASSIFICATION
TCO 0608184 6911.10.00 Tableware, porcelain
TCO 0611599 6911.10.00 Tableware, china
TCO 0707017 6911.10.00 Kitchenware, porcelain or china
TCO 0613480 6912.00.00 Tableware, ceramic
TCO 0703436 6912.00.00 Kitchenware or toilet articles, ceramicMr Michael Perry, the respondent’s delegate and the decision-maker in this review, recorded that he formed a belief on 14 June 2012 in respect of certain TCOs that if they were not in force on that day and an application for those TCOs was made on that day, his CEO would not have made them (T2, p.22).
In his statement of reasons for the decision under review, Mr Perry recorded that on 14 June 2012 he:
…considered that the wording of each TCO [above] did not contain a full description of the goods. The CEO would not have made the TCOs on that day as the wording would be contrary to s.269F(3)(a). The goods the subject of the TCOs did not contain a full description of the goods and could not be accurately identified from the wording. Additionally, I am aware of local manufacturers of the goods (T8, p.54).
The respondent's decision to revoke the above TCOs was made pursuant to s 269SD of the Act. This section empowers the respondent to revoke TCOs at its initiative. The relevant parts of s 269SD of the Act are reproduced as follows:
(1AA) If:
(a) a TCO is in force on a particular day; and
(b) the CEO believes that if:
(i) the TCO were not in force on that day; and
(ii)that day were the day on which the application for the TCO was lodged;
the CEO would not have made the TCO;
the CEO may, not later than 14 days after that day, publish a notice in the Gazette:
(c)declaring his or her intention, subject to subsection (lAB), to make an order revoking the TCO with effect from that particular day (the intended revocation day); and
(d)inviting any person who might be affected by the revocation of that TCO to give a written submission to the CEO within 28 days of the notice concerning the proposed revocation.
(1AB) Within 60 days after the date of publication of the notice referred to in subsection (1AA), the CEO must, after consideration of the matters raised in any submissions made in response to the invitation and of any other relevant matters:
(a)decide whether or not he or she is satisfied of the matters referred to in paragraph (1AA)(b); and
(b)if the CEO is so satisfied—make an order revoking the TCO with effect from the intended revocation day.
The applicant provided written submissions to the respondent on 17 and 18 July 2012 objecting to the proposed revocation. On 15 August 2012, Mr Perry notified the applicant's lawyers that he had decided to revoke the TCOs with effect from 14 June 2012. In that notification, Mr Perry advised the applicant's lawyers that the applicant could apply for new TCOs worded in terms that contain a full description of the goods to which the applications relates. He also indicated that there were numerous local manufacturers of tableware/kitchenware/cookware/bathroom and toilet articles in Australia. Mr Perry recorded the names of those manufacturers (T9, p.68).
On 22 August 2012 the respondent published a notice in the Gazette revoking the TCOs with effect from 14 June 2012. The reasons for revocation recorded against each of the revoked TCOs are identical, namely, due to the TCO not containing a full description of the TCO goods in contravention of section 269F(3)(a) and/or there are Australian manufacturers of substitutable goods (T10, p.69-70).
I am not aware of any previous decision of the Federal Court or the Tribunal concerning s 269SD of the Act. Neither Counsel who appeared for each party in this review was aware of it having previously been considered.
THE LEGISLATION
If an application is made for a TCO there must be a full description of the goods to which the application relates (s 269F(3)(a)). A TCO cannot be made in respect of goods described in terms other than generic terms (generic terms is not defined) or described in terms of their intended end use or by regulations declared to be goods to which a TCO should not extend (s 269SJ(1)).
A TCO applicant must satisfy the respondent, that there are reasonable grounds for asserting the application meets the core criteria (s 269FA).
The application is deemed to have satisfied the core criteria if on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business (s 269C).
Substitutable goods are goods that are produced in Australia that are put to a use or capable of being put to a use corresponding with the use of the goods the subject of the TCO application (s 269B(1)).
Goods are produced in Australia if not less than a ¼ of the manufacturing costs represent the value of Australian labour, Australian materials and overhead expenses incurred in Australia (s 269D(1)).
Goods are deemed to be produced in Australia in the ordinary course of business if they were produced in Australia within the 2 years before the TCO application was lodged or had been produced and held in stock in Australia or were produced on an intermittent basis within 5 years prior to the application being lodged and an Australian producer is prepared to accept an order to supply the goods (s 269E(1)).
EVIDENCE
Terence Fitzell
Mr Fitzell, who is the general manager of the applicant, confirmed that all of the products under the Maxwell & Williams brand are imported. He said he was not aware of any Australian manufacturer who can supply equivalent goods at the same price, volume and quality.
He said the Maxwell & Williams brand consists of tabletop or tableware products that he described as plates, mugs, saucers, serving dishes, cutlery and salt and pepper grinders. He said those products are regarded as tableware because they are used to present food and eat from.
He agreed that the applicant also imports casserole dishes which he described as oven-to-tableware. He said items of that type are used for baking under a moderate heat and for presentation on a table.
Mr Fitzell also said that the term kitchenware includes utensils used in food preparation and the storage of food. More often than not, he said, cookware was referable to metal utensils used in the cooking process which are more durable than ceramic and are able to withstand heat.
Leslie Mclean
Mr McLean is the general manager of Bessemer Pty Ltd, an Australian manufacturer of cookware. He said at 14 June 2012 his company was prepared to accept orders for the supply of cookware which he described as frypans, saucepans, oven pans, casserole dishes, grillers, skillets, woks, baking dishes, dutch ovens and lids.
He said the cookware manufactured by Bessemer is cast aluminium, coated externally with enamel and internally with a non-stick coating. He regarded cookware as a subset of kitchenware.
Mr McLean agreed that Bessemer had never objected to any TCO concerned with products manufactured with or described as porcelain, china or ceramic.
Santo Alessi
Mr Alessi is the managing director of Unique Pottery Australia Pty Ltd (Unique). In an affidavit lodged prior to the commencement of the proceedings, he recorded that Unique makes a range of porcelain, ceramic, bone china, earthenware and stoneware products at its factory in Melbourne including plates, saucers, decanters, mugs, sugar bowls and toiletry articles. Whilst production levels have now been reduced to about 50 products there is a capacity to return to previous levels.
Mr Alessi said the Unique products had been used on the television program Master Chef and had been supplied to restaurants around Australia. He said the materials used in the manufacturing process are sourced and obtained within Australia except for a small percentage of an ingredient of the clay used to produce the goods.
Although he disputed that the goods produced by Unique are works of art, he said each item was unique having regard to their respective shapes, sizes, colour and decoration.
Rodney Thompson
Mr Thomson is the managing director of Bendigo Pottery which he said had been in existence since 1858 and was Australia's oldest working pottery.
In an affidavit lodged prior to the commencement of the hearing, Mr Thompson recorded that Bendigo Pottery manufactures a wide range of tableware, kitchenware and toiletry goods in Australia. With the exception of feldspar, which constitutes approximately 10% of materials used in the manufacturing process, all other materials are sourced within Australia and the costs of manufacturing incorporating labour, materials and factory overheads is well in excess of 25%.
Mr Thompson said that some of the Bendigo products have traditional and contemporary designs and it is prepared to accept orders for the supply of plates, saucers, cups, and bowls that he described as tableware; pudding basins, pie and pasta dishes and mixing bowls that he described as kitchenware; and toiletry articles such as soap dishes and toothbrush holders.
He said that some of the business of Bendigo Pottery was catering for tourists who could observe ceramicists working and purchase manufactured items. He agreed that Bendigo Pottery differs from mass produced products by regard to its manufacturing processes and its supply, either by website or to smaller retailers, including craft shops.
Michael Perry
Mr Perry is currently an acting manager in the tariff concession section of the office of Australian Customs and Border Protection. He made the decision under review in these proceedings (T8, p.53-67) and signed it as a delegate of the respondent.
Mr Perry said that he collated all of the documents that he regarded as relevant and which he had when he made the decision to revoke the TCOs. He said he provided those documents to the legal department. He was aware that the T‑documents were ultimately delivered to the applicant’s solicitors in 3 stages.
When he inspected the totality of the T‑documents before giving his evidence, he was satisfied that every document that was in his possession when he made the decision under review had been disclosed, except for a report in relation to a revocation decision made in 2010 following an application by Bessemer concerning eight TCOs that were described as cookware (Transcript, Day 2, p.73). (Mr Perry referred to that application and the revocation of TCOs within his decision at T8, p.59).
Mr Perry said that about one week before 14 June 2012, he was given a number of files by a colleague for the purposes of examining the 12 TCOs identified in the first 2 pages of his decision. (He was aware that only 5 of those TCOs were in issue in this review). He said that he intended to undertake an examination of those TCOs for the purposes of s.269SD of the Act (Transcript, p.74).
Within those files were documents generated through a Google search undertaken by another officer. The search was made of cookware made in Australia (T11, p.77). Mr Perry agreed that his colleague made that enquiry on 30 May 2012 as evidenced by the date recorded on page 77. Between pages 78 and 91of the T‑documents are copies of pages downloaded from a number of the companies recorded on the search page. Those pages are dated either 30 or 31 May 2012. Accordingly, Mr Perry had those documents available to him before 14 June 2012.
Prior to 14 June 2012, Mr Perry also had a copy of a report dated 2 April 2012 prepared by his colleague, Mr Buntine, following a site visit of Starmaid International Pty Ltd (T11, p.71-76) and the Bessemer report of 2010.
Mr Perry said that the documents downloaded from Google, together with Starmaid and Bessemer reports were the entirety of the material that was before him and which influenced him to form a belief, in respect of the TCOs, that if they did not then exist and an application was made for those TCOs, they would not have been made (Transcript, p.75-76).
In his decision, Mr Perry concluded that the TCOs should be revoked because the wording contained in those TCOs is not a full description of the goods and is contrary to s 269F(3)(a) of the Act. He also decided that there are local manufacturers of the goods the subject of the TCOs (T8, p.66).
In evidence, Mr Perry agreed that he looked at the description and decided:
…it is clear that these TCOs as originally presented were not open-ended in respect of the terms “kitchenware” “tableware” “cookware” and the like. Each particular TCO application, regardless of the wording was for a subset of goods covered by the terms “kitchenware” etc (T8, p.64).
He said the wording of the TCOs did not qualify or describe the goods that were intended to be covered. He suggested, as an example, that an Australian producer of ceramic products (Bendigo Pottery) described one of its products as a porcelain casserole. He said no such description could be gleaned from the wording of the TCOs. He agreed that the material from which the goods are made is recorded (porcelain, china, ceramic) but he regarded that as a small factor in the identification process (Transcript, p.76).
Mr Perry said that he had previously made TCOs which he now considered were incorrect. One of the TCOs in issue in this application ‑ 0611599 – Tableware, China – was made by him. Another TCO which was within the 12 TCOs initially in issue but not one of the 5 identified for this review – 0611600 ‑ Tableware, Earthenware, vitrified was also made by him. Both were made in 2006.
Mr Perry was also involved in another TCO – 0720053 ‑ to which he applied the description Cookers ‑ Ceramic. That description was imposed after he rejected the description given by the importer which referred to the shape, colour, construction, cooking methods and intended use. That decision was made in 2007. He said that he had made a mistake but his description was imposed at the behest of a different direction of a different manager who was asking for wording to be super generic. He also said that the approval process in 2006/2007 was wrong because the approving officers were not complying with the Customs Act. They were approving TCO wordings that were not full descriptions (Transcript, p.78-79). He agreed that products under these TCOs have been imported since 2006 and 2007.
Mr Perry agreed that the TCOs previously made in 2006 and 2007 would have been the subject of a notice in the Gazette. However, he said I know a large proportion of the manufacturers don't read our tariff concessions Gazette (Transcript, p.80). He denied a suggestion put to him that there was no confusion by local manufacturers of the type of goods that fit within these TCOs. He also denied that local manufacturers had not complained or communicated to him about the description of the TCOs. He said Bessemer has successfully applied to revoke some TCOs but acknowledged, when questioned, that Bessemer had not lodged any objection to any of the 5 TCOs remaining in issue (Transcript, p.79). (The application by Bessemer concerned TCOs relating to steel cookware).
When considering the description of the TCOs, Mr Perry also referred to the complaint made by Starmaid International Pty Ltd in its application for revocation – a manufacturer of plastic tableware – but that complaint concerned TCOs variously having the description of Plastic tableware (that is tableware with a plastic composition). None of those TCOs were within the 12 TCOs that were initially in issue in these proceedings (Transcript, p.81).
Mr Perry agreed that he had not received any complaints from any local manufacturer about the width of the TCOs, but there were objections received from local industry about tableware. He agreed that the objections concerned plastic tableware. He agreed that no complaints had been made since 2006 and 2007 when the 5 TCOs were made. However, he said, the TCOs then made were deficient in their description and the decisions that he made were …wrong in law. And the policy and the people that were approving the TCOs were wrong in law (Transcript, p.82).
When concluding his evidence, Mr Perry agreed that in the letter notifying the applicant’s solicitors of his decision to revoke the TCOs, dated 15 August 2012, he also identified numerous local manufacturers of tableware/kitchenware/cookware/bathroom and toilet articles (T9, p.68).
Mr Perry said that he had information on 14 June 2012 from Starmaid and Bessemer which would have caused the CEO not to have made TCOs on that day. He agreed that although Starmaid was a manufacturer of plastic tableware and kitchenware and was satisfied, by the visit to the Starmaid manufacturing facility (on 29 March 2012), that bowls, cups and other goods that can be broadly described as cookware, kitchenware and tableware are produced in Australia (T8, p.65) and are substitutable (Transcript, p.84).
Mr Perry was also satisfied as result of a site visit to Bessemer on 3 July 2012 (T11, p.96-100) that pans, trays, pots and other goods described as steel cookware are also manufactured in Australia (T8, p.65).
At the conclusion of examination by counsel, I asked Mr Perry to explain what prompted his office to enquire into the adequacy of the description of the TCOs. He said our director decided that there had not been compliance with the Act because it was believed that there were substitutable goods manufactured in Australia and recording in the TCOs the materials from which goods are made was contrary to the Act. He said that the trigger was a colleague having a Starmaid lunchbox who queried whether Customs was adequately covering tableware generally (Transcript, p.87). He said that query was made long before the Starmaid inspection.
I suggested to Mr Perry that on the basis of the evidence heard and the documents lodged, it would appear that at 14 June 2012, he had not received any complaint or revocation application from any local manufacturer of ceramic, porcelain or china goods that would fit within the description of tableware or kitchenware. He agreed that was so. He said if those complaints had been made, they would have been within the T‑documents. He said perhaps they hadn't read our gazette (Transcript, p.88).
Mr Perry also said that he knew of ceramic manufacturers because [he] worked with one (Transcript, p.88). He said that manufacturer had not made any complaint about the TCOs or lodged an application for revocation.
In concluding his evidence, Mr Perry said that his enquiries started well before he published his intention to revoke the TCOs and he was satisfied there was enough information as at 14 June [2012] to revoke TCOs (Transcript, p.88).
CONCLUSION AND REASONS FOR DECISION
Often, decisions made under statute, by persons either appointed or delegated, affecting citizens’ rights or entitlements, either existing or sought are subject to an internal review process, sometimes called, reconsideration.
Those primary decisions are usually reconsidered by another officer within the same agency or department. This offers a measure of independence that fresh eyes and thought provides. There may also have been a request made for additional information to assist the reconsideration process. The officer charged with responsibility for reconsideration will then make a decision and persons affected by that decision are usually entitled to seek review of it. Often they do not, for a variety of reasons, one being, I suggest, that having their application considered twice, they have a degree of confidence by the decision-making process that they were not able to satisfy applicable legislation.
Section 269SD of the Act is relatively unique because the process of cancelling a TCO is initiated by the respondent or his delegate first having a belief of matters within ss (1AA)(b). He then publishes his intention to revoke existing TCOs in the Gazette. He then calls for submissions and ultimately, he will make a decision on the basis of those submissions and any other relevant matters. If he is satisfied of the matters in ss (1AA)(b), he will make a decision revoking the TCOs. If that decision is made, it has retrospective effect. By making the decision to revoke, he validates the belief he previously held.
Contrast the process above with an application initiated by an importer under s 269F and an application to revoke by a local producer under s 269SC of the Act.
In an application by an importer, in addition to giving a full description of the goods to which the application relates, particulars must also be given of enquiries made by the importer establishing reasonable grounds for a belief that there were no producers in Australia of substitutable goods.
A process then commences pursuant to s 269H whereby the respondent considers the validity of the application. If the application is considered to be valid, the respondent will publish a notice in the Gazette providing details of the application and inviting submissions by interested parties (s 269K). If satisfied about the description and the absence of local producers, the respondent will publish his finding in the Gazette that the application meets the core criteria. He will also declare, by a written order that the goods will fall under a particular TCO classification and the day that decision will come into force (s 269P).
If a local producer requests revocation of an existing TCO on the basis that he is a local producer in Australia of substitutable goods, the respondent may request relevant information or material. If he becomes satisfied that the person is a local producer of substitutable goods, he may eventually decide to revoke the TCO with effect from the date of the request.
In both of the cases above, each process has a similarity with s 269SD to the extent that publication of the respective requests is required in the Gazette, submissions are invited and the CEO will consider them. However, unlike s 269SD, each process is initiated by a person and must be supported by documented information. That is, at the date the application is made, the applicant is obliged to support their respective applications by documents or other materials. No such provision exists within s 269SD where that process is initiated following a belief on the part of the CEO (in this case, his delegate) unencumbered by any need to demonstrate the basis for his belief or recording the enquiries he made. The belief permits the CEO to declare an intention to revoke.
Additionally, the date that a decision comes into force on an application either for a TCO by an importer or an application to revoke a TCO by a local manufacturer is the date their respective applications are made. A decision to revoke a TCO at the initiation of the CEO under s 269SD comes into effect from the date the CEO formed his belief.
If an importer or a local producer is dissatisfied with a decision made on their respective applications, they cannot challenge it without first having sought reconsideration under s 269SH. The CEO must decide whether to affirm or substitute his decision by regard to any additional documents or materials that may be supplied.
Section 273GA(1)(n) and (q) entitles a person to review a reconsidered decision made under s 269SH. Section 273GA(1)(s) permits review under s 269SD(1AB) only, that is the decision eventually made by the CEO and without reconsideration.
The duty and responsibility of the delegate acting under powers within s 269SD cannot be understated.
What is under review?
Both parties submitted, and I agree, that this review is confined to the delegate’s decision of 15 August 2012. For reasons which will emerge, it is worth recording that merits review is not a process of examining the decision initially made on the basis of the information that was before the primary decision-maker and deciding whether the decision then made was correct or preferable on that material. The Tribunal Member is placed in the position of the decision-maker to decide the correct or preferable decision on all of the material that was before the Tribunal, at the date of the review. The review process by the Tribunal may therefore, involve consideration of material not before the primary decision-maker (Drake v Minister for Immigration and Ethnic Affairs (1979) 2 ALD 60 at 68; Shi v Migration Agents Registration Authority (2008) 235 CLR 286 at [37-38], [101]).
The Belief
An issue that emerged with some vigour during the hearing was whether a belief, if held, can be examined in the process of review of the decision of 15 August 2012.
Mr Niall on behalf of the applicant submitted that the belief on the part of Mr Perry, the delegate, should be examined. He said the belief was the essential precondition for deciding to publish his intention to revoke the TCOs. It follows, he said, that there must be an examination of the state of mind of the delegate at 14 June 2012 and what information was then available to him which would constitute objective facts to support his belief.
Mr Millea on behalf of the respondent submitted that the belief, by its nature, is no more than of low-level certainty or standard (Transcript, Day 1, p.17) or low-level criteria (Transcript, Day 2, p. 121). In written submissions lodged at the conclusion of the hearing, Mr Millea recorded at [23]:
The Tribunal has no jurisdiction to review a decision under s. 269SD(1AA) to form a relevant belief and publish a notice in the Gazette. Therefore it is largely irrelevant as to exactly how the delegate formed the belief in s. 269SD(1AA) and what led him to publish the notice. Questions should not be asked seeking to impugn that decision nor should submissions be made that the decision was somehow unlawful.
The word belief is not defined by the Act. That probably is not surprising because it is a term of everyday use, commonly understood. The Macquarie Dictionary (5th edition) defines it variously as meaning an accepted opinion; conviction of the truth or reality of a thing based upon grounds insufficient to afford positive knowledge;… to have confidence; to be persuaded of the truth.
In the Federal Court decision in Nguyen and Other v Minister for Immigration, Local Government and Ethnic Affairs and Another (No 2) (1996) 68 FCR 463, Merkel J considered the discretion available to the Minister to issue conclusive certificates to persons seeking asylum under the Migration Act. His Honour held that the belief of the Minister is the sole condition of his authority. Although the adequacy of the reasons for the belief are subjective, there must be a rational ground for the belief entertained and in forming the requisite belief, he must act in good faith and have regard to considerations consistent with the Act. A failure to do so may expose the decision-maker to judicial review (at 513-4).
The process of revocation of a TCO under s 269SD (which in this case gave rise to review) can only commence:
a)if a TCO is in force on a particular day; and
b)the CEO had a belief that if it was not in force and an application for it was lodged he would not have made it.
Given the consequences that flow from the belief in s 269SD of the Act, I do not accept Mr Millea’s submission that the provision only requires a low level standard. The existence of a TCO is the foundation for the process envisaged by s 269SD. The belief is the sole condition of his authority to initiate that process by which a TCO may be revoked with retrospective effect. Therefore, it is incumbent on the delegate to have had a belief that is properly formed and reasonably based, upon reasons subjectively and rationally adequate. He must then act on the belief in good faith. The standard of belief described by Mr Millea should not, with respect, be adopted.
The word if, found in s 269SD(1AA)(b) in respect of the belief, imports a conditional basis for ultimately publishing the notice in the Gazette. Enquiring into and the basis for the belief is therefore apparent and relevant. Without a belief, the notice would be invalid and the process of calling for and subsequently acting on submissions would be infected.
The enquiry is also important because a decision ultimately made to revoke a TCO under this section has retrospective effect, to the date of the belief and without any right to seek reconsideration of an adverse decision (such as in applications made by an importer or a local producer under s 269F or s 269SC). Persons who might be adversely affected are entitled to be reassured by and have confidence in the decision making process envisaged by s 269SD and undertaken by agents of government.
I reaffirm that this review is confined to the decision made 15 August 2012. I will not review a decision made by the delegate to form a relevant belief (refer paragraph 67).
I am satisfied the delegate did have a belief at 14 June 2012. However, unlike review of a decision upon the material before the Tribunal subsequent to the date the decision was made, an enquiry into the delegate’s belief, which I am satisfied should occur, will be on the state of mind of the delegate at 14 June 2012 and identification of the matters he considered when the belief was formed. A number of entries in the T-documents will assist that process.
In a file note made by him on 14 June 2012 (T3, p.28-29) he, relevantly, recorded:
I have formed the view that, in accordance with s. 269SD(1AA) the CEO would not have made these TCOs today, being a particular day for the purpose of the legislation, as the wording does not provide a full description of the goods that are covered by these TCOs.
A notice was published in the Gazette on 20 June 2012, under the delegate's name, relevantly as follows (T4, p.30):
I, Michael Perry, a delegate of the Chief Executive Officer (CEO), declare my intention, subject to s.269SD(1AB), to make orders revoking the TCOs in the table below with effect from 14 June 2012. On 14 June 2012, I formed the belief in respect of the TCO, that if the TCO was not in force on that day, and an application for the TCO was made on that day, the CEO would not have made the TCO.
That is because these TCOs were made in contravention of s.269F(3)(a), to the extent that these TCOs must contain a full description of the goods to which the application relates. It was found that the good’s (sic) description was insufficient to accurately identify the TCO goods in terms of full descriptions. I am also aware of potential local manufacturers of substitutable goods.
In his hand written note of 25 June 2012, Mr Perry recorded that he notified the applicant’s solicitors – by telephone – that there were manufacturers of substitutable goods manufactured in Australia, including but not limited to Starmaid, Palm Products, Viscount Plastics, Genfac and Bessemer (T5, p.33).
In his decision made on 15 August 2012, he recorded that there had been a number of enquiries by potential local manufacturers of these goods (T8, p.59). Mr Perry did not explain who made the enquiries or when they were made. He did not explain where or how they were made. He recorded [t]hese have not necessarily been in the public domain (T8, p.59).
In that decision he also recorded (at p.54):
The goods the subject of the TCOs did not contain a full description of the goods and could not be accurately identified from the wording. Additionally, I am aware of local manufacturers of the goods.
And (at p.66):
Having assessed the information contained in the TCO files, submissions from affected parties, and Customs and Border Protections own research the 12 affected TCOs should be revoked as:
·the wording contained in those TCOs is not a full description of the goods and is contrary to s.269F(3)(a); and
·additionally or in the alternative, there are local manufacturers of the goods the subject of the TCOs.
The belief on 14 June 2012 as he recorded was confined to an absence of a full description of goods. On 20 June 2012 – 6 days later – the notice records that belief was formed by him on 14 June 2012.
The notice also records that he was aware of potential local manufacturers of substitutable goods. The handwritten note of a conversation on 25 June 2012 records him advising the applicant’s solicitor that there were substitutable goods manufactured in Australia (p.33). His decision of 15 August 2012 records that he was aware (p.54) and there are (p.66) local manufacturers of the goods subject to the TCOs.
Only the documents of 14 June and 20 June 2012 record his belief. The latter document also records him being aware of local manufacturers. It is not recorded as a belief he held at 14 June. The entries subsequently on 25 June and in the reviewable decision concerning substitutability are not recorded as a belief he had formed. I also note that the notice of 20 June and the note of 25 June differ. He moved from a position of awareness of potential manufacturers to actual knowledge.
I am satisfied and find as a fact that the delegate’s belief at 14 June was confined to the description of the goods only.
The T-documents contain a report of an inspection of products made by Starmaid dated 2 April 2012 (T11, p.71-76). Starmaid mainly producers plastic goods. There are also copies of pages downloaded from web-sites of a number of manufacturers of saucepans, frypans, knives and kitchen implements made from steel (T11, p.77-91) and dated 30 May 2012 and obtained in response to a google search of that date of cookware made in Australia.
The existence of a belief – and what it was – is critical in commencing the process which may ultimately result in a reviewable decision being made.
It would not appear that the contents of these documents influenced the belief of the delegate evident by his memorandum of 14 June. If it did, I would expect that the memorandum would have recorded an additional belief of local manufacturers of substitutable goods.
It would appear that the delegate has, subsequent to 14 June, investigated whether there were local manufacturers and subsequently became satisfied that there were. This occurred by:
·webpages extracted from Genfac Plastics, Viscount Plastics (both dated 15 August 2012) and Palm Products (undated) (T11, p.176 – 179 and 181);
·requesting a report from the Industry Capability Network Ltd of whether there were any Australian manufacturers who are able to supply cookware, tableware, bathware or toilet articles made from porcelain, china, aluminium, plastic, copper, steel, earthenware, ceramic, steel and brass (T11, p.113); and
·becoming aware, from that report (received on 7 July 2012) of the existence of Bendigo Pottery and Unique Ceramics. The delegate said he was not aware of Bendigo Pottery until this report was received (Transcript, Day 2, p.86). A memorandum of a discussion between the delegate and an employee of Unique Ceramics is found at T11 page 146 and dated 30 July 2012. A number of pages from its website are found at T11 page 146-151 and are also dated 30 July 2012.
To have acted on a belief – which I am satisfied he did not have – of the manufacture of substitutable goods in Australia, extends beyond a belief, to actual knowledge, of the provisions within the Act and satisfaction of those provisions by the local manufacturers. In order to satisfy the core criteria – s 269C – he would need to have known whether substitutable goods – s 269B – were goods produced in Australia – s 269D –in the ordinary course of business – s 269E.
I think it is more likely that any belief he had of local producers, irrespective of whether the core criteria was satisfied, was acquired after 14 June 2012.
I am satisfied and find as a fact that Mr Perry did not have a belief of local manufacturers of substitutable goods at 14 June 2012. If he did, he did not record it in his memorandum of that date, which I expect he would have recorded contemporaneously with it being formed. I am not satisfied at that date that he had knowledge, as a fact, of those manufacturers. There was nothing then available to him which could provide reassurance that the core criteria could be satisfied. In the absence of that knowledge, he was unable to have any belief of local manufacturing of substitutable goods.
If the decision under review was confined only to substitutability of local goods, it is likely that a finding would be made that it was a nullity but otherwise remain reviewable. That is, a party adversely affected could, upon review, agitate to have it set aside. It might also have given rights under the Administrative Decisions (Judicial Review) Act 1977 because the delegate had no authority to make such a decision in the absence of a condition (a belief) being fulfilled (Collector of Customs (New South Wales) v Brian Lawler Automotive Pty Ltd (1980) 2 ALD 1 at 21 and 23).
I do not think the decision, in whole, is unsound or a nullity. It remains valid because there was a belief, confined to the absence of description of the goods. The belief was an essential precondition to the notice in the Gazette, the calling for and receipt of submissions and the decision the delegate ultimately made which is reviewable under s 273GA(1)(s) of the Act.
I have decided that the belief that was held at 14 June 2012 was confined to the absence of a full description of the goods. For the reasons which follow, the decision of 15 August 2012 in so far as it concerned this issue will be affirmed.
Description of the goods
Section 269F of the Act records the process of making a TCO application. In addition to the application being in writing and in an approved form, the application must contain a full description of the goods to which the application relates (s 269F(3)(a)).
The relevant goods had been imported into Australia in significant quantities by the applicant since the TCOs had been made in 2006 and 2007. Apparently no one within the office of the respondent had any difficulty with the description of the goods since then nor, it would seem, had any officer of the respondent undertaking the wharf-side inspection task had any difficulty identifying them.
The goods are described by the materials from which they are made ‑ porcelain, china and ceramic ‑ and the words tableware, kitchenware and toilet articles. Mr Perry agreed that there had not been any objection by any Australian manufacturer to those TCOs.
In written submissions lodged at the conclusion of the hearing, Mr Millea contended on behalf of the respondent (at [73]) that:
…the wording of the Revoked TCOs is so wide as to become meaningless and do not assist Customs officers, other importers and potential objectors to know whether goods imported fall in the Revoked TCOs.
That submission has merit. Although s 269SJ(1)(aa) permits a generic description when making a TCO, in SMS Autoparts and Chief Executive of Customs (1996) 41 ALD 615 Deputy President McMahon said at [16] that a full description is required for purposes of certainty of administration … and the Act depends upon a clear statement of the unique identity of the goods referred to in the TCOs.
The TCOs remaining in issue in this review have wording that is no more than a description of the material used in the manufacture of the goods (porcelain, china, ceramic) and the words kitchenware, tableware and toilet articles are likely to fall foul of s 269SJ(1)(a) of the Act (being the places of their intended end use).
There is no full description of the goods to which the application [for a TCO] relates. There is no description at all of the goods. The materials from which they are made and the likely place of use does not describe what the goods are. A description of goods is a question of fact. The absence of a description, whether full or otherwise, prohibits identification. Objective identification of goods in the absence of a properly constructed TCO is not possible. It is true that wharf-side inspectors apparently had been able to determine appropriate classifications for the last 6 years. However, s 269SD is premised on the basis that the TCOs existing before 14 June 2012 no longer exist but if an application was made to lodge them on that day, they would not be made. The decision concerning full description signals an intention by the Respondent to be more vigilant in its compliance with the Act.
It is not possible from the TCOs existing at 14 June 2012 to identify with any confidence the goods intended to fit within them. A cup and saucer, bread and butter plates or salt and pepper shakers, for example, made from porcelain or china or ceramic, might readily be found to be tableware. But what of a large platter onto which food might be prepared and assembled in a kitchen and taken to a table for carving or serving; or a casserole dish in which food was cooked, in a kitchen, and then taken and placed on a table for serving. The absence of a full description of them, points to contravention of s 269F(3)(a) and s 269SJ of the Act. The correct decision would be to find that an application made for a TCO in the same language that previously existed would not be made.
In his decision, Mr Perry has given examples of substituted wording which specifically records the types of goods that are likely to fall within the existing headings (T8, p.63). The examples published by him are not dissimilar with the evidence of Mr Fitzell and Mr Thompson.
Greater clarity of the description of goods in TCOs also eliminates the risk of argument that goods intended for classification under a TCO could be found as a subset of goods under another TCO (for example, should a casserole dish, in which food is cooked be regarded as cookware, kitchenware or tableware?) Clarity of description might also lead to greater certainty of industry terms used to describe goods (for example, Mr Fitzell described his casserole dishes as oven-to-tableware).
I am satisfied that Mr Perry did have a belief at 14 June 2012 that TCOs existing prior to that date, if not existing but if an application for their equivalent had been lodged that they would not be made. I am also satisfied that he formed that belief because the TCO application, if lodged, was contrary to s 269F(3)(a) because of the absence of a full description of the goods to which that application related.
DECISION
The decision under review made on 15 August 2012 is affirmed only insofar as it decided that the TCOs existing at 14 June 2012 did not have a full description of the goods within the meaning of s 269F(3)(a) of the Act.
I certify that the preceding 106 (one hundred and six) paragraphs are a true copy of the reasons for the decision herein of
Mr John Handley, Senior Member
...........................[sgd]..............................
Associate
Dated 23 August 2013
Date(s) of hearing 29-30 May 2013 Counsel for the Applicant Mr R. Niall SC Advocate for the Applicant Mr A. Hudson Solicitors for the Applicant Hunt & Hunt Counsel for the Respondent Mr J. Millea Solicitors for the Respondent Legal Services Branch, Customs House
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