JM Gillies Agencies Pty Ltd and Chief Executive Officer of Customs
[2014] AATA 868
•21 November 2014
[2014] AATA 868
Division GENERAL ADMINISTRATIVE DIVISION File Number
2014/0303
Re
JM Gillies Agencies Pty Ltd
APPLICANT
And
Chief Executive Officer of Customs
RESPONDENT
DECISION
Tribunal Egon Fice, Senior Member
Date 21 November 2014 Place Melbourne The synthetic monofilament the subject of this proceeding does not fall within the description of TCO 0713590. The Tribunal affirms the decision made by the National Trade Advice Centre on behalf of the Australian Customs and Border Protection Service on 14 November 2013.
.............[sgd]...........................................................
Egon Fice, Senior Member
CUSTOMS – synthetic monofilament fishing lines – classification of goods – chapter 54 and chapter 95 – expert evidence by manufacturers of similar goods – application of the general rules of interpretation – use of chapter and section notes – reference to extrinsic materials – use of Explanatory Notes to the Harmonized Commodity Description and Coding System – statutory construction – tariff concession orders – interpretation of tariff concession orders – the stated use set out in an application for a TCO – tariff classification to which a TCO is keyed – the meaning of nylon yarn - decision affirmed.
PRACTICE & PROCEDURE – withdrawal of concessions previously made – model litigant rules – whether estoppel applies to proceedings in the Tribunal
LEGISLATION
Acts Interpretation Act 1901 s 15AB
Customs Act 1901 (Cth) ss 167, 269F, 269SJ, 273GA,
Customs Tariff Act 1995 (Cth) s 7The Legal Services Directions 2005
CASES
Bramwell v Repatriation Commission (1998) 51 ALD 56
Chinese Food and Wine Supplies Pty Ltd v Collector of Customs (Vic) (1987) 72 ALR 591
Collector of Customs v Agfa-Gevaert Ltd (1996) 186 CLR 389
Drake v Minister for Immigration and Ethnic Affairs (1979) 2 ALD 60
Gwenda Farley-Smith and Repatriation Commission [2010] AATA 637
Minister for Immigration and Multicultural Affairs v Wang (2003) 215 CLR 518
Re Tridon Pty Ltd and Collector of Customs (1982) 4 ALD 615
Re Roncevich and Repatriation Commission (2006) 91 ALD 662
Toyota Tsusho Australia Pty Ltd and Nippondenso Australia Pty Ltd v Collector of Customs [1992] FCA 211
Vernon-Carus Australia Pty Ltd and Another v Collector of Customs (1995) 21 AAR 450
Voxson Sales Pty Ltd v Collector of Customs (1993) 19 AAR 129SECONDARY MATERIALS
Australian Concise Oxford Dictionary
Statutory Interpretation in Australia, Seventh Edition, DC Pearce and RS Geddes
The Shorter Oxford English Dictionary
The Modern Textile & Apparel Dictionary, Fourth Revised Enlarged EditionCommonwealth of Australia Gazette 5 September 2007
REASONS FOR DECISION
Egon Fice, Senior Member
21 November 2014
Following an investigation of the importation of synthetic monofilament fishing lines by JM Gillies Agencies Pty Ltd (JM Gillies), the Australian Customs and Border Protection Service (ACBPS) produced a compliance assessment of the company’s import records for the period 12 August 2009 to 18 April 2013. ACBPS identified a number of reporting errors which resulted in a shortfall of import duty and GST. The responsible officer of ACBPS identified 21 Full Import Declarations as being incorrectly classified and seven of those as having incorrectly claimed a Tariff Concession Order (TCO).
In a letter dated 4 November 2013, ACBPS provided JM Gillies with an Indirect Tax Assessment indicating it had an outstanding amount of customs duty totalling $20,085.77 (the Compliance Decision). JM Gillies said it would make that payment under protest in accordance with s. 167 (1) of the Customs Act 1901 (Cth) (the Customs Act).
On 6 November 2013, Clemenger International Trade Consultancy (Clemenger), acting on behalf of JM Gillies, sought a review of the Compliance Decision. Following an internal review, on 14 November 2013 a manager with the National Trade Advice Centre for ACBPS informed Clemenger that it had completed a review of the Compliance Decision and was satisfied that it was correct. The manager informed Clemenger that if it was dissatisfied with that decision it should make payment under protest and then proceed with an application to the AAT. On 20 January 2014 JM Gillies lodged with the Tribunal an application seeking review of the Compliance Decision in accordance with s. 273GA (2) of the Customs Act.
JM Gillies imports and distributes equipment and accessories for recreational fishing, including fishing line manufactured by the Maxima group of companies. The dispute with ACBPS involves the correct classification of goods imported by JM Gillies and entered for home consumption (set out in Import Declaration AAX4EY499) as well as the application of TCO 0713590.
JM Gillies contended that the correct classification of the goods in dispute fell under Heading 5404 of Schedule 3 to the Customs Tariff Act 1995 (Cth) (the Tariff Act). ACBPS contended that the correct heading was 9507. Accordingly, the issues I am required to determine are:
(a)the correct classification of the subject goods under the Tariff Act for which payment of duty under protest has been made; and
(b)if the goods in question are classified under Heading 5404, whether TCO 0713590 applies to those goods (it cannot apply if the goods are correctly classified to Heading 9507).
IDENTIFICATION OF THE GOODS
The first step in this process is to identify the goods in question. Authoritative statements regarding the process of identification of goods were comprehensively set out in the Administrative Appeals Tribunal (AAT) decision Re Tridon Pty Ltd and Collector of Customs (1982) 4 ALD 615 at 620 – 622. That decision was cited with approval by the Full Court of the Federal Court of Australia in Chinese Food and Wine Supplies Pty Ltd v Collector of Customs (Vic) (1987) 72 ALR 591 at 599. The principles of identification of goods for Customs purposes may conveniently be summarised as follows (Tridon page 620 – 621):
(a)... the starting point… is to identify the goods in their condition as imported ...;
(b)Identification must be objective having regard to the characteristics which the goods, on informed inspection, present:...;
(c)The identification of goods cannot be controlled by the descriptions of goods adopted in the nomenclature of the Tariff: ...;
(d)Nevertheless, ... it is necessary to be aware of the structure of the nomenclature, the basis on which goods are classified and the characteristics of goods which may be relevant to the task of classification…;
(e)... knowledge of how those who trade in the goods described them will usually be relevant, but not necessarily conclusive:...;
(f)All the descriptive terms, both specific and generic, by which the goods may fairly be identified may be relevant to the classification of the goods within the Tariff:...;
(g)Descriptive terms may be of varying degrees of specificity .... Generic descriptions may be by reference to the materials or substances from which the goods are manufactured: ...;
(h)... characterisation of the goods by reference to their design features…, or by reference to their suitability for a particular use where those characteristics emerge from an informed inspection of the goods as imported: ... and
(i)Composite goods, ... which may have components which are separately identifiable, may nevertheless be identifiable in combination as a new entity if the identity of the separate units is subordinated to the identity of the combination:….
The Full Court of the Federal Court of Australia (Northrop, Jenkinson and Branson JJ) in Vernon-Carus Australia Pty Ltd and Another v Collector of Customs (1995) 21 AAR 450, at 454, explained that in determining the classification of particular goods, a two-stage process is involved. First, the goods must be identified. Secondly, the relevant heading must be construed properly and applied to the goods as identified. Northrop J said:
It must always be remembered that the classification of goods for tariff purposes is a practical ‘wharf-side’ task. Upon some occasions it will be necessary for the classifier to obtain information to enable identification of the goods but it is entirely inappropriate that he or she should enter into inquiries upon matters such as cost, commercial advantage and purchaser preference which the Tribunal undertook. It ought normally be possible to classify goods merely by looking at them and by considering their nature and the function which they were designed to serve...
After referring to the principles set out in the Tridon case, Northrop J said, at 455 – 456:
These principles may not be sufficient for the purposes of the present case. In performing the task of identifying goods for classification, it is essential to have regard to the relevant classification heading. Some heading classifications make specific reference to a form or to a purpose. Where this is so, a “practical wharf-side” task, may not be appropriate. Evidence may need to be received relating to the form or purpose of the goods. In cases of this kind, the heading will need to be construed properly in order to determine what evidence is relevant to identify the goods. This is such a case where purpose forms an essential part of the classification.
Accepting what Northrop J said in Tridon, I should first set out the relevant headings of the Tariff Act. There are only two, they being:
5404 SYNTHETIC MONOFILAMENT OF 67 DECITEX OR MORE AND OF WHICH NO CROSS-SECTION OR DIMENSIONS EXCEED 1 mm; STRIP AND THE LIKE (FOR EXAMPLE, ARTIFICIAL STRAW) OF SYNTHETIC TEXTILE MATERIALS OF AN APPARENT WIDTH NOT EXCEEDING 5 mm:
5404.1 -Monofilament:
5404.11.00 --Elastomeric
5404.12 .00 --Other, of polypropylene
5404.19 .00 -- Other
5404.90 .00 -Other
9507 FISHING RODS, FISH-HOOKS AND OTHER LINE FISHING TACKLE; FISH LANDING NETS, BUTTERFLY NETS AND SIMILAR NETS; DECOY “BIRDS” (OTHER THAN THOSE OF 9208 OR 9705.00.00) AND SIMILAR HUNTING OR SHOOTING REQUISITES:
9507.10.00 -Fishing rods
9507.20.00 -Fish-hooks, whether or not snelled
9507.30.00 -Fishing reels9507.90.00 -Other
A visual inspection of the articles in question (examples of which were in evidence) discloses what appears to be nylon fishing line of varying lengths and colours wound onto plastic spools. The spools are packaged in clear plastic with some having a cardboard container enclosing most of the spool. All of the items are clearly marked with the name Maxima and the statement premium monofilament fishing line or made by Maxima fishing lines printed on the packaging. The lines are of a number of different colours and the packaging is stamped with the length of line on each spool and its breaking strain. Some also have the diameter of the line imprinted on the packaging which ranges between 0.20 mm to 0.70 mm.
In this case, it seems to me that both the specific and generic descriptive terms, by which the goods may fairly be identified, are relevant to the classification of the goods. If the articles in question are described in generic terms by reference to the material from which they are manufactured, it would be fair to describe them as nylon monofilament. Nylon is, unquestionably, a synthetic substance. The word monofilament is plainly the combination of the word mono, meaning single or alone, and the word filament which means a slender thread like body or fibre (the Australian Concise Oxford Dictionary). The word nylon is defined as any of various synthetic polyamide fibres having a protein-like structure, with tough, lightweight, elastic properties, used in industry and for textiles etc.
If the articles in question are characterised by reference to their suitability for a particular use, based on an informed inspection, as imported, one would describe them as fishing lines. That description is reinforced by the descriptions on the packaging to which I have referred above. In addition, given the colour of some of the nylon line, the descriptions also state that the line is virtually invisible to fish. The packaging also refers to an advanced polymer formula producing exceptional strength to diameter ratio, being ideal for spinning reels and a range of special sport fishing applications. The descriptions on the packaging also refer to the line being highly abrasion resistant, extra limp and durable, with superior knot strength and just the right amount of stretch.
One particular article in evidence, referred to as Chameleon, describes the product as:
... the premium monofilament specially formulated to change color [sic]. By absorbing rather than reflecting light below the water’s surface, Chameleon becomes invisible, thus presenting your lure or bait most naturally. Its superior abrasion resistance provides optimum protection from nicks and cuts while offering excellent knot strength.
In my opinion, this is a case like that of Vernon-Carus where purpose forms an essential part of the classification. This is so whether the goods in question are classified to articles in Chapter 54 or Chapter 95.
As the Tribunal pointed out in Tridon, knowledge of how those who trade in goods of the kind in question describe them would usually be relevant, although not necessarily conclusive. I had in evidence two witness statements: one by Mr Bruce Alvey, who described himself as the Managing Director of Alvey Reels Australia Pty Ltd, which is a family business manufacturing fishing reels since 1920; and the second by Mr Stewart McPherson, who described himself as the Chief Executive Officer of Australian Monofilament Co Pty Ltd, a company also in the business of manufacturing fishing lines in Australia since 1898.
While both Mr Alvey and Mr McPherson acknowledged that they produced products in competition with Maxima, they also acknowledged their overriding duty to provide impartial assistance to the Tribunal and said that producing goods in competition with Maxima had not affected their evidence. Both witnesses have extensive experience in the manufacture of fishing lines and other products for the purpose of fishing, commonly referred to as fishing tackle. Mr Alvey described the goods in question in the following way:
In my opinion each of the fishing lines is a monofilament fishing line made up for retail sale.
Mr McPherson described the goods as: monofilament fishing lines. He also said:
There are two main kinds of fishing lines made predominantly from nylon: braided; and monofilament. Monofilament lines are a single filament of extruded nylon. A braided line consists of several filaments that are braided together. Braided fishing lines are generally stronger and have less stretch, than monofilament fishing lines. Monofilament lines are cheaper to produce and provide most of the sales volume.
Different monofilament fishing lines are designed with different diameters, colours, visibility (some are designed to make the line almost invisible to the fish), breaking strain and different tolerance for abrasion.
Some fishing lines have a coating or contain an additive for UV protection, otherwise the fishing line will break down under UV exposure. Coatings can also improve abrasion resistance and affect other properties. Fishing lines are dyed different colours, for example “green”, “pink” or “brown” or even a mixture of colours on the single monofilament fishing line, all designed for different fishing conditions.
Mr McPherson clarified what he meant when he used the phrase: made up into fishing lines. He said:
I consider that term refers to monofilament that has been made up into fishing lines for sale, usually by being wound onto a spool, labelled and packaged as fishing line. By that stage the product is readily identifiable as fishing line and will be sold as fishing line.
Mr McPherson explained that his company also produced nylon monofilament for other uses such as weed trimmer line, 3D printing filament and carpet overlocking. He said the difference was significant and that different nylon mixtures and different production settings were used. He also explained that:
after the initial extrusion and spooling onto a “bulk spool”, nylon monofilament fishing lines and nylon monofilament for other uses are virtually indistinguishable on a visual inspection.
He continued:
Without appropriate labelling, consumers would only be able to distinguish nylon monofilament fishing lines from other nylon monofilament products by actually using the two products and comparing them (for example a coating put on the fishing line makes it feels smoother and decreases friction enabling the line to cast further when fishing). That is impractical, and of course consumers identify nylon monofilament fishing line as “fishing line” by looking at the labelling on the spools and any exterior packaging.
Taking into account the above evidence, I find that the goods in question in this proceeding should be identified as monofilament nylon fishing line.
CLASSIFICATION
Classification of goods under the Tariff Act must be done under the Interpretation Rules which are the General Rules for the Interpretation of the Harmonized System provided for by the Convention, as set out in Schedule 2. The Convention is a reference to the Convention on the Harmonized Commodity Description and Coding System done in Brussels on 14 June 1983 (s. 3 and 6). Relevantly, s. 7 of the Tariff Act provides:
(1)The Interpretation Rules must be used for working out the tariff classification under which goods are classified.
(2)If the letters “NSA” are specified in relation to a description of goods in the second column of the subheading of a heading, the goods described do not include any goods prima facie classified under a preceding subheading of that heading whose second column begins with the same number of dashes as the first-mentioned subheading.
(3)A reference in the Interpretation Rules to Notes includes a reference to Additional Notes.
The relevant General Rules of interpretation set out in Schedule 2 are as follows:
Classification of goods in Schedule 3 shall be governed by the following principles:
1.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 relevant Section or Chapter Notes and, provided such headings or Notes do not otherwise require, according to the following provisions:
2.(a) Any reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as presented, the incomplete or unfinished article has the essential character of the complete or finished article. It shall also be taken to include a reference to that article complete or finished (or falling to be classified as complete or finished by virtue of this Rule), presented unassembled or disassembled.
(b)Any reference in a heading to a material or substance shall be taken to include a reference to mixtures or combinations of that material or substance with other materials or substances. Any reference to goods of a given material or substance shall be taken to include a reference to goods consisting wholly or partly of such material or substance. The classification of goods consisting of more than one material or substance shall be according to the principles of Rule 3.
3.When by application of Rule 2(b) or for any other reason, the goods are, prima facie, classifiable under two or more headings, the classification shall be effected as follows:
(a)The heading which provides the most specific description shall be preferred to headings providing a more general description. However, when two or more headings each refer to part only of the materials or substances contained in mixed or composite goods or to part only of the items in a set put up for retail sale, those headings are to be regarded as equally specific in relation to those goods, even if one of them gives a more complete or precise description of the goods.
(b)Mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets for retail sale, which cannot be classified by reference to 3(a), shall be classified as if they consisted of the material or component which gives them their essential character, insofar as this criterion is applicable.
(c) When goods cannot be classified by reference to 3(a) or 3(b), they shall be classified under the heading which occurs last in numerical order among those which equally merit consideration.
4.Goods which cannot be classified in accordance with the above Rules shall be classified under the heading appropriate to the goods to which they are most akin.
5.…
6.For legal purposes, the classification of goods in the subheadings of a heading shall be determined according to the terms of those subheadings and any related Subheading Notes and, mutatis mutandis, to the above Rules, on the understanding that only subheadings at the same level are comparable. For the purposes of this Rule the relative Section and Chapter Notes also apply, unless the context otherwise requires.
There seemed to be no dispute between the parties that the only headings to which the goods in question could be classified are 5404 and 9507. Mr J Slonim of counsel, who appeared on behalf of JM Gillies, submitted that it is a fundamental principle of general statutory construction and tariff interpretation that headings in the tariff must be read as a whole, subject to any relevant punctuation, and construed in their entirety. Furthermore, he submitted that construing individual words or phrases within a heading and classifying goods accordingly was an error of law. With respect, while those are undoubtedly accepted canons of construction, it should be apparent that they cannot always be applied to the Tariff Act. That is because no attempt is made under headings and subheadings to apply any grammatical construction to the descriptions. It is obvious from a reading of the headings that they are not constructed as complete sentences. They do not contain a verb. The headings simply describe articles or goods. As the High Court of Australia (Brennan CJ, Dawson, Toohey, Gaudron and McHugh JJ) said in Collector of Customs v Agfa-Gevaert Ltd (1996) 186 CLR 389 at 401:
Much depends on the subject matter and context of the phrase. In the area of statutory interpretation of construction, courts must be wary of propounding rigid rules. Even the use of general rules carries dangers in this area because of the tendency of such rules to be given an inflexible application.
The High Court in the Agfa-Gevaert case was dealing with the construction of a Commercial Tariff Concession Order (CTCO), the forerunner to the current TCOs. After stating that CTCOs should be considered as a species of delegated legislation, the Court said, at 398:
Because the CTCOs are governed by the rules of statutory construction, the speech of Lord Simon of Glaisdale in Maunsell v Olins [[1975] AC 373 at 391], is a useful starting point in determining the construction of the instruments. His Lordship said:
“Statutory language, like all language, is capable of an almost infinite gradation of ‘register’ – ie, it will be used at the semantic level appropriate to the subject matter and to the audience addressed (the man in the street, lawyers, merchants, etc). It is the duty of a court of construction to tune into such register and so to interpret the statutory language as to give it the primary meaning which is appropriate in that register (unless it is clear that some other meaning must be given in order to carry out the statutory purpose or to avoid injustice, absurdity or contradiction). In other words, statutory language must always be given presumptively the most natural and ordinary meaning which is appropriate in the circumstances.”
When comparing the two headings in question, essentially Heading 5404 describes the goods or articles by reference to the material or substance from which they are made, while Heading 9507 describes the goods by reference to their use. It is apparent that synthetic monofilament fibres have a large variety of possible uses and, for the moment disregarding any specific qualities that such fibres may possess, may therefore conceivably fall within either heading. Therefore, assistance should be made of the Notes found under Chapter 95 and Chapter 54 as set out in clause 1 of the General Rules for the interpretation of Schedule 3.
The Notes under Chapter 95, insofar as they are relevant, provide:
Notes.
1.-This Chapter does not cover:
...
(c)Yarns, monofilament, cords or gut or the like for fishing, cut to length but not made up into fishing lines, of chapter 39, 4206.00.00 or Section XI;…
Chapter 54 falls under Section XI of the Tariff Act. The Section Notes to Section XI provide:
1.-This Section does not cover:
(j)…
(t)Articles of Chapter 95 (for example, toys, games, sports requisites and nets);
As Mr J Millea, Senior Lawyer with the CEO of Customs submitted, the effect of the Section Note to Section XI, which is concerned with textiles and textile articles, is that even if the goods in question fall within Heading 5404, the goods are not classifiable to that heading if the goods are also classifiable under Heading 9507.
Furthermore, Chapter Note 1(c) to Chapter 95 states that, amongst other things, monofilament or the like for fishing, which would fall within Section XI and which is cut to length but not made up into fishing lines, should not be classified under Chapter 95.
The consequence of the interaction of the Section Note to Section XI and the Chapter Note to Chapter 95 is that if the goods are classifiable under Chapter 95, then they must not be classified under Chapter 54. However, given that I have found that the goods are monofilament cut to length for fishing, the goods are not classifiable under Chapter 95 unless they are properly described as monofilament for fishing, cut to length and made up into fishing lines. Therefore, the first issue which I must resolve is whether the goods in question are monofilament for fishing made up into fishing lines.
Broadly speaking, the articles listed under Heading 9507 may be described as sports requisites. Line fishing is one of those sports where certain items or accessories for that sport may fall under that heading of the Tariff Act. While the heading plainly encompasses fishing rods; fishhooks and other line fishing tackle; and fish landing nets, it does not list fishing line or synthetic monofilament fishing line.
Mr Slonim submitted that the description OTHER LINE FISHING TACKLE in Heading 9507 could not be a reference to fishing line as was contended by Mr Millea. He referred to paragraph (3) of the Explanatory Notes to Heading 9507 where it is stated:
... Fishing tackle comprises such items as reels and reel mountings; artificial bait (e.g., imitation fish, flies, insects or worms) and hooks mounted with such bait; spinning bait; mounted lines and casts; fishing floats (cork, glass, quill, etc.) including luminous floats; line winding frame; automatic striking devices; mounted fishing rings (other than mounted rings of precious or semi-precious stone); sinkers, and fishing rod bells on mounts.
Alternatively, Mr Slonim submitted that if I were to find that fishing line fell within the meaning of the expression other line fishing tackle, it was otherwise excluded by Chapter Note 1(c). It follows, according to Mr Slonim, that the effect of the Note is to preclude any consideration of Chapter 95 if the goods are monofilament for fishing, even if they are cut to length, provided they are not made up into fishing lines. He submitted that the goods the subject of this enquiry are not made up into fishing lines and therefore cannot be classified under Chapter 95 of the Tariff Act.
Both parties referred to use of the Explanatory Notes to the Harmonized Commodity Description and Coding System. As the Full Court of the Federal Court of Australia (Black CJ, Gray, Heerey JJ) said in Toyota Tsusho Australia Pty Ltd and Nippondenso Australia Pty Ltd v Collector of Customs [1992] FCA 211 , at [23]-[24]:
23.The Explanatory Notes are prepared as an aid to the interpretation of the Harmonized System by the Harmonized Commodity Description and Coding Committee under the authority of Article 7(1)(b) of the Convention and are approved, or are deemed to be approved, by the Customs Co-Operation Council in accordance with the terms of Article 8.…
24. It is established by the decisions of Full Courts of this court that s. 15AB of the Acts Interpretation Act 1901 permits, in the manner allowed by s. 15AB(1), reference to be made to the Explanatory Notes to assist in the interpretation of the Customs Tariff Act: Barry R. Liggins Pty. Ltd. v Comptroller-General of Customs and Ors, (1991) 103 ALR 565. In Gardner Smith Pty. Ltd. v Collector of Customs, Victoria (1986) 66 ALR 377, the Full Court of the Federal Court approved the use of the Explanatory Notes to the Brussels nomenclature as an aid to the interpretation of Schedule 3 to the Customs Tariff Act 1982, to which the same principles apply.
The Court also referred to the limitations on the use of extrinsic materials. It said, at [25]:
25In Barry R Liggins Pty Ltd v Comptroller-General of Customs at 573, Beaumont J., with whom Lockhart and Gummow JJ agreed, quoted with approval a passage from E.J. Cooper, Customs and Excise Law, (Cumulative Supplement to 30 June 1985 at 9) where it is said:
… (The Brussels Notes) are secondary guide only and cannot displace the plain words of the statute… or be used when there is no ambiguity in the legislation, eg a doubt cannot be created by the use of the explanatory notes and then have the doubt settled by reference to the same notes.
The Court then said:
In our view, the Explanatory Notes are of assistance in confirming that the meaning of heading 8419 and the relevant sub-heading is the ordinary meaning conveyed by the text of the provision taking into account the context.
It may assist if I set out the contents of s. 15 AB of the Acts Interpretation Act 1901.
15AB Use of extrinsic material in the interpretation of an Act
(1)Subject to subsection (3), in the interpretation of a provision of an Act, if any material not forming part of the Act is capable of assisting in the ascertainment of the meaning of the provision, consideration may be given to that material:
(a)to confirm that the meaning of the provision is the ordinary meaning conveyed by the text of the provision taking into account its context in the Act and the purpose or object underlying the Act; or
(b)to determine the meaning of the provision when:
(i) the provision is ambiguous or obscure; or
(ii) the ordinary meaning conveyed by the text of the provision taking into account its context in the Act and the purpose or object underlying the Act leads to a result that is manifestly absurd or is unreasonable.
(2)Without limiting the generality of subsection (1), the material that may be considered in accordance with that subsection in the interpretation of a provision of an Act includes:
(a)all matters not forming part of the Act that are set out in the document containing the text of the Act as printed by the Government Printer;
(b)any relevant report of a Royal Commission, Law Reform Commission, committee of inquiry or other similar body that was laid before either House of the Parliament before the time when the provision was enacted;
(c)any relevant report of a committee of the Parliament or of either House of the Parliament that was made to the Parliament or that House of the Parliament before the time when the provision was enacted;
(d)any treaty or other international agreement that is referred to in the Act;
(e)any explanatory memorandum relating to the Bill containing the provision, or any other relevant document, that was laid before, or furnished to the members of, either House of the Parliament by a Minister before the time when the provision was enacted;
(f)the speech made to a House of the Parliament by a Minister on the occasion of the moving by that Minister of a motion that the Bill containing the provision be read a second time in that House;
(g)any document (whether or not a document to which a preceding paragraph applies) that is declared by the Act to be a relevant document for the purposes of this section; and
(h)any relevant material in the Journals of the Senate, in the Votes and Proceedings of the House of Representatives or in any official record of debates in the Parliament or either House of the Parliament.
(3)In determining whether consideration should be given to any material in accordance with subsection (1), or in considering the weight to be given to any such material, regard shall be had, in addition to any other relevant matters, to:
(a)he desirability of persons being able to rely on the ordinary meaning conveyed by the text of the provision taking into account its context in the Act and the purpose or object underlying the Act; and
(b)the need to avoid prolonging legal or other proceedings without compensating advantage.
Mr Slonim submitted that Heading 5404, which he contended was the correct heading under which these goods should be classified, defined the goods by reference to their physical characteristics and therefore no construction assistance was required. As I have already said above at paragraph [24], that is the case. However, given that Heading 5404 applies to synthetic monofilament of a kind that is used as fishing line, and that Heading 9507 applies, amongst other things, to other line fishing tackle, it will assist in the proper construction if regard were had to the Explanatory Notes. It may assist in determining ambiguity which, on the face of the descriptions given in both headings, may exist.
Although Mr Millea submitted that it was not appropriate to consult the Explanatory Notes to create doubt about the ordinary meaning of the words fishing tackle, and then attempt to settle the doubt by reference to those notes, that is not the purpose of my examination. I believe it will assist in clarifying what was intended to be covered under each of the headings in question.
It is reasonably clear that Chapter 54, which deals with man-made filaments; strip and the like of man-made textile materials, is concerned with materials which fit the description under the headings set out therein. The descriptions go solely to the nature of the material and have no bearing upon its use. Therefore, any synthetic or nylon monofilament may be classified under Chapter 54 provided its cross-sectional dimension is greater than 67 decitex but does not exceed 1 mm. The monofilament may be used in a number of different applications as is described in the Explanatory Note to Heading 5404 where it states:
All these products are generally in long lengths, but remain classified here even if cut into short lengths and whether or not put up for retail sale. They are used according to their different characteristics in the manufacture of brushes, sports rackets, fishing lines, surgical sutures, upholstery fabrics, belts, millinery, braids, etc.[emphasis added]
It is abundantly clear that the articles described under Heading 5404 are materials which may be used in the manufacture of a variety of different products, including fishing lines. Furthermore, the Explanatory Note makes it clear that even where the material in question is cut into short lengths and put up for retail sale, it remains to be classified under Heading 5404. Regardless of its intended use, including subsequent use as fishing line, that does not alter the classification of artificial monofilament which falls within Heading 5404.
The question then is whether the articles, the subject of this application, can properly be classified to Heading 9507. To do so, they must fit the description set out in that heading. In particular, Mr Millea relied on the phrase: fish-hooks and other line fishing tackle.
The first thing that must be said about this description is that it calls for a syntactical analysis of the phrase. It commences with the word fish-hooks which is, without question, a specific item. It then goes on to describe, in general terms, other items. This is, in my opinion, an example of where one might consider applying the ejusdem generis rule of construction. In English, it means that general matters are constrained by reference to specific matters (see Statutory Interpretation in Australia, Seventh Edition, DC Pearce and RS Geddes at [4.24]). In the phrase in question, it means that the expression other line fishing tackle could be constrained by the specific item, fish-hooks. I will return to the consequences of this rule of construction to the material in this case presently.
Regardless, Mr Millea referred to General Rule 1 which deals with Section and Chapter Notes. He then referred to the expression made up into fishing lines which is found in Note 1 (c) of Chapter 95. In essence, Mr Millea submitted that understanding this expression clarified the correct Chapter to which the goods in question should be classified. The fact that the Note states that Chapter 95 does not cover monofilament which has been cut to length but not been made up into fishing lines attracts the reasonable inference that monofilament, cut to length and made up into fishing lines may be classified to that Chapter if the monofilament falls within Chapter 39, Heading 4206 or Section XI. Heading 5404, which is the heading that JM Gillies contends is the correct heading under which the monofilament should be classified, falls under Section XI.
In support of his submission, Mr Millea referred to Mr McPherson’s evidence where he explained that nylon monofilament has a number of uses other than in the manufacture of fishing lines. In fact, Mr McPherson’s company produces nylon monofilament for use as weed trimmer line, 3D printing filament and carpet overlocking. He went on to explain:
The nylon monofilament fishing line and nylon monofilament for other uses are produced using different nylon mixtures and different production settings. Nylon monofilament fishing lines are more expensive to manufacture than for other uses. This is because the nylon mix is different, the manufacturing process is more elaborate and often more labour intensive with a result that the nylon monofilament fishing line is up to 50% stronger than nylon monofilament line for other uses. It can be said that in manufacturing nylon fishing line we push the mechanical limits of nylon, heating and stretching the monofilament so much during manufacture that the line often breaks resulting in good fishing line but also increasing the labour required and waste. After the initial extrusion and spooling onto a “bulk spool”, nylon monofilament fishing lines and nylon monofilament for other uses are virtually indistinguishable on a visual inspection. Without appropriate labelling, consumers would only be able to distinguish nylon monofilament fishing lines from other nylon monofilament products by actually using the two products and comparing them (for example a coating put on the fishing line makes it feel smoother and decreases friction enabling the line to cast further when fishing).… As mentioned above, the labelling usually provides detailed information regarding the particular characteristics of the fishing line which make it suitable for particular kinds of fishing.
The evidence given by Mr McPherson regarding the use of nylon monofilament as fishing lines is supported by the descriptions on the packaging of the goods in question. Furthermore, as Mr McPherson said, without those descriptions, the goods simply appear to be nylon filament of various colours and thicknesses. The fact that they have been manufactured for a particular use is not apparent from a visual inspection. However, the description on the packaging makes it clear that the goods are a synthetic filament manufactured for a particular purpose, that is, to serve as fishing line. Furthermore, nylon monofilament fishing lines have a variety of different characteristics including varying filament diameters, breaking strains, lengths and colours. They also have characteristics which are described on the packaging making it clear that the nylon monofilament in question has been manufactured specifically for the purpose of being used as fishing line.
As I understood Mr Millea’s submission, having undertaken a process when manufacturing the nylon monofilament to ensure that it had characteristics suitable for use as a fishing line, it could be said that the process itself gave rise to the conclusion that the nylon monofilament had been made up into fishing lines. With respect to Mr Millea, that does not provide the answer to the problem in issue. It means that nylon monofilament fishing lines, by themselves, may not be excluded from Chapter 95 by reason of Chapter Note 1 (c). It does not mean that they can or must be classified to Chapter 95. In order to determine that question, one needs to carefully interpret what was intended by the expression set out under the relevant heading, in this case, 9507.
This issue can only be determined by construction of the expression fish-hooks and other line fishing tackle. That process may require account be taken of the ejusdem generis rule to which I have referred above. If that is the case, I need to determine what falls within the general description line fishing tackle. In doing so, I am mindful of what Pearce and Geddes said in their text at [4.27]:
As mentioned previously, the imposition of a limitation on the scope of a general expression by the application of the ejusdem generis principle presupposes the identification of a group of like matters. If no genus is established, the rule cannot be applied. In R v Neal, Rigos & Morgan (1947) 74 CLR 613 at 624 Latham CJ said that the specific things enumerated must ‘possess some common and dominant feature’.
I am also mindful of the fact that only one specific item (fish-hooks) appears before the general expression. As Pearce and Geddes state in their text, in those circumstances, it may not be possible to determine the relevant genus which may be used to read down the general words which follow. After citing a number of cases on that point, the learned authors said:
These cases should more readily be understood not as examples of the use or otherwise of the ejusdem generis rule but as a process of interpretation in context. The single instance does not establish the context. It is to be gleaned from the whole legislative instrument under consideration. In contrast, where a number of items are listed, the context is more readily to be ascertained by reference to them.
In my respectful opinion, all of the items listed under Heading 9507 give context to the items intended to be classified to that heading. Putting aside those items of equipment listed under that heading which have nothing to do with fishing, broadly speaking, the items identified are what can properly be described as line fishing tackle. In other words, the question is whether fishing line itself is considered to be an item of tackle contemplated by Heading 9507.
The first and obvious point to make is that the heading makes no reference to fishing line. Given that fishing line is nylon monofilament which is capable of being classified under Heading 5404, and it includes nylon monofilament suitable for use as fishing line, in order to fall under Heading 9507, there must be some characteristic of that nylon monofilament which distinguishes it from the nylon monofilament referred to under Heading 5404. That distinguishing feature cannot be in the nylon monofilament itself. The distinguishing feature is identified in Chapter Note 1 (c). It must be made up into fishing lines. In the context of Heading 9507, that expression appears to be a reference to other items used in conjunction with fishing line which is often described as fishing tackle. The Shorter Oxford English Dictionary defines tackle to include: 5. Apparatus for fishing; fishing-tackle. Fishing line does not appear to fit the common meaning of apparatus. Tackle ordinarily means a number of items or objects collectively falling within the description.
To clarify any ambiguity which may exist in the relevant expression (fishing tackle) in so far as it relates to line fishing equipment, I have examined the Explanatory Notes. Under Heading 9507 is the following explanation regarding what is covered under that heading. It states:
This heading covers:
(1)Fish-hooks…
(2) Fish landing nets, butterfly nets and similar nets…
(3) Line fishing rods and tackle. Fishing rods may be of various sizes, and may be made of various materials (bamboo, wood, metal, glass fibre, plastics etc). They may consist of a single piece or be jointed. Fishing tackle [emphasis added] comprises such items as reels and reel mountings; artificial bait (e.g., imitation fish, flies, insects or worms) and hooks mounted with such bait; spinning bait; mounted lines and casts; fishing floats (cork, glass, quill, etc.) including luminous floats; line winding frames; automatic striking devices; mounted fishing rings (other than mounted rings of precious of precious or semi-precious stone); sinkers, and fishing rod bells on mounts.
Once again, fishing line is not described as an item of fishing tackle. That is consistent with whether the ejusdem generis rule is applied to the expression in question or, which appears to be more appropriate in these circumstances, the entire context is taken into account. Furthermore, it is consistent with the exclusion referred to in Chapter Note 1 (c) of fishing line cut to length but not made up into fishing lines. The nylon monofilament fishing lines could properly be described as having been made up into fishing lines where such line or lines were attached to or had attached to them those items which are properly described as fishing tackle. Contextually, the items set out under Heading 9507 do not include fishing line. They are items which are used in conjunction with fishing line for the purpose of the sport or recreation of line fishing.
By way of distinction, the Explanatory Note to Heading 5404 states that the heading does not include, amongst other things:
(e) Synthetic monofilament, with hooks attached or otherwise made up into fishing lines (heading 95.07).
In my opinion, that explanation makes it clear that reference to the expression made up into fishing lines means synthetic monofilament which has attached to it items commonly referred to as tackle. That may include a wire trace with hooks, sinkers, floats, artificial lures and the like attached.
Accordingly, I find that the nylon monofilament fishing lines, the subject of this application cannot be classified to Heading 9507. They are synthetic monofilament which exceeds 67 decitex with cross section or dimensions not exceeding 1 mm, cut to length but not made up into fishing lines. Therefore, I agree with JM Gillies that the goods in question should be classified to Chapter 54. Having found that to be the case, I must determine whether the goods in question are eligible for the TCO.
TCO 0713590
TCO 0713590 is for: YARNS, NYLON. It is keyed to tariff subheading 5404.19.00.
In his statement of facts and contentions, the CEO of Customs stated that if the Tribunal were to find that the goods in question should be classified under subheading 5404.19.00, he conceded they were eligible to benefit from TCO 0713590. However, in written submissions made by Mr Millea and lodged with the Tribunal on 12 August 2014, he contended that it was open to the Tribunal not to accept the concession that the goods were eligible to benefit from the TCO. He submitted it was open to the Tribunal to examine the ordinary meaning of the words yarn and nylon and consider whether the subject goods met the precise description in the TCO.
After some discussion of this issue during the hearing, I granted both parties leave to file supplementary submissions regarding the TCO issue. The applicant lodged its submissions on 25 August 2014 and the respondent on 1 September 2014.
In his supplementary submissions, Mr Millea said that after careful consideration, the CEO of Customs had decided to resile from his previous concession that if the subject goods were classified to subheading 5404.19.00, they were eligible to benefit from TCO 0713590. Mr Millea submitted that the CEO of Customs was cognisant of his obligations as a model litigant and was of the view that withdrawal of the previous concession was consistent with that obligation. He further submitted that the obligation imposed on the CEO of Customs was to assist the Tribunal to reach the correct or preferable decision on the facts before it. Furthermore, given that JM Gillies was aware of the CEO’s intention to withdraw the concession, and had been given time to make written submissions about it, there could be no unfairness caused by that withdrawal.
In the supplementary submissions prepared on behalf of JM Gillies by Mr Slonim, he objected to the CEO of Customs now challenging that the goods in question should have the benefit of the TCO if they were classified under subheading 5404.19.00. Mr Slonim submitted that the CEO of Customs was estopped from denying that the goods in question were eligible for concessional entry under the TCO. He did not refer to any authority for that proposition. Mr Slonim also submitted that it would be antithetical to the conduct expected from a model litigant and that such conduct should not be encouraged by the Tribunal.
Dealing first with the model litigant conduct issue, the Tribunal dealt with this in Gwenda Farley-Smith and Repatriation Commission [2010] AATA 637. In that case, the Repatriation Commission had, on the first hearing of the matter, conceded that Mr Farley-Smith was exposed to benzene in the course of his operational service. However, following remittal by the Federal Court, and prior to rehearing by the Tribunal, the Repatriation Commission withdrew that concession. Ms Farley-Smith contended that the withdrawal was contrary to the Model Litigant Rules. After reviewing The Model Litigant Obligation set out in The Legal Services Directions 2005, the Tribunal found that there was nothing in the Directions which so much as suggested that an agency should not withdraw concessions previously made. In fact, it found that an agency was bound to do so if, upon reviewing the evidence including fresh evidence obtained between the two hearings, it formed the view that the concession was incorrectly made. As the Full Court of the Federal Court of Australia (Bowen CJ, Smithers and Deane JJ) said in Drake v Minister for Immigration and Ethnic Affairs (1979) 2 ALD 60, at 68:
The question for the determination of the Tribunal is not whether the decision which the decision-maker made was the correct or preferable one on the material before him. The question for determination of the Tribunal is whether that decision was the correct or preferable one on the material before the Tribunal. ...
An agency would not be assisting the Tribunal to come to the correct or preferable decision if it was aware that a concession previously made was incorrect.
Given that the CEO of Customs is required to assist the Tribunal in coming to the correct or preferable decision on the material before the Tribunal at the time of hearing, and provided that JM Gillies was given sufficient time to respond to the withdrawal of the concession, I cannot see just cause for the criticism. This was also the finding of the Tribunal in Re Roncevich and Repatriation Commission (2006) 91 ALD 662. In that case, for the first two hearings before the Tribunal, the respondent conceded that the applicant suffered an internal derangement of his knee. However, on the third hearing, the respondent withdrew that concession and contended that the applicant was not suffering from that condition. The Tribunal referred to the High Court decision in Minister for Immigration and Multicultural Affairs v Wang (2003) 215 CLR 518 and concluded, at 666:
It follows that we are of the view that it is open to the respondent to raise now the issue earlier conceded. Despite reaching that conclusion we should observe that the respondent’s approach in withdrawing an early concession is not the type of approach that the tribunal expects of the executive branch of government, a fortiori, when it is done a very short time before the hearing.
In my view, for the reasons expressed in Farley-Smith, the withdrawal of the concession regarding the eligibility of the goods for the TCO was properly made. JM Gillies had ample time in which to respond and therefore no procedural unfairness could arise.
As far as the estoppel claim is concerned, this has been dealt with by the Tribunal and the Federal Court on a number of occasions. The position was comprehensively dealt with by Weinberg J in Bramwell v Repatriation Commission (1998) 51 ALD 56. The applicant in that appeal from the Tribunal submitted that the respondent was estopped from raising before the Tribunal a challenge to an earlier finding that the deceased had rendered operational service. He claimed the correctness of the finding had been tacitly conceded by the respondent in proceedings below. Therefore, the applicant contended that there operated a form of estoppel by conduct in that it would be unconscionable to permit the respondent to change the position which it had adopted at the outset, and maintained throughout, before the tribunal. His Honour said, at 68:
There is a substantial body of authority against each of these contentions. In Minister for Immigration and Ethnic Affairs v Danielle (1981) 5 ALD 135; 39 ALR 649 the full court of the Federal Court held that the doctrine of issue estoppel did not have any place in proceedings of the tribunal. See also Commonwealth v Sciacca (1988) 17 FCR 476 at 480; 14 ALD 565; 78 ALR 279 at 283 where a full court of the Federal Court had no hesitation in saying:
A finding by an administrative tribunal will not give rise to an issue estoppel.
His Honour then went on to look at whether an estoppel by conduct can be raised against the donee of a statutory power. He said, at 68 – 69:
In Formosa v Secretary, Department of Social Security (1988) 15 ALD 657; 81 ALR 687 Davies and Gummow JJ, in a joint judgement, dealt with the question of estoppel at ALR 695 – 6. Their Honours concluded that estoppel has no role to play where the issues to be determined involve rights and obligations rather than the exercise of administrative discretions. The authority of a decision-maker cannot be extended beyond that given by the statute through the mechanism of an estoppel.
The question whether the deceased rendered operational service so as to bring into play the provisions of ss 8, and 120 (1) and (3) seems to me to involve the determination of rights and obligations rather than the exercise of any administrative discretions. The principles laid down in Formosa are, therefore, strongly against this particular contention by the applicant.
In this case, the CEO of Customs is required to exercise statutory power regarding the application of a TCO to imported goods. In my opinion, that involves the determination of legal rights and has nothing to do with administrative discretion. His withdrawal of the concession earlier made regarding the application of the TCO does not give rise to an estoppel by conduct.
Returning to the substantive matter before me, the description used in Heading 5404 is Synthetic Monofilament of 67 decitex or more and of which no Cross-Sectional Dimension exceeds 1 mm…. The word synthetic, when used in relation to fibres, is defined in the Chapter 54 Chapter Note by reference to the process of manufacture which is: By polymerisation of organic monomers to produce polymers such as polyamides, polyesters etc. I have set out the definition of nylon in paragraph [11]. Essentially, it is a reference to various synthetic polyamide fibres.
The principles of construction of a TCO were explained by Spender J in Voxson Sales Pty Ltd v Collector of Customs (1993) 19 AAR 129 where he said, at 137:
On the question then “does the cellular mobile telephone fall within the terms of the TCO as properly construed”, the principles of construction have long been settled. One applies the ordinary rules of construction, and if notwithstanding this a doubt still remains as to the meaning of the words to be interpreted, one resolves that doubt in favour of the taxpayer. In determining the meaning of the words, one gives them their ordinary meaning unless it is proved that they have acquired some generalised secondary meaning through trade usage or commerce.
In addition, Spender J explained the link between the TCO and the classification of the goods in question. He said, at 135:
The fundamental requirement is that, before goods can fit within a particular TCO they must be within the tariff classification to which that TCO is keyed.
However, one needs to bear in mind that just because goods fit within the classification to which the TCO is keyed does not result in the conclusion that they fall within the TCO. As Spender J said in the Voxson Sales case, at 140:
The items covered by a TCO generally constitute a subset of the items with which the keyed heading deals, although the possibility exists that the set of the goods within the description of the TCO might consist precisely at the same goods as the set of the goods within the keyed heading. It is a matter for determination whether, as a matter of fact on the proper construction of the TCO, the Cellvox falls within it.
I should also explain that the tariff classification to which a TCO is keyed is established in the course of making an application for a TCO. Section 269F of the Customs Act relevantly provides:
(1)A person may apply to the CEO for tariff concession order in respect of goods.
(2)An application must:
(a)be in writing; and
(b)be in an approved form; and
(c)contain such information as the form requires; and
(d)be signed in the manner indicated in the form.
(3)Without limiting the generality of paragraph (2)(c), a TCO application must contain:
(a)a full description of the goods to which the application relates; and
(b)a statement of the tariff classification that, in the opinion of the applicant, applies to the goods; and…
The description applied to a TCO is confined by s. 269SJ which, relevantly provides:
(1)The CEO must not make a TCO in respect of goods:
(aa) described in terms other than generic terms; or
(a)described in terms of their intended end use; or
(b)declared by the regulations to be goods to which a TCO should not extend.
The TCO in question in this matter was first gazetted on 27 June 2007 under the tariff classification subheading 5404.12.00 with the TCO number 0708638.
However, that TCO was revoked as is recorded in the Commonwealth of Australia Gazette 5 September 2007 and reissued under the tariff classification subheading 5404.19.00. The description of the goods remained unchanged. The new TCO number was 0713590.
Although the description of the goods set out in a TCO must not be in terms of their intended end use (s. 269SJ (1)(a)), an applicant for a TCO must, on the application form, set out a Stated Use. As is explained in the introductory section of the Commonwealth of Australia Gazette regarding applications made for tariff concession orders:
To assist local manufacturers, the use(s) to which the goods can be put follow the description of the goods.
In accordance with that requirement, the stated use was described as:
Used for the manufacture of conveyor fabrics and industrial filter cloth
In other words, the stated use is a reference only to a use to which the goods are capable of being put but does not include all possible uses. It is inserted in the application simply to permit Australian manufacturers who may wish to contest the granting of a TCO for the described goods to lodge a submission opposing the grant. Nevertheless, what the Stated Use description does in this case is to assist in understanding the meaning of the word yarn in the context of Heading 5404 and what was intended by the use of that word in the TCO.
I should also explain that, in my opinion, one cannot simply disregard the characterisation of the goods as imported when endeavouring to establish the correct construction of the expression used in the TCO. Furthermore, it should always be borne in mind that characterisation or identification is conducted of the goods as imported. In this case, I have identified the goods as imported as nylon monofilament fishing lines. While it might be said that such a description goes to the use intended by the manufacturer of the goods, that is plainly what a wharf-side inspection discloses. In any event, as Northrop J pointed out in the Vernon-Carus case, some heading classifications make specific reference to a form or to a purpose. His Honour went on to say, at 456:
Where this is so, a “practical wharf side” task, may not be appropriate. Evidence may need to be received relating to the form or purpose of the goods. In cases of this kind, the heading will need to be construed properly in order to determine what evidence is relevant to identify the goods. This is such a case where purpose forms an essential part of the classification.
Plainly, the word nylon is used to describe a range of synthetic polyamide fibres. I accept Mr McPherson’s description of the articles in question being nylon monofilament fishing line. Accordingly, for the purposes of Chapter 54, the description man-made or synthetic filament necessarily includes nylon monofilament.
Use of the word yarn in TCO 0713590 is more troubling. The TCO is keyed to tariff subheading 5404.19.00. It fits the classification synthetic monofilament of 67 decitex or more of which no cross-sectional dimension exceeds 1 mm. The cross-sectional dimension of the monofilament in question varies between 0.20 mm and 0.70 mm.
However, the ordinary meaning of the word yarn is: 1. orig. Spun fibre, as of wool, flax, silk, cotton; now usu., fibre spun and [emphasis added] prepared for use in weaving, knitting etc. b. In Rope-making, one of the threads composing a strand, or these threads collectively 1627. (The Shorter Oxford English Dictionary).
As Mr Slonim submitted in his supplementary submissions, words of the tariff should be given their current meaning unless it is clear that the legislature intended otherwise (paragraph 4). He also attached to his supplementary submissions extracts from contemporary dictionaries containing a variety of meanings attributed to the word yarn. On the other hand, Mr Millea attached to his supplementary submissions an extract from The Modern Textile & Apparel Dictionary, Fourth Revised Enlarged Edition. Despite minor differences in the various definitions disclosed, the majority not only describe the word yarn by its composition, but also refer to the fact that it is material used in weaving, knitting, braiding, plaiting, or otherwise made into a textile material. In fact, while its composition or substance from which it is composed may vary widely, including natural or man-made fibres or filaments, the common understanding is that it is any of the substances referred to in the ordinary meaning made into a strand which is suitable for the uses to which I have referred above. In other words, it is defined, predominantly, by its suitability for a particular use.
The problem for JM Gillies in this case is that the nylon monofilament in question, as imported, is simply synthetic monofilament fishing line. It cannot be properly described as yarn. It is nylon monofilament with particular characteristics and, as imported, is suitable predominantly for use as fishing line. There was no evidence before me which would enable a finding that it was suitable for use as yarn. In fact, in his supplementary submissions Mr Slonim said that the word yarn must be given the same meaning in both Chapter 54 of the Tariff Act and TCO 0713590. While I do not disagree with that submission, it does amplify the significant problem facing JM Gillies.
While Chapter 54 deals with man-made filaments; and strip and the like of man-made textile materials, the chapter headings refer to particular types of man-made filaments and materials. For example, Heading 5401 refers to SEWING THREAD of MAN‑MADE FILAMENTS; Heading 5402 refers to SYNTHETIC FILAMENT YARN (OTHER THAN SEWING THREAD); Heading 5403 refers to ARTIFICIAL FILAMENT YARN (OTHER THAN SEWING THREAD) Heading 5405 refers to ARTIFICIAL MONOFILAMENT etc.; Heading 5406 refers to MAN-MADE FILAMENT YARN (OTHER THAN SEWING THREAD); and Heading 5407 refers to WOVEN FABRICS OF SYNTHETIC FILAMENT YARN, INCLUDING WOVEN FABRICS OBTAINED FROM MATERIALS OF 5404.
It should be apparent from the above examples that while a number of headings refer to yarn, some do not. In fact the heading to which the TCO is keyed, 5404, makes no reference to yarn. While that may raise a question regarding whether the TCO is keyed to the correct classification, it is not something that I need be concerned with. The only point I make about the various headings in Chapter 54 is that some refer to the goods by their intended use, for example sewing thread and yarn, while other headings, such as 5404, only refer to the composition of the goods. TCO 0713590 is plainly concerned with synthetic filament which is capable of being used as yarn and is primarily manufactured for that purpose. That is, it is suitable for weaving, braiding, plaiting, knitting or otherwise made into textile material. The goods in question do not satisfy that description even though I accept that there will be synthetic monofilament which is suitable for use as yarn. The goods in question are composed of synthetic filaments suitable for and manufactured primarily for use as fishing line.
It follows I must find that the articles which are the subject of this dispute are not eligible for concessional entry for home consumption under TCO 0713590 as claimed by JM Gillies.
CONCLUSION
Although the CEO of Customs contended that the goods as identified, being synthetic monofilament, should be classified to Heading 9507, I have found that they are properly classified to Heading 5404 and in particular to subheading 5404.19.00. That is because the goods are properly described as synthetic monofilament for fishing, cut to length but not made up into fishing lines.
However, I have come to the conclusion that the synthetic monofilament in question does not fall within the description of TCO 0713590. It cannot be properly described as nylon yarn. While the description synthetic encompasses nylon, the monofilament does not fit the description yarn. Therefore, I find that the decision made by the National Trade Advice Centre for ACBPS on 14 November 2013 was correct. I affirm that decision.
I certify that the preceding 87 (eighty-seven) paragraphs are a true copy of the reasons for the decision herein of Egon Fice, Senior Member .........[sgd]........................................................
Personal Assistant
Dated 21 November 2014
Date of hearing 12 August 2014 Date of Final Submission
Counsel for the Applicant
1 September 2014
Mr J Slonim
For the Applicant
Ms C Kontos, National Consultancy Manager,
Clemenger International Freight Pty LtdSolicitor for the Respondent Mr J Millea, Legal Services Branch
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