John Deere Limited and Chief Executive Officer of Customs and Anor
[2005] AATA 940
•27 September 2005
Administrative
Appeals
Tribunal
DECISION AND REASONS FOR DECISION [2005] AATA 940
ADMINISTRATIVE APPEALS TRIBUNAL Nº V2005/11
GENERAL ADMINISTRATIVE DIVISION
Re: JOHN DEERE LIMITED
Applicant
And: CHIEF EXECUTIVE OFFICER
OF CUSTOMS
Respondent
And: BMW AUSTRALIA LIMITED
Party Joined
DECISION
Tribunal: Mr B.H. Pascoe, Senior Member
Date: 27 September 2005
Place: Melbourne
Decision:The Tribunal sets aside the decision under review and in its stead remits the matter to the respondent with a direction that goods which satisfy the definition of “US originating goods” and which were imported prior to 1 January 2005 but entered for home consumption after that date attract the rate of duty applicable to “US originating goods” at the date of such entry for home consumption.
(sgd) B.H. Pascoe
Senior Member
ADMINISTRATIVE APPEALS TRIBUNAL Nº V2005/11
Nº V2005/481
GENERAL ADMINISTRATIVE DIVISION
Re: JOHN DEERE LIMITED
Applicant
And: CHIEF EXECUTIVE OFFICER
OF CUSTOMS
Respondent
And: BMW AUSTRALIA LIMITED
Party Joined
DIRECTION [2005] AATA 940
Tribunal: Mr B.H. Pascoe, Senior Member
Date: 14 October 2005
Place: Melbourne
The Tribunal, being satisfied that there is an error in the text of the decision in this matter dated 27 September 2005, directs the Registrar pursuant to s 43AA of the Administrative Appeals Tribunal Act 1975 to alter the decision by inserting application number "V2005/481" on the Decision page.
(sgd) B.H. Pascoe
Senior Member
CUSTOMS DUTY – US originating goods – imported prior to 1 January 2005 – entered for home consumption after 1 January 2005 – rate of duty – whether at rate applicable at date of importation
Customs Tariff Act 1995
Customs Act 1901
Chief executive Officer of Customs V Tony Longo Pty Ltd (2001) 184 ALR 355
REASONS FOR DECISION
27 September 2005 Mr B.H. Pascoe, Senior Member
This is an application to review a decision of the respondent to impose customs duty at the general rate of 5 per cent on goods imported from the USA prior to 31 December 2004 but entered for warehousing and entered for home consumption in January 2005. The relevant duty was paid under protest by the applicant.
At the hearing the applicant John Deere Limited (“John Deere”) was represented by Mr O. Shtein, a solicitor. The respondent was represented by Mr L. Kennedy, a solicitor with the Australian Government Solicitors Office. There was no dispute as to the primary facts of this case and no evidence as to facts was necessary at the hearing.
The dispute centres on the effect of the amendments to the legislation to incorporate the Australia‑United States Free Trade Agreement. These amendments to provide preferential rates of customs duty on US originating goods commenced on 1 January 2005. The view of the Australian Customs Service was conveyed to a representative of the applicant in a letter dated 8 December 2004, which stated:
As outlined in ACN No.2004/47, goods will need to satisfy the requirements of “US originating goods”, a term that is defined in the US Free Trade Agreement Implementation Act 2004, to qualify for preferential rates of customs duty under the AUSFTA.
The customs legislation for the AUSTFA is due to commence on 1 January 2005, when the AUSTFA comes into force.
Goods imported from the United States of America after the commencement of the AUSFTA legislation that are “US originating goods” will be eligible for preferential rates of customs duty.
Goods imported from the United States of America before the commencement of the AUSFTA legislation cannot be “US originating goods”. Consequently, such goods will be subject to general rates of customs duty (paragraph 16(a) of the Customs Tariff Act 1995 refers). Such goods will not qualify for the preferential rates of customs duty applying under the AUSFTA, even if the goods are entered for home consumption after the commencement of the AUSFTA legislation.
Section 15 and s 16 of the Customs Tariff Act 1995 (the 1995 Act) provides for the importation and calculation duties on imported goods and states:
15 Imposition of duties
Duties of Customs are imposed by this Act on:
(a)goods imported into Australia on or after 1 July 1996; and
(b)goods:
(i)imported into Australia before 1 July 1996; and
(ii)entered, or again entered, for home consumption on or after that day.
16 Calculation of duty
(1) Subject to sections 17, 18, 20 and 22, the duty in respect of goods must be worked out as follows:
(a)if the goods:
(i)are not the produce or manufacture of a Preference Country; and
(ii)are not US originating goods; and
(iii)are not Thai originating goods;
by reference to the general rate set out in the third column of the tariff classification under which the goods are classified;
…
(k)if the goods are US originating goods:
(i)if the goods are classified to a heading or subheading in Schedule 3 that is specified in column 2 of an item in the table in Schedule 5—by reference to the rate of duty set out in column 3 of that item; or
(ii)otherwise—Free;
There is no dispute that the goods in question satisfied the definition of US originating goods.
While the 1995 Act imposes the duty, the Customs Act 1901 (the 1901 Act) provides for the assessment and collection of the duty and other incidental matters. The argument for John Deere relied on s 132 of that 1901 Act. Section 132(1) of the 1901 Act provides:
132(1) Subject to this section and to section 132B, the rate of any import duty payable on goods is the rate of the duty in force when the goods are entered for home consumption.
Section 132B and the balance of the sub-sections of s 132 of the 1901 Act have no bearing on the goods involved in this matter. In his book Customs Law, published in 1904, Dr H.N.P. Wollaston LL.M, LL.D, the then permanent head of the Department of Trade and Customs and Comptroller‑General of Customs, said in relation to the then s 132, which was in virtually identical terms to the current section:
…
This section disposes for many purposes of the question so often raised under other Acts, as to what constitutes the exact date of importation. Seeing that duties are leviable under the tariff on importation and become a debt due to the Crown immediately on importation, a change in the tariff after importation, but before payment of duty, frequently raised the question under the State laws, as to what duties were payable.
The above section settles the point as regards the rate of duty. Liability to or freedom from duty is determined by the law in force at the date of entry for home consumption, not the date of importation.
In Chief Executive Officer of Customs v Tony Longo Pty Ltd (2001) 184 ALR 355 the Court of Appeal of the Supreme Court of New South Wales referred to this passage from Dr Wollaston’s book, and said (at p382):
…
The defendant relied on the first, third and fourth sentences. The plaintiff relied on the second sentence, and submitted that Dr Wollaston was only dealing with the position where an entry had been made, not the position where it had not been made. The better reading is that s 132 is limited to the instance described by Dr Wollaston in the second sentence, namely where there is a change in tariff between the date of importation and the date of payment, and the goods have been entered for home consumption. That construction is not inconsistent with the High Court cases.
In that case the defendant had sought to adopt the simple expedient of failing to enter the imported goods for home consumption to avoid payment of the duty.
Mr Shtein submitted that the words of s 132 are clear and unambiguous so that the rate of duty is that applicable when the goods are entered for home consumption and, as that date was after 1 January 2005, the rate on US originating goods is nil. The date of actual importation was said to be irrelevant, particularly where the goods were warehoused in accordance with the legislation. Mr Shtein also submitted that any other interpretation would cause significant difficulties particularly in determining the actual date of importation on each and every item in the warehouse.
Mr Kennedy submitted that the Australia-United States Free Trade Agreement dealt with changes in import duties prospectively not retrospectively. It was said that goods were classified and customs value established at the time of importation and it was at that time that liability for duty was established. Mr Kennedy submitted that s 132 of the 1901 Act only allows for variation in general rates or the rate applicable to goods of a particular classification. He argued that, at the date of importation, there was no rate of duty other than the general rate on goods imported from the United States of Amercia because the category of US originating goods did not exist at that date.
There was no change in the classification of the relevant goods between the date of Entry for Warehousing prior to 1 January 2005 and the date after 1 January 2005 when they were entered for home consumption. On each date they were classified to 8433.11.00 of Schedule 3 of the1995 Act. The only difference was the description as goods of US origin in the first entry and US originating goods in the entry for home consumption.
The question raised in this case is difficult. Unfortunately, the legislation did not include any phasing in provisions in the amendments to give effect to the Australia–United States Free Trade Agreement. For example, there could have been a qualification to the definition of US originating goods to limit the definition to goods imported from 1 January 2005. In this case there was no change to the classification of the goods. There is a change in the rate of duty to goods of that classification from 1 January 2005 if they were US originating goods. The goods satisfied that definition both prior and from 1 January 2005.
Unfortunately there appears to be no previous decisions of the Courts which assist in deciding what, if any, limitations are to be placed on the operation of s 132 of the 1901 Act in circumstances such as these. On balance, I accept the argument of the applicant that the words of s 132 should be given their ordinary meaning as outlined by Dr Wollaston. There was a change in tariff on these particular goods after importation, but before entry for home consumption; and the applicable tariff in the absence of any specific contrary intention within the legislation is that applicable at the date of entry for home consumption. I am unable to differentiate this change of tariff from the change in the general rate from 10 per cent to 5 per cent between date of importation and date of entry for home consumption.
It follows that the decision under review should be set aside. The parties agreed that if the Tribunal arrived at that decision, the matter should be remitted to the respondent to determine the specific goods to which the decision relates.
I certify that the twelve [12] preceding paragraphs are a true copy of the reasons for the decision herein of
Mr B.H. Pascoe, Senior Member
(sgd) Catherine Thomas
Clerk
Date of Hearing: 1 July 2005
Date of Decision: 27 September 2005
Solicitor for the applicant: Mr O. Shtein, Bartier Perry
Solicitor for the respondent: Mr L. Kennedy, Australian Government Solicitor
0
1
0