Johnson & Johnson Australia Pty Ltd v Collector of Customs

[1989] FCA 679

Re: JOHNSON AND JOHNSON AUSTRALIA PTY LIMITED
And: COLLECTOR OF CUSTOMS
No. G378 of 1987
FED No. 679
Administrative Law

COURT

IN THE FEDERAL COURT OF AUSTRALIA

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

CATCHWORDS

Administrative lw - customs - Appeal from Administrative Appeals Tribunal - Tariff classification - dental floss - whether yarn of continuous man-made fibres - whether packaging and other materials took dental floss outside this classification - whether medicament - whether toilet preparation - error of law.

Administrative Appeals Tribunal Act 1975 (Cth) - s.44 Customs Tariff Act 1982 (Cth) - Schedule 2 Rules 2(2), 2(3), 2(4) and 3 - Schedule 3, Division 11 note 4(2), chapter 30 note 1(1), Items 30.03, 33.06, 51.01

HEARING

SYDNEY

#DATE 10:11:1989

Counsel for the applicant: Mr A. Robertson

Solicitors for the applicant: Michell, Sillar and Brown

Counsel for the respondent: Miss M.J. Beazley

Solicitor for the respondent: Australian Government Solicitor

ORDER

1. The decision of the Administrative Appeals Tribunal

be set aside and that, in lieu thereof, there be substituted a decision that the decision of the Collector of Customs be set aside and that the matter be remitted to the Collector of Customs with the direction that the subject goods fell for classification within Item 51.01 of the Tariff.

2. The respondent pay the costs of this application.

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

JUDGE1

This is an appeal from a decision of the Administrative Appeals Tribunal which affirmed a decision of the Collector of Customs that dental floss, imported by the applicant, Johnson & Johnson Aust. Pty Limited, was dutiable under Item 33.06 of the Customs Tariff. The appeal is brought under s.44 of the Administrative Appeals Tribunal Act 1975 (Cth) and is limited to questions of law.

1. The Tribunal cited with apparent approval the following remarks appearing in the statement of reasons for the decision being reviewed by it:-
   

"'Dental Floss (Dentotape) consists of a particular quantity of polyamide yarn located on a spool within a plastic container that incorporates a hinged lid. The container is fitted with a guide for ease of manipulating the yarn and a metal hook for cutting the yarn to a desired length. The plastic container is sold in a blister pack. Certain claims for the product and instructions for use are printed on the back of the pack. These instructions are:- 'GUIDE FOR EASY USE Remove 18 inches of floss. Anchor by wrapping ends around middle fingers, leaving about 2 inches held taut between hands. Guide floss with thumbs for teeth, index fingers for lower teeth. Insert gently between teeth. To help remove decay-causing material (plaque) and food particles, use up-and-down scraping motion on side of each tooth and slide just beneath gums. As needed, unwind fresh floss from middle finger of one hand while winding used floss around the other.'

Dental Floss is sold in particular quantities in a waxed or unwaxed condition. Certain flavours (e.g. mint) are available. Dental Floss is claimed to free teeth and gums from plaque or minute fibres of food. Because Dental Floss gets in between the teeth where a toothbrush can't reach, it ensures that no damaging particles remain in these difficult areas where decay, gum inflammation and mouth odours often start.'"

1. The Tribunal went on to say:-
   

"The identification of the goods in this case does not present any difficulty. They are goods which consist of a particular quantity of polyamide yarn located on a spool within a plastic container incorporating a hinged lid and a cutting edge."

1. The Tribunal also said, in a passage as to which there appears to be no dispute:-
   

"The evidence of Professor Craig was that dental floss is a fine piece of cord made from fine nylon fibres twisted together ... and in some cases bound together by wax. It is a mechanical device for removing plaque between the teeth near the gum line. It is a means of plaque control. It is a part of the dental armamentarium required for the control of caries and periodontal diseases."

1. The Tribunal considered four Items of the Tariff (Schedule 3 to the Customs Tariff Act 1982 (Cth)), 30.03, 33.06, 51.01 and 59.06. In this appeal, counsel relied upon only the first three of those Items. I agree with counsel that those three Items are the appropriate Items to be considered. Item 59.06 is not descriptive of the subject goods.

2. It is useful to consider first Item 51.01 which applies to:-
   

"YARN OF CONTINUOUS MAN-MADE FIBRES, NOT PUT UP FOR RETAIL SALE"

1. It was agreed before the Tribunal and was not disputed in this appeal that dental floss was "yarn of continuous man-made fibres". The Tribunal found, and it is now agreed, that the goods were "not put up for retail sale", because of the provisions of Note 4(2) of Division 11 of the Tariff which I need not set out. The application of Item 51.01 was rejected by the Tribunal on the sole ground that the goods were "more than yarn of continuous man-made fibres".

2. Plainly the goods were more than just yarn. There was the spool on which the yarn was wound, the hinged plastic box in which the yarn and spool were contained, the metal hook attached to the plastic container for the cutting of the yarn and, lastly, the blister packaging.

3. Nevertheless, the Tribunal, in its approach, made an error of law. Goods which are imported, particularly goods imported in a packaged state, commonly incorporate elements which do not meet the description of the appropriate Item. The rules for the interpretation of the Tariff set out in Schedule 2 to the Customs Tariff Act provide for such a circumstance. Rules 2(2) and (3) provide:-
   

"(2) A reference in an item (including a reference in a sub-item, paragraph or sub-paragraph) to a material or substance shall be read as including a reference to a mixture or combination of that material or substance with another material or substance or with other materials or substances.

(3) A reference in an item (including a reference in a sub-item, paragraph or sub-paragraph) to goods consisting of a specified material or substance shall be read as a reference to goods consisting wholly or partly of that material or substance."

1. Of these rules, Rule 2(2) was applicable to the subject goods for what was imported was a material or substance, the yarn, combined with other materials or substances, the spool, the plastic container, the metal hook and the blister packaging. Accordingly, Item 51.01 comprehended the subject goods.

2. Rule 2(4) provides that, in this event, for the purpose of ascertaining whether an Item applies to goods that consist of more than one material or substance, regard should be had to the principles set out in Rule 3. That Rule provides that, where goods fall within two or more Items, then the appropriate Item is to be ascertained by adopting the Item which provides a more specific description of the goods than any other Item, that in the event that that principle cannot be applied and if one material component gives to the goods their essential character, the goods should be taken to consist of that material or component and classified accordingly. Finally, if neither of those principles applies, then the last Item in the Tariff meriting consideration should be adopted.

3. I therefore turn to Items 30.03 and 33.06 which may be considered together. Item 30.03 specified:-
   

"30.03 MEDICAMENTS ......"

1. Note 1(1) to Chapter 30 provided:-
   

"In 30.03, 'medicaments' means goods (other than dietetic, diabetic or fortified foods, tonic beverages, spa water or similar foods or beverages) that are -

(a) goods comprising 2 or more constituents that have been mixed or compounded together for a therapeutic or prophylactic use;

(b) unmixed goods suitable for such a use that have been put up in measured doses or in forms or in packs of a kind sold by retail for therapeutic or prophylactic purposes, but does not include goods falling within 30.02 or 30.04."

1. Item 33.06 specified:-
   

"PERFUMERY, COSMETICS AND TOILET PREPARATIONS; AQUEOUS DISTILLATES AND AQUEOUS SOLUTIONS OF ESSENTIAL OILS, INCLUDING SUCH OF THOSE GOODS AS ARE SUITABLE FOR MEDICINAL USE"

1. The Tribunal held that the subject goods were not a "medicament" within the ordinary meaning of that word which was that of "a curative or healing substance" but that Note 1(1) of the Chapter Notes extended the ordinary meaning and that the subject goods were "unmixed goods suitable for a prophylactic use that have been put up in packs of a kind sold by retail for prophylactic purposes". However, insofar as the Tribunal considered that Note 1(1) defined "medicaments" so as to include goods that, in their essential character, were not medicaments, it was in error. The Note merely uses the term "therapeutic or prophylactic use" rather than the term "medicinal use" and makes it clear that "medicaments" include unmixed goods suitable for and sold by retail for therapeutic or prophylactic purposes.

2. The Tribunal held that the goods were "a toilet preparation" and indeed found Item 33.06 to be the appropriate classification. The Tribunal said:-
   

"The subject goods may also be classified as a toilet preparation (33.06). They are put up in packs of a kind sold by retail for such use.

1. The word 'toilet' is defined as follows:-
   

'The act or process of dressing including bathing, arranging the hair etc. e.g. to make one's toilet' (Random House, Macquarie and Oxford).

'Preparation' is defined as including - 'Something prepared, manufactured or compounded"

(Random House and Macquarie) 'The action or special process of putting something into proper condition for use; composition, manufacture (of a chemical, medicinal or other substance; a substance specially prepared e.g. food or medicine' (Oxford) In our opinion a toilet preparation includes something which is manufactured or specially prepared for the purpose of cleansing any part of the body."

1. In reading the terms "medicaments" and "toilet preparations" in this exceedingly wide manner, the Tribunal gave an impermissible interpretation to the Tariff. The interpretation was no doubt influenced by the Tribunal's failure to appreciate that Item 51.01 was an appropriate classification. Having rejected this appropriate classification, the Tribunal had to find a classification and read 30.03 and 33.06 widely in order to do so. But in doing so it extended these Items beyond their permissible reach.

2. Medicaments are good such as ointments, salves, pills, tonics and the like, substances which are to be taken internally or applied for medicinal (therapeutic or prophylactic) purposes. Toilet preparations are substances such as soaps, creams and lotions. Neither term, in ordinary parlance or in the Tariff, refers to goods which are an instrument or apparatus. Hair brushes, toothbrushes, razors and hair dryers are not toilet preparations, they are instruments or apparatus for use in toiletry. Equally, a toothbrush is not a medicinal (therapeutic or prophylactic) substance. The Tribunal did not adopt the ordinary meaning of "toilet preparations" but, having referred to the Macquarie Dictionary's definition, that of "something prepared, manufactured or compounded", went on to hold that, in the context, the Item referred to anything which was manufactured or specially prepared for the purpose of cleansing any part of the body. But such a meaning is not the meaning of the term in ordinary parlance and no such interpretation can be gleaned from the context in which the words are used. Items such as a face washer, a nail brush and a pumice stone are not toilet preparations. They are goods used in toiletry.

3. There is no Item in the Tariff which specifies, as a class, apparatus or instruments used in toiletry. Apparatus and instruments are dealt with in divisions of the Tariff later than Division 11. Item 82.11 refers to razors and razor blades. Item 82.12 refers to scissors. Item 82.13 includes manicure and chiropody sets and nail files. Item 90.17 comprehends instruments and appliances used in the medical, dental, surgical and veterinary sciences. Brushes are dealt with in Chapter 96. Many instruments and apparatus fall within Items by reference to the material from which they are made. But no Item refers to instruments and apparatus used in toiletry as a genus or class. To read Items 30.03 and 33.06 to comprehend such goods when the words used in their ordinary denotation are not suited to describe instruments and apparatus is to misread the Tariff. Dental floss, like a toothbrush, is an instrument used for cleansing teeth and, like a toothbrush, must find its place in the Tariff under an Item other than Items 30.03 and 30.06.

4. I have been concerned as to whether the error of the Tribunal as to the application of Item 33.06 was an error of act or an error of law. The meaning of an ordinary word of the English language is a question of fact. It is ordinarily a question of fact as to whether such a word describes particular goods. See per Bowen CJ in Lombardo v. Federal Commissioner of Taxation (1979) 28 ALR 574 at p 576-7. I have come to the view, however, that the Tribunal's error was an error of law brought about by its incorrect reading of Item 51.01, in the context of the Interpretative Rules. Having incorrectly interpreted the Tariff and rejected Item 51.01, the Tribunal was driven, in order to find a suitable Item in the Tariff, to giving an unduly wide and wrong meaning to the term "medicaments" in Item 30.03 and to the term "toilet preparations" in Item 33.06. The Tribunal's error was therefore one of law.

5. On the correct interpretation of the Tariff, only one Item, Item 51.01, was an appropriate Item for the classification of these goods. In these circumstances, it was an error of law not to apply that classification.

6. I may add that, in fact, Item 51.01 provides both a specific description of the subject goods and a description of their essential character. The essential character of the subject goods is yarn of continuous man-made fibres, albeit packaged for use as dental floss.

7. The order of the Court will therefore be that the decision of the Tribunal is set aside and that, in lieu thereof, there be substituted a decision that the decision of the Collector of Customs be set aside and that the matter be remitted to the Collector of Customs with the direction that the subject goods fell for classification within Item 51.01. The respondent should pay the costs of the application to this Court.