Laerdal Medical Pty Ltd and Comptroller-General of Customs
[2017] AATA 2427
•1 December 2017
Laerdal Medical Pty Ltd and Comptroller-General of Customs [2017] AATA 2427 (1 December 2017)
Division:General Division
File Number(s): 2016/4656
Re:Laerdal Medical Pty Ltd
APPLICANT
AndComptroller-General of Customs
RESPONDENT
Decision
Tribunal:Deputy President S A Forgie
Date:1 December 2017
Place:Melbourne
The Tribunal decides:
to affirm the decision of a delegate of the respondent dated 18 July 2016.
............[sgd]........................................................
Deputy President S A Forgie
Catchwords
CUSTOMS – whether subject goods accessory – whether furniture of plastics – subject goods hold automated external defibrillator – whether accessory to defibrillator- authorities – principles – decision affirmed
Legislation
Customs Act 1901 ss 132AA, 167
Customs Tariff Act 1995 ss 3, 6, 7, 15, 16, 17, 18, 20, 22; and Schs 2, 3; and Headings 4202, 9402, 9403.70.00, 9018.90.00
Cases
Barry R Liggins Pty Ltd v Comptroller-General of Customs (1991) 32 FCR 112; 103 ALR 565
Chief Executive Officer of Customs v Boehringer Mannheim Australia Pty Ltd [1997] FCA 1235
Chinese Food and Wine Supplies Pty Ltd v Collector of Customs (Vic) (1987) 72 ALR 591; 12 ALD 313
Deputy Commissioner of Taxation v Polaroid Australia Pty Ltd (1972) 46 ALJR 32; 71 ATC 4249; 2 ATR 653
Federal Commissioner of Taxation v Kentucky Fried Chicken Pty Ltd (1988) 12 NSWLR 643; 91 FLR 242; 19 ATR 1141
Re Gissing and Collector of Customs (1977) 1 ALD 144; 14 ALR 555
Re Tridon Pty Ltd and Collector of Customs (1982) 4 ALD 615
Re Zendel Australia Limited v Commissioner of Taxation [1992] FCA 461; (1992) 92 ATC 4515; 24 ATR 101
Times Consultants Pty Ltd v Collector of Customs (QLD) (1987) 16 FCR 449; 76 ALR 313 Vernon-Carus Australia Pty Ltd and Anor v Collector of Customs [1995] FCA 1283; (1995) 21 AAR 450
Waterscheid Australia Pty Ltd v Collector of Customs (1988) 7 AAR 555
Zendel Australia v Federal Commissioner of Taxation (1993) 46 FCR 14
Harmonized System Explanatory Notes
Secondary Materials
Chambers 21st Century Dictionary, 1999, reprinted 2004, Chambers
Macquarie Dictionary, revised 5th edition, 2009, The Macquarie Library Pty Ltd
The Macquarie Dictionary, 2nd edition, 1991
The New Shorter Oxford Dictionary, 1993
REASONS FOR DECISION
Deputy President SA Forgie
Laerdal Medical Pty Ltd (Laerdal) imports the goods that it has described variously as a “Headstart Defibrillator Wall Box with Alarm”, a “Headstart Wall Box”, an “AED Headstart Wall Cabinet” a “Heartstart Wall Cabinet” or a “Cabinet”.[1] Laerdal sells them for use with an Automated External Defibrillator (AED) (defibrillator),[2] which is purchased separately. For the purposes of the Customs Tariff Act 1995 (CT Act), they are known as the “subject goods”. The Comptroller-General of Customs (Comptroller-General) decided that the subject goods should be classified under Schedule 3 to the CT Act to 9403.70.00 as “-Furniture of plastics”. He did not accept that they should be characterised as an accessory to defibrillators,[3] which are classified to Heading 9018.90.00,[4] and so did not accept that the same tariff classification was the appropriate tariff classification for the subject goods. The consequence of the Comptroller-General’s decision made on 18 July 2016 was that Laerdal was required to pay duty at the rate of 5% rather than being permitted to import them free of duty. Laerdal disputed the decision and paid that duty under protest as it was permitted to do under s 167 of the Customs Act 1901 (Customs Act). As s 273GA(2) permitted it to do, Laerdal lodged an application for review of the Comptroller-General’s decision and did so on 2 September 2016. I have decided to affirm the decision.
[1] See documents lodged under s 37 of the Administrative Appeals Tribunal Act 1975 (T documents); T3 at 32, T15 at 195, T9 at 53, T3 at 32 and T14 at 100
[2] I will refer to the defibrillator housed in the subject goods as either a defibrillator or as an AED.
[3] The defibrillator housed in the subject goods is also known as an “Automated External Defibrillator” (AED).
[4] “-Other instruments and appliances”
LEGISLATIVE FRAMEWORK
Section 132AA of the Customs Act sets out the general rule. Only Item 1 of that rule is relevant:
“Import duty payable on goods described in an item of the following table must be paid by the time indicated in the item. Import duty on goods covered by both items 1 and 2 is payable by the time indicated in item 2.
When import duty must be paid
Item
Description of goods
Time by which duty on goods must be paid
1
Goods entered for home consumption
Time of entry of the goods for home consumption
2-4
…
…”
Subject to exceptions that are not relevant in this case, the rate of any import duty payable on goods is the rate of duty in force when the goods are entered for home consumption.[5]
[5] Customs Act; s 132(1)
Section 15(a) of the CT Act provides that it imposes duties of customs on, among others, goods imported into Australia on or after 1 July 1996. The duty payable upon such goods is worked out in the manner provided for in ss 16, 17, 18, 20 and 22. In summary, the duty is worked out by reference to the place of produce or manufacture of the goods and the relevant rate set out in the third column of the tariff classification under which the goods are classified. A reference to the tariff classification under which the goods are classified is a reference to the heading or subheading in whose third column a rate of duty is set out and under which the goods are classified.[6] The reference to a heading and a subheading is a reference to those appearing in Schedule 3 to the CT Act.[7]
[6] CT Act; s 6
[7] CT Act; s 3(1)
The parties agreed that the following four headings of Schedule 3 are the only possible headings that may be applicable to the subject goods. I have included the title of the relevant Chapter for ease of reference only. To do so is consistent with Rule 1 of the Interpretation Rules set out in Schedule 2 to the CT Act. The following table also sets out an extract from the Notes to the relevant Chapter that may be relevant in this matter.
Chapter
Title
Heading
42
Articles of leather; saddlery and harness; travel goods, handbags and similar containers; articles of animal gut (other than silk-worm gut)
4202
TRUNKS, SUIT-CASES, VANITY-CASES, EXECUTIVE-CASES, BRIEF-CASES, SCHOOL SATCHELS, SPECTACLE CASES, BINOCULAR CASES, CAMERA CASES, MUSICAL INSTRUMENT CASES, GUN CASES, HOLSTERS AND SIMILAR CONTAINERS; TRAVELLING-BAGS, INSULATED FOOD OR BEVERAGES BAGS, TOILET BAGS, RUCKSACKS, HANDBAGS, SHOPPING-BAGS, WALLETS, PURSES, MAP-CASES, CIGARETTE-CASES, TOBACCO-POUCHES, TOOL BAGS, SPORTS BAGS, BOTTLE-CASES, JEWELLERY BOXES, POWDER-BOXES, CUTLERY CASES AND SIMILAR CONTAINERS, OF LEATHER OR OF COMPOSITION LEATHER, OF SHEETING OF PLASTICS, OF TEXTILE MATERIALS, OF VULCANISED FIBRE OR OF PAPERBOARD, OR WHOLLY OR MAINLY COVERED WITH SUCH MATERIAL OR WITH PAPER
Notes to Chapter 42
1._ …
2.- This Chapter does not cover:(a)-(ij) …
(k) Articles of Chapter 94 (for example, furniture, lamps and lighting fittings);
(l)-(m) …
3- …
4.- …
90
Optical, photographic, cinematographic, measuring, checking, precision, medical or surgical instruments and apparatus; parts and accessories thereof
9018
9018.90
INSTRUMENTS AND APPLIANCES USED IN MEDICAL, SURGICAL, DENTAL OR VETERINARY SCIENCES, INCLUDING SCINTIGRAPHIC APPARATUS, OTHER ELECTRO-MEDICAL APPARATUS AND SIGHT-TESTING INSTRUMENTS
Other instruments and appliancesNotes to Chapter 90
1.- This Chapter does not cover:
(a)-(n)
2.- Subject to Note 1 above, parts and accessories for machines, apparatus, instruments or articles of this Chapter are to be classified according to the following rules:
(a) Parts and accessories which are goods included in any of the headings of this Chapter or of Chapter 84, 85 or 91 (other than 8487, 8548 or 9033.00.00) are in all cases to be classified in their respective headings;
(b) Other parts and accessories, if suitable for use solely or principally with a particular kind of machine, instrument or apparatus, or with a number of machines, instruments or apparatus of the same heading (including a machine, instrument or apparatus of 9010, 9013 or 9031) are to be classified with the machines, instruments or apparatus of that kind;
(c) All other parts and accessories are to be classified in 9033.00.00.
3.-7.- …
94
Furniture; bedding, mattresses, mattress supports, cushions and similar stuffed furnishings; lamps and lighting fittings, not elsewhere specified or included; illuminated signs, illuminated name-plates and the like; prefabricated buildings
9402
9402.90
MEDICAL, SURGICAL, DENTAL OR VETERINARY FURNITURE (FOR EXAMPLE, OPERATING TABLES, EXAMINATION TABLES, HOSPITAL BEDS WITH MECHANICAL FITTINGS, DENTISTS’S CHAIRS); BARBERS’ CHAIRS AND SIMILAR CHAIRS, HAVING ROTATING AS WELL AS BOTH RECLINING AND ELEVATING MOVEMENTS; PARTS OF THE FOREGOING ARTICLES.
Other
Notes to Chapter 94
1.- …
2.- The articles (other than parts) referred to in 9401 to 9403 are to be classified in those headings only if they are designed for placing on the floor or ground.
The following are, however, to be classified in the above-mentioned headings even if they are designed to be hung, to be fixed to the wall or to stand one on the other:
(a) Cupboards, bookcases, other shelved furniture (including single shelves presented with supports for fixing them to the wall) and unit furniture;
(b) Seats and beds.
9403
9403.70
OTHER FURNITURE AND PARTS THEREOF:
Furniture of plastics
…
PRINCIPLES GUIDING TARIFF CLASSIFICATION
Interpretation Rules
Section 7(1) of the CT Act provides that the Interpretation Rules must be used for working out the tariff classification under which goods are classified. A reference to the Interpretation Rules includes a reference to the Additional Notes.[8] The Interpretation Rules are set out in Schedule 2 to the CT Act.[9] They are based on the wording in the Harmonized Commodity Description and Coding System that is referred to in the International Convention on the Harmonized Commodity Description and Coding System done at Brussels on 14 June 1983.[10] Only the following rules are relevant in the circumstances of this case:
[8] CT Act; s 7(3)
[9] CT Act; s 3(1)
[10] CT Act; s 7 Note 1
“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 relative Section or Chapter Notes and, provided such headings or Notes do not otherwise require, according to the following provisions:
2.(a) …
(b)…
3.When by application of Rule 2(b) or for any other reason, goods are, prima facie, classifiable under two or more headings, 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. In addition to the foregoing provisions, the following Rules shall apply in respect of the goods referred to therein:
(a) Camera cases, musical instrument cases, gun cases, drawing instrument cases, necklace cases and similar containers, specially shaped or fitted to contain a specific article or set of articles, suitable for long-term use and presented with the articles for which they are intended, shall be classified with such articles when of a kind normally sold therewith. This Rule does not, however, apply to containers which give the whole its essential character;
(b) …
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.”
Principles guiding classification
In considering the proper classification of the subject goods, the first step is to identify those goods. Only when that has been done is it appropriate to construe the Headings to determine to which Heading the subject goods should be classified. This follows from the Tribunal’s decision in Re Gissing and Collector of Customs[11] and also from the later decision of Times Consultants Pty Ltd v Collector of Customs (QLD).[12]
[11] (1977) 1 ALD 144; 14 ALR 555, Brennan J, President, Mr Skermer and Mr Stock, Members
[12] (1987) 16 FCR 449; 76 ALR 313, Fox, Morling and Wilcox JJ
The manner in which the first step of identification is undertaken was considered by the Tribunal in Re Tridon Pty Ltd and Collector of Customs.[13] Referring to the authorities, the Tribunal in Re Tridon identified eight principles as relevant in identifying the subject goods:
“(i) Identification must be objective, having regard to the characteristics which the goods, on informed inspection, present ...;
(ii) The identification of goods cannot be controlled by the descriptions of goods adopted in the nomenclature of the Tariff ...;
(iii) Nevertheless in identifying goods 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 frequently complex task of classification ...;
(iv) In the identification of goods, knowledge of how those who trade in the goods describe them will usually be relevant, but not necessarily conclusive ...;
(v) 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 ...;
(vi) Descriptive terms may be of varying degrees of specificity (eg windscreen wiper blade refills, parts for a windscreen wiper or parts for a motor vehicle). Generic descriptions may be by reference to the materials or substances from which the goods are manufactured ...;
(vii) Identification will frequently extend to characterisation of goods by reference to their design features cf Re Virgo Manufacturing Co Pty Ltd and Collector of Customs (Vic) (1981) 3 ALN No 15, or by reference to their suitability for a particular use where those characteristics emerge from informed inspection of the goods as imported ... . The extent to which these characteristics may be relevant to the ultimate classification of the goods and whether evidence of the use to which goods are put after importation is relevant, will depend upon the language of the Tariff Nomenclature ...;
(viii) Composite goods, notwithstanding that they 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 ...”[14]
[13] (1982) 4 ALD 615 at 620, Mr Hall, then Senior Member and Mr Wickens and Mr Prowse, Members
[14] (1982) 4 ALD 615 at 620-621, authorities and citations omitted
The task of identifying goods was further considered by the Full Court of the Federal Court in Times Consultants Pty Ltd v Collector of Customs (QLD).[15] The majority noted that:
“ 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 or purchaser preference … It ought normally be possible to classify goods merely by looking at them and by considering their nature and function which they were designed to serve. In the case of goods made up in sets, it may be that there is no single essential character; in which case r 3(1)(b) will be inapplicable and reference will need to be made to the arbitrary rule contained in r 3(1)(c).”[16]
[15] (1987) 16 FCR 449; 76 ALR 313, Morling and Wilcox JJ, Fox J dissenting
[16] (1987) 16 FCR 449; 76 ALR 313 at 463; 328
Earlier in their judgement, they had addressed another aspect of the wharf-side task:
“ The authorities make it clear that in determining what is the essential character of goods it is the state or condition of the goods at the time of importation that is the determining factor and that it is wrong to classify goods or to determine their essential character by reference to the purpose of the importer or of the purchaser. Regard must be had to the characteristics of the goods themselves, as they would present themselves to an informed observer: see Chandler & Co v Collector of Customs (1907) 4 CLR 1719 at 1729; Whitton v Falkiner (1915) 20 CLR 118 at 131; Blackwood Hodge (Australia) Pty Ltd v Collector of Customs (1980) 47 FLR 131 at 155.”[17]
[17] (1987) 16 FCR 449; 76 ALR 313 at 462; 327
In Chinese Food and Wine Supplies Pty Ltd v Collector of Customs (Vic),[18] Lockhart J, with whom Woodward and Ryan JJ agreed, was concerned with the classification of certain liquid as either a medicament under Item 30.03 of Schedule 3 to the CT Act or as alcoholic beverages under 22.09.91. He described the task of identifying the subject goods:
“ It is the goods themselves in the condition in which they are imported here to which it is generally necessary to look under the Tariff Act to determine the identification of goods for the purposes of Customs duty …
Whether the goods in suit properly fall within Item 30.03 of the Customs tariff is determined by an objective test not by the intention of the manufacturer in China or of the exporter or the importer. The test is applied at the port of entry of the goods and at the time of entry. The characteristics of the goods, their get-up, colour, decoration, labelling and packaging are all relevant considerations. In some cases, a visual inspection of the goods and their packaging will disclose characteristics of the goods and enable a judgment to be made as to whether they are for therapeutic or prophylactic use. But visual inspection will not necessarily provide the answer in each case. Tests may have to be carried out and inquiries made to ascertain the relevant characteristics of the goods. In the present case, samples were taken and sent for chemical analysis. As the tribunal noted, the paucity of the information contained in the labelling of the goods necessitated further inquiries being made in respect of them.
The critical elements upon which the tribunal relied, namely, the labelling and general presentation of the goods as imported into Australia, the analysis of the liquid contained in the bottles, the contents of the sale catalogue issued with the title ‘Wines’ on its cover with both kinds of goods included in it and the display of those kinds of goods in the liquor section of a supermarket in Hong Kong are in my view all relevant matters which the tribunal was entitled to consider …”[19]
[18] (1987) 72 ALR 591; 12 ALD 313
[19] (1987) 72 ALR 59; 12 ALD 313 at 599
A little more recently, the same principles were identified by Northrop J in Vernon-Carus Australia Pty Ltd and Anor v Collector of Customs:[20]
“... 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. ...”[21]
[20] [1995] FCA 1283; (1995) 21 AAR 450
[21] [1995] FCA 1283; (1995) 21 AAR 450 at [20]; 455-456
DESCRIPTION OF THE SUBJECT GOODS
The subject goods is, when not fixed to the wall, an irregular box-shaped object made of a plastic material measuring approximately 49cms wide, 39cms wide and 20cms deep at its extremities. Although broadly rectangular in shape, it is divided into two equal halves and is hinged on its shorter side. The hinged side protrudes slightly from the rectangular shape to accommodate the hinge. Opposite the hinged side of what I will call the “box” for the purposes of description, is a latch so that the box does not open without intervention. A lamp covered in red plastic sits above the hinge on one of the long edges of one half of the box. The box is red in colour but has an inner lining that is made of a light grey plastic material. One half of the box has a clear window placed in the centre and measuring just short of 30cm by 19cm. Surrounding the window is a white plastic border set in the red plastic. Words are written on the white plastic either in red lettering, in a red strip of colour with white lettering or in black and red. Pictures of the subject goods were included in the evidence as was the box itself. Apart from the AED placed inside the box, the following picture is an accurate representation of the subject goods:
Although it could conceivably be used when it is lying flat on a surface, the box is designed to be fixed to a wall for four reasons. One reason comes in the form of four bolt holes in one half of the box that does not have the window together with the four bolts included in the box. Another comes from the fact that the plastic lining forms a built in shelf along the bottom long edge of the box when it is placed against the wall with the writing on the window half the right way up so that it can be read. When the box is in that position, a globe protected by a cover made of red plastic like material sits at the top of the box where it can be seen. That is the third reason. The last arises from words themselves. Those appearing at the top of the box in that position are written in red lettering on the white border and read:
“HEARTSTART
First Aid Defibrillator”
The words appearing under the window on the right hand side of the box read “Pull to open”. They are written on a red strip of colour with white lettering. Laerdal’s name and logo appear on the left hand side under the window with the words “helping save lives”. The lettering is in black on the white border and the logo in red, white and black.
The shelf inside the box is recessed from the hinged side of the box to allow room for a switch. When the box is closed, the switch depresses. There is a depression or “pocket” in the grey plastic inner lining of the box. Leading into the depression are two wires being a red wire and a black wire. The wires run into a connection commonly used for a 9V battery and the depression or pocket is of a size to accommodate such a battery neatly. Attached to the hinged side of the other half, which is effectively the door to the box, are three Velcro straps.
On the basis of the statement of dated 14 February 2017 of Dr William Patrickson who was, from 12 March 2012 until 1 January 2017, the Chief Executive Officer of Laerdal, I find that opening the box means that the switch is no longer depressed and the globe activates together an audible alarm. The purpose of the light and alarm is twofold. One purpose is to deter people from opening it when there is no emergency. If there is an emergency, the other purpose is to notify others that there is such an emergency.
On the same basis, I find that the box is intended to be used to store any one of four models of Heartstart defibrillators. It has been made to Laerdal’s specifications for that purpose since 2003 and Laerdal has the product liability for it. Laerdal imports the boxes separately from the defibrillators and it sells many separately from them as well. That does not change the purpose for which Laerdal designed it. Consistently with that purpose, the box is coloured red to draw people’s attention to it and to the fact that a defibrillator is on the premises because every minute that goes by decreases a person’s chances of survival from a cardiac arrest by 10%. The clear panel on the front of the box enables the defibrillator to be seen clearly.
Again on the basis of Dr Patrickson’s evidence and the photographs attached to his statement, I find that the box is located in public areas such as those at the Melbourne Airport, the Hobart Airport and the Fountain Gate Shopping Centre and at a school.[22] On the wall immediately above each box is placed a notice with white writing on a green background in a form showing the following information:
One of the notices above one of the defibrillators at the Hobart Airport appears from the photograph to include pictorial representation of what to do with the defibrillator and the notice at the school advises what to do when there are no signs of life.
[22] Exhibit C and Exhibit 2
The box is advertised on Laerdal’s website at for use with HeartStart® FR2, HeartStart FRx, HeartStart First Aid Defibrillator and HeartStart® FR3. Dr Patrickson’s evidence is that Laerdal has sold the box only to customers who either own or are purchasing one of those defibrillators. I accept that Dr Patrickson and those associated with Laerdal have only ever seen the box housing one or other of those four types of defibrillators and have not seen it used for any other purpose but the evidence is otherwise. The pictorial evidence tendered by both Laerdal and the Comptroller-General shows that the box is used to house a HeartStart defibrillator at the Fountain Gate Shopping Centre and at one location in the Hobart Airport, it is used to house a Philips defibrillator at a second location at the Hobart Airport and at the school and at two locations at the Melbourne Airport. That said, I am satisfied that there is no evidence in this case that the box has been used for any purpose other than to house a defibrillator.
On the basis of the photograph of the HeartStart defibrillator at the Marysville Community Golf and Bowls Club[23] and the evidence of Dr Patrickson, I find that a defibrillator, whether of the HeartStart brand or otherwise, may be stored in ways other than in the box that comprises the subject goods in this case. In that instance, it is stored on a purpose built shelf that has a ledge to keep the defibrillator in place. Instructions on how to use the defibrillator are written on the front of the ledge as well as the emergency 000 number. The number of St John Ambulance is written on the side wall of the ledge.
[23] Exhibit B
ARE THE SUBJECT GOODS A PART OR ACCESSORY FOR A DEFIBRILLATOR?
On behalf of the Comptroller-General, Mr Millea conceded that, if the subject goods are a part of an AED or an accessory that is suitable for use solely or principally with an AED, the subject goods should be classified under the same Heading as the AEDs i.e. 9018.90.00. The concession is consistent with Note 2 to Heading 90.[24] Mr Millea submitted, however, that they were neither a part of, nor an accessory to, an AED and drew my attention to the dictionary meanings of those terms and to previous authorities.
Are the subject goods a part of a defibrillator?
[24] See [4] above
A. The authorities
The ordinary meanings of the word “part” include:
“… 1 a portion, piece or bit; some but not all. 2 one of a set of equal divisions or amounts that compose the whole. o in the proportion of five parts cement to two of sand. 3 an essential piece; a component o vehicle spare parts. …”[25]
[25] Chambers 21st Century Dictionary, 1999, reprinted 2004, Chambers (Chambers)
It is a word that has been considered by Gibbs J in Deputy Commissioner of Taxation v Polaroid Australia Pty Ltd[26] (Polaroid). Decided in the context of sales tax, the sole issue was whether Polaroid film packs and picture rolls designed for use in particular kinds of Polaroid cameras were subject to duty at the rate of 25%, because they fell within an item in Schedule 2 to the Sales Tax (Exemptions and Classifications) Act 1935-1967 (STEC Act) or at a lower rate of 12½% and later 15% because they did not. The answer depended on whether the Polaroid film packs and picture rolls were properly classified to Items 38 or 42 in Schedule 2.
[26] (1972) 46 ALJR 32; 71 ATC 4249; 2 ATR 653
Only Item 38, which draws in Item 36, is relevant for the purposes of the issue I must decide. Item 38 read: “Accessories and parts for goods covered by item 37 … in this Schedule.” Item 36 read:
“Cameras (including cinematograph and stereo cameras), photomatons and machines for taking photographs, but not including photographic equipment of a kind used exclusively or primarily and principally in the reproduction of documents, drawings and plans.”
The primary contention made by the Commissioner for Taxation (Commissioner) was to the effect that the Polaroid film packs and picture rolls were “parts” of the Polaroid camera. Gibbs J noted that the evidence was to the effect that a picture roll could only be used in the “Swinger” model of Polaroid camera and that, to take a picture with that camera, a picture roll had to be used. Similarly, a film pack could only be used with one type of Polaroid camera, although there were several versions of that type. When either the film pack or the picture roll is placed in the relevant camera, it is fixed in position by a strong clip. His Honour continued:
“… This evidence did not however establish that a film pack or picture roll is part of a camera. One thing does not become part of another simply because the latter thing cannot be put to proper use without the aid of the former, even if, in use, the two things are fixed together. In my opinion a film is not part of a camera, nor a bullet of a gun, nor petrol of a motor vehicle. A Polaroid camera is a different thing from a film pack or picture roll, and is complete even though it has no pack or roll in it. A person who contracted to buy a camera could not, in my opinion, successfully contend that his contract entitled him to a supply of film as well, or, if he had contracted to buy a Polaroid camera, to the supply of a film pack or a picture roll. The fact that the film pack and the picture roll are each designed to fit only one type of camera, which cannot be worked with any other type of photographic material, merely re-enforces the view that the pack and the roll are essential aids to use of the cameras, but does not show that the pack or the roll is part of the camera itself. In The D.F.C. of T. v Fowler Rex (N.S.W.) Pty. Limited (1967) 118 C.L.R. 160, at 163, Owen J held that the word ‘parts’ appearing in the definition of ‘aids to manufacture’ in the First Schedule to the Sales Tax (Exemptions and Classifications) Act 1935-1962 (Cth) did no more than describe those things which in ordinary parlance would be described as spare parts for the various classes of goods mentioned. I take the same view of ‘parts’ in Item 38.”[27]
[27] (1972) 71 ATC 4249; 2 ATR 653 at 4252-4253; 656-657
B. Consideration
On the basis of Mr Patrickson’s evidence, I find that defibrillators were once used exclusively in hospitals and emergency vehicles. Since the late 1990s they have been available for public use as they have become smaller and lighter than in earlier years. The places at which they may be located is not restricted. This finding is also supported by the photographs of the defibrillators at the Melbourne and Hobart Airports, the shopping centre, the school and the golf and bowls club. Putting aside the fact that they are located in a box matching the subject goods, those photographs show that defibrillators are made available in areas where they are accessible by those using the facilities be they members of the public generally at the airports and shopping centre or more restricted groups of people at the school or golf and bowls club. The extract from Volume 38 No. 1 of the Bush Fire Bulletin also shows the broad availability of AED units in that it refers to the New South Wales Regional Fire Service’s (NSWRFS) having more than 5,000 “life saving Automated External Defibrillator (AED) units, installed in all vehicles and Fire Control Centres across NSW. …”.[28] Although not pictured in location in the vehicles, I accept that the AED units are not housed in a box of the type of the subject goods. As Mr Patrickson said in giving evidence, AED units may be stored in the subject goods, on a shelf on the wall or carried with or without a carry bag.
[28] Exhibit 3
The AED does not draw its power from the battery located in the subject goods but from its own battery. The subject goods may be used to house the AED and spare electrodes but, as is apparent from the way in which the NSWRFS uses AEDs without the subject goods or their equivalent, an AED can be used without them. I would go further and find that the subject goods have no role to play in the operation of the AED they house.
In other words and to adopt those used by Gibbs J in the Polaroid case, the AED is complete even though it is not placed or housed in the subject goods. A person who contracts to buy the subject goods would not expect to have a defibrillator or AED included with it and, indeed, Mr Patrickson’s evidence and supported by the separate pricing of the subject goods from the defibrillator, the expectation would be to the contrary. Therefore, I have concluded that the subject goods are not a portion or piece, and so are not a part, of an AED or defibrillator.
Are the subject goods accessories to AEDs?
A. The authorities
The ordinary meanings of the word “accessory” or “accessories” include:
“… 1. a subordinate part or object; something added or attached for convenience, attractiveness etc., such as a spotlight, heater, driving mirror, etc., for a vehicle. …”[29]
“… 1 An additional or subordinate thing; an adjunct, an accompaniment; a minor fitting or attachment; …”[30]
[29] The Macquarie Dictionary, 2nd edition, 1991
[30] The New Shorter Oxford English Dictionary, 1993
The word "accessories" has also been considered in a number of authorities including Polaroid, Federal Commissioner of Taxation v Kentucky Fried Chicken Pty Ltd[31] (Kentucky Fried Chicken), Waterscheid Australia Pty Ltd v Collector of Customs[32] (Waterscheid) and Zendel Australia v Federal Commissioner of Taxation[33] (Zendel). In the Polaroid case, for example, Gibbs J went on to consider whether the Polaroid film packs and picture rolls were accessories to the Polaroid camera:
“… The ordinary dictionary meaning of accessory is an adjunct, which itself is defined as something joined to another, but subordinate, as auxiliary, or dependent upon it. It was because the Deputy Commissioner regarded the goods as essential to the use of a Polaroid camera that he preferred to submit that they are parts rather than accessories. In my opinion, however, the goods in question cannot be regarded as accessories for a Polaroid camera. An accessory for a camera is an extra and additional part of the equipment of the camera itself, such as a light meter, a filter or a wide angle lens, and in the ordinary course of language a film would not be referred to as an accessory for a conventional camera, nor a film pack or a picture roll as an accessory for a Polaroid camera.”[34]
[31] (1988) 12 NSWLR 643; 91 FLR 242; 19 ATR 1141; Hope, Samuels, McHugh JJA
[32] (1988) 7 AAR 555; Davies J
[33] (1993) 46 FCR 14; Lockhart, Beaumont and Gummow JJ
[34] (1972) 46 ALJR 32; 71 ATC 4249; 2 ATR 653 at 35; 4253; 657
In the Kentucky Fried Chicken case, Hope JA, with whom Samuels and McHugh JJA agreed, considered the meaning of “accessory”. The issue again related to the imposition of sales tax under the STEC Act but only the first issue decided on appeal is relevant in the context of the present case. It was whether the paper serviettes, refresher towels and plastic spoons included in serviette packs and refresher towels alone are, when packed in cardboard or polystyrene foam cartons with food products sold to Kentucky Fried Chicken’s customers, accessories of the food products marketed in those cartons for the purposes of Item 91(1) of the First Schedule to the STEC Act.
Reading s 5(1) and Item 91(1) together, “containers used, or for use, in marketing goods … where the property in the container passes, or is to pass, to the purchaser of the contents” are exempt from sales tax. The word “containers” is defined in Item 1(1) of the First Schedule:
“(a) the inner or outer coverings in which goods are packed or secured, or are to be packed or secured, in the ordinary course of business (including inside linings and inside packing materials); or
(b)goods ordinarily used to secure or seal, or to describe the contents of, coverings to which paragraph 1 applies, being goods forming part of the completed coverings,
and includes can keys, glass droppers and other goods that –
(c)are accessories of coverings or goods to which paragraph (a) or (b) applies or of goods marketed in such coverings;
(d)are attached to or form part of the inner coverings, or are contained in the outer coverings, of the goods so marketed; and
(e)are sold with those goods for one inclusive price.” (emphasis added)
Hope JA said:
“… The word ‘accessory’ can be either an adjective or a noun. … In the Macquarie Dictionary, as an adjective its meaning is given as: ‘contributing to a general effect; subsidiary.’ As a noun its meaning is given as: ‘a subordinate part or object; something added or attached for convenience, attractiveness, etc, such as a spotlight, heater, driving mirror, etc, for a vehicle.’ …
… [E]ven without a context which may confirm such a conclusion, the word 'accessory' whether used as an adjective or a noun does not necessarily connote that the accessory must be joined to something else. An object that is joined to another may well be an accessory although it will not necessarily be so. However, it may still be an accessory even though it is not joined. Adopting as a basis the meaning given in the Macquarie Dictionary, an article will be an accessory if it is a subordinate part or object, added or attached for convenience or effectiveness or other such reason.
I do not regard the word ‘added’ in this meaning to require conjunction nor do I suggest that this meaning is exhaustive. However, it is enough for present purposes. The word thus may apply to a subsidiary article whether joined or not joined to the principal article; it must be subordinate or subsidiary to that principal article and is added or attached for reasons such as convenience or effectiveness.”[35]
[35] (1988) 12 NSWLR 643; 91 FLR 242; 19 ATR 1141 at 649-650; 247-248; 1146-1147
His Honour rejected the Commissioner’s argument that an accessory must have some inherent characteristic which makes it suitable only, or substantially only, for use with the goods to be marketed. He also said:
“ With this background can it be said that the paper serviettes, refresher towels and plastic spoons included in the coverings in which Kentucky’s food products are marketed are accessories of those food products. It cannot be questioned that these articles are subsidiary to the principal item which is sold, namely, the food products. Likewise, I think it clear that they are added to the food products within the cartons for the purposes of the convenience of purchasers in the consumption of those products, in exactly the same way as eye droppers are included in a container holding a bottle of eye drops or nose drops for the convenience of the buyer in the consumption of the fluid in the bottle. It is true, of course, that these articles do not and could not form part of the food products, but nor does and nor could the separate glass dropper form part of the fluid to be dropped or of the bottle containing it, or of the container in which both bottle and dropper are packed. In each case the article could be used for purposes other than in association with the principal article, but in each case it adds greatly to the convenience of the buyer to have the article for use with that principal article.
… [I]t seems to me the purposes of this type of legislation, and relevantly for the purposes of the sales tax legislation, are often better served by looking at the substance and reality of the matter. The substance and reality in the present case is that Kentucky manufactures and sells what have come to be called ‘fast foods’, which are ready to be eaten at once, and which have achieved their market success because of the convenience they provide for the people who make up the market. The spoons (which are used for eating mashed potatoes), the serviettes and the washers are obviously a convenience to those people in the consumption of that convenient food.
I have concluded that that Yeldham J was correct in deciding that the serviette packs comprising refresher towels, paper serviettes and spoons and the separate refresher towels, when packed by Kentucky in cardboard or polystyrene foam cartons with the food products which Kentucky sells and sold with those products at one inclusive price, are accessories of the food products so marketed.”[36]
[36] (1988) 12 NSWLR 643; 91 FLR 242; 19 ATR 1141 at 651-652; 249; 1148
Both the Polaroid and Kentucky Fried Chicken cases were considered by Lockhart J, with whom Beaumont and Gummow JJ agreed, in Zendel. The appellants sold plastic film packaged in certain lengths, aluminium foil used principally by consumers for cooking and packets of small plastic bags used principally by consumers for use in refrigerators and freezers. Only the aluminium foil and plastic bags are relevant in this case. The appellants claimed that they attracted Sales Tax at the rate of 10% only because they fell within Item 2 of the Third Schedule to the STEC Act as “Parts, fittings and accessories for goods covered by item 1, namely … (1) kitchen hardware”. :
“Ultimately, the meaning of the word ‘accessory’ must acquire its meaning from the particular context in which it is used. In my opinion, for an item to be an accessory within the meaning of the Act, it must contribute to the working of some principal item or its general effect or appearance. The aluminium foil, for example, with which this case is concerned, does not, in my view, contribute to the stove or its function, or its effect or appearance.
A stove functions and performs in the same way irrespective of the use of aluminium foil. Foil certainly may improve the effect of cooking on the food, just as freezer bags may modify the effect of freezing on food; but that simply says that the product in question assists in the process of cooking or freezing. They are an adjunct to the process, rather than an adjunct to the appliance itself, and unless they are an adjunct to the appliance – which in my view they are not – they cannot fall within the relevant position.”[37]
[37] (1993) 46 FCR 14 at 18;
In the course of his judgment, Lockhart J observed that the meaning of the word “accessory” depends on its context and it was the context which distinguished the different meanings given to it in Polaroid and in Kentucky Fried Chicken. This was a theme that appeared in the judgment of Hill J at first instance and his judgment was upheld on appeal.[38] Hill J explained the bases of the two meanings and applied the principles to the aluminium foil and plastic bags under consideration:
“ The broad meaning which the Kentucky Fried Chicken case advanced depended, as the judgment in that case acknowledged, upon the context in which the word appeared. No such expansion of meaning can be inferred from the context of Item 2 of the Third Schedule and, as in Polaroid, the word must be taken to have its ordinary meaning. …”[39]
[38] Re Zendel Australia Limited v Commissioner of Taxation [1992] FCA 461; (1992) 92 ATC 4515; 24 ATR 101
[39] [1992] FCA 461; (1992) 92 ATC 4515; 24 ATR 101 at [41]; 107; 4,520
To understand the distinction Hill J drew, it is necessary to remember that the issue in Polaroid was whether the Polaroid film packs and picture rolls were “Accessories and parts for goods covered by item 36 … in this Schedule.” Item 36 read:
“Cameras (including cinematograph and stereo cameras), photomatons and machines for taking photographs, but not including photographic equipment of a kind used exclusively or primarily and principally in the reproduction of documents, drawings and plans.”
In Kentucky Fried Chicken, the issue was whether the paper serviettes, refresher towels and plastic spoons included in serviette packs and refresher towels alone could be classified under Item 91(1) as “containers used, or for use, in marketing goods … where the property in the container passes, or is to pass, to the purchaser of the contents”. On their face, they could not but the word “container” was broadly defined so that it included “other goods that – … (c) are accessories … of goods marketed in such coverings”. Drawing in accessories to the goods marketed in the container meant that the question was not whether the paper serviettes and so on were accessories to the containers but to the food marketed in those containers. That was a different question. In the same way, the item in Zendel decided the issue. The Item was Item 2 of the Third Schedule to the STEC Act: “Parts, fittings and accessories for goods covered by item 1, namely … (1) kitchen hardware”. The relevant kitchen hardware were stoves and refrigerators and it was of no relevance that the aluminium foil might have enhanced the cooking process or the plastic bags enhanced the freezing of food. They were, in the words adopted by Hill J, “… an adjunct to the process, rather than an adjunct to the appliance.”[40]
[40] [1992] FCA 461; (1992) 92 ATC 4515; 24 ATR 101 at [42]; 108; 4,520
Focusing on the issue in the particular context in which it arises is, I respectfully suggest, at the heart of the following passage from the judgment of Lehane J in Chief Executive Officer of Customs v Boehringer Mannheim Australia Pty Ltd[41] (Boehringer). The issue centred on the classification under the CT Act of particular test strips and calibration strips made specifically for two particular photometers. In combination, the strips and the photometers are used by individuals suffering from diabetes to test their blood sugar or glucose levels. The respondent company had contended that the strips should be classified under heading 9027.90.90 as “parts” or “accessories” of the photometers. In dismissing an appeal against the Tribunal’s decision that they did fall within that heading, Lehane J warned against reasoning by analogy:
“As Zendel holds, however, regard is to be had to the context and, as Whitlam J in substance pointed out when remitting the matter to the Tribunal, reasoning by analogy, while a common and useful process, has its dangers. It is, perhaps, all too easy to say that a camera will not function without a film, a recorder without a tape or a motor car without petrol; a film is not an accessory of a camera, a tape of a recorder or petrol of a motor car: because a photometer, in a similar way, will not function without a test strip, consistently with authority a test strip is not an accessory of a photometer. But to say that is to fall into … error …”[42]
[41] [1997] FCA 1235
[42] [1997] FCA 1235
His Honour then went on to consider general principles:
“‘Accessories’ is used, in the statutory context here in question (as in the sales tax legislation), in close association with ‘parts’. The dividing line between what is a ‘part’ and what is an ‘accessory’ may itself be elusive. A part of a manufactured good may be of crucial, of little or of no importance to the performance of its primary function: a cigarette lighter built into a vehicle in the course of its manufacture may, apparently, be a ‘part’ of the vehicle: Waterscheid at 565. On the other hand, apparently, mag wheels may be an accessory of a car (Zendel 92 ATC at 4515).”[43]
[43] [1997] FCA 1235
As for the strips in the case before him Lehane J concluded:
“If one turns to the facts found by the Tribunal in this case, the purpose of the photometers is to measure the level of sugar in blood. In order to use the photometer for that purpose, one needs calibration and test strips designed specifically for the particular photometer. The strips in question meet that description. They may properly be described as performing a subordinate, though essential, role in the performance by the photometer of its function. They may properly, therefore, be described as accessory things in relation to the photometers; things contributing in a subordinate degree to the general result which the photometer is designed to produce.”[44]
[44] [1997] FCA 1235
Principles that can be drawn from these cases include:
(1)The question whether one thing is an accessory of another is decided not by analogy but by principle: Boehringer.
(2)That one thing may be designed and made specifically for use with another does not of itself lead to the conclusion that the former is an accessory of the latter: Polaroid.
(3)That one thing may be used for purposes other than in association with the thing of which it is said to be an accessory does not of itself lead to the conclusion that it is not such an accessory in the particular circumstances: Kentucky Fried Chicken.
(4)An accessory may be an extra and additional part of the equipment itself: Polaroid.
(5)It need not, however, be joined in some way to another item in order to be an accessory but it must be a subordinate part or object added or attached for convenience or effectiveness of that other item as in Kentucky Fried Chicken or essential to its operation as in Boehringer.
(6)The functions and characteristics of the item to which another is said to be an accessory must be kept in mind when determining whether that other is an accessory. In Kentucky Fried Chicken, for example, the item was the food in the container and not the container by virtue of the extended definition given to the word “container”. In Zendel, the items were a stove and a refrigerator.
B. Consideration
In the case of the subject goods and a defibrillator that is an AED, the subject goods house or store the AED and keep the unit in one place. The whole presentation of the box including its colouring and lettering is designed to draw attention both to it and, more importantly, the fact that an AED is located within it. When the subject goods are opened, the light flashes and a noise is made to indicate that fact but also to alert those in the vicinity that the AED may be removed. Given that is to be hoped that the AED would be removed only to assist a person, the light and sound may draw attention to the situation and attract help if that were required.
The AED housed in the subject goods does not rely in any way on those subject goods for its operation. It does not, for example, draw power for its operation from the battery in the subject goods for that is connected solely for the purpose of activating the light and sound. To say that they make an AED visible and, by providing a storage unit, enhance the possibility that the AED will not be misplaced does not add to the effectiveness of the AED itself or to the convenience of its use. Those matters relate to the availability of the AED and that is not a matter that reflects in any way on the performance, convenience or effectiveness of the AED. It follows that I am not satisfied that the subject goods are an accessory to an AED. Therefore, I am not satisfied that they fall for classification under Heading 9018.90.00 as an accessory to defibrillators.
Are the subject goods classified to Headings 9402 or 9403?
A. Are the subject goods “furniture”?
I must consider Headings 9402 and 9403 before I consider Heading 4202 for Chapter 42, in which the latter heading is located, does not cover articles of Chapter 94, in which the former headings are found.
The effect of Note 2(a) to Chapter 94 is that “Cupboards, bookcases, other shelved furniture (including single shelves presented with supports for fixing them to the wall) and unit furniture” are classified to Headings 9401 to 9403 whether they are to be hung, fixed to the wall, to stand one on the other or if designed for placing on the floor or ground. The first question, therefore, is whether the subject goods come within the description of a “cupboard”. They are not a bookcase and do not sit easily within the description of “shelved furniture … and unit furniture”.
A “cupboard” is defined in various ways:
“… a piece of furniture or a recess, fitted with doors, shelves, etc, for storing provisions or personal effects. …”[45]
“… 1. an enclosed recess of a room for storing foodstuffs, clothing, etc, usually having shelves, hooks or the like. 2. a free-standing article of furniture for any of these or similar purposes. …”[46]
[45] Chambers 21st Century Dictionary (1999, reprinted 2004) (Chambers)
[46] Macquarie Dictionary, revised 5th edition, 2009, The Macquarie Library Pty Ltd (Macquarie Dictionary)
The use of the word “furniture” in these definitions might suggest that a cupboard is used in a domestic setting but not in, for example, a public setting of the sort in which the subject goods may be used. This suggestion arises from the following meanings of the word “furniture”:
“… movable household equipment such as tables, chairs, beds, etc. …”[47]
“6 (The predominant sense.) The movable (functional) articles in a room, house, etc.; such articles in general. …”[48]
[47] Chambers
[48] Macquarie Dictionary
When regard is had to the wording of heading 9402, however, it would appear that the heading is not intended to be limited to domestic furniture. In order to resolve the doubt, I have referred to the Harmonized System Explanatory Notes (“Harmonized Notes” or “Brussels Notes”). The Harmonized Notes are extrinsic aids for construing headings in Schedule 3 of the CT Act in the interest of promoting international uniformity. Like all extrinsic aids, however, the Harmonized Notes provide a secondary guide and cannot displace the plain words of the statute. As with all extrinsic material, they can be used to assist in resolving ambiguity in a statutory expression. They are not available, however, to contradict the meaning of an Act of Parliament when that is a meaning taken from its proper statutory context or create doubt where there is none: Barry R Liggins Pty Ltd v Comptroller-General of Customs.[49]
[49] (1991) 32 FCR 112; 103 ALR 565 at 120; 573 per Beaumont J, Lockhart and Gummow JJ concurring
Paragraph (A) of the General Notes to Chapter 94 in the Harmonized Notes states that:
“For the purposes of this Chapter, the term ‘furniture’ means:
(A)Any ‘movable’ articles (not included under other more specific headings of the Nomenclature), which have the essential characteristic that they are constructed for placing on the floor or ground, and which are used, mainly with a utilitarian purpose, to equip private dwellings, hotels, theatres, cinemas, offices, churches, schools, cafés restaurants, laboratories, hospitals, dentists’ surgeries, etc., or ships, aircraft, railway coaches, motor vehicles, caravan-trailers or similar means of transport. …
(B)The following:
(i)Cupboards, bookcases, other shelved furniture (including single shelves presented with supports for fixing them to the wall) and unit furniture, designed to be hung, to be fixed to the wall or to stand one on the other or side by side, for holding various objects or articles (books, crockery, kitchen utensils, glassware, linen, medicaments, toilet articles, radio or television receivers, ornaments, etc.) and separately presented elements of unit furniture.
(ii)Seats or beds designed to be hung or to be fixed to the wall.
Except for the goods referred to in subparagraph (B) above, the term ‘furniture’ does not apply to articles used as furniture but designed for placing on other furniture or shelves or for hanging on walls or from the ceiling.
…”
Any ambiguity regarding the word “furniture” is removed when I have regard to this passage from the Harmonized Notes. Subject only to exceptions that are specified, the word “furniture” is intended to encompass all furniture however it may be further described or characterised. In particular, the word is not limited to furniture for domestic use.
I have used the word “box” in describing the subject goods in the sense that they are a container or receptacle. They are designed to hang from a wall and four screws are provided for that purpose. The screws are used to go through the holes located on what becomes the back of the subject goods when they are hanging from a wall. The front of the subject goods becomes the side with the clear panel so that the AED can be seen and the lettering identifying it can be read. When in position on a wall as intended, the essential characteristic of the subject goods continues to be that of a container or receptacle to store an AED but it becomes clear that it is an enclosed unit with a door and a single platform or shelf on which an AED rests. The essential characteristic of the subject goods is that of a cupboard constructed specifically to store or house a particular thing. The fact that the particular thing stored is an AED makes the subject goods no less a cupboard than if the subject goods had been made specifically to store something far more mundane such as cups and mugs. As they are a cupboard, the subject goods are furniture.
Generally, articles (other than parts) referred to in headings 9401 to 9403 may only be classified to those headings if they are designed for placing on the floor or ground. The subject goods are designed to be hung from a wall and not designed for placing on the floor or ground. Despite that, they may still be classified in those headings as they are a cupboard. Note 2 to Chapter 94 expressly excludes cupboards, and other items, from the requirement that would otherwise apply that they be designed for placing on the floor or ground.
A. Are the goods classified to Heading 9402.90?
Are the subject goods medical, surgical, dental or veterinary furniture? They are specially designed to store an AED, which is a piece of medical equipment designed to resuscitate a person, but they do not sit comfortably within the examples given in Heading 9402. I have referred to the Harmonized Notes for guidance and they state, in so far as they are relevant:
“(A) MEDICAL, SURGICAL, DENTAL OR VETERINARY FURNITURE
This group includes:
(1)-(10) …
(11)Small tables, table-cupboards and the like, whether or not on wheels (trolleys), of a type specially designed for instruments or bandages, medical or surgical supplies or anaesthetic equipment; instrument sterilising trolleys; special disinfection wash-basins, self-opening sterile dressing boxes (generally on wheels) and waste bins for soiled dressings (whether or not on wheels); bottle-holders, irrigator or douche carriers and the like, whether or not on pivoting castors; special instrument or dressing cabinets and cases.
(12)…
It should be noted that this group is restricted to furniture of a type specially designed for medical, surgical, dental or veterinary use; furniture for general use not having such characteristics is therefore excluded.”
The last sentence draws attention to the fact that the furniture is to be of a type specially designed for “medical, surgical, dental or veterinary use”. The subject goods are designed to house an AED, which has a medical use, but the subject goods are themselves not designed for a medical use. They are designed to house or store an AED, which will be available to be used by anybody in the vicinity of the AED whether the person be an untrained member of the general public or by a health professional. Even if the subject goods are opened by a health professional to gain access to the AED, it is going too far to say that the subject goods themselves are designed for use by that health professional. The subject goods are intended to be, and are, located in public venues and in private venues such as clubs and schools to store an AED. The subject goods are not designed for “medical, surgical, dental or veterinary use” even though they house an AED that may be used by a health professional and may have medical consequences if used by a health professional or a non-health professional. I have concluded, therefore, that the subject goods should not be classified under Heading 9402 generally or Heading 9402.90.00 in particular.
B. Are the goods classified to Heading 9403.70.00?
Heading 9403.70.00 reads: “Furniture of plastics”. It comes under the Heading 9403: “OTHER FURNITURE AND PARTS THEREOF …”. The heading is somewhat brief but the Harmonized Notes add some context:
“This heading covers furniture and parts thereof, not covered by the previous headings. It includes furniture for general use (e.g., cupboards, show-cases, tables, telephone stands, writing-desks, escritoires, book-cases, and other shelved furniture (including single shelves presented with supports for fixing them to the wall), etc.), and also furniture for special uses.
The heading includes furniture for:
(1)Private dwellings, hotels, etc., such as: cabinets, linen chests, bread chests, log chests; chests of drawers, tallboys; pedestals, plant stands; dressing-tables; pedestal tables; wardrobes, linen presses; hall stands, umbrella stands; side-boards, dressers, cupboards; food-safes; … music cabinets …
(2)Offices, such as: clothes lockers, filing cabinets, filing trolleys, card index files, etc.
(3)Schools …
(4)Churches …
(5)Shops, stores, workshops, etc., such as: counters; dress racks; shelving units; compartment or drawer cupboards; cupboards for tools, etc; special furniture (with cases or drawers) for printing works.
(6)Laboratories or technical offices …”
The subject goods are furniture not covered by previous headings in Chapter 94. They are a cupboard made of plastic and, therefore, meet the description under Heading 9403.70.00.
Are the subject goods classified to Heading 4202?
Note 2(k) to Chapter 42 states that the Chapter does not cover Articles of Chapter 94. In view of my conclusion in the previous paragraph, I cannot classify the subject goods to Chapter 4202 in view of that note. While I recognise that, I will briefly explain why I would not have done so quite apart from Note 2(k).
Putting aside the materials from which they may be made, the items described in Heading 4202 fall into three groups. One is in the nature of a case or container for a particular item. Examples are spectacle cases, binocular cases, map cases and tobacco pouches. The second group into which items fall are containers for items of a particular type. Examples are vanity-cases, tool bags, sports bags, insulated food or beverages bags and jewellery cases. The third group comprises larger items that hold goods and that are recognised by their description rather than by what may be placed within them. Examples are trunks, suit cases, school satchels and shopping bags. What the cases or containers of each group have in common with those in the other two is that they have two features. One feature is that they are used to hold, if not protect, the goods they encase or hold. The other feature is that they are not only moveable but made to be moved in order to transport the goods they hold from one location to another. If goods are to be described as “similar containers” so that they come within Heading 4202, it seems to me that they should have these two features.
Only the first feature is a feature of the subject goods. They are intended to hold, if not protect, the goods that they encase or hold but they are not intended to be used to transport them. They are large to be carried without a handle of some type and their size and shape means that carrying them would be awkward. Therefore, I have decided that I would not have classified the subject goods to Heading 4202 even if I had not been prevented from doing so by Note 2(k) to Chapter 42.
DECISION
For the reasons I have given, I affirm the decision of the respondent dated 18 July 2016.
| I certify that the preceding sixty (60) paragraphs are a true copy of the reasons for the decision herein of Deputy President Forgie |
.......[sgd]..............................................................
Associate
Dated: 1 December 2017
| Date of hearing: | 24 July 2017 |
Representative for the Applicant: | Mr Peter Lilley |
Solicitor for the Respondent: | Mr James Millea |
0
8
0