Liebert Corporation Australia Pty Ltd v Collector of Customs

Re: LIEBERT CORPORATION AUSTRALIA PTY. LTD.
And: COLLECTOR OF CUSTOMS
No. N G459 of 1991
FED No. 69
Administrative Appeals Tribunal - Customs Tariff Act

COURT

IN THE FEDERAL COURT OF AUSTRALIA

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

CATCHWORDS

Administrative Appeals Tribunal - error of law by Tribunal - use of extrinsic material in statutory interpretation.

Customs Tariff Act - interpretation - use of "Brussels" nomenclature - classification of goods for duty purposes.

Administrative Appeals Tribunal Act 1975 (Cth)

Customs Tariff Act 1987 (Cth)

D and R Henderson (Mfg) Pty Limited v Collector of Customs (NSW) (1974) 48 ALJR 132

Gardner Smith Pty Limited v Collector of Customs (Vic) (1986) 66 ALR 377

Barry R. Liggins v Comptroller-General of Customs and Ors (1992) 103 ALR 565)

HEARING

SYDNEY

#DATE 26:2:1992

Counsel for the Applicant: Mr C. Stevens QC

Instructed by: Baker and McKenzie

Counsel for the Respondent: Mr A. Robertson

Instructed by: Australian Government Solicitors

ORDER

That the appeal be allowed.

That the matter be remitted to the Administrative Appeals Tribunal for reconsideration in accordance with these reasons for judgment.

That the respondent pay the appellant's costs of this appeal.
Note: Settlement and entry of orders is dealt with by Order 36 of the Federal Court Rules.

JUDGE1

This is an appeal from the decision of a Deputy President of the Administrative Appeals Tribunal (the "Tribunal") given on 18 July 1991. The Deputy President affirmed the decision of the respondent that certain goods supplied by the appellant and imported into Australia on 30 November 1989, described as three packages of "Uninterruptible Power System" should be classified for duty purposes as "static converters" under sub-heading 8504.40.00 of Schedule 3 ("Schedule 3") to the Customs Tariff Act 1987 (Cth) (the "Act"). The effect of this decision was that the goods attracted a rate of duty of 18 percent.

The appellant had contended before the original decision-maker and before the Tribunal that the goods should be classified (inter alia) as "automatic regulating or controlling apparatus" under heading 9032 and thereby be free of customs duty. This argument was rejected by the learned Deputy President. In so rejecting it he had regard to the material placed before the decision-maker and also to additional evidence, including oral testimony of expert witnesses called at the hearing before him. In reaching his decision he made factual determinations as to the nature and function of the goods imported based upon this evidentiary material. It has not been submitted that, as a matter of law, those decisions were vitiated for want of evidence to support them.
This appeal is brought pursuant to s 44 of the Administrative Appeals Tribunal Act 1975 (Cth) and restricted to questions of law. In the course of debate in these proceedings before me the questions for determination have been refined to certain specific submissions by the appellant as to errors said to have been committed by the Deputy President in reaching his decision. I shall refer to these submissions later in these reasons. In order to expose these questions, it is necessary for me to refer to the findings and reasons of the Tribunal.
The goods supplied and described as "Uninterruptible Power Systems" did not under that description correspond with any category of goods prescribed under any heading in Schedule 3. It was therefore necessary for the decision-maker and the Deputy President to determine into which prescribed classification they should fall. The contest was originally between the heading chosen by the relevant officer and affirmed by the Deputy President, and certain other headings. It is now asserted by the appellant that the only appropriate alternative heading which should have been applied was heading 9032 which has been set out above. Indeed it seeks, inter alia, a declaration in these proceedings that "the proper tariff classification of the imported goods is sub-heading 9032.89.90 of Schedule 3 of the Customs Tariff Act 1989".
The Tribunal made findings as to the nature of the goods in the following terms:

"An inspection of a sample unit of the subject goods, an examination of the Brochures of the applicant (T6) and the evidence of the various witnesses satisfies me that the subject goods are units contained in rectangular metal boxes designed to deliver power supply, in a form free from `spikes' or variations, to sensitive equipment. The witness, Dr C. Grantham, Ph.D. is a fellow of the Institution of Electrical Engineers and lectures at the University of New South Wales. He described a typical layout of the subject goods in his report, Exh A (see Tr p 16) illustrated in the annexed diagram marked Figure 6-3. He explained that inside each box was a unit identified as a rectifier, which he regarded as being a static converter and also an item identified as an inverter, which he also regarded as a static converter. This view accords with the definition in Chambers Technical Dictionary 1974 defining `converter' as follows:- `(Elect. Eng.) A machine or device for changing a.c. to d.c. or the converse particularly transistor oscillator for supplying high-tension high tension for low tension.'

It also accords with the view reached by me in a Sales Tax case No. X35, Vol 90 ATC 316. I see no reason to reach a different conclusion in this case.

As Dr Grantham explained (Tr p 17 to 19) the rectifier converts alternating current from the power supply into direct current and the item marked `inverter' changes the power back again to alternating current. Missing from the diagram 6-3 is a depiction of capacitors (Tr p 19). These are included in the subject units and their purpose, as explained by the witness is to act as devices capable of storing energy to smooth out the supply. They help prevent damaging `spikes' or variations of the normal sinusoidal voltage, from getting into the equipment protected by the subject units (Tr p 20). The units have a by-pass supply line but little was made of that, and likewise a cooling fan. There is also a filter depicted in diagram 6-3, which is a device to improve electromagnetic compatibility and control the electrical noise generated by the power supply (Tr p 19). Again this and the circuit breaker mentioned at Tr p 19, appear to be subsidiary items which were not given prominence in the evidence.

However, the item in Diagram 6-3 which was given some prominence, was a battery described as an external back-up power source (Tr p 18), which can prevent disruption caused by loss of power leading to loss of data e.g. in an automatic data processing machine. As was pointed out in the transcript at p 21 this only applied to current data which has not been permanently recorded."

I am satisfied that, although this passage refers in part to certain evidence of Dr Grantham, the most reasonable construction of it is that it indicates an acceptance by the Deputy President of that evidence.
The Deputy President then went on to review further evidence in the case. He stated that Dr Grantham said that:

"...from an academic or purist view the equipment in the subject units could be described as `static converters'. However, he said that, because they also contain other devices which are not static converters, he was not comfortable with that description and expressed the view that few, if any, engineers or technicians would so describe them. When giving his evidence at Tr p 25, he said he would regard the units as a sub-set of automatic regulators, which may also be or overlap into the class of static converters."

He further stated that:

"Having listened to Dr Grantham and read his reports, Exhs. A,B and C, what appears to emerge is that essential features of the subject units lie in the fact that they contain static converters together with regulators which provide `spike' free current to achieve a steady voltage supply to sensitive equipment within predetermined tolerances."

The Deputy President also refers to the fact that Dr Grantham in his conclusions to his report in evidence, having referred to his discomfort with the classification of the equipment as "a static converter" went on to say:

"However, in an attempt to produce a balanced report the classification `regulator' does not rest comfortably with me either for the same reasons as the static converter i.e. the equipment contains more than just a regulator. In my opinion, the equipments (sic) in question can be accurately described as uninterruptible power supplies and as an engineer without detailed knowledge of the Custom's Tariff Classification Document and the reasons behind the various classifications, it would be unprofessional of me to attempt to give the equipments in question such a classification. However, I do believe that the equipments in question satisfy the two classes put to me originally i.e.:

(a) automatic regulating or controlling apparatus, and

(b) automatic regulators of electrical quantities."

These descriptions accord with the relevant descriptions given under heading 9032 and note 6 to Chapter 90 to which I shall make reference later.
The Tribunal then referred to the evidence of a further expert witness, Associate Professor Dr V.S. Ramsden, who said that:

"...he had difficulty in regarding the unit as merely a static converter and said he would prefer to regard it as a regulator, because the outward voltage is regulated. He said he saw the units as regulators of electrical quantities, namely the voltage."

The Professor further stated that:

"...the essential function of the unit as being to provide a stabilised pure power supply and said the stability is principally supplied by the regulator."

Professor Ramsden remained firm in his view that the subject equipment should be regarded as an automatic regulator. This would mean, of course, that the appropriate classification in Schedule 3 would be under heading 9032.
Reference was also made by the Deputy President to the evidence of Mr Mallia to the effect that the inverter which is the second part of the static converter was the most essential part of the subject equipment but that the inverter could not operate without a regulator.
The Tribunal also referred to the evidence of Mr Heezeman, a specialist in control systems, power, electronics and computers, who was called on behalf of the respondent. He said that the effect of the appellant's equipment was to produce "a new power to a critical load application, an alternating current outward power". He further stated that "the basic criteria is to try and reconstruct that input voltage wave form but with improved characteristics" and that "to ensure that the inverter's outputs is stable and free of interruption a regulator is attached to the static converter". He expressed the view that the most essential component of the equipment was the static inverter.
After considering the expert testimony the Deputy President stated his conclusions in the following passage:

"Having reviewed the evidence and bearing in mind that in carrying out its primary task of identification the tribunal may need, as is the case here, to consider more than what is ascertainable on a visual inspection of the goods, Chinese Food and Wine Supplies Pty Ltd v Collector of Customs (1987) 72 ALR 592 at 599 per Lockhart J., I have reached the conclusion that the subject goods comprise composite equipment. Various parts perform separate functions. In my opinion the most important function is that performed by the rectifier and the inverter, in providing spike free current. This accords with Dr Grantham's `purist view' of the equipment as being static converters and with the views of Mr Heezeman. It is noted that Mr Mallia also gives some support to this view. However, I am of the opinion that the static converter does not give these composite units their essential character within the meaning of Rule 3(b) of the General Rules or the Interpretation of the Harmonized System contained in Schedule 2 to the Tariff although it may be their principal function. The regulator also plays a very important role as Dr Ramsden pointed out. It is the co-operation between the static converter and the regulator which provides smooth `spike' free current, within defined tolerances, to sensitive equipment. ... In the light of the findings to date, I opine that it is appropriate to apply Note 3 to sec. XVI of the Tariff previously set out. I have decided that static conversion is the principal function, and it appears appropriate that the goods be classified as Static Converters under Heading

8504. This accords with Dr Grantham's `purist view' expressed in Exh.A. This also appears to accord with the terms of Note 7 to Chapter 84. In my view it also accords with the explanation of Electrical Static Converters in the Brussels Nomenclature set out in the Tribunal documents Exh.T.15 (p 71) as follows:-

`The apparatus of this group are used to convert electrical energy in order to adapt it for further use. They incorporate converting elements (e.g., valves) of different types. They may also incorporate various auxiliary devices (e.g., transformers, induction coils, resistors, command regulators, etc.). Their operation is based on the principle that the converting elements act alternately as conductors and non-conductors.

The fact that these apparatus often incorporate auxiliary circuits to regulate the voltage fo the emerging current does not affect their classification in this group, nor does the fact they are sometimes referred to as voltage or current regulators.

This group includes:

(A) Rectifiers by which alternating current (single or polyphase) is converted to direct current, generally accompanied by a voltage change.

(B) Inverters by which direct current is converted to alternating current.

(C) Alternating current converters and cycle converters by which alternative current (single or polyphase) is converted to a different frequency or voltage.

(D) Direct current converters by which direct current is converted to a different voltage.'"

I have omitted portions of the reasons which do not appear to be relevant to this appeal. I shall refer to the relevant portions of the General Rules, the Note to Section XVI of the Act, Heading 8504, Note 7 to Chapter 84, and relevant portions of the Brussels Nomenclature later in these reasons.
The Tribunal then dealt with the contention that the subject goods should be classified under Heading 9032 by stating "I agree with the primary decision-maker that the goods do not fall within the heading 9032".
This statement has been criticised in argument as supplying no reasons. I am satisfied, however, that it must be read with a passage appearing earlier in the Tribunal's reasons where the Deputy President stated that classification under Heading 9032 was "rejected on behalf of the respondent". He then set out the reasons for such rejection as they appeared in certain paragraphs of the decision-maker's reasons, as follows:

"16. To fall within the heading 9032, goods must be automatic regulating or controlling instruments and apparatus and also comply with Chapter 90 Note 6. From the HSEN, it is clear that these goods must, as part of a complete automatic control system, regulate or control a particular apparatus. They do so by using output measurement and signal control processes to operate an external actuator to return the output to the desired value. This is confirmed by New Penguin's and McGraw-Hill 2's definitions of `automatic control' and `actuator'. It is also reflected in the wording of the more specific subheading of 9032.

20. On analysis, although it may incorporate feedback control loops as auxiliary circuits for controlling the output of the converters, a UPS itself is not an automatic regulating or controlling apparatus of 9032. It does not control another apparatus, it is not part of an automatic control system and it does not operate an actuator which returns a derived output to the required value. It simply draws power from the mains and modifies that power so that it can be used by a further machine - and this is achieved using conversion processes, not output measurement and signal control processes. Therefore, the subject goods do not fall to heading 9032."

I shall refer to Chapter 90 Note 6 and the sub-headings of Heading 9032 later. The reference to "HSEN" is a reference to the Brussels Nomenclature.
Before dealing with the errors of law submitted to have occurred in the Tribunal's reasoning, I find it convenient to refer to the relevant legislative provisions.
The Act provides a comprehensive scheme for the classification for duty purposes of imported goods in accordance with headings set out in a most elaborate form in Schedule 3. The Schedule, itself, is divided into Sections which are themselves divided into Chapters. Within the Chapters are found Headings which are descriptive of types of goods and which themselves are divided into Sub-headings. Section 6 of the Act provides a system by which headings and sub-headings and the relation of one to the other can be determined by the way in which they appear in the Schedule. It is unnecessary to set out or further describe this section. It may be noted that whereas a "Chapter" is defined in s 5 as meaning "a Chapter of a section of Schedule 3" and a section is defined as being "a section of Schedule 3", heading is defined "a heading in Schedule 3".
For classification purposes it appears that the headings proved the descriptions of primary significance, although Notes which are to be found associated with particular sections and Chapters also play a significant role. This is made manifest by the provisions of Schedule 2 to the Act, the "General Rules For The Interpretation Of The Harmonized System". Section 10(1) of the Act provides that these Rules "shall be used for ascertaining the Tariff classification under which goods are classified".
The General Rules provide so far as relevant for the determination of this appeal 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 the 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) ...

(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) ..."

The notes to Section XVI, so far as relevant, provide as follows:-
"1.- This section does not cover:

...

(m) Articles of Chapter 90;

...

2.- ...

3.- Unless the context otherwise requires, composite machines

consisting of two or more machines fitted together to form a whole and other machines adapted for the purpose of performing two or more complementary or alternative function are to be classified as if consisting only of that component or as being that machine which performs the principal function.

4.- ...

5.- For the purposes of these Notes, `machine' means any

machine, machinery, plant, equipment, apparatus or appliance cited in the headings of Chapter 84 or 85." Heading 8504 reads as follows: "8504 ELECTRICAL TRANSFORMERS, STATIC CONVERTERS (FOR EXAMPLE, RECTIFIERS) AND INDUCTORS:"

Sub-heading 8504.40.00 reads as follows:

"-Static converters".

Heading 9032 and its associated sub-headings, so far as relevant, read as follows:

"9032 AUTOMATIC REGULATING OR CONTROLLING INSTRUMENTS AND APPARATUS:

9032.10 - Thermostats:

9032.10.10 --- Of a kind used with electrically operated domestic appliances 9032.10.90 --- Other

9032.20.00 - Manostats

9032.8 - Other instruments and apparatus: 9032.81.00 -- Hydraulic or pneumatic 9032.89 -- Other:

9032.89.10 --- Automatic voltage regulators of a kind commonly used with motor vehicles, for 6 V or 12 V systems 9032.89.20 --- Of a kind commonly used with dies or moulds to automatically control their temperature, being apparatus the control function of which is achieved by the temperature of the circulating fluid responding to changes in the temperature of the goods being controlled 9032.89.30 --- Goods incorporating, or designed to incorporate, thyristors, power transistors or the like, of a kind used for controlling electric motors 9032.89.90 --- Other"

Note 6 to Chapter 90, so far as relevant, provides as follows:-

"6.- 9032 applies only to:

(a) ...

(b) Automatic regulators of electrical quantities, and instruments or apparatus for automatically controlling non-electrical quantities the operation of which depends on an electrical phenomenon varying to the factor to be controlled."

It is necessary also to refer to portions of the Brussels Nomenclature which have been referred to in argument. These notes are the explanatory notes prepared by the Committee established by the Convention on Nomenclature for the Classification of Goods in Customs Tariffs, Brussels 1950. These notes (referred to as the Brussels Notes) are explanatory commentaries on Chapters of Schedule 3. Their use in relation to the interpretation of the headings in Schedule 3 has been the subject of judicial consideration in a number of cases (see e.g. D and R Henderson (Mfg) Pty Limited v Collector of Customs (NSW) (1974) 48 ALJR 132; Gardner Smith Pty Limited v Collector of Customs (Vic) (1986) 66 ALR 377; Barry R. Liggins v Comptroller-General of Customs and Ors (1992) 103 ALR 565).
In Gardner Smith the Full Federal Court (Keely, Neaves and Wilcox JJ.) considered the application of s 15AB of the Acts Interpretation Act 1901 (Cth) in relation to the use of relevant portions of the notes for the purpose of interpretation of the wording of Schedule 3. That section provides as follows:

"15AB(1) ... 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 of the provision 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 of 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."

The Full Court dealt with the matter (at pp 383-4) as follows:-

"The argument that the tribunal was in error in giving consideration to the explanatory notes was based on the applicant's contention that the words `or otherwise modified' in item 15.08 were not ambiguous or obscure nor, if given their ordinary meaning, would lead it to a result that was manifestly absurd or unreasonable. But it is plain that, to limit the use of extrinsic material to such circumstances - circumstances obviously referable to para

(1)(b) of s 15AB of the Acts Interpretation Act 1902 - is to deprive para (1)(a) of that section of any operation. Even if it could properly be said that the tribunal was in error in regarding the meaning of `modified' in Item 15.08 as obscure - a proposition which it is difficult to accept having regard to the arguments presented - it would not follow that the court should intervene. It would, as we think, have been open to the tribunal to consider the explanatory notes in order to confirm the meaning which, on the other material available to it, it considered the expression bore having regard to its context in the Tariff Act."

In Barry Liggins, the Full Court of the Federal Court (Lockhart, Beaumont and Gummow JJ) approved the following passage from E.J. Cooper "Customs and Excise Law" (cumulative supplement to 30 June 1985 at 9 (at p 573)):

"...(the Brussels Notes) are a 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."

In the instant case reference was made to relevant portions of the Brussels Notes relating to Chapter 85 and Chapter 90 of Schedule 3.
The passage relating to Electrical Static Converters in Chapter 85 has already been set out above. It is to be noted that the section of the Notes in which that passage occurs concludes with the statement that "Automatic voltage regulators are classified in Heading 90.32."
The Notes relating to 90.32, which clearly take into account Note 6 to Chapter 90, set out above, read as follows:

"(II) AUTOMATIC REGULATORS OF ELECTRICAL QUANTITIES AND INSTRUMENTS APPARATUS FOR AUTOMATICALLY CONTROLLING OR NON-ELECTRICAL QUANTITIES THE OPERATION OF WHICH DEPENDS ON AN ELECTRICAL PHENOMENON VARYING ACCORDING TO THE FACTOR TO BE CONTROLLED The automatic regulators of this heading are intended for use in complete automatic control systems which are designed to bring a quantity, electrical or non-electrical, to, and maintain it at, a desired value, stabilised against any disturbances, by constantly measuring its actual value. They consist essential of the following devices:

(A) A measuring device (sensing device, converter, resistance probe, thermocouple, etc.) which determines the actual value of the variable to be controlled and converts it into a proportional electrical signal.

(B) An electrical control device which compares the measured value with the desired value and gives a signal (generally in the form of a modulated current).

(C) A stating, stopping or operating device (generally contacts, switches or circuit breakers. reversing switches or, sometimes, relay switches) which supplies current to an actuator in accordance with the signal received from the control device. An automatic regulator within the meaning of Note 6 (b) to this Chapter consists of the devices described in (A), (B) and (C) above, whether assembled together as a single entity or in accordance with Note 3 to this Chapter, a functional unit."

The Note further says:

"Automatic regulators are connected to an electrical, pneumatic or hydraulic actuator, which brings the controlled variable back to the desired value. This actuator may be the clamps which adjust the gap between the electrodes of an arc furnace, the motorised value which controls the intake of water or steam in a boiler, a furnace, a pulping machine, etc. The actuators are to be classified in their own appropriate headings (adjustable clamp: heading 84.25: motorised or solenoid valve: heading 84.81: electro-magnetic positioner: heading 85.05: etc.). If the automatic regulator is combined with the actuator, the classification of the whole is to be determined under either Interpretative Rule 1 or Interpretative Rule 3 (b) (see Part (III) of the General Explanatory Note to Section XVI and the Explanatory Note to heading 84.81).

Electronic regulators function on a strictly electrical principle, and not electro-mechanically. Their characteristic features are semiconductors (transistors) or integrated circuits.

These regulators are used not only for electrical quantities, such as voltage, amperage, frequency and power, but also for other quantities such as revolutions per minute, torque, traction force, level, pressure, flow or temperature."

Against this background I come to consider the questions of law which have been raised. These questions were the product of discussion during argument rather than written formulation. In these circumstances, I consider it appropriate that I indicate the views that I have formed as a result of considering the arguments in the case.
It is clear that in the hearing before the Tribunal there were competing contentions as to whether the subject machine fell for classification under Heading 8504 (or a sub-heading) or under Heading 9032 (or a sub-heading). The Tribunal was obliged to approach the resolution of this question by the application of the Rules in Schedule 2. Rule 1 required that the classification be determined "according to the terms of the headings and any relative Section or Chapter Notes". Consideration of subsequent provisions, in particular so far as this case is concerned, the provisions of Rule 3(b) was to take place only if the "headings or notes" did not "otherwise require".
Section XVI, Note 1(m) specifically provided that the section which included Chapters 84 and 85 should not "cover Articles of Chapter 90". Although I was at first hesitant about the proposition, I have come to the view that this is a Note which "otherwise requires" within Rule 1. It produces the result, in my opinion, that whenever there is competition in the classification of goods between the headings of Chapter 90 and the headings of the Chapters falling within Section XVI, it is necessary before entering upon the question whether the goods may be appropriately classified under a heading or sub-heading of those Chapters, to positively exclude their classification under some heading of Chapter 90. To put the matter another way, where there exists a competition between such classifications, it is not appropriate to approach the question, in the first instance, by seeking to determine whether the goods should be classified under some heading in the Chapters of Section XVI.
This means, as was submitted by the appellant, that it was necessary for the Tribunal, in the present case, to have considered squarely whether or not the subject machine fell within the description prescribed by heading 9032 or any of its sub-headings, before giving consideration to the applicability of any of the headings in Chapter 85. I have already pointed out that the Tribunal dealt with the applicability of heading 9032 in a very cryptic way, merely indicating an agreement with the primary decision-maker "that the goods do not fall under heading 9032". I have also indicated that, in my view, this statement reasonably indicates an acceptance by the Tribunal of the passages from the primary decision-maker's reasons which have already been set out. The problem is that the Deputy President does not expressly in his reasons pose for answer the question whether the subject goods were "automatic regulating apparatus" within the meaning of heading 9032 as further explained by Note 6 to Chapter 90. Although, of course, there was no requirement that he should expressly do so, nevertheless his failure to do so does raise a query as to whether he gave precise consideration to this question or to his need to do so having regard to the requirements of Rule 1 when read with Section XVI Note 1(m).
Moreover, his acceptance of the reasons of the primary decision-maker without further comment necessarily indicates, in my view, that he endorsed those reasons together with any problems that might arise from the way in which they were expressed.
Those reasons make it plain that the primary decision-maker had regard to the provisions of the Brussels Notes. They do not, however, make it clear why the decision-maker had recourse to the notes or whether in so doing regard was paid to the principles set out above. It is clear that in determining whether the goods should be classified under heading 9032, it was appropriate, in accordance with Rule 1, to have regard to the heading itself and to Note 6 to Chapter 90, which provided that heading 9032 should apply, for relevant purposes, only to "automatic regulators of electrical quantities".
It follows, in my view, that the appellant was entitled, before any consideration of the possible applicability of heading 8504, to a determination by the Tribunal of the question whether the subject equipment should be classified as automatic regulating apparatus being an automatic regulator of electrical quantities. It was also entitled to have this question determined on the basis of the wording of the heading and the note alone without recourse to the explanatory material in the relevant Brussels Notes, except in accordance with the principles set out above.
It is clear that the primary decision-maker, after recourse to the Brussels Notes, formed the view, expressed in his reasons, that classification under heading 9032 and its sub-headings was appropriate only where the apparatus in question exercised a regulating or controlling function over some other piece of apparatus. I agree with submissions of counsel for the appellant that it does not appear possible to obtain that requirement from a reading of heading 9032 and Note 6 to Chapter 90 although, contrary to a further submission made by him, it does seem possible, to me, to derive such a interpretation from the wording of the relevant Brussels Notes. I express no definitive view on either of these matters. It is sufficient for present purposes that I be satisfied, as I am, that there has been a failure to approach the question of classification under heading 9032 in the manner required by a proper interpretation of the relevant provisions. It appears to me that the Brussels Notes have been used in the manner forbidden by the reasoning in Barry Liggins.
There are two further errors, which in my view, appear in the Tribunal's reasons. Although I have already determined to send the matter back as a result of the error I have just discussed, it seems appropriate that I should also discuss these other two matters.
It follows from what I have said as to what is, in my view, the proper interpretation of Rule 1 read with Note 1(m) to Section XVI that it was inappropriate in this case to have regard to the provisions of General Rule 3(b). There was relevantly a requirement "otherwise". The decision-maker and the Tribunal were required to determine in the first place whether the goods should be classified under heading 9032 and, if not, whether they should be classified under some heading of the Chapters of Section XVI. Accordingly it was not appropriate to consider whether the goods were prima facie classifiable under headings 9032 or 8054 as this question was not open for consideration. Accordingly, in respectful view, the learned Deputy President erred when he entered upon a consideration of the issues posed by General Rule 3(b).
I am also of the view that if, as seems at least possible, the Tribunal was applying Note 3 to Section XVI to aid the determination of whether the goods should be classified under heading 8504 or heading 9032 then this would also constitute an error of law. I am satisfied that when Note 3 is read with Note 5, it becomes apparent that Note 3 is intended only to apply to composite machines where the component machines are classifiable under the headings of Chapter 84 or 85. In other words the Note merely does the work of assisting the determination of which heading or sub-heading of Chapters 84 or 85 is the appropriate one for classification. It cannot be called in aid of determining whether goods should be classified in one of the headings of those Chapters as opposed to a heading in some other Chapter.
I should say that, having regard to the fact that competing classifications in Chapters 84 and 85 were postulated before the Tribunal, although not in this appeal, it is possible that the passage in which the Tribunal deals with this matter was intended to apply only to the question of whether a classification under heading 8504 was appropriate as against a classification under those other headings. In the circumstances it is unnecessary for me to reach a final view of this matter.
For these reasons I consider that the decision under appeal must be set aside. There is not, in my view, sufficient appropriate findings of fact to enable me to make any decision as to the appropriate classification. In the circumstances I therefore order the matter be remitted to the Tribunal for reconsideration in accordance with these reasons.
I therefore allow the appeal and order that the matter be remitted to the Tribunal for reconsideration. I also order that the respondent pay the appellant's costs of this appeal.

[1992] FCA 69

26 FEBRUARY 1992