Logan and Chief Executive Officer of Customs
[2005] AATA 536
•8 June 2005
Administrative
Appeals
Tribunal
DECISION AND REASONS FOR DECISION [2005] AATA 536
ADMINISTRATIVE APPEALS TRIBUNAL )
) No Q2004/605
GENERAL ADMINISTRATIVE DIVISION ) Re VICKI LOGAN Applicant
And
CHIEF EXECUTIVE OFFICER OF CUSTOMS
Respondent
DECISION
Tribunal Senior Member McCabe Date8 June 2005
PlaceBrisbane
Decision The decision under review is affirmed. ....................[Sgd]........................
SENIOR MEMBER
CATCHWORDS
CUSTOMS – Tariff Classification – interpretation of Customs Tariff Act 1995 – it is appropriate for the decision maker to refer to extrinsic material - motor-home properly classified as a “motor vehicle principally designed for the transport of persons”.
Customs Tariff Act 1995 ss 6, 7, 15, 273GA
Gardner Smith Pty Ltd v Collector of Customs (1986) 66 ALR 377; (1986) 10 ALN N167
Barry R Liggins Pty Ltd v Comptroller-General of Customs (1991) 32 FCR 112; (1991) 103 ALR 565
REASONS FOR DECISION
8 June 2005 Senior Member B J McCabe
introduction
1. Mrs Vicki Logan imported a motor-home from the United States into Australia on 14 July 2004. The respondent classified the motor-home as a “motor vehicle principally designed for the transport of persons” under subheading 8703.24.11 of Schedule 3 of the Customs Tariff Act 1995 (the Act). Duty was levied at the rate applicable to vehicles of that description. The applicant disputes the classification and the amount of duty.
2. The decision to demand duty is reviewable by the Tribunal pursuant to s 273GA(2) of the Act.
3. I am satisfied the vehicle was classified correctly. The decision under review should therefore be affirmed. My reasons are set out below.
the material before the tribunal
4. The Tribunal was provided with the documents required under s 37 of the Administrative Appeals Tribunal Act 1975. The following documents were also tendered in evidence:
·Floorplan of motor-home with email attachment of Mrs Logan (exhibit 2);
·Profile picture of motor-home (exhibit 3);
·Bundle of emailed pictures dated 6 May 2005 (exhibit 4);
·Supplementary bundle of pictures – undated (exhibit 5);
·Statement of Roy Frank Setaro dated 12 April 2005 (exhibit 6);
·Swagman Motor Homes marketing brochure – A Class 2004 Series (exhibit 7);
·Statement of Mr Bruce Binns dated 24 March 2005 (exhibit 8);
·Bundle of brochures from Winnebago Industries (exhibit 9).
5. The applicant gave evidence in person. Mr Denis Leahy, an importer of motor-homes, also gave evidence on her behalf. Messrs Roy Setaro and Bruce Binns gave evidence on behalf of the respondent. Both individuals are involved in businesses manufacturing mobile homes in Australia.
6. The applicant was represented by Mr Nicholls, a customs agent. Mr Komora, of the Australian Government Solicitor, represented the Chief Executive Officer of Customs.
the facts
7. Mr and Mrs Logan are planning their retirement and wish to travel around Australia. Mrs Logan gave evidence that she and her husband had previously driven a motor-home in the United States on vacation. She said they enjoyed the freedom of being able to travel around the country at a leisurely pace. She said one typically stayed in caravan parks and camp-sites for several days at a time before driving a short distance to the next point of interest. They undertook one trip from California to Vancouver. It took them three months. They made friends along the way with other couples in a similar situation.
8. The applicant and her husband decided to purchase a second-hand motor-home in the United States and import it into Australia. They located a suitable vehicle and arranged for it to be transported to this country. The FOB (Free On Board) price of the vehicle was $A22,832.03.
9. The vehicle in question is a Pace Arrow Class A motor-home. The body of the vehicle was constructed on a purpose-built motor-home chassis. Not all motor-homes are built in this way: in some cases, the manufacturer simply builds the motor-home on a truck chassis. The vehicle was 15 years old when it was purchased in 2004.
10. The import of the motor-home was handled by a customs agent. It was landed in Australia on or about 14 July 2004.
11. The vehicle required substantial work to make it comply with the relevant Australian design rules (for example, it needed to be converted from left hand drive), and it needed refurbishing in view of its age. Mr Leahy’s firm went to work. Mr Leahy estimated around $50,000 worth of work was done on the vehicle.
12. Mr Leahy suggested one of the principal concerns when refurbishing an imported vehicle was to identify the number of passengers that would be carried in seats aboard the vehicle. Seats with anchor points to accommodate seat belts were essential if the vehicle was to be registered in Australia. Mr Setaro and Mr Binns confirmed that seating arrangements and safety concerns were a priority in the manufacture of new motor-homes as well.
13. Mr Nicholls argued the bulk of the vehicle was devoted to accommodation, and the vehicle spent most of its time serving as a home instead of a vehicle used for transportation of passengers.
the legislation
14. Customs duties are imposed on imported goods under the Customs Tariff Act 1995. Section 15 provides for the imposition of duty. The rate of duty is determined in part by the classification of the goods. Goods are classified with reference to the headings and sub-headings in Schedule 3 to the Act: s 6. Section 7(1) says the decision-maker must use the Interpretation Rules found in Schedule 2 when working out the classification of the goods.
15. The motor-home in this case was classified under heading 8703 on the basis it was a used or second-hand passenger motor vehicle. It was more than 15 years old, so it was classified under sub-heading 8703.24.11. By-law No 0140001 to Item 59 in Schedule 4 of the Act says goods classified under that sub-heading attract a 15% duty. The duty was levied on $22,832.08, the FOB price of the goods. The applicant paid duty in the amount of $3424.80.
16. The applicant said the goods were classified wrongly. Mr Nicholls points out that heading 8703 refers to “motor cars and other motor vehicles principally designed for the transport of persons…including station wagons and racing cars.” He emphasised the word principally. While he concedes the motor-home acts as a vehicle to transport passengers on occasions, he argues it is principally designed to provide accommodation – most obviously at camp-sites.
17. The respondent suggested the only alternative was to classify the vehicle under sub-heading 8705.90.00, which deals with special purpose vehicles that are not principally designed for the transport of persons or goods. That classification attracts a lower rate of duty. The respondent says classification under sub-heading 8703.24.11 is more accurate. Mr Nicholls did not express a concluded view as to an alternative classification.
the role of the explanatory notes to the harmonized commodity description and coding system
18. The classification system must be considered in context. Classifications proceed against the backdrop of the International Convention on the Harmonized Commodity Description and Coding System 1983. Australia is a signatory to that Convention. The Convention is intended to promote the uniform interpretation of terms used in the customs legislation of member countries. The Interpretation Rules in Schedule 2 were drafted having regard to the Convention. The Convention also includes explanatory notes (the harmonized notes) which are not incorporated into Schedule 2.
19. The harmonized notes that refer to heading 8703 say the heading includes “Motor homes (campers etc), vehicles for the transport of persons, specially equipped for habitation (with sleeping, cooking, toilet facilities, etc)”.
20. The respondent says a motor-home is principally designed for the transport of persons, so it is covered by heading 8703. The respondent argues that if there is any ambiguity in the words accompanying the heading in the schedule, it is legitimate to have regard to the harmonized notes to the Convention. The applicant disagrees: Mr Nicholls says the expression “motor vehicles principally designed for the transport of persons” unambiguously excludes motor-homes since the vehicle is clearly principally designed for another purpose.
21. I think it is reasonably clear from the words accompanying the heading in the schedule that motor-homes are in fact vehicles used for the transport of passengers. (If a racing car is a motor vehicle used for transporting passengers, a motor-home almost certainly would be too.) In any event I do not accept the wording accompanying heading 8703 unambiguously excludes motor-homes. It is therefore appropriate to refer to extrinsic material. The Full Federal Court held in Gardner Smith Pty Ltd v Collector of Customs (1986) 66 ALR 377 (at 383-4) that decision-makers were entitled to consider the (then equivalent of the) harmonized notes as an aid in the classification process in the event of ambiguity: see also Barry R Liggins Pty Ltd v Comptroller-General of Customs (1991) 32 FCR 112 (at 118-120).
22. If I have regard to the harmonized notes, the classification is put beyond doubt. The applicant’s vehicle is properly classified under heading 8703.
conclusion
23. The classification process is not a scientific one. It depends on the interpretation of words, and words are blunt instruments – particularly when used by draftsmen who are attempting to anticipate the almost infinite variety of goods that might be imported into Australia. While I am inclined to accept the words accompanying heading 8703 contemplate motor-homes, the fact the applicant expresses such a strong view to the contrary suggests there is ambiguity. The courts allow the decision-maker to have regard to the harmonized notes to assist in the interpretation process, and those notes make it clear motor-homes are covered under heading 8703. Mr Nicholls criticised the ready resort to the harmonized notes, but I disagree. Even where the notes appear to make fine or arbitrary distinctions, they help to promote consistency. Consistent and predictable decision-making is an important goal of administrative justice. It also makes life easier for those, like Mr Nicholls, who have to deal with decision-makers on a daily basis.
24. The decision under review is affirmed.
I certify that the 24 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member B J McCabe.
Signed: .....................................................................................
Associate: Sam J AppletonDate of Hearing 9 May 2005
Date of Decision 8 June 2005The applicant was represented by Mr Nicholls.
The respondent was represented by Mr Komora.
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