Metal Manufacturers Ltd v The Comptroller-General of Customs
[1995] FCA 237
•13 APRIL 1995
CATCHWORDS
CUSTOMS AND EXCISE - anti-dumping - determination of normal value of electric cable manufactured in Korea - determination where no sales on domestic market - whether Anti-Dumping Authority took into account irrelevant considerations or failed to take into account relevant considerations - whether decision unreasonable
Administrative Decisions (Judicial Review) Act 1977 (Cth), ss 5(1)(e), (2)(a), (b) and (g)
Customs Act 1901 (Cth), s 269TAC(2)(c)
Darling Downs Bacon Co-operative Association Ltd v
Comptroller-General of Customs (1994) 50 FCR 45
Minister for Aboriginal Affairs v Peko Wallsend Ltd (1986) 162
CLR 24
Wattmaster Alco Pty Ltd v Button (1985) 8 FCR 471
GTE (Aust) Pty Ltd v Brown (1986) 14 FCR 309
Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321
Bienke v Minister for Primary Industries and Energy (1994) 125
ALR 151
Associated Provincial Picture Houses v Wednesbury Corporation
(1948) 1 KB 223
Chapman & ors v Minister for Aboriginal and Torres Strait
Island Affairs & ors, 15 February 1995, unreported,
O'Loughlin J, Federal Court of Australia
Enichem Anic Srl v Anti-Dumping Authority (1992) 39 FCR 458
Tasman Timber Ltd v Minister for Industry and Commerce (1983)
67 FLR 12
Feltex Reidrubber Ltd v Minister for Industry and Commerce
(1983) 67 FLR 32
ICI Operations Pty Ltd v Frazer (1992) 34 FCR 564
No. NG 665 of 1993
METAL MANUFACTURERS LIMITED t/as MM CABLES & ors v THE COMPTROLLER-GENERAL OF CUSTOMS and ors
MOORE J
SYDNEY
13 APRIL 1995
IN THE FEDERAL COURT OF AUSTRALIA )
)
NEW SOUTH WALES DISTRICT REGISTRY ) No. NG 665 of 1993
)
GENERAL DIVISION )
BETWEEN: METAL MANUFACTURERS LIMITED
t/as MM CABLES
First Applicant
PACIFIC DUNLOP LIMITED
t/as OLEX CABLES
Second Applicant
PIRELLI CABLES AUSTRALIA LIMITED
Third Applicant
AND: THE COMPTROLLER-GENERAL OF CUSTOMS
First Respondent
THE ANTI-DUMPING AUTHORITY
Second Respondent
MIDLAND METALS OVERSEAS PTE LIMITED
Third Respondent
JUDGE: Moore J
PLACE: Sydney
DATE: 13 April 1995
ORDER OF THE COURT
THE COURT ORDERS THAT:
The application is dismissed.
The applicants pay the respondents costs.
NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA )
)
NEW SOUTH WALES DISTRICT REGISTRY ) No. NG 665 of 1993
)
GENERAL DIVISION )
BETWEEN: METAL MANUFACTURERS LIMITED
t/as MM CABLES
First Applicant
PACIFIC DUNLOP LIMITED
t/as OLEX CABLES
Second Applicant
PIRELLI CABLES AUSTRALIA LIMITED
Third Applicant
AND: THE COMPTROLLER-GENERAL OF CUSTOMS
First Respondent
THE ANTI-DUMPING AUTHORITY
Second Respondent
MIDLAND METALS OVERSEAS PTE LIMITED
Third Respondent
JUDGE: Moore J
PLACE: Sydney
DATE: 13 April 1995
REASONS FOR JUDGMENT
This is an application under s5 of the Administrative Decisions (Judicial Review) Act 1977 (Cth) ("ADJR Act") for an order of review of decisions made by a delegate of the Comptroller-General of Customs ("ACS") and the Anti-Dumping Authority ("the Authority"). These decisions were made under the Customs Act 1901 (Cth) ("Customs Act") and the Anti-Dumping Authority Act 1988 (Cth) ("ADA Act") respectively. They concerned an application lodged in August 1991 by the Australian Electrical and Electronic Manufacturers' Association under s269TB of the Customs Act on behalf of Metal Manufacturers Ltd, Pacific Dunlop Limited and Pirelli Cables Australia Limited ("the manufacturers") seeking the imposition of a dumping duty on cable imported into Australia from the Republic of Korea.
The initial consideration of the application by ACS and the Authority gave rise to proceedings in this Court which resulted in the decisions of ACS and the Authority being set aside and a further consideration of the application. As a result, ACS published a report dated 14 May 1993 ("the ACS report") which included a preliminary finding that there were not sufficient grounds for the publication of a dumping duty notice in respect of the cable. This is the first decision the subject of this application for judicial review ("the ACS decision"). A review by the Authority of this preliminary finding was sought. The Authority published a report (No 103) in July 1993 ("the Authority's report") in which it confirmed the negative preliminary finding of ACS. This is the second decision the subject of the application for judicial review ("the Authority's decision").
The application under s5 of the ADJR Act was made on 27 August 1993 and has been substantially amended on two occasions. It is unnecessary to detail the history of the application beyond noting that the applicants were able to obtain access, for the first time, to confidential material on discovery at an early stage in the proceedings. It had been part of the material upon which ACS and the Authority made their decisions. It was the consideration of this confidential material by the applicants' solicitors that led to the present amended application. In large part, the case of the applicants, as it is now framed, is based on this material and the use that was, or was not, made of it by ACS and the Authority in reaching their decisions.
The legislation
I recently considered similar issues in Darling Downs Bacon Co-operative Association Ltd v Comptroller-General of Customs (1994) 50 FCR 45 and in doing so I summarised the relevant legislation:
"Section 269TB of the Customs Act allows a person to lodge an application requesting the Minister to publish a notice in respect of goods that have been or are likely to be imported into Australia (or like goods - s269TB(1)(a)(iii)). Such a notice can be published under ss269TG (in relation to dumping duty) or 269TJ (in relation to a countervailing duty) of the Customs Act and by operation of s8 of the Customs Tariff (Anti-Dumping) Act 1975 (Cth) ("Anti-Dumping Act") a dumping duty is thereby imposed or by operation of s10 of that Act a countervailing duty is imposed.
The general legislative scheme concerning the dumping of goods in Australia has been discussed in detail in two recent decisions of Full Courts: see Enichem v Anti-Dumping Authority (1992) 39 FCR 458 and ICI Australia Operations v Fraser (1992) 34 FCR 564, and I do not undertake my own analysis of it. It is only necessary for me to refer to those parts of the legislation which are directly relevant to this application.
The application which is lodged under s269TB must be considered by ACS in accordance with the requirements of s269TC to s269TE. It may be rejected (s269TC(1) or (2)) or not (s269TC(4)). When it is not rejected it is the subject of further consideration leading to a preliminary finding (s269TD) either that there are sufficient grounds to publish a notice or there are not sufficient grounds as was the case in this matter. In making a preliminary finding of insufficient grounds (s269TD(3)) ACS must take into account any submissions received and any other matters ACS thinks relevant (s269TD(1)).
Section 269TF(1)(b) provides for a review by the Authority of a preliminary finding of ACS that there are not sufficient grounds for the publication of a dumping or countervailing duty notice. The review is initiated by application under s269TF(1) made by the original applicant under s269TB. The nature of that review is, in part, to be gleaned from ss8, 10 and 11 of the ADA Act. Section 8(3) provides that the Authority shall not have regard to any information that was unavailable to ACS at the time of the negative preliminary finding. Further s10 provides that the Authority shall have regard to Government policy and Australia's obligations under the General Agreement on Tariffs and Trade ("GATT") and s11 provides that the Authority shall have regard to the same matters as the Minister were he or she deciding the matter. When reviewing a negative preliminary finding of ACS, the Authority is able to confirm the finding or reject the finding and substitute its own positive preliminary finding (s8(2) of the ADA Act).
Section 269TG deals with whether goods have been dumped in Australia. It relevantly provides:
"269TG.(1) Subject to section 269TN, where the Minister is satisfied, as to any goods that have been exported to Australia, that:
(a)the amount of the export price of the goods is less than the amount of the normal value of those goods; and
(b)because of that:
(i) material injury to an Australian industry producing like goods has been or is being caused or is threatened, or the establishment of an Australian industry producing like goods has been or may be materially hindered; or
(ii) in a case where security has been taken under section 42 in respect of any interim duty that may become payable on the goods under section 8 of the Anti-Dumping Act - material injury to an Australian industry producing like goods would or might have been caused if the security had not been taken;
the Minister may, by notice published in the Gazette, declare that section 8 of that Act applies to those goods."
Section 269TAB deals with the manner in which the export price is to be calculated and s269TAC identifies the manner in which the normal value of goods is to be determined. As I later discuss the normal value of goods is, for present purposes, the price paid for the goods on the domestic market in the country of export subject to any adjustments that may be made under s269TAC(8)."
Central to these proceedings is s269TAC(2). The relevant provision of s269TAC are:
"(1)Subject to this section, for the purposes of this Part, the normal value of any goods exported to Australia is the price paid for like goods sold in the ordinary course of trade for home consumption in the country of export in sales that are arms length transactions by the exporter or, if like goods are not so sold by the exporter, by other sellers of like goods.
Subject to this section, where the Minister:
(a)is satisfied that:
(i)by reason of the absence of sales that would be relevant for the purpose of determining a price under subsection (1); or
(ii)by reason that the situation in the relevant market is such that sales in that market that would otherwise be relevant for the purpose of determining a price under subsection (1) are not suitable for use in determining such a price;
the normal value of goods exported to Australia cannot be ascertained under subsection (1); or
(b)is satisfied, in a case where like goods are not sold in the ordinary course of trade for home consumption in the country of export in sales that are arms length transactions by the exporter, that it is not practicable to obtain, within a reasonable time, information in relation to sales by other sellers of like goods that would be relevant for the purpose of determining a price under subsection (1);
the normal value of the goods for the purposes of this Part is:
(c)except where paragraph (d) applies, the sum of:
(i)such amount as the Minister determines to be the cost of production or manufacture of the goods in the country of export; and
(ii)on the assumption that the goods, instead of being exported, had been sold for home consumption in the ordinary course of trade in the country of export;
(A)such amounts as the Minister determines would be the delivery charges and other costs necessarily incurred in that sale; and
(B)subject to subsection (13), an amount calculated in accordance with such rate, if any, as the Minister determines would be the rate of profit on that sale; or
(d)where the Minister so directs, the price determined by the Minister to be representative of the price paid for like goods sold in the ordinary course of trade in the country of export for export to a third country, being sales that are arms length transactions.
....
....
....
Where the Minister is satisfied that sufficient information has not been furnished or is not available to enable the normal value of goods to be ascertained under the preceding subsections, the normal value of those goods is such amount as is determined by the Minister having regard to all relevant information.
For the purposes of subsection (6), the Minister may disregard any information that he or she considers to be unreliable."
It can be seen that the normal value is ordinarily the domestic price of the goods in the country of export. Circumstances will arise where the goods that are said to be dumped are not sold in the domestic market and, if so, s269TAC(2)(c) and (d) provide a mechanism that enables a normal value to be constructed.
The decisions under review
The application under s5 seeks the judicial review of both the ACS decision and the Authority's decision. The respondents submitted the discretionary power of the Court arising under s10(2)(b) of the ADJR Act should be exercised and the application, in so far as it seeks the review of the ACS decision, should be summarily dismissed. This course should be followed, it was submitted, for the same reasons that it was in Darling Downs, supra. The applicants submitted that Darling Downs, supra, was wrongly decided and/or should not be followed in the present case though they accepted that the alleged errors of ACS were of substantially the same kind as the errors alleged to have been made by the Authority. The submission that Darling Downs, supra, was wrongly decided was formally made and no detailed argument put as to why the circumstances of this application should result in the discretionary power being exercised differently.
I propose, for the reasons I gave in Darling Downs, supra, to exercise the discretionary power under s10(2)(b) of the ADJR Act and summarily dismiss the application in so far as it seeks the review of the ACS decision.
The first grounds of challenge to the Authority's decision - the calculation of normal value by reference to transactions not in the ordinary course of trade at arms length
The cable under consideration was aerial, bundled electric cable with a voltage range of 0.6 to 1 kv ("the exported cable"). This cable is used to distribute low voltage electricity from the main network to consumers and is principally composed of an aluminium conductor and an insulated cover made of cross-linked polyethylene. The exported cable to which the application under s269TB related, was manufactured in Korea by Daesung Electric Wire Co Ltd ("Daesung") though it was not sold on the Korean domestic market. That being so, a normal value could be constructed under, relevantly, s269TAC(2)(c). This was done by the Authority by reference to data supplied by Daesung.
The first alleged error was that the Authority, in making a purported calculation of delivery charges and other costs necessarily incurred in an assumed sale for the purposes of s269TAC(2)(c)(ii)(A), failed to apply what was said to be a statutory requirement that the assumed domestic sales be in the ordinary course of trade. The issue thus raised, is whether the amounts determined under s269TAC(2)(c)(ii)(A) have to be determined by reference to sales that themselves were at arms length and in the ordinary course of trade.
The constructed price was determined by the Authority by taking what was understood to be the cost of manufacturing the exported cable in Korea and adding to it amounts intended to reflect delivery charges and other costs that would necessarily be incurred on the sale of the exported cable on the domestic market had such sales occurred. A further amount was added to reflect profit on the sales. Significant purchasers in the domestic market of cable produced by Daesung were the Korea Electric Wire Co‑operative ("KEWIC"), and domestic construction companies and distributors. ACS had found that the sales to KEWIC were not at arms length and that the sales to at least some of the construction companies and distributors were not in the ordinary course of trade. However it was by reference, in part, to figures concerning sales to these purchasers that the delivery and other costs necessarily incurred in the assumed sale of the exported cable on the domestic market were computed.
The applicants submitted that in adopting this approach the Authority firstly failed to take into account a relevant consideration, namely the need to make an assumption that hypothetical domestic sales were in the ordinary course of trade: thus establishing the ground in ss5(1)(e) and 5(2)(b) of the ADJR Act; secondly made an error of law in failing to apply the requirements that the assumed domestic sales be in the ordinary course of trade: s5(1)(f); and thirdly determined delivery and other "necessary" costs and charges in such a way that the overall decision to confirm the negative preliminary finding was so unreasonable that no reasonable person could have so exercised the power: ss5(1)(e) and 5(2)(g).
Section 269TAC(2)(c) empowers the Minister to construct a normal value by determining an amount for each of the identified component costs and aggregating them. The Authority is required to determine matters in the same way as the Minister: see s11 of the ADA Act, so that, for present purposes, a reference in the legislation to the Minister can be treated as a reference to the Authority. One component cost is that identified in s269TAC(2)(c)(ii)(A), namely delivery charges and other costs necessarily incurred on sale. Clause (A) does not require that the charges and costs be determined in any particular way nor does it require that the determination of those costs be by reference to information of a particular character. If the determination is made by reference to information concerning actual sales there is no express requirement that the sales themselves be in the ordinary course of trade in arms length transactions.
It is plain that the value constructed under s269TAC(2)(c) is to provide a price that would have emerged from the operation of s269TAC(1) had there been goods sold in the ordinary course of trade for home consumption in arms length transactions. Similarly a price determined under s269TAC(2)(d) involves sales with the same characteristics though in relation to export sales and not those for home consumption. It is also plain that the component costs identified in ss269TAC(2)(c)(i) and (ii)(A) and (B), namely production costs, delivery charges and other sale costs and profit, are intended to give a composite figure that would be equivalent in its characteristics to a price emerging from the operation of s269TAC(1).
However there is no reason apparent from the purpose or terms of s269TAC or the Customs Act generally which would warrant treating the power of the Authority to determine the delivery charges and other costs under s269TAC(2)(c)(ii)(A) as impliedly limited so as to preclude reference to and reliance upon actual charges and costs in transactions where the sales were not in the ordinary course of trade in arms length transactions. If a transaction is not at arms length it may be that, because of the prescribed relationship between the buyer and the seller: see s269TAA, the price might be distorted. Distortion might arise because no profit or minimal profit is reflected in the sale price. However that would be dealt with when the Authority determined profit under s269TAC(3)(c)(ii)(B).
The legislation confers on the Authority the task of judging what reliance should be placed on available information in making the determination under s269TAC(2)(c)(ii)(A). While reliance on such information could give rise to a result so perverse as to attract the operation of s5(1)(e) and (2)(g) of the ADJR Act, nothing the applicants have pointed to suggests that the determination under cl(A) was of this character. The applicants point to reliance on information of this type and nothing more and have failed to establish error on this issue.
The second ground of challenge - the calculation of manufacturing costs
The second alleged error concerned the calculation of the manufacturing costs. It is necessary to discuss some of the factual material relied on by the Authority before turning to the submissions that were made. The data supplied by Daesung concerning manufacturing costs included manufacturing costs attributed to five cost centres. The following description is a summary of an explanation given by counsel for the first and second respondents of the methods used by Daesung to determine the manufacturing costs of any particular cable type. The five cost centres were drawing, stranding, insulation, assembly and sheathing. The data supplied by Daesung reflected the costs at each cost centre for the production of all cable and detailed the figures for various component costs that, together, gave rise to the costs for each cost centre. The component costs included items such as wages and depreciation.
The costs identified for each cost centre were for all cable products produced by Daesung and the costs at each cost centre attributable to the production of a particular type of cable were calculated by use of what were described as coefficients. The coefficients were arrived at by multiplying the total length of the particular cable type produced in a given period, by a figure reflecting the number of cores in the cable and another reflecting the number of strands in the cable. In an illustration given by counsel this was a figure in the tens or hundreds of thousands. That figure is described as a standard coefficient. In relation to each cost centre, the standard coefficient was multiplied or divided by another single digit figure. Each type of cable had its own divisor or multiplier of this latter type for each cost centre. The multiplication or division of the standard coefficient resulted in a figure for each cable for each cost centre. The resulting figures for each cable type produced were added together. The figure resulting from this addition was used to divide the total cost, in monetary terms, of each cost centre. The wan is the standard unit of Korean currency. The division of the total cost at each cost centre in this way resulted in a figure that represented the number of wan or fractions of a wan per coefficiency unit. The cost at each cost centre of producing a particular cable is the cost in wan per coefficiency unit multiplied, it would appear, by the relevant coefficient for that cable.
One of the cost centres is described as sheathing which is also the description of a step in the manufacturing process of cable though the exported cable is not sheathed. Also of relevance is that the exported cable was insulated by means of catenary continuous vulcanisation which is considerably more expensive than the alternative extender method.
Against this factual background, it was submitted by the applicants that the Authority's calculation of manufacturing costs for the purposes of sub-paragraph 269TAC(2)(c)(i) was flawed for the following reasons:
(a)The data used as the purported costs to make the exported cable included the purported cost of "sheathing", yet the Authority was on notice that the manufacture of the exported cable did not involve sheathing.
(b)The Daesung data was apparently based on "coefficients", but there was only limited explanation of how those "coefficients" were derived and it was not possible to reconcile some "coefficient" totals with other "coefficient" totals.
(c)Daesung used the more expensive catenary continuous vulcanisation method of insulation for the exported cable but the Authority did not take this into account.
(d)The "coefficients" used made no allowance for physical characteristics of each cable in terms of processing time, differing metal densities, set up costs, run size and time and manning levels.
(e)The Authority overlooked that manufacturing costs purportedly calculated by Daesung for the exported cable were substantially less than the range of those submitted by the Australian industry or supplied by its members.
(f)The Authority overlooked that manufacturing costs purportedly calculated by Daesung were typically between less than and often significantly less than purported packing costs, yet Australian industry figures indicated that manufacturing costs for the goods varied between several to many times the packing costs for the goods.
(g)The Authority overlooked that Daesung's purported manufacturing costs for the exported cable were commonly less than a comparatively small percentage of calculated costs to make and sell the goods, whereas Daesung's audited accounts and Australian industry figures both showed manufacturing costs to be a significantly larger percentage of total cost to make and sell.
(h)Daesung reported profits on export sales of the exported cable was significantly larger than its profit for all cables.
I have used words such as "significant", "less", "small" and "large", to describe information in the applicants' submissions set out in precise terms though calculated by reference to confidential material and in respect of which an order had been made under s50 of the Federal Court of Australia Act 1976 (Cth). It is unnecessary for the purposes of understanding this summary of the submissions and this judgment more generally that these references be any more precise.
It was submitted by the applicants that the calculation of manufacturing costs in this way involved the Authority failing to take into account relevant considerations: see s5(1)(e) and (2)(b) of the ADJR Act, or involved the Authority taking into account irrelevant considerations: see s5(1)(e) and (2)(b). Further the failure of the Authority to take into account the considerations referred to in pars(a) to (h) resulted in the Authority's decision being so unreasonable that no reasonable person taking into account those matters would have so decided: see s5(1)(e) and (2)(g).
Of the matters listed in paragraphs (a) to (h), the matter concerning sheathing is, in my opinion, of most substance. It is instructive to consider the submission of the applicants on that matter in the context of the submission made by all respondents that the applicants' challenge to the Authority's decision went beyond the legitimate bounds of judicial review.
The applicants submitted that the use of data which included the purported cost of sheathing in determining the cost of manufacture overlooked that the exported cable was not sheathed. That constituted a failure to take into account a relevant consideration: see s5(1)(e) and (2)(b) or the use of data that was an irrelevant consideration: see s5(1)(e) and (2)(a).
The material relied upon by the applicants to illustrate their submission came from a report prepared in October 1991 by an ACS senior inspector based on data supplied by Daesung. In its written submissions the applicants identified an entry in a column headed "sheathing" in a computer generated document containing raw data supplied by Daesung. A handwritten notation on the top of the document suggests the reference to "sheathing" is to a cost centre. There are similar entries under columns headed "drawing", "stranding", "insulation" and "assembly". Other entries referred to by the applicants in two other documents of the same character contain figures under these four headings but not under "sheathing". At best this shows reliance by the inspector in one instance, but not others, on data where a manufacturing cost for a quantity of exported cable is attributed to the cost centre entitled "sheathing". In his report the inspector describes the cost centres in this way:
"There are five cost centres involved in the production of (exported cable). Daesung maintain a computerised costing system that is based on co-efficients to aggregate costs for each process of manufacture. The five cost centres are the
drawing of the rod into wire, stranding of the wires into a conductor, insulating the conductor, assembly of the bundled cable and packing of the bundled cables onto drums."
It can be seen that the cost centre referred to in the data as "sheathing" is not identified or at least clearly identified in the summary of the cost centres in the report. This October 1991 report formed the basis of an ACS decision of December 1991 which was set aside by a consent order made by this Court in January 1993. The subsequent consideration of the matter by ACS gave rise to a further report of 29 April 1993 prepared by an ACS representative in Tokyo. That representative looked afresh at more recent data provided by Daesung. The Authority says in its July 1993 report that in assessing normal value, it "examined the information collected during this and previous inquiries" which I take to be a reference to at least the information in the October 1991 report and the April 1993 report. In that later report the five cost centres are identified by the ACS representative in this way:
"Manufacturing Cost is broken down into each of the manufacturing processes and is maintained by each product type. There are five processes, all of which are different cost centres. These include drawing of the rod into wire, stranding of the wires into a conductor, insulating the conductor, assembly of the bundled cables and sheathing. The manufacturing costs provided by Daesung at Attachment D-2-1 are calculated on the basis of actual production quantities for each grade of cable produced by Daesung."
It is clear from this report that, in a general way, the cost centres were understood to relate to manufacturing processes. In the data relied on for the April 1993 report there are costs attributable to the "sheathing" cost centre: see Annexure D-4-2, that appear to have been used in calculating the manufacturing costs of the exported cable.
Thus the Authority has relied upon data that includes as one of the manufacturing costs, costs associated with a manufacturing process that had no application to exported cable. The first and second respondents sought to show that the costs for the "sheathing" cost centre included labour costs unconnected to the manufacturing process to which that centre appears to relate. The example relied upon was forklift drivers. However in an attachment to the April 1993 report (Attachment summary D-4, BOD 356) it is clear that the relevant labour costs related to the manufacturing process. In describing how labour costs are allocated the report states:
"Allocation Basis
Daesung stated that direct labour expense (ie the labour expense associated with all the processes involved in manufacture of LV ABC - drawing, stranding, insulation, assembly, sheathing) is allocated to the direct cost centre based on the number of people involved in each manufacture process by the number of hours. At Attachment D-4-5 is the allocation basis for labour. Indirect labour costs (for quality assurance, tools, maintenance, cleaning etc) is allocated based on direct labour rate.
......
To support the allocation basis, Daesung provided background data from the factory which shows the number of people employed on each process (this is at Attachment D-4-6)."
The report and attachments do not support the contention that the labour costs of the fork lift drivers, and by implication other costs attributed to the sheathing cost centre, do not relate to the production process of sheathing. The respondents did not challenge the contention of the applicants that the exported cable was not sheathed. It is a contention that is supported by documents in evidence. Further, the respondents did not challenge the contention of the applicants that the calculations made to determine the manufacturing costs for the purposes of s269TAC(2)(c)(i) included costs arising at the "sheathing" cost centre. The answer of the first and second respondents that costs attributable to the sheathing cost centre may not relate to costs associated with the production process of sheathing is not one I would readily accept having regard to the material the respondents relied on to support it. However, it does not follow that I am satisfied that the inclusion of costs relating to that cost centre should be accepted as demonstrating that a cost for actually sheathing exported cable was included in the Daesung data notwithstanding that exported cable is not sheathed. What precisely that cost relates to is unknown.
In the result the Authority has used data in calculating the cost of production or manufacture of exported cable which is likely to have included a cost relating to a manufacturing process that the exported cable does not undergo. However the nature of that relationship is entirely unclear.
The starting point in assessing whether grounds in s5 of the ADJR Act are thus made out, is the legislative basis for the decision the Authority was called upon to make. The decision under review is the decision of the Authority to affirm a preliminary finding that there were not sufficient grounds for the publication of a dumping duty notice in relation to the exported cable. Whether such a notice should be published requires a comparison of export price and normal value: see s269TG. Normal value can be an actual price though it may be adjusted: see ss269TAC(1) and (8), a constructed price of amounts determined under s269TAC(2) or a determination under s269TAC(6). Section 269TAC(6) authorises the determination of an amount having regard to all relevant information in circumstances where the Authority is satisfied that sufficient information has not been furnished or is not available to enable the normal value to be determined under, relevantly, s269TAC(1) or (2). Section 269TAC(7) enables the Authority to disregard information that it considers unreliable when making a determination under s269TAC(6). The terms of s269TAC(6) imply that a determination of normal value under s269TAC(2) is undertaken when there is sufficient information to enable the normal value to be ascertained. While the determination of the cost of manufacture or production under s269TAC(2)(c)(i) is based on the opinion of the Authority on what that cost is, sub-paragraph (i) is directed to the determination of a cost approximating the actual cost based on information that permits its determination. The absence of such information enables resort to s269TAC(6). The combined effect of these provisions is that the Authority determines the cost of production or manufacture in the manner contemplated by s269TAC(2)(c)(i) as a step towards making the comparison required by s269TG.
The respondents submitted that the determination of production costs under s269TAC(2)(c)(i) involved judgments of fact for the administrative decision maker who may make choices about accounting methodology and may accept or reject accounting information for the purpose of making the determination. The ultimate decision made in reliance on facts determined this way may only be impugned on the basis that it is so unreasonable that no reasonable person could have exercised the power.
It may be accepted that the role of the Court in reviewing an administrative decision is a limited one. As Mason J said in Minister for Aboriginal Affairs v Peko Wallsend Ltd (1986) 162 CLR 24 at 42:
"So too in the context of administrative law, a court should proceed with caution when reviewing an administrative decision on the ground that it does not give proper weight to relevant factors, lest it exceed its supervisory role by reviewing the decision on its merits."
In issue in these proceedings is what relevantly are the proper bounds of that supervisory role.
The applicants referred to Wattmaster Alco Pty Ltd v Button (1985) 8 FCR 471, as illustrating the appropriate measure of supervision by the Court. In that matter Pincus J set aside a decision of the Minister for Industry and Commerce to publish a declaration under s8(2) of the Customs (Anti-Dumping) Act 1975 ("the 1975 Act") concerning a certain class of ceiling fans imported from Hong Kong. The declaration had been made on the basis of a normal value determined by the Minister under s5(4) of the 1975 Act which is a provision in essentially the same terms as s269TAC(6). For reasons of simplicity I will refer, from this point, to sections of the 1975 Act considered in this and a later judgment of Burchett J, by referring to the equivalent section now found in PtXVB of the Customs Act.
It had been argued in Wattmaster, supra that the Minister had failed to take into account generous credit terms, resulting from delayed payment, the seller of the relevant goods provided to purchasers on the domestic market when determining the normal value of the goods. Thus an adjustment should have been made under s269TAC(8) to reflect these credit terms. The applicants relied on an observation of Pincus J at 479.6 to the effect that in the circumstances there should have been "a most careful scrutiny of the (vendor on the domestic market's) price".
That matter concerned issues that do not arise in these proceedings. The first point of distinction is that normal value was determined under s269TAC(6) though, as Pincus J points out at 474, it may well have been capable of being determined under s269TAC(1) and the determinations were based on prices as if made under subsec(1). Of greater significance was the relevance of the mechanism in s269TAC(8) which contemplates adjustments being made to the normal value of goods for the "terms ... of the sales" to which they relate. While his Honour does not say so in express terms, it is clear from his discussion of adjustments that were in fact made under s269TAC(8) for terms of credit provided to Australian importers, that an adjustment should also have been made under s269TAC(8) for the terms of credit provided to the purchasers on the domestic market. The decision was set aside as the Minister failed to determine normal value in the manner contemplated by s269TAC because he failed to make an adjustment under s269TAC(8) for terms of credit which is expressly referred to in that subsection. Pincus J viewed this failure to make allowance for terms of credit as satisfying the ground in s5(2)(b) of the ADJR Act. The Minister failed to have regard to a consideration raised by the section under which the determination of normal value was made which resulted in the decision being set aside.
The applicants also relied upon a subsequent case concerning the operation of the 1975 Act, GTE (Aust) Pty Ltd v Brown (1986) 14 FCR 309, in which Burchett J had to consider the method by which the Minister had assessed the normal value of certain light bulbs manufactured in Belgium, that is, the price at which they were sold on the domestic market. The assessment had been made under s269TAC(1) and (8). Burchett J decided that the Minister had failed to take into account a relevant consideration and took into account two irrelevant ones. The relevant consideration not taken into account concerned matters such as the cost of warehousing and transporting the goods. Those costs were not borne by the manufacturer and thus not reflected in the manufacturer's selling price. His Honour considered an adjustment should have been made to take account of those matters under s269TAC(8). The irrelevant considerations taken into account concerned the prices of bulbs which were not of the same character as the bulbs alleged to have been dumped. They were not of the same character either because of differences in the nature of the glass in the globe or the voltages. The prices of the globes with different glass did not tend logically to establish the price of bulbs sold on the domestic market equivalent to those exported: see R v Deputy Industrial Injuries Commissioner; Ex parte Moore [1965] 1QB 456 at 488. The prices of globes of a different voltage were used to assess normal value were not identical goods and an adjustment was required to be made under s269TAC(8).
Again that matter concerned issues that do not arise in the present proceedings. Not only was normal value assessed under s269TAC(1) and (8), there is, in these proceedings, no issue that the cable for which the normal value was determined under s269TAC(2) was the cable which was exported. Further the data used by the Authority to determine manufacturing cost, in so far as it may have erroneously included a cost relating to the process of sheathing, nonetheless was probative of the cost of manufacturing.
Both Wattmaster and GTE, supra, illustrate situations where the evaluation of material to ascertain facts by reference to which normal value was determined, has involved reliance on data or a failure to refer to data in a way that has attracted the provisions of ss5(1)(e) and (2)(a) and (b) of the ADJR Act.
However the scope of ss5(1)(e) and (2)(a) and (b) now has to be viewed in the light of the decision of the High Court in Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321. In the judgment of Mason CJ the following is said at 359:
"However, in several decisions it has been suggested that findings of fact which are unreasonable or arbitrary may be reviewed under s.5(1)(e) and (2)(a) and (b): see Singh v. Minister for Immigration and Ethnic Affairs; Independent F.M. Radio Pty. Ltd. v. Australian Broadcasting Tribunal; Minister for Immigration, Local Government and Ethnic Affairs v. Pashmforoosh. In the last-mentioned case, Davies, Burchett and Lee JJ said.
'Thus, decisions may be set aside because, being insufficiently supported by reason, they appear to be an improper exercise of the power conferred or arbitrary or because there was no evidence or other material sufficient to justify the making of the decision or the decision was so unreasonable that no reasonable person could have so exercised the power. The making of, or failure to make, a particular finding of fact in the course of the reasoning process may equally be attacked on any such ground. The taking into account of a fact found unreasonably or the failure to take into account a fact that a reasonable decision-maker would have found and taken into account provides a ground of review under ss.5(1)(e) and 5(2)(a) and (b) of the A.D.(J.R.) Act.' (Emphasis added.)
This statement is unobjectionable to the extent that a finding of fact constitutes a 'decision' such that it can be reviewed for unreasonableness and on other appropriate grounds. But if the finding does not constitute a 'decision', it is beyond review independently of such a 'decision'. In accordance with what I have already said, a finding of fact will then be reviewable on the ground that there is no probative evidence to support it and an inference will be reviewable on the ground that it was not reasonably open on the facts, which amounts to the same thing."
To similar effect are the observations of Gummow J in Bienke v Minister for Primary Industries and Energy (1994) 125 ALR 151 at 165:
"In Broadbridge v Stammers (1987) 16 F.C.R. 296 at 301, the Full Court, when considering a challenge to decision making involving evaluation of factual matters, relied upon the following passage from the speech of Lord Brightman in Puhlhofer v Hillingdon London Borough Council [1986] A.C. 484 at 518:
'Where the existence or non-existence of a fact is left to the judgment and discretion of a public body and that fact involves a broad spectrum ranging from the obvious to the debatable to the just conceivable, it is the duty of the court to leave the decision of that fact to the public body to whom Parliament has entrusted the decision-making power save in a case where it is obvious that the public body, consciously or unconsciously, are acting perversely.'
What is there said is consistent with the approach taken in Australian Broadcasting Tribunal v Bond (1990) 170 C.L.R. 321; see also Re MacMillan Bloedel Ltd and Appeal Board Under the Forest Act (1984) 8 D.L.R. (4th) 33 at 40, 44-45."
In the present case, the findings of fact concerning Daesung's costs of production of exported cable was not a decision. The impugned decision in these proceedings is the decision to affirm under s8 of the ADA Act the negative preliminary finding of ACS under s269TD of the Customs Act. The determination of a cost of manufacture or production under s269TAC(2)(c)(i) involved an evaluation made by the decision maker by reference to found facts. It is open to the decision maker to make erroneous findings of fact that do not render the ultimate decision upon which they are based open to review
on the grounds in s5(2)(a) and (b) though, as Mason CJ points out, it may be amenable to review on other grounds. I am not satisfied that any error the Authority may have made in determining what were Daesung's actual production costs of exported cable by relying on costs of production associated with the manufacturing process of sheathing, can be said to evidence a failure to take into account relevant considerations or the taking into account of irrelevant considerations.
This leads to a consideration of the remainder of the matters referred to in pars(b) to (h) in my earlier summary of the criticisms made by the applicants though I do not propose to discuss each in the same detail as the previous matter. I have endeavoured to identify the substance of the criticism made and the answer by the respondents without distinguishing between what was said by the first and second respondents and what was said by the third respondent. Where appropriate I also refer to the applicants' reply to the respondents' answer.
Par(b): The applicants submitted that there is limited explanation as to how the coefficients were derived and that some of the figures in ACS working papers involving the application of the coefficients could not be reconciled and figures which should correspond, do not. They submitted that "the lack of correspondence, together with the limited explanation of how the "coefficients were derived was a relevant consideration to be taken into account in evaluating the reliability of the report". The submission went on to say that the Authority "failed to take into account that relevant consideration". The applicants' critique of the data descends into detail that I do not propose to repeat. For the reasons I earlier gave in relation to par(a) these matters do not establish the ground in s5(1)(e) and (2)(a) or (b). The respondents' answer to the criticism was to say that the applicants' understanding is irrelevant, the data was verified though without every figure or formula being checked and to explain, as I earlier set out, the manner in which the coefficients operated. The applicants' reply was that the explanation is an ex post facto rationalisation not evident in the Authority's report.
Par(c): The applicants submitted the Authority failed to make allowance for the fact that the catenary continuous vulcanisation method of insulation used on exported cable is more expensive than the alternative method, the extruder and post cure method. This was said to have been necessary because the coefficients used to apportion manufacturing costs did not, in relation to cable types, allow for differing costs arising from the use of different methods of insulation. Again this is said to raise grounds in s5(1)(e) and (2)(a) or (2)(b) and for reasons already given it does not. The respondents' answer to the criticism was to say that this does not show the coefficients are unreasonable and the Australian figures used to establish the difference in the cost of the two methods did not disclose a difference of the magnitude contended for by the applicants. The applicants' reply was that all the Australian figures must be looked at and the difference is as submitted.
Par(d): The next matter raised by the applicants concerned the use of the coefficients which were formulae based on length of cable, strands in each cable and number of cores in each cable. They submitted that the coefficients make no allowance for physical characteristics of each cable in terms of processing time, differing metal densities, set up costs, run size and time and manning levels. Material provided to the Authority by Australian manufacturers was said to show that matters of this type affect the cost of production and that these matters were not taken into account thus establishing a failure on the Authority's part to take into account a relevant consideration. Again this is said to raise the ground in s5(1)(e) and (2)(b) and for reasons already given it does not. The respondents' answer to the criticism was to say that the coefficients are a sophisticated method of allocating cost by reference to costs per unit based on total costs in a specified period.
Pars (e) and (f): The next two matters I deal with together as they involve a comparison of Daesung data on manufacturing costs with that of Australian manufacturers. It is said by the applicants that Daesung's manufacturing costs for exported cable are a comparatively small percentage, over a range, of the costs of manufacturing those goods in Australia and that the costs identified by Daesung as packing costs bear a quite different relationship to manufacturing costs than costs of the same description in manufacturing in Australia. Again those matters are said to raise the ground in s5(1)(e) and (2)(b) and for reasons already given they do not. The respondents' answer is that significant differences in the manufacturing costs of Australian manufacturers, differing methods of internal cost allocation make comparisons of manufacturing costs of limited utility and a comparison of total costs to make exported cable between Daesung and Australian manufacturers yields, in relation to some Australian manufacturers, a limited and explicable difference.
Par(g): The applicants point to figures that indicate the ratio, as a percentage, of Daesung's manufacturing costs of exported cable to its cost to make and sell that cable, differs from the same ratio, as a percentage, for all cable it manufactures and the same ratio, as a percentage, for exported cable manufactured in Australia. Again this is said to raise the ground in s5(1)(e) and (2)(b) and for reasons already given it does not.
Par(h): The applicants point to what are said to be "unusual features" in relation to Daesung's profits or purported profits, namely the profits on export sales of the exported cable was significantly larger than its profits for all cables. This is relevant to the submission next made.
Having submitted that each of the preceding matters (except par(h)) establish a failure of the Authority to take into account a relevant consideration or taking into account an irrelevant consideration, the applicants then submitted they "were collectively relevant considerations". However their character does not alter by viewing them together for the purposes of the grounds identified in s5(2)(a) and (b) and for the reasons given by Mason CJ in Bond, supra, those grounds have no application.
The applicants then submitted that those matters, when taken together, establish that the Authority's decision was so unreasonable that no reasonable person taking into account those matters would have so decided: see s5(1)(e) and (2)(g). This ground is treated as the statutory expression of the principle in Associated Provincial Picture Houses v Wednesbury Corporation (1948) 1 KB 223. Its application was recently considered by O'Loughlin J in Chapman & ors v Minister for Aboriginal and Torres Strait Island Affairs & ors, 15 February 1995, unreported, Federal Court of Australia. His Honour said at 98:
"The onus is on the (applicants), as the complaining parties, to establish that the challenged decision, when looked at objectively, is 'so devoid of any plausible justification that no reasonable person could have taken this course...': Prasad v Minister for Immigration and Ethnic Affairs (1984-1985) 6 FCR 155 at 169 per Wilcox J; see also Conyngham v Minister for Immigration and Ethnic Affairs (1986) 68 ALR 423 at 433-434, Bromley London Borough Council v Greater London Council [1983] 1 AC 768 at 821 and Wouters, Wright & Holmes v Deputy Commissioner of Taxation (1988-1989) 20 FCR 342 at 352 where the Full Court quoted with approval the comment made by Lord Hailsham LC in Re W (An Infant) [1971] AC 682 at 700:
'Not every reasonable exercise of judgment is right, and not every mistaken exercise of judgment is unreasonable. There is a band of decisions within which no court should seek to replace the individual's judgment with his own.'"
The impugned decision is the Authority's decision affirming the ACS negative preliminary finding which depended upon the Authority making the comparison required by s269TG, namely whether the amount of the export price is less than the amount of the normal value.
The determination of normal value under s269TAC(2)(c) depends, in part, on the amount determined by the Minister under sub-par(i) as the cost of production or manufacture. At issue is the impact of any error that may have been made in determining those costs on the impugned decision and whether that impact is such that it should be viewed as devoid of plausible justification to use the language of Prasad, supra.
The gravamen of the applicants' case is the unreliability of the data upon which the Authority determined a cost under s269TAC(2)(c)(ii). The applicants invite the inference that the cost determined does not reflect the true cost because of anomalies or inconsistencies some of which are manifest when the Daesung data concerning production cost is compared with other Daesung data or with data concerning the cost of production of exported cable other than by Daesung. The determination of cost is thus indirectly shown to be erroneous.
I have not set out in great detail the criticism made by the applicants, at least in relation to matters in pars(b) to (g), nor the response of the respondents. It is difficult to do so in view of the confidential nature of the material upon which much of it depends. The respondents response has not, in all instances, answered entirely the criticism made which were of apparent substance and this is so, in my opinion, in relation to the matters raised in pars(c), (d) and (e).
The analysis undertaken by the Authority of the data to construct a normal value is found in confidential attachment 3 to its report. Section 269TAC(2)(c)(i) speaks of a cost of "production or manufacture" though the Authority used these words to signify different processes when making the calculations in confidential attachment 3 and I will adopt, for present purposes, the language it used. The Authority calculated the cost of the raw material to which it added a cost identified as the manufacturing cost as well as costs for packing and, in some instances, outside processing. The total of those costs was treated by the Authority as the cost of production. Some of the criticism made by the applicants concern the calculation of the cost referred to by the Authority as the manufacturing cost. That cost is only a comparatively small percentage of the total cost of what the Authority described as the cost of production relied on in determining normal value. As is apparent from confidential attachment 3, the total cost of production is made up substantially of the costs of raw materials. Further the manufacturing cost is only a comparatively small proportion of the normal value. Yet in all but four of the fifteen instances of export cable for which a normal value was calculated, the percentage difference between the export price and the normal value is a double digit figure. In only two instances does the export price exceed the normal value by a small margin.
In those circumstances, in my opinion, it would only be in a clear case that criticism intended to show indirectly, in the way I have discussed, that the cost determined under s269TAC(2)(c)(i) was not the cost of production, could establish that the impugned decision, made by reference to s269TG, satisfied the Wednesbury test. As Hill J said in Enichem Anic Srl v Anti-Dumping Authority (1992) 39 FCR 458 at 468:
"Decision-making is a function of the real world. A decision-maker is not bound to investigate each avenue that may be suggested to him by a party interested. Ultimately, a decision-maker must do the best on the material available after giving interested parties the right to be heard on the question."
I have already referred to the April 1993 report prepared by an ACS representative in Tokyo. In it he explains the steps he took to verify the data provided by Daesung and to respond to and deal with criticism made by Australian manufacturers of the determination of normal value in an earlier ACS enquiry. I view as significant that the Daesung data was the product of a system of cost allocation internal to the company used by it for its own purposes. The critical analysis of it by the ACS representative plainly evidences a bona fide attempt to determine a normal value and ascertain whether the data provided by Daesung should have been accepted as correct. The Authority took into account that analysis in determining normal value. It may be accepted that a sceptical mind, aided by the analysis that has since been undertaken on behalf of the applicants, might not have as readily accepted that data as correct or accepted it without further analysis. However it must be remembered that the ground in s5(2)(g) is an example of the ground in s5(1)(e) which is directed to the manner in which power is exercised: see Luu v Renevier (1989) 91 ALR 39 at 50 and also Tickner v Bropho (1993) 114 ALR 409 at 424 per Black CJ, and provides a means of restraining its improper exercise. As Brennan J said in Attorney General for the State of New South Wales v Quin (1990) 170 CLR 1 at 36:
"Properly applied, Wednesbury unreasonableness leaves the merits of a decision or action unaffected unless the decision or action is such as to amount to an abuse of power:"
and later:
"Moreover, if the courts were permitted to review the merits of administrative action whenever interested parties were prepared to risk the costs of litigation, the exercise of administrative power might be skewed in favour of the rich, the powerful, or the simply litigious.
Some advocates of judicial intervention would encourage the courts to expand the scope and purpose of judicial review, especially to provide some check on the Executive Government which nowadays exercises enormous powers beyond the capacity of the Parliament to supervise effectively. Such advocacy is misplaced. If the courts were to assume a jurisdiction to review administrative acts or decisions which are 'unfair' in the opinion of the court - not the product of procedural unfairness, but unfair on the merits - the courts would be assuming a jurisdiction to do the very thing which is to be done by the repository of an administrative power, namely choosing among the courses of action upon which reasonable minds might differ: see Secretary of State for Education and Science v Tameside Metropolitan B.C. and Council of Civil Service Unions v Minister for the Civil Service."
Ultimately it is for the applicants to establish, which in my opinion they have not, that the impugned decision is one that no reasonable decision maker would have made, that is, no reasonable decision maker would have concluded that a negative preliminary finding should have been affirmed on the basis that there are not sufficient grounds for the publication of a dumping duty notice which could be published under s269TG because the export price exceeded the normal value. I am not satisfied that the ground in s5(1)(e) and 2(g) is made out.
The third ground of challenge - error of law arising from failure to determine cost
The last submission of the applicants is that the Authority's decision involved an error of law because the Daesung data could not reflect an actual cost which is what s269TAC(2)(c)(i) requires be determined and that the use of coefficients by Daesung in computing its production costs, led to the determination of an arbitrary figure, given the reliance on that data, and not an actual cost. As I have already said, the provisions of s269TAC(6) operate in circumstances where insufficient information is available and imply that normal value is only determined under s269TAC(2)(c) when there is. However the amount arising from the operation of s269TAC(2)(c)(i) is "such amount as the Minister determines". Section 269TAC(2)(c) does not require the normal value to include the actual "cost of production or manufacture". The determination by the Minister, which for present purposes is the determination by the Authority, will necessarily involve matters for judgment. The exercise of that judgment permits of some approximation of the actual cost based on sufficient information. The applicants have not established the error of law they contend.
In conclusion I deal with a submission made by the applicants that Commonwealth legislation which permits the imposition of dumping duty should be beneficially construed having regard to its purpose, namely the protection of Australian manufacturers from unfair international trading practices. That was accepted by Lockhart J in Tasman Timber Ltd v Minister for Industry and Commerce (1983) 67 FLR 12 at 14 and Sheppard J in Feltex Reidrubber Ltd v Minister for Industry and Commerce (1983) 67 FLR 32 at 42 as the purpose of the Commonwealth anti-dumping legislation in the form it then took. While that object was also accepted as correct by the Full Court in ICI Operations Pty Ltd v Frazer (1992) 34 FCR 564 at 570, the Full Court indicated that at the same time the scheme of the legislation was to ensure that protective measures adopted by the imposition of duties did not unjustifiably impede international trade. There is nothing in existing anti-dumping legislation nor the decision of the Full Court which suggests that the latter object is a subsidiary or subordinate one. On the basis that the relevant provisions of the Customs Act should be beneficially construed the applicants submitted such a construction should lead the Court to "insist(ing) on the relevant decision makers taking all material considerations into account". For my part, I do not see how the purpose of legislation, under which a decision is made, which might lead to a beneficial construction of it, could render considerations relevant or irrelevant for the purposes of s5(1)(e) and 2(a) and (b) of the ADJR Act if, in application of established principle, they are not.
The applicants have not made out the grounds on which they seek to impugn the Authority's decision. Accordingly their application is dismissed with costs.
I certify that this and the preceding thirty-seven (37) pages are a true copy of the Reasons for Judgment herein of his Honour Justice Moore.
Associate:
Date:13 April 1995
Counsel for the Applicants: Mr J.R. Sackar QC &
Mr M.R. Speakman
Solicitor for the Applicants: C.G. Gillis & Co.
Counsel for the First &
Second Respondents: Mr S.J. Gageler
Solicitor for the First &
Second Respondents: Australian Government Solicitors
Counsel for Third Respondent: Mr C.M. Erskine
Solicitor for the Third
Respondent: Clayton Utz
Date of hearing: 14 December 1994
Date of judgment: 13 April 1995
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