Mullins Wheels Pty Ltd v Minister for Customs and Consumer Affairs
[2000] FCA 357
•28 MARCH 2000
FEDERAL COURT OF AUSTRALIA
Mullins Wheels Pty Ltd v Minister for Customs & Consumer Affairs
[2000] FCA 357TAXES AND DUTIES – anti-dumping duty – appeal against the dismissal of an application for judicial review of a decision of the Minister – foreign exporter of wheel rims entitled, upon proof of export, to a rebate against the purchase price of steel used in their manufacture and to saleable Import Rebate Credit Certificates (IRCCs) which entitle their holder to duty concessions upon importing motor vehicles or motor vehicle components - normal value of the exported goods ascertained under s 269 TAC(2) of the Customs Act 1901 (Cth) – whether the Minister was bound, in determining the cost of production or manufacture of the exported rims (i) to determine that cost by reference to the rebated price of the steel used in the manufacture of the rims (whether because the “cost of production or manufacture” to be determined under s 269 TAC(2)(c)(i) necessarily includes only the rebated cost of the steel or, if that is not the case, because he was obliged to adjust those costs downward under s 269 TAC(9), and (ii) to make a downward adjustment under s 269 TAC(9) so as to reduce the cost of production or manufacture by the value of the IRCCs
ADMINISTRATIVE LAW – judicial review – whether the Minister’s application of provisions of Customs Act 1901 (Cth) involved an error of law
Customs Act 1901 (Cth), s 269 TAC
Customs Tariff (Anti-Dumping) Act 1978 (Cth)
Anti-Dumping Authority Act 1988 (Cth)
Customs Tariff (Anti-Dumping) Act 1975Collector of Customs v Pozzolanic Enterprises Pty Ltd (1993) 43 FCR 280 referred to
Sharp Corporation of Australia Pty Ltd v Collector of Customs (1995) 59 FCR 6 cited
Nordland Papier AG v Anti-Dumping Authority (1999) 161 ALR 120 referred to
Powerlift (Nissan) Pty Ltd v Minister for Small Business, Construction and Customs (1993) 40 FCR 332 cited
Reg v The District Court; ex parte White (1966) 116 CLR 644 cited
Waterford v Commonwealth (1987) 163 CLR 54 cited
Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 cited
Minister for Immigration & Multicultural Affairs v Epeabaka (1999) 84 FCR 411 cited
Collector of Customs v Agfa-Gevaert Ltd (1996) 186 CLR 389 referred toMULLINS WHEELS PTY LIMITED v MINISTER FOR CUSTOMS AND CONSUMER AFFAIRS AND ANTI‑DUMPING AUTHORITY
N 1111 OF 1999
WHITLAM, LEHANE AND GYLES JJ
28 MARCH 2000
SYDNEY
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
N 1111 OF 1999
On appeal from a Judge of the Federal Court of Australia
BETWEEN:
MULLINS WHEELS PTY LIMITED
APPELLANTAND:
MINISTER FOR CUSTOMS AND CONSUMER AFFAIRS
FIRST RESPONDENTANTI‑DUMPING AUTHORITY
SECOND RESPONDENT
JUDGE:
WHITLAM, LEHANE AND GYLES JJ
DATE OF ORDER:
28 MARCH 2000
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
1. The appeal be dismissed.
2. The appellant pay the costs of the first respondent.
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
N 1111 OF 1999
On appeal from a Judge of the Federal Court of Australia
BETWEEN:
MULLINS WHEELS PTY LIMITED
APPELLANTAND:
MINISTER FOR CUSTOMS AND CONSUMER AFFAIRS
FIRST RESPONDENTANTI-DUMPING AUTHORITY
SECOND RESPONDENT
JUDGES:
WHITLAM, LEHANE AND GYLES JJ
DATE:
28 MARCH 2000
PLACE:
SYDNEY
REASONS FOR JUDGMENT
WHITLAM J:
I have had the advantage of reading in draft the reasons for judgment of Lehane J and of Gyles J. For the reasons given by each of them, I agree that the appeal should be dismissed with costs.
I certify that the preceding one (1) numbered paragraph is a true copy of the Reasons for Judgment herein of the Honourable Justice Whitlam. Associate:
Dated:
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
N 1111 OF 1999
On appeal from a Judge of the Federal Court of Australia
BETWEEN:
MULLINS WHEELS PTY LIMITED
APPELLANTAND:
MINISTER FOR CUSTOMS AND CONSUMER AFFAIRS
FIRST RESPONDENTANTI‑DUMPING AUTHORITY
SECOND RESPONDENT
JUDGE:
WHITLAM, LEHANE AND GYLES JJ
DATE:
28 MARCH 2000
PLACE:
SYDNEY
REASONS FOR JUDGMENT
LEHANE J:
I have had the advantage of reading, in draft, the judgment of Gyles J. It is unnecessary to repeat his Honour’s statement of the circumstances and the relevant provisions of the Customs Act 1901 (Cth), which I gratefully adopt.
The essential facts are very simple. The exporter, a South African company, manufactured and sold wheel rims. It did not sell those goods on the South African domestic market. The rims were manufactured from steel. South African steel manufacturers had the benefit of tariff protection, which had the effect of inflating the price of steel sold on the South African market. The exporter, however, was entitled to a rebate against the purchase price of the steel which it used in manufacturing the rims upon proof that the rims had been exported. The exporter was entitled also to what were called Import Rebate Credit Certificates (IRCCs). Those certificates entitled their holder to duty concessions upon importing motor vehicles and components of motor vehicles. The exporter did not itself import motor vehicles or motor vehicle components, but the certificates to which it was entitled had a monetary value, being saleable. If the exporter had sold wheel rims domestically, it would not have been entitled either to a rebate against the purchase price of the steel used in the manufacture of those rims or, of course, to IRCCs in respect of them.
For the purpose of determining whether dumping duty should be imposed on wheel rims exported by the exporter to Australia, the Minister, in order to ascertain the normal value of the wheel rims, determined (as part of his determination of the cost of production or manufacture of the wheel rims under s 269 TAC(2)(c)(i) of the Customs Act) that the cost of the steel used in the manufacture of the rims was its unrebated price; and the Minister declined to adjust the cost of production or manufacture of the exported goods (downwards) under s 269 TAC(9) so as to incorporate the effect of either the rebate or the IRCCs.
The essence of the questions of law to be decided on this appeal are whether the Minister, in determining the cost of production or manufacture of the rims exported to Australia, was obliged, first, to determine that cost by reference to the rebated price of the steel used in the manufacture of the rims (whether because the “cost of production or manufacture” to be determined under s 269 TAC(2)(c)(i) necessarily includes only the rebated cost of the steel or, if that is not the case, because he was obliged to adjust those costs (downwards) under s 269 TAC(9)) and, secondly, to make a (downward) adjustment under s 269 TAC(9) so as to reduce the cost of production or manufacture by the value of the IRCCs.
The distinction, in this area of discourse, between questions of fact and questions of law has been stated with some precision: see, for example, Collector of Customs v Pozzolanic Enterprises Pty Ltd (1993) 43 FCR 280 at 286–289; Sharp Corporation of Australia Pty Ltd v Collector of Customs (1995) 59 FCR 6 at 11‑13 and at 15, 16. But the precision may be illusory (Collector of Customs v Agfa-Gevaert Ltd (1996) 186 CLR 389 at 394-396) and boundaries are not always distinct: it is sufficient to refer to the fifth proposition stated in Pozzolanic at 287 and its discussion by Hill J in Sharp at 16. It is clear enough, however, that the question whether “the goods” referred to in s 269 TAC(2)(c)(i) are the exported goods (rather than goods notionally sold domestically) is a question of law and in my view counsel for the appellant was right in submitting that the goods referred to are the exported goods. That conclusion is required, I think, by the use of the words “the goods” rather than (as for instance in s 269 TAC(1) and s 269 TAC(2)(b)) “like goods”; the immediate context (“production or manufacture of the goods in the country of export”); and the opening words of s 269 TAC(2)(c)(ii) (“on the assumption that the goods, instead of being exported, had been sold for home consumption … in the country of export”).
It may not necessarily follow, however, that the cost of production or manufacture of the exported goods is to be determined, under s 269 TAC(2)(c)(i), by reference to the rebated cost of the steel used in their manufacture (there may be a question of law whether, on the facts found, only the rebated cost of the steel falls within the meaning of “cost” or a question of fact, arising because either rebated or unrebated cost is capable of meeting the statutory description (Sharp at 16)). Decisions concerning different statutory provisions, such as Nordland Papier AG v Anti‑Dumping Authority (1999) 161 ALR 120, may offer some guidance, but cannot be conclusive. The appellant’s argument is that, in context and as a matter of law, only the rebated cost may be regarded as the cost of the steel and therefore included in the “cost” of the exported goods. But in circumstances where the steel is actually paid for at the unrebated price, the rebate being paid only if and when goods are exported, I do not think it is possible to conclude, as a matter of law, that “cost” necessarily and only means rebated cost. If it is a matter of the ordinary meaning of the word “cost”, that is a question of fact. And I do not think any basis has been demonstrated for a conclusion that, having made its other findings of fact, it was open to the Minister to decide the question only in one way.
The question then arises whether a different result follows because the making of adjustments under subs (9) is part of the process of making a determination under subs (2)(c)(i). Adjustments to be made are those which are “necessary to ensure that the normal value so ascertained is properly comparable with the export price of those goods”.
The paradigm “normal value” is the price for which like goods to those exported are sold domestically: see s 269 TAC(1), which provides
“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.”
In cases in which subs (1) is used to determine normal value, subs (8) requires adjustments to be made in certain circumstances:
“Where the normal value of goods exported to Australia is the price paid for like goods and that price and the export price of the goods exported:
(a) relate to sales occurring at different times; or
(b) are not in respect of identical goods; or
(c)are modified in different ways by taxes or the terms or circumstances of the sales to which they relate;
that price paid for like goods is to be taken to be that price paid adjusted in accordance with directions by the Minister so that those differences would not affect its comparison with that export price.”
The construct for which subs (2) provides is, plainly enough, intended to enable a comparison to be made which will approximate that which would be required under subs (1) if the exporter sold like goods domestically in arms length transactions.
Subsection (8) plays, in relation to subs (1), a role similar to that played by subs (9) in relation to subs (2)(c)(i) (see the discussion of the provisions by Hill J in Powerlift (Nissan) Pty Ltd v Minister for Small Business, Construction and Customs (1993) 40 FCR 332 at 347‑350). There are, necessarily, differences between subs (8) and subs (9). The former subsection provides for particular circumstances in which the “price paid for like goods” is to be adjusted so that differences of the kinds mentioned in the subsection will not “affect its comparison with [the] export price”. Subsection (9) is in somewhat different terms because it deals only with adjustments to the costs of manufacture or production to be determined under subs (2)(c) (or subs (4)(e)) and provides generally that such adjustments are to be made “as are necessary to ensure that the normal value so ascertained is properly comparable with the export price of [the] goods”. But counsel for the appellant not only accepted, but forcefully argued, that the way in which the rebates and IRCCs would be dealt with under subs (8) provided a sound guide to the way in which they ought to be dealt with under subs (9). The considerations to which I have referred indicate, I think, that the argument is correct.
The next step in the appellant’s submissions was that, if normal value were to be ascertained under subs (1) by reference to a domestic sale in South Africa and if the domestic sale price reflected the absence of the rebate and the IRCCs, then an adjustment would be made under subs (8) so that the adjusted price would reflect the (hypothetical) availability of each. The submission was that the presence in export sales of the rebate and IRCCs, and their absence in domestic sales, would result in a modification of the sales in different ways by their different circumstances.
But the circumstance that gives rise to the difference, in this case, is that one is an export sale and the other not. Such a difference, I think, cannot be one for which an adjustment is required, substantially for the reasons given by the Anti Dumping Authority in its Report (in the passage extracted in the judgment of Gyles J). Perhaps that is why express provision was included for taxes in subs (8)(c): if taxes were not expressly included, then similar reasoning might well lead to the conclusion that an adjustment ought not to be made simply because taxes apply differently to domestic and export sales, or to elements of the price of either.
For those reasons I do not think it can be said that the Minister was required to take the rebate into account in determining the cost of production or manufacture or to make adjustments for the rebate or the IRCCs. As Gyles J points out, the appellant, in order to succeed, had to make good the proposition that the Minister was obliged, as a matter of law, to do so. Accordingly, I agree that the appeal should be dismissed with costs.
I certify that the preceding fourteen (14) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lehane. Associate:
Dated: 28 March 2000
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
N 1111 OF 1999
On appeal from a Judge of the Federal Court of Australia
BETWEEN:
MULLINS WHEELS PTY LIMITED
APPELLANTAND:
MINISTER FOR CUSTOMS AND CONSUMER AFFAIRS
FIRST RESPONDENTANTI-DUMPING AUTHORITY
SECOND RESPONDENT
JUDGE:
WHITLAM, LEHANE AND GYLES JJ
DATE:
28 MARCH 2000
PLACE:
SYDNEY
REASONS FOR JUDGMENT
GYLES J:
Mullins Wheels Pty Limited (“the appellant”) appeals against the dismissal of proceedings which it brought for judicial review in relation to the declaration by the Minister for Customs and Consumer Affairs (“the Minister”) pursuant to s 269TG(1) of the Customs Act 1901 (Cth) (as it stood prior to the Amendments effected by Act No 79 of 1998) (“the Act”) that s 8 of the Customs Tariff (Anti-Dumping) Act 1978 (Cth) (“the Anti-Dumping Act”) applied to certain goods and some other related decisions. Proceedings were initially brought against both the Minister and the Anti-Dumping Authority. The Anti-Dumping Authority has ceased to exist as the Anti-Dumping Authority Act 1988 (Cth) has been repealed. The proceedings are continued against the Minister alone.
It is common ground that the decisions of the Minister in question were made on the recommendation of the Anti-Dumping Authority for the reasons set out in its Report number 187 (“the ADA Report”), and that any reviewable errors which may be discerned in the ADA Report may be attributed to the Minister for the purposes of judicial review.
The appellant imports truck wheel rims, exported by Guestro Wheels from the Republic of South Africa, which are used mainly on heavy transport vehicles. The judgment below adequately summarises the statutory background. These reasons can concentrate upon the live issues on appeal.
Section 269TG of the Act provides as a condition precedent to a declaration pursuant to s 8 of the Anti-Dumping Act that the Minister be satisfied (as to any goods that have been exported to Australia) that the amount of the export price of the goods is less than the amount of the normal value of those goods. In the present case, it is the satisfaction of the Minister as to the amount of the normal value of the steel demountable rims which is in question. That topic is dealt with by s 269TAC of the Act. The relevant parts of that section are as follows:
“269TAC. (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.
(2)Subject to this section, where the Minister:
(a) is satisfied that:
(i)because of the absence, or low volume, of sales of like goods in the market of the country of export that would be relevant for the purpose of determining a price under subsection (1); or
(ii)because the situation in the market of the country of export is such that sales in that market are not suitable for use in determining a price under subsection (1);
(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 – such amounts as the Minister determines would be the administrative, selling and general costs associated with the sale and, subject to subsection (13), the profit on that sale; or
(d)if the Minister directs that this paragraph applies – the price determined by the Minister to be the price paid for like goods sold in the ordinary course of trade in arms length transactions for exportation from the country of export to a third country determined by the Minister to be an appropriate third country.
…
(5A) Amounts determined:(a)to be the cost of production or manufacture of goods under subparagraph (2)(c)(i) or (4)(e)(i); and
(b)to be the administrative, selling and general costs in relation to goods under subparagraph (2)(c)(ii) or (4)(e)(ii);
must be worked out in such manner, and taking account of such factors, as the regulations provide for the respective purposes of paragraphs 269TAAD(4)(a) and (b).
(5B) The amount determined to be the profit on the sale of goods under subparagraph (2)(c)(ii) or (4)(e)(ii), must be worked out in such manner, and taking account of such factors, as the regulations provide for that purpose.
…
(8) Where the normal value of goods exported to Australia is the price paid for like goods and that price and the export price of the goods exported:
(a)relate to sales occurring at different times; or
(b)are not in respect of identical goods; or
(c)are modified in different ways by taxes or the terms or circumstances of the sales to which they relate:
that price paid for like goods is to be taken to be that price paid adjusted in accordance with directions by the Minister so that those differences would not affect its comparison with that export price.
(9) Where the normal value of goods exported to Australia is to be ascertained in accordance with paragraph (2)(c) or (4)(e), the Minister must make such adjustments, in determining the costs to be determined under that paragraph, as are necessary to ensure that the normal value so ascertained is properly comparable with the export price of those goods.”
Regulations 180 and 181 of the Customs Regulations are the regulations identified in s 269TAC(5A) and (5B). The relevant parts of reg 180 are as follows:
“(1) In determining an amount to be:
(a)the cost of production or manufacture of goods in a country of export for the purposes of paragraph 269TAAD(4)(a) of the Act; or
(b)the administrative, selling and general costs associated with the sale of goods for the purposes of paragraph 269TAAD(4)(b) of the Act;
the Minister must take into account the matters, and use the methods of calculation, set out in this regulation.
(2)If:
(a)an exporter or other seller of like goods keeps records relating to like goods; and
(b)the records:
(i)are in accordance with generally accepted accounting principles in the country of export; and
(ii)reasonably reflect the costs associated with the production, or manufacture, and sale of like goods;
the Minister must calculate the costs using the information set out in the records.
(3)The Minister must take into account the information available to the Minister concerning the allocation of costs in relation to like goods, in particular to establish:
(a)appropriate amortisation and depreciation periods; and
(b)allowances for capital expenditures and other development costs;
including information given by the exporter or other seller of the goods referred to in subregulation (1) that demonstrates that the exporter or other seller of the goods has historically used the method of allocation.”
Pursuant to a recommendation by the Anti-Dumping Authority, on 24 June 1998 the Minister made a determination pursuant to s 269TAC(2)(c) of the Act:
“… that the normal value of certain steel, demountable, tubeless truck wheel rims (‘the goods’) described in Column 1 of the attached Table, exported to Australia from the Republic of South Africa by Guestro Wheels, for the periods shown in Column 2, is the amount set out in Column 6, being the sum of the amounts set out in Column 3 (manufacturing cost), Column 4 (selling, general and administrative costs), and Column 5 (profit).
In accordance with subsection 269TAC(9) of the Act, I have adjusted the amount set out in Column 6 to ensure that the normal value is properly comparable with the export price of the goods by:
(a)the subtraction of the amount shown in Column 7 of the Table being an adjustment for credit terms; and
(b)the addition of the amounts shown in Columns 8 and 9 of the Table, being adjustments for export packing and FOB costs.”
The contents of the table show that the methodology was to take a figure for manufacturing costs and add to it selling, general and administrative costs and profit to arrive at what was called normal value, then add amounts for credit terms, export packing costs and FOB costs, to arrive at the adjusted normal value. The adjusted normal value became the normal value for the purposes of comparison with the export price in relation to the decision that s 8 of the Customs Tariff (Anti-Dumping) Act 1975 applied to the goods.
The relevant part of the ADA Report to the Minister was as follows:
“6.5.2 South Africa
The Authority found that Guestro did not sell the goods under inquiry on the South African market and that there was no information on actual sales of the goods in South Africa that would allow normal values to be assessed under subsection 269TAC(1) of the Act.In the absence of information relating to domestic sales, the Authority has determined normal values for Guestro under paragraph 269TAC(2)(c) of the Act using the costs to make and sell the goods plus a profit margin.
In accordance with subsection 269TAC(9) of the Act, the Authority has adjusted the normal values so determined for differences between domestic and export sales in respect of credit terms, export packaging costs and FOB charges.
The Authority has not made adjustments to normal values for Guestro for differences between domestic and export sales in respect of steel costs and export-related import credits as requested by Roger D. Simpson & Associates Pty Ltd on behalf of Guestro and Mullins.
The Authority is aware that Guestro is able to avail itself of a rebate on steel purchases in South Africa provided that the goods made from the steel purchased are subsequently exported. The rebate is not payable on steel used in goods sold domestically in South Africa and proof of export is required by the steel supplier for the rebate to be payable. This arrangement exists to allow South African exporters of steel products to be competitive in world markets since the South African domestic price of steel is inflated by tariff protection in that market.
In this case, the Authority has constructed normal values for Guestro under paragraph 269TAC(2)(c) of the Act. Adjustments to normal values so determined are made under subsection 269 TAC(9) of the Act ‘to ensure that the normal value so ascertained is properly comparable with the export price’.
The evidence clearly shows that, were truck wheel rims to be sold by Guestro (or for that matter, by any other South African manufacturer) on the South African market, no rebate would be paid on purchases of South African steel used in the production of those rims. The rebate applies only to steel used in goods subsequently exported (i.e. export is a condition of the rebate) and, as mentioned earlier, proof of export is required for the rebate to be paid.
The Authority has covered this ground extensively in an earlier inquiry (see ADA Report no. 112 of November 1993) where the issues raised were virtually identical. The following paragraphs from that report bear repeating since the Authority does not resile from the stance it took in that inquiry:
The purpose of adjustments … is to eliminate such factors which bear differently on domestic and export sales and thus to allow a fair comparison of domestic and export prices. If that comparison shows that the export price is less than the domestic price, it may be fairly concluded that the goods are dumped.
This cannot, however, be taken to mean that every factor bearing differently on the two prices must be eliminated by making an adjustment. In particular, a factor which cannot be so eliminated is the mere fact that one sale takes place on the domestic and the other on the export market. To adjust for this factor would destroy the whole basis of anti-dumping policy, since normal values so adjusted would always be identical to export prices.
Prices, be they on the domestic or export markets, are determined (a) by the ‘terms and circumstances’ of particular sales, the taxes payable on them and so forth; and also (b) ‘by the market’, i.e. by the interaction of supply and demand in the market in question. Differences (as between the domestic and export markets) in the former must be eliminated before a test is made for dumping. Differences in the latter cannot be, or else dumping would never be found: such differences constitute dumping. To put the point in a different way, it cannot be the law’s intention that one must adjust for differences in prices between domestic and export markets which result from the fact that there are different prices on the domestic and export markets!
The Authority also found that Guestro received a benefit from the South African Government in the form of an Import Rebate Credit Certificate (IRCC) in respect of its exports of the goods. Under the South African Government’s Motor Vehicle Industry Plan, an exporter of motor vehicle components earns credits which allow duty-free import of certain motor vehicles and components. Guestro did not use the IRCCs itself but, rather, sold them to an importer for an agreed price. Guestro argued that the earnings from the sale of the IRCCs reduced the cost of production of the goods exported and an adjustment under subsection 269TAC(9) of the Act should be made to the normal value for these credits.
The Authority is not satisfied that the revenue received from the sale of IRCCs reduces the cost of producing the goods that gave rise to that benefit. Even if it were so satisfied, the abovementioned arguments in respect of differential steel prices apply equally in respect of the requested adjustment to Guestro’s normal values for import credits.
Details of the normal values assessed by the Authority are at Confidential Attachment 4.”
The ADA Report had been preceded by an inquiry and finding by Customs in Customs Report No 97/010 (“the Customs Report”), which was reviewed by the Anti-Dumping Authority.
The Customs Report took the view that the proper raw materials cost was the price excluding what were called rebates, although it allowed the possibility that an adjustment pursuant to s 269TAC(9) might add them back in. There is no precise analysis of the factual or legal basis for either rebate in the evidence.
One curious feature of the Customs Report, and of the ADA Report, is that no mention is made of regulation 180, although mention is made in the Customs Service Report of regulation 181 when considering selling and general costs and profits. When this was pointed out during argument, neither party sought to make anything of it.
The argument below was that the Anti-Dumping Authority, and so, for relevant purposes, the Minister, erred in law in excluding the rebates from calculation of the cost of manufacture for the purposes of s 269TAC(2)(c)(i), taken together with s 269TAC(9). His Honour rejected this, holding that the cost of production within the meaning of s 269TAC(2)(c)(i) did not take into account the rebates in question, and, if it did, an adjustment would be positively required by subsection (9) of s 269TAC to remove their impact. His Honour said:
“… It is plain that the primary measure of normal value, contained in subs. (1), is intended to enable a comparison to be made between sales on the domestic market of the country of export, whether by the exporter or by other sellers of like goods, on the one hand, and the export prices under examination, on the other. Subsection (2)(c) is designed to provide an alternative way of arriving at the same result. It would not do so on the applicant’s interpretation of it, but would unaccountably insert into the construct to be compared with the export price an adjustment forming an element of that export price itself (an aspect of its cost) which is entirely divorced from the domestic price. The other components of the construct (fixed by subpara. (c)(ii)) all relate to domestic sales, including costs of domestic sales, so the argument involves attributing to Parliament the intention to create a hybrid. No reason of logic or policy was advanced to justify this hybrid, or to explain the purpose of it. It is easy to see why radically different measures (prescribed in subsequent provisions of the section) have to be provided for cases where elements of the primary measure in subs. (1) cannot be ascertained, or particular circumstances call for some other comparison, but subs. (2)(c) (which applies, as is made clear by subs. (2)(a) and (b), if subs. (1) is inapplicable for practical reasons) provides an alternative way of pursuing in substance the comparison contemplated by the primary measure. On that basis, the suggested hybrid would make no sense. Subsection (2)(c)(i), it seems to me, means, by “cost of production or manufacture”, all costs inherent in the operation of production or manufacture, without regard to rebates which are not attributable to that operation itself, but to the subsequent export of the goods. That is so notwithstanding that, for different purposes, the rebate might be styled a “negative cost”.”
Later, his Honour said:
“The primary aim of s 269TAC, as is made clear by subsection (1), is to enable a comparison to be made between the export price and the price “in the ordinary course of trade for home consumption in the country of export”.”
The gravamen of his Honour’s view may be found in the following passage:
“Upon the construction I have given to s 269TAC(2)(c)(i), and upon its findings of fact, the Authority was justified in leaving the rebate out of its calculation of costs. For it found the rebate was payable only on “proof of export”. It was not an element of the cost inherent in production or manufacture, but arose, for the first time, as an incident of export. Export, of course, could not occur until after production and manufacture were complete.”
The appellant submits that his Honour misdirected himself as to the purpose of the section by not taking account of the circumstance that, just as subsections (2)(c) and (4)(e) of s 269TAC must be read subject to subsection (9), subsection (1) must be read subject to subsection (8). It was submitted that the local price must always be adjusted to ensure that it is properly comparable with the export price, so that factors which cause the local price to be unduly high (as they should not apply to exports) have to be stripped out of the price, which is adjusted accordingly.
It was also submitted that his Honour misdirected himself in construing subsection (2)(c)(i) as relating to the cost of manufacture of goods to be sold locally, rather than being goods manufactured locally for export.
The respondent’s first answer is to submit that the cost of manufacture is a matter of fact committed to the determination of the Minister, and that the treatment of these rebates is simply one aspect of that factual determination. The amount to be determined is a global amount rather than a series of individual costs, the ascertainment of which inevitably involves questions of judgment.
This submission by Mr Hutley SC was not clearly flagged in the written submissions. Neither counsel referred to any of the myriad of cases which deal with the distinction between questions of law and questions of fact in situations like the present. The submission does require close attention to be paid to the precise grounds of appeal and, ultimately more importantly, the precise grounds advanced to support the application for judicial review decided below, in order to isolate a true error of law.
The grounds of appeal which are pressed are:
“2. His Honour erred in his construction of:
(a)section 269TAC(2)(c)(i); and
(b)section 269TAC(9).
3.His Honour erred in failing to hold that the Respondents were bound to take the steel rebates into account:
(a)in the calculation of costs under section 269TAC(2)(c)(i); or
(b)(if not taken into account in the calculation of costs) in making an adjustment under section 269TAC(9).
4.His honour erred in failing to hold that the Respondents were bound to make adjustments under subsection 269TAC(9) in respect of the Import Rebate Credit Certificates.” (emphasis added)
Ground 2 has no meat. It is grounds 3 and 4 which set out the substance of the appellant’s case.
The grounds for review identified in the Amended Statement of Claim which remain live are as follows:
“14.The report of the ADA to the Minister (“the ADA decision”) and the decision of the Minister to accept the ADA’s recommendations (“the Minister’s decision”) involved an error of law.
Particulars
(1)The respondents misconstrued the provisions of sub-section 269TAC(9) of the Act as allowing the Minister not to make an adjustment for the effect of the benefits received by Guestro Wheels from the sale of IRCCs and the steel rebate.
(2)The respondents misconstrued the provisions of sub-section 269TAC(2) in not treating sub-paragraph (c)(i) as referring to the actual cost of production or manufacture of the goods.
…
15.The ADA’s decision and the Minister’s decision were not authorised by sub-section 269TAC(2) of the Act and sub-section 269TG(1) of the Act pursuant to which they were purported to be made.
Particulars
(1)On its proper construction sub-section 269TAC(9) required the Minister to make an adjustment to the normal value calculation under sub-section 269TAC(2) for the effect of the benefit received on the sale of the IRCCs and the steel rebate.
…”
The written submissions on behalf of the appellant were put in the following way:
“7.The issue in this case concerns the proper treatment of a rebate or credit given to an exporter upon the exportation of the goods.
8.There is no doubt that such a rebate or credit may in some circumstances amount to a countervailable subsidy. There has been no suggestion that such circumstances exist in the present case.
9.The present case is rather concerned with whether such a rebate or credit must or must not be taken into account in the calculation of “normal value” for the purpose of determining whether or not there has been “dumping”.
10.The position of the respondents – accepted by his Honour – is that any such rebate or credit must be included in (or added to) the calculation of “normal value” (so as to increase that amount). The position of the appellant is that any such rebate or credit must be excluded (or deducted) from the calculation of “normal value” (so as not to increase that amount).”
These propositions were spelled out in a little more detail in the following paragraphs:
“14. What is to be calculated is the sum of:
(a)the cost of production of the exported goods (section 269TAC(1)(2)(c)(i)); and
(b)on the assumption that those goods were sold domestically, the selling costs and profit on the assumed domestic sales (section 269TAC(2)(c)(ii)).
15.In determining the cost of production of the exported goods, any rebate reducing the price of raw materials purchased for production of the exported goods must obviously be taken into account: cf Nordland Papier AG v The Anti-Dumping Authority (1999) 161 ALR 120 at [22].
16.If this literal construction of section 269TAC(2)(c)(i) is correct, the error of law of the Anti-Dumping Authority was incorrectly to make the assumption required by section 269TAC(2)(c)(ii) in the application of section 269TAC(2)(c)(i). It determined the cost of production of truck wheel rims on the assumption that those goods would be sold on the South African market. It failed to determine the cost of production of the exported goods.
…
21.The appellant submits that (contrary to the view taken by his Honour at AB 80-84) the Anti-Dumping Authority and the Minister were obliged to reduce the constructed normal value under section 269TAC(9):
(a)to reflect the amount of the steel rebate if, contrary to the appellant’s principal argument concerning the construction of section 269TAC(2)(c), the steel rebate is not already to be netted out of the cost of production; and
(b)separately, and in any event, to reflect the IRCCs.
…
24.Where, as here, particular amounts (both the steel rebate and the IRCCs) are payable:
(a)to the exporter;
(b)by reference to export sales;
(c)in circumstances where the amounts are fairly characterised either as reducing the cost of production of the exported goods or as increasing the exporter’s profit on the export sales;
an adjustment to the normal value by the deduction of that amount (or so much of it as may result in a decrease in the export price) is “necessary to ensure that the normal value … is properly comparable with the export price” within the meaning of section 269TAC(9). To fail to make the adjustment is to fail to comply with the requirements of the legislation and to fail to take a relevant consideration into account: GTE at 336.
25.Conversely, to make an adjustment upwards, as suggested by the respondents in argument below and accepted by his Honour at AB 80 as a fallback position in relation to the steel rebate, is to make adjustments other than those “necessary” to ensure a proper comparison between the normal value and the export price and to take irrelevant consideration into account.”
In his oral submissions, Mr Gageler undertook the burden of establishing that dumping cannot occur simply because an exporter receives a rebate on or refund of some part of the manufacturing cost upon the export of goods that it does not receive where goods are sold for home consumption enabling it to charge a lower export price than it could if the goods were sold in the domestic market. The contention, so framed, is a question of law.
Before examining that proposition, it was not incumbent upon the respondents to establish that the rebates must be taken into account in the calculation of normal value so as to increase that value. If the Minister might lawfully have done so, whether to do so was a matter of fact and degree, not a question of law.
The argument that the statute expressly or impliedly prohibited the Minister from determining manufacturing costs on the basis of the purchase price of the steel regardless of rebates is elusive. Any error which the appellant can identify in his Honour’s reasons is ultimately irrelevant unless it can make good its attack upon the ADA Report. As has been seen, the Anti-Dumping Authority took the actual price of steel paid into account in arriving at the cost of manufacture, declining, in the course of that exercise, to adjust that price by deducting from the cost of steel the rebates which were received after export pursuant to subsection (9). It is not possible to find any basis for attacking the first step as a matter of law. There is nothing in the ADA Report to support the appellant’s submission that it did not seek to fix the cost of manufacture of the goods for export. Indeed, rather the contrary, as they concentrate upon the cost of manufacture of the goods as that cost stood after manufacture but before export. This can hardly be attacked as an error of law. Ascertainment of cost of manufacture by an administrative authority is a question of fact, and a question of fact involving a myriad of issues of judgment and degree. Even if the ADA Report had revealed error or illogicality in making the decision, there would be no ground for the Court to review the decision (Reg v The District Court; ex parte White (1966) 116 CLR 644 at 654; Waterford v Commonwealth (1987) 163 CLR 54, 77; Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 at 355-7; Minister for Immigration & Multicultural Affairs v Epeabaka (1999) 84 FCR 411, 420-422). To include the actual cost of steel as one integer in the global cost of manufacture cannot be an error of law. The circumstance that the Customs Report expresses a different view does not establish any error of law.
Was there, then, an error of law in not deducting the value of the rebate from the actual cost of production, pursuant to subsection (9)? Contrary to the submission of the appellant, I can see no error in law in taking the normal value of goods, as described by subsection (1), as the starting point for construction of the section, with the various alternatives in what has been called the hierarchy constituted by the other subsections, being regarded as designed to produce the same result. It is put that in so directing himself his Honour overlooked the impact of subsection (8) which requires adjustments to make the export price and the normal value comparable. However, when the substance of subsection (8) is considered, there is no warrant for concluding that there should be, or, indeed, could be, any downward adjustment of the price of the local sale for home consumption to take account of any export rebate which an exporter might earn which enabled it to sell more cheaply on the export market. Indeed, as both the Anti-Dumping Authority and his Honour have said, and as submitted to us on behalf of the Minister, this would be the very antithesis of the objective of s 269TAC. The local price might be adjusted downwards for proper comparison with the export price if, for example, there are local taxes which are included as part of that price which are not leviable upon export transactions. What normally should not be done is to adjust the local price downward for advantages (such as indirect subsidies) which the exporter may have over the local seller.
When subsections (2)(c) and (9) are considered together, the same reasoning will apply, although in a different context, because the cost of manufacture is involved. The cost of manufacture might be adjusted downwards to exclude local taxes on domestic production, but not downwards by deducting any advantage which the export manufacturer would have by virtue of any special arrangements in favour of exporters.
Mr Hutley pointed out in argument that to hold otherwise would be to permit and encourage arrangements which could artificially lower the cost of components of an exported article. An example would be a subsidy to an upstream supplier to enable it to grant a rebate to an exporter but not a local seller. Such arrangements are, in a real sense, the very stuff of dumping. This is the concept which lies behind the extract from the ADA Report which is set out in paragraph 8 above.
Once this argument as to error in construction of the section is rejected, there is no basis upon which it can be said that the Minister was prohibited by the statute from determining normal value in the manner it was. Whether the Minister was bound to determine normal value as was done, does not arise. The appellant has failed to make good the error of law it propounded.
The appellant criticised the manner in which his Honour used the Treaty and European commentaries. I can find nothing in Article 6 of the General Agreement on Tariffs and Trade 1994, the Agreement on implementation of that article, or the commentaries to which I was referred which is inconsistent with the way the Anti-Dumping Authority approached the matter.
The appeal should be dismissed with costs.
I certify that the preceding thirty–two (32) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gyles. Associate:
Dated: 28 March 2000
Counsel for the Applicant: Mr S J Gageler Solicitor for the Applicant: Baker & McKenzie Counsel for the Respondent: Mr N C Hutley SC and Mr J G Renwick Solicitor for the Respondent: Australian Government Solicitor Date of Hearing: 23 February 2000 Date of Judgment: 28 March 2000
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