National Oilwell Pty Ltd and Comptroller-General of Customs
[2017] AATA 322
•16 March 2017
National Oilwell Pty Ltd and Comptroller-General of Customs [2017] AATA 322 (16 March 2017)
Division:GENERAL DIVISION
File Number: 2016/4922
Re:National Oilwell Pty Ltd
APPLICANT
AndComptroller-General of Customs
RESPONDENT
DECISION
Tribunal:Senior Member D R Davies
Date:16 March 2017
Place:Brisbane
The Tribunal affirms the decisions under review.
.........................[Sgd]...............................................
Senior Member D R Davies
CATCHWORDS
CUSTOMS – custom’s regulations - tariff classifications – tariff concession orders –description of the goods – duty paid on imported goods – applications for refund of duty paid on goods
LEGISLATION
Customs Act 1901
Customs Regulation 2015
Customs Tariff Act 1995
CASES
Voxson Sales Pty Ltd and Collector of Customs [1993] FCA 609
Cameron Australasia Pty Ltd and Chief Executive Officer of Customs [2012] AATA 865
Becker Vale Pty Ltd and Chief Executive Officer of Customs [2014] AATA 625
Becker Vale Pty Ltd and Chief Executive Officer of Customs [2015] FCA 525
Gillies Agencies Pty Ltd and Chief Executive Officer of Customs [2014] AATA 868Brand Developers Aust Pty Ltd and Chief Executive Officer of Customs [2015] AATA 215
REASONS FOR DECISION
Senior Member D R Davies
16 March 2017
BACKGROUND
The Applicant, National Oilwell Pty Ltd has applied to this Tribunal for review of decisions of the Comptroller-General of Customs (the "CG Customs") to reject applications for the refund of duty in relation to four importations of goods described as “pony rods” being refund applications:
·ACFW3PW3A;
·ACFTA46PK;
·ACF7C3GNT; and
·ACGH4ME66.
The application for review is contained in Exhibit 1, the Tribunal Documents, T1.
The Tribunal Documents (TDocs) and the other Exhibits were admitted by consent of the parties. The applicant was represented by Mr Gaunt of FAL Consulting Pty Ltd and the Respondent by Mr Northcote, Director of Customs Law and Prosecutions, Legal Services Division, Department of Immigration and Border Protection. Both parties relied on the documents admitted into evidence, their respective Statements of Facts and Contentions and written and oral submissions to the Tribunal.
The facts of the matter are not controversial and the parties agreed on them. Those facts are set out in paragraphs 1 to 24 of the section headed "Background" in the Respondent's Statement of Findings on Material Questions of Fact.[1]
[1] Exhibit 1, T Docs - T2
That background is summarised as follows:
4.1On 11 February 2009, application for Tariff Concession Order (TCO) 0900116 was listed in the Commonwealth of Australia Gazette TC09/06 under the heading "TCO Applications". That TCO Application was keyed to tariff subheading 8413.91.10.[2]
[2] Exhibit 1, T Docs - T3
4.2On 25 February 2009 application for TCO 0900116 was relisted in the Commonwealth of Australia Gazette TC09/08 under the heading "TCO Applications". The TCO Application was keyed to tariff subheading 8413.91.90.[3]
[3] Exhibit 1, T Docs - T4
4.3On 17 April 2009, TCO 0900116 was granted with operative date of 9 January 2009 which was when the TCO Application was received. TCO 0900116 was listed in Commonwealth of Australia Gazette TC09/16 under the heading "TCOs Made".[4] TCO 0900116 applied to goods of tariff classification "8413.91.90" with the word description "PARTS, OIL AND GAS WELL PUMP, being sucker rods".
[4] Exhibit 1 T Docs - T5
4.4On 28 January 2014, a Tariff Advice[5] was provided to the Applicant which advised that certain "pony rods" imported by the Applicant (the subject goods) were not eligible for TCO 0900116, on the basis that although the "pony rods" were short "sucker rods" which complied with the word description in the TCO, they were of tariff classification 8413.91.10 and not tariff classification 8413.91.90 as specified in the TCO.
[5] Exhibit 1, T Docs - T6
4.5It is accepted by both parties that "pony rods" (the subject goods) are short "sucker rods", being a component of an oil well pump and are within the word description of TCO 0900116.
4.6TCO 0900116 was revoked and replaced pursuant to section 269SD(2) of the Customs Act 1901 (Customs Act) with TCO 1412997 from the operative date of 15 April 2014.[6] TCO 1412997 applies to goods of tariff classification of 8413.91.10 with the same word description as the revoked TCO 0900116, namely "PARTS, OIL AND GAS WELL PUMP, being sucker rods".
4.7The Applicant has claimed TCO 1412997 in numerous import declarations of the subject goods since 15 April 2014 which is keyed to tariff classification 8413.91.10.[7] A second Tariff Advice was issued to the Applicant on 8 July 2014[8] confirming that TCO 1412997 applies to the subject goods. The Applicant sought, through correspondence with the Respondent commencing in April 2014 and eventually with refund applications, to obtain refunds of duty paid in respect of the subject goods imported prior to 15 April 2014:
(a)On 9 July 2014, the Respondent advised that the Applicant was not eligible for a refund in respect of the subject goods imported prior to 15 April 2014 when TCO 1412997 came into force;[9]
(b)On 14 November 2014 the Respondent confirmed that advice;[10]
(c)On 19 June 2016, the Applicant lodged, and on 22 July 2016 the Respondent rejected, four applications for refunds of customs duty.[11] Each of the four refund applications was in respect of an import declaration of the subject goods in which duty was paid under tariff classification 8413.91.10 prior to 15 April 2014 (on respectively 3 February 2014, 24 December 2013, 7 January 2014 and 17 March 2014). The Applicant claimed in the refund applications that the subject goods "should have been classified to 8413.91.90 as was the classification practice at time of entry. TC 0900116 is therefore applicable."[12]
(d)The Applicant subsequently sought an internal review of the decision to refuse the refund applications.[13] The decision to reject the refunds was upheld and communicated to the Applicant in an email dated 19 August 2016.[14] The application to the Tribunal for review was made on 15 September 2016.[15]
[6] Exhibit 1, T Docs - T8
[7] Exhibit 2, Respondents Statement of Facts and Contentions, para 1.4
[8] Exhibit 1, T Docs - T15
[9] Exhibit 1, T Docs - T16 at page 104
[10] Exhibit 1, T Docs - T19 at page 166
[11] Exhibit 1, T Docs - T21
[12] Exhibit 1, T Docs - T21 at page 268
[13] Exhibit 1, T Docs - T22 and T23
[14] Exhibit 1, T Docs - T25
[15] Exhibit 1, T Docs - T1
ISSUE FOR THE TRIBUNAL
The issue for the Tribunal is whether, in respect of the four refund of duty applications which were refused by the Respondent, TCO 0900116 applied to the subject goods and therefore the prescribed refund circumstance in Item 15 of Schedule 6 to the Customs Regulation 2015 (Custom Regulation) applied.
LEGISLATIVE FRAMEWORK
The Tariff Concession System under the Customs Act and the Customs Tariff Act 1995 (Tariff Act) is intended to assist Australian industry and to reduce cost to the general community where the imposition of a tariff serves no purpose of assisting Australian industry because no local manufacturer produces substitutable goods. To receive a duty concession under the Tariff Concession System, an imported good must be covered by a correct Tariff Concession Order (TCO). TCOs are considered in part XVA of the Customs Act. A TCO consists of a tariff classification and descriptive text which together describe the good that is covered by the order and therefore eligible for the tariff concession.
Section 163(1) of the Customs Act relevantly provides:
"Refunds… of duty may be made:
…
(b) in such circumstances, and subject to such conditions and restrictions (if any), as are prescribed…"
By Regulation 102 of the Customs Regulation, Schedule 6 of that Regulation prescribes circumstances in which a refund of duty may be made by a Collector.[16] The Applicant claims the refund circumstance in item 15 of Schedule 6 which provides:
"Duty has been paid on goods that were first entered for home consumption at a time when a TCO, made in relation to those goods under Part XVA of the Act, was in force or was taken to have come into force."
[16] A “Collector” is defined by section 8 of the Customs Act to mean the Comptroller-General of Customs or "any officer doing duty in the matter in relation to which the expression is used."
Regulations 106-109 of the Customs Regulation prescribe various matters in relation to refunds, including whether an application for refund is required; the manner in which an application is to be made; and the period in which an application for a refund may be made. It is accepted by the Respondent that the Applicant's four refund applications complied with all of those requirements.[17]
[17] Exhibit 2, Respondent’s Statement of Facts and Contentions, para 6
Section 269P of the Customs Act sets out the provisions relating to the making of a standard TCO. Relevantly, section 269P(4) provides:
"the TCO must include:
(a) a description of the goods the subject of the order, including a reference to the customs tariff classification that, in the opinion of the Comptroller-General of Customs, applies to the goods…"
A "Tariff Classification" is an eight figure item in Schedule 3 of the Tariff Act which provides a rate of duty.[18] The various tariff classifications are contained in Schedule 3 of the Tariff Act.
[18] Tariff Act, Schedule 3
Subsection 7(1) of the Tariff Act provides:
"The Interpretation Rules must be used for working out the tariff classification under which goods are classified".
The Interpretation Rules are set out in Schedule 2 of the Tariff Act. Interpretive Rule 1 relevantly provides:
"For legal purposes, classification shall be determined according to the terms of the headings and any relative section or Chapter Notes…"
A heading is, relevantly, a four figure item in Schedule 3 of the Tariff Act.[19]
[19] Tariff Act, section 4
Under section 273GA(haaa) of the Customs Act, the Tribunal has the power to review:
"A decision of a Collector under section 163 in relation to an application for refund, rebate or remission of duty."
Accordingly, the Tribunal has the power to review the decision to reject the Applicant's refund applications.
CONSIDERATION
As I previously mentioned, the issue for consideration in this matter is whether the Applicant is entitled to a refund of duty in respect of the four applications which it made relating to the subject goods. That requires the determination of whether the prescribed circumstance in Item 15 of Schedule 6 of the Customs Regulation applies, so as to entitle the Applicant to a refund of duty.
TCO 0900116 was in force during the period from December 2013 - March 2014 when the four shipments of the subject goods were imported, declared and duty paid. As previously mentioned, that TCO applied to goods of tariff classification 8413.91.90 with the words description "PARTS, OIL AND GAS WELL PUMP, being sucker rods".[20]
[20] Exhibit 1, T Docs - T5
The Tariff Classification Heading 8143 refers to "pumps for liquids" and applies to the subject goods pursuant to Note 2 to section XVI, Schedule 3 which relevantly provides that:
"… parts of machines… are to be classified according to the following rules:
…
(b) other parts, if suitable for use solely or principally with a particular kind of machine… are to be classified with the machines of that kind…"
The tariff classification issues in this matter arose in relation to the relevant subheadings under 8413:
8413.9 -Parts:
8413.91 -Of Pumps:
8413.91.10 -Specially designed for use in the mining or 5%
Metallurgical industries other than pulp pumps DCS:4%
For use in conjunction with ore dressing machines DCT:5%
8413.91.20 ---Of pumps 8413.30.10 Free
8413.91.90 ---Other 5%
Interpretive Rule 6 relevantly requires that the applicable subheading be determined by the terms of the respective subheadings.
TCO 0900116 which was made in January 2009 specified tariff classification 8413.91.90. "Sucker rods" are parts of pumps specifically designed for use in oil and gas wells. When TCO 0900116 was made in 2009 it was decided that the correct tariff classification for "sucker rods" was 8413.91.90 on the basis that the extraction of oil and gas is not within "the mining or metallurgical industries" mentioned in 8413.91.10 and the parts fell to 8413.91.90 "Other". In 2014 it was decided that the correct classification for the subject goods is 8413.91.10 on the basis that the extraction of oil and gas is "mining" and as a consequence TCO 0900116 was revoked and replaced with TCO 1412997 which specified tariff classification 8413.91.10 with effect from 15 April 2014.
The Applicant in its submissions to the Tribunal accepted that the correct tariff classification of the subject goods is 8413.91.10. I note that at the time of importation of the subject goods they were keyed to tariff classification 8413.91.10. Mr Gaunt in his submissions said that this was because the declarations in relation to the subject goods were made by a different customs broker on behalf of the Applicant. I note that consistently with this, the Applicant has claimed TCO 8412997 under tariff classification 8413.91.10 for a number of import declarations of "pony rods" since 15 April 2014.
In its refund application, the Applicant claimed that the subject goods:
"Should have been classified to 8413.91.90 as was the classification process at the time of entry. TC 0900116 is therefore applicable."[21]
[21] Exhibit 1, T Docs - T21
The Applicant in its submissions to the Tribunal argued that it appeared that the person making the decision on TCO 0900116 formed the view that oil well pumps were not part of mining, and therefore that the classification of "sucker rods" could not be 8413.91.10 but should be 8413.91.90, which was the tariff classification to which the TCO was keyed. The Applicant referred to a Minute Paper of the Respondent dated 17 February 2009 which records this.[22]
[22] Exhibit 3, Attachment A, Doc 11
The Applicant submitted that the tariff classification which applied to TCO 0900116 from 2009 until Tariff Advice 20854300 dated 28 January 2014[23], was that "sucker rods" were classified as 8413.91.90. The Applicant submits that this practice should have continued to apply until such time as TCO 0900116 was revoked, which was operative on 15 April 2014.
[23] Exhibit 1, T Docs - T6
The Applicant in its submissions relied on Australian Customs Notice number 2008/34 dated 9 July 2008[24] which provided that where there is a change of administrative practice regarding the classification of goods, that Customs will not apply the new practice retrospectively. That Notice further provided that where the change results in a higher rate of duty applying to particular goods, Customs will not seek to recover further duties for goods imported prior to advice of the change of practice or goods in transit at the time of the advised change, provided that the goods were entered in accordance with the advised practice applicable prior to the change.
[24] Exhibit 1, T Docs - T22.2 page 331
However that Notice is referring to an administrative practice of the Respondent in relation to tariff classification.
As previously mentioned, the tariff classification is a required statutory element of the description of the goods in the TCO. In Voxson Sales Pty Ltd and Collector of Customs[25] Justice Spender said:
"The fundamental requirement is that, before goods can fit within a particular TCO they must be within the tariff classification to which the TCO is keyed."[26]
That principle has been applied to many subsequent decisions of the Federal Court and the Tribunal.
[25] [1993] FCA 609 at 36
[26] including: Cameron Australasia Pty Ltd and Chief Executive Officer of Customs [2012] AATA 865 at (11) and (27); Becker Vale Pty Ltd and Chief Executive Officer of Customs [2014] AATA 625 at (3) and (28); Becker Vale Pty Ltd and Chief Executive Officer of Customs [2015] FCA 525 at (2)-(6) and (56)-(64); JM Gillies Agencies Pty Ltd and Chief Executive Officer of Customs [2014] AATA 868 at (67)-(73); and Brand Developers Aust Pty Ltd and Chief Executive Officer of Customs [2015] AATA 215
In Becker Vale Pty Ltd v Chief Executive Officer of Customs[27] Justice Yates stated:
"There is a line of authority which holds that, in order to fall within a tariff concession order, the goods must 'precisely' meet the description of that order".
[27] [2015] FCA 525
In Brand Developers Aust Pty Ltd v Chief Executive Officer of Customs[28] Deputy President Forgie at footnote 27 noted that in Voxson Sales Pty Ltd v Collector of Customs, Spender J was referring to previous regulations and sections of the Customs Act and that the requirements to which he referred have been included in section 269P.
[28] [2015] AATA 215
On the basis of the legislation and those authorities, I consider it is clear, that for a TCO to apply to particular goods, those goods must be within both the tariff classification specified in the TCO and also described by the words of the TCO.
As I have previously mentioned, both parties accept that the subject goods, namely "pony rods" are a form of "sucker rods" and are correctly within tariff classification 8413.91.10. I am satisfied that "sucker rods" are parts of an oil well pump, and are parts of pumps of liquids; specially designed for use in the mining industries and that their correct tariff classification is 8413.91.10.
I do not consider that the Customs administrative classification practice prior to 2014 is relevant to the determination of the correct tariff classification of the subject goods in accordance with the legislation and the law.
Accordingly I find that the tariff classification of the subject goods being "pony rods" is 8413.91.10.
Whilst the subject goods are within the word description of TCO 0900116 being "PARTS, OIL AND GAS WELL PUMP, being sucker rods" they are not within the tariff classification to which TCO 0900116 is keyed, namely 8413.91.90.
CONCLUSION
I find that, whilst the subject goods are described by the words of TCO 0900116, they are not within the tariff classification specified in the TCO 8413.91.90 because the correct tariff classification of the subject goods is 8413.91.10. Accordingly TCO 0900116 does not apply to the subject goods and the prescribed circumstance for the refund of duty in Item 15 of Schedule 6 of the Customs Regulation does not apply.
I find that the Applicant is not entitled to a refund of duty in respect of the subject goods. The decisions under review are affirmed.
I certify that the preceding 35 (thirty-five) paragraphs are a true copy of the reasons for the decision herein of Senior Member D R Davies
..........................[Sgd]..............................................
Associate
Dated: 16 March 2017
Date of hearing: 2 March 2017 Advocate for the Applicant: Mr John Gaunt Representative for the Applicant: FAL Consulting Pty Ltd Representative for the Respondent: Mr Roger Northcote
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