Re General Merchandise and Apparel Group Pty Ltd and CEO, Customs
[2009] AATA 988
•23 December 2009
ADMINISTRATIVE APPEALS TRIBUNAL )
) V200600759-0764
GENERAL ADMINISTRATIVE DIVISION )Re:GENERAL MERCHANDISE & APPAREL GROUP P/L
Applicant
And:CEO OF CUSTOMS
Respondent
ADMINISTRATIVE APPEALS TRIBUNAL )
) V200601106-1112
GENERAL ADMINISTRATIVE DIVISION )Re:GENERAL MERCHANDISE & APPAREL GROUP P/L
Applicant
And:CEO OF CUSTOMS
Respondent
And:AUSTRALIAN WEAVING MILLS
Party Joined
Tribunal: Deputy President S A Forgie
Place: Melbourne
Date: 16 February 2010
CORRIGENDUM TO DECISION [2009] AATA 988
The Tribunal amends its decision and reasons for decision published on 23 December 2009 as follows:
1.Delete paragraph 2(b) of the decision and replace with:
I set aside the respondent’s decisions:
(i)to revoke TCO 0511357; and
(ii)to revoke TCOs 0511358, 0511359 and 0511360 and to reissue them as TCOs 0613070, 0613067 and 0613064 respectively;
2.In paragraphs 349, 350, 352, 358, 359 & 360 replace all references to ‘valances’ with ‘sheets and pillow cases’; and
3.Delete the first two sentences of paragraph 87 and replace with:
“Even if Bruck were a producer in Australia of substitutable goods at the time it lodged its request for revocation, General Merchandise went on to contend that, had the relevant TCOs the subject of No V200600759-764 not been in force on that day but had an application for a TCO been lodged on that day, the CEO would have made the TCO. The GMSFC goes on to examine the evidence to support its contention that the application would have met the core criteria.”
S A FORGIE
Deputy President
CATCHWORDS – CUSTOMS – TARIFF CONCESSION ORDERS – applications for revocation - whether persons requesting revocation producers of substitutable goods – whether goods put or capable of being put to a use that corresponds with a use to which the goods the subject of the relevant TCOs can be put- whether goods meet local content test – whether goods meet substantial process test – whether core criteria would have been met if TCOs not in force on days and an application for them had been lodged – decisions set aside.
PRACTICE AND PROCEDURE – summons – grounds on which may be refused.
PRACTICE AND PROCEDURE – whether Tribunal required to pursue all relevant material - whether parties required to produce all relevant material in their custody, possession or control.
PRACTICE AND PROCEDURE - role of party joined - whether required to lodge material in support of the argument it wishes to make.
Acts Interpretation Act 1901, s 46
Administrative Appeals Tribunal Act 1975, ss 2, 2A, 3, 25, 30A, 32, 33, 35, 36, 36B, 36C, 37, 39, 39A, 42A, 43, 59A
Administrative Appeals Tribunal Amendment Act, s 25
Administrative Decisions (Judicial Review) Act 1977, s 5
Broadcasting and Television Act 1942, ss 25, 92F, 94F
Corporations Act 2001, ss 9, 50, 50AAA, 124, 588V-X
Customs Act 1901, ss 132, 132AA, 269B, 269C, 269E, 269D, 269F, 269FA, 269H, 269J, 269L, 269M, 269P, 269Q, 269R, 269S, 269SA, 269SB, 269SC, 269SD, 269SE, 269SF, 269SH, 269SHA, 269SJ, 269SM, 273GA
Customs Tariff Act 1995, ss 3, 7, 15, 16, 17, 18, 20, 22, Schedule 2
Evidence Act 1995, ss 55, 56
Judiciary Act 1903, s 55ZF
Legislative Instruments Act 2003, ss 4, 5, 6, 7, 9, 13
Migration Act 1958, s 420
Legal Service Directions, Appendix B
Supreme Court (General Civil Procedures) Rules
Alexandra Private Geriatric Hospital Pty Ltd v Blewett (1984) 2 FCR 368; 56 ALR 265
Amcor Ltd v Comptroller-General of Customs and Others [1988] FCR 225; (1988) 79 ALR 221
Apache Northwest Pty Ltd v Western Power Corporation (1998) 19 WAR 350
Associated Dominions Assurance Society Pty Ltd v John Fairfax & Sons Pty Ltd (1952) 72 WN(NSW) 250
Australian National University v Burns (1982) 64 FLR 166
Barrier Reef Broadcasting Pty Ltd v Minister for Post and Telecommunications (1978) 19 ALR 418
Blackwood Hodge (Australia) Pty Ltd v Collector of Customs (1980) 47 FLR 131
Bogaards v McMahon (1988) 80 ALR 342
Boral Resources (Vic) Pty Ltd v Robak Engineering and Construction Pty Ltd and Another [1999] 2 VR 507
Botany Bay Instrumentation & Control Pty Ltd v Stewart [1984] 3 NSWLR 98
Bourne v Norwich Crematorium Ltd [1967] 1 WLR 691; 2 All ER 576
Brew v Repatriation Commission (1999) 94 FCR 80
Brydges v Brydges and Wood [1909] P 187
Bushell v Repatriation Commission (1992) 175 CLR 408; 109 ALR 30; 66 ALJR 753; 16 AAR 1; 29 ALD 1
Carter v Hayes [1994] SASC 4477; (1994) 61 SASR 451; 72 A Crim R 387
Chandler & Co v Collector of Customs [1907] HCA 81; (1907) 4 CLR 1719
Chen v Minister for Immigration and Multicultural Affairs [2000] FCA 1901
Chief Executive Officer of Customs v AMI Toyota Ltd (2000) 102 FCR 578
Collector of Customs v Agfa Gevaert Ltd [1996] HCA 36; (1996) 186 CLR 389; (1996) 141 ALR 59; (1996) 71 ALJR 123
Comcare v Davies [2008] FCA 393
Comcare v Holt [2007] FCA 405; 94 ALD 576
Comcare v Maganga [2008] FCA 285
Commonwealth of Australia v Albany Port Authority [2006] WASCA 185
Compsyd Pty Ltd v Streamline Travel Service Pty Ltd (1987) 10 NSWL 648
Comptroller-General of Customs v Kawasaki Motors Pty Ltd (1991) 32 FCR 219; 103 ALR 661
Cosco Holdings Pty Ltd v Commissioner for Taxation [1997] FCA 1504
Courtney v Peters (1990) 27 FCR 404; 98 ALR 645
Dorajay Pty Ltd v Aristocrat Leisure Ltd [2005] FCA 588
Drake v Minister for Immigration and Ethnic Affairs (1979) 2 ALD 60; 24 ALR 577
Eurovox Pty Ltd v Chief Executive Officer of Customs [2000] FCA 1906
Financial Wisdom Limited v Dale Newman & Ors (2005) 12 VR 79
Grant v Repatriation Commission [1999] FCA 1629
Hamilton v Oades (1988-89) 85 ALR 1
Harris v Secretary, Department of Employment and Workplace Relations (2007) 158 FCR 252
Hunt v Wark (1985) 40 SASR 489
Hunter v Chief Constable of the West Midlands Police [1982] AC 529
Irving v Minister for Immigration, Local Government & Ethnic Affairs [1993] FCA 457; (1993) 44 FCR 540
Kelso v Forward (1995) 60 FCR 39
Lucas Industries Ltd. v Hewit (1978) 45 FLR 174
Luu v Renevier (1989) 91 ALR 39
Mandic v Phillis [2005] FCA 1279; 225 ALR 760
Marsden v Amalgamated Television Services Pty Limited [1999] NSWSC 619
McColl v Lehmann [1987] VR 503; (1986) 24 A Crim R 234
McDonald v Director-General of Social Security (1984) 6 ALD 6
Melbourne Steamship Co Ltd v Moorehead (1912) 15 CLR 333
Minister for Immigration and Multicultural Affairs v Eshetu (1999) 197 CLR 611; 162 ALR 577
Minister for Immigration and Ethnic Affairs v Pochi (1980) 4 ALD 139
Noble v Repatriation Commission [1997] FCA 1159
Oceanic Sun Line Special Shipping Co Inc v Fay (1988) 62 ALJR 389
Pancontinental Mining Ltdand Others v Burns and Others
Pharm-a-Care Laboratories Pty Ltd v Commonwealth of Australia [2009] FCA 1203
Pilato v Metropolitan Water Sewerage & Drainage Board (1959) 76 WN (NSW) 364
Polypacific Pty Ltd v Comptroller-General of Customs [1993] FCA 447; (1993) 45 FCR 238
Prasad v Minister for Immigration and Ethnic Affairs (1985) 6 FCR 155
Precision Data Holdings Ltd v Wills (1991) 173 CLR 167; 104 ALR 317
Qantas Airways Ltd v Gubbins (1992) 28 NSWLR 26
R v Australian Broadcasting Tribunal; Ex parte Hardiman (1980) 144 CLR 13; 29 ALR 289
R v Carroll (2002) 213 CLR 635
R v Khelawon [2006] 2 SCR 787; (2006) 274 DLR (4th) 385; 215 CCC (3d) 161 (SCC)
R v Skaf (2004) 60 NSWLR 86
R v Trade Practices Tribunal; Ex parte Tasmanian Breweries Pty Ltd (1970) 123 CLR 361
Re Amcor Ltd v Comptroller-General of Customs [1991] FCA 622; (1991) 105 ALR 216; 33 FCR 200
Re Becker and Minister for Immigration and Ethnic Affairs (1977) 1 ALD 158; 15 ALR 696
Re Bird and Military Rehabilitation and Compensation Commission [2006] AATA 109; (2006) 91 ALD 691
Re Dunstan and Comcare [2009] AATA 843
Re General Merchandise & Apparel Group and CEO of Customs [2007] AATA 1138
Re General Merchandise & Apparel Group and CEO of Customs and Australian Weaving Mills [2007] AATA 1139
Re Howard Smith Industries Pty Ltd & Adelaide Steamship Industries Pty Ltd (1977) 28 FLR 385
Re Kenso Marketing (M) SDN BHD and Chief Executive Officer of Customs and Nufarm Australia Limited [2008] AATA 42
Re Kumar and Minister for Immigration and Citizenship [2009] AATA 124
Re Marine World Victoria Ltd and Minister for Arts, Heritage and Environment (1986) 10 ALD 262
Repatriation Commission v Hughes (1991) 23 ALD 270
Re Queensland Co-operative Milling Association Ltd; Re Defiance Holdings Ltd (1976) 25 FLR 169
Re Ranger Uranium Mines Pty Ltd; Ex parte Federated Miscellaneous Workers’ Union of Australia (1987) 163 CLR 656; 76 ALR 36
Re Rana and Military Rehabilitation and Compensation Commission [2008] AATA 558
Re Times Consultants Pty Limited v Collector of Customs (Queensland) [1987] FCA 311
Re Trade Practices Commission v Kimberley Homes Pty Limited [1989] FCA 262
Re Vulcan Australia and Comptroller of Customs [1994] AATA 150; 20 AAR 116
Ridgeway v The Queen (1995) 184 CLR 19
Riverwood Cartons Pty Ltd v Chief Executive Officer of Customs & Anor [1997] FCA 817; 77 FCR 493
Rogers v The Queen (1994) 181 CLR 251
Roufos Jewellers of Adelaide Pty Ltd v Malltown Pty Ltd (1980) 27 SASR 270
Sandtara Pty Ltd v Abigroup Ltd (1997) 42 NSWLR 5
Satheeskumar v Minister for Immigration and Multicultural Affairs [1999] FCA 1285
Scott v Handley (1999) 58 ALD 373
Sellamuthu v Minister for Immigration and Multicultural Affairs [1999] FCA 247
Sharp Corporation of Australia Pty Ltd v Collector of Customs [1995] FCA 1521
Southern Pacific Hotel Services Inc v Southern Pacific Hotel Corporation Ltd; Kirby v Southern Pacific Hotel Corporation Ltd [1984] 1 NSWLR 710
Spatialinfo Pty Ltd v Telstra Corporation Ltd [2005] FCA 455
Sullivan v Department of Transport (1978) 20 ALR 323
Tedeschi v Legal Services Commissioner (1997) 43 NSWLR 20
Thomson Australian holdings Pty Ltd v Federal Commissioner of Taxation (1988) 20 FCR 85
Times Consultants Pty Limited v Collector of Customs (Qld) (1987) 76 ALR 313
Trade Practices Commission v Arnotts Limited (No 2) (1989) 88 ALR 90
Tuite v Administrative Appeals Tribunal (1993) 40 FCR 483
TVW Enterprises Ltd v Australian Broadcasting Tribunal (1986) 11 FCR 293
VHAU of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs [2003] FCA 376
V Roads & Traffic Authority of New South Wales (2006) 80 ALJR 1100
Waind v Hill and National Employers’ Mutual General Association Ltd [1978] 1 NSWLR 372
Walton v Gardiner (1993) 177 CLR 378
Whitton v Falkiner [1915] HCA 38; (1915) 20 CLR 118Witness v Marsden [2000] NSWCA 52
Wilson v Minister for Aboriginal and Torres Strait Islander Affairs [1996] HCA 18; (1996) 189 CLR 1
DECISION AND REASONS FOR DECISION [2009] AATA 988
ADMINISTRATIVE APPEALS TRIBUNAL )
) V200600759-0764
GENERAL ADMINISTRATIVE DIVISION )Re:GENERAL MERCHANDISE & APPAREL GROUP P/L
Applicant
And:CEO OF CUSTOMS
Respondent
ADMINISTRATIVE APPEALS TRIBUNAL )
) V200601106-1112
GENERAL ADMINISTRATIVE DIVISION )Re:GENERAL MERCHANDISE & APPAREL GROUP P/L
Applicant
And:CEO OF CUSTOMS
Respondent
And:AUSTRALIAN WEAVING MILLS
Party Joined
DECISION
Tribunal: Deputy President S A Forgie
Date: 23 December 2009
Place: Melbourne
Decision:The Tribunal decides:
1.in respect of the respondent’s decisions
(1)dated 28 July 2006:
(a)I note that the effect of my decision is to reinstate TCOs 0511452-5, 0511361 and 0511363; and
(b)I set aside the respondent’s decisions:
(i)to revoke TCOs 0511452, 0511453 and 0511363; and
(ii)to revoke TCOs 0511454, 0511455 and 0511361 and to reissue them as TCOs 0607137, 0607143 and 0607144 respectively; and
(2)dated 2 November 2006:
(a)I note that:
(i)the effect of my decision under (1) is that TCOs 0607137, 0607143 and 0607144 have been set aside and so do not remain to be reviewed in the context of the review of this decision; and
(ii)the effect of my decision is to reinstate TCOs 0511357-60; and
(b)I set aside the respondent’s decisions:
(i)to revoke TCO 051137; and
(ii)to revoke TCOs 0511358, 0511369 and 0511360 and to reissue them as TCOs 0613070, 0613067 and 0613064 respectively.
S A Forgie
Deputy President
REASONS FOR DECISION
This case involves various tariff concession orders (TCOs) for which Sheridan Australia Pty Ltd (Sheridan) initially applied to the Chief Executive Officer of Customs (CEO). Those TCOs related to various products of bed linen. On
20 December 2005, a delegate of the CEO made ten TCOs. Under s 269R(1) of the Customs Act 1901 (Customs Act), the CEO published the TCOs in the Commonwealth of Australia Tariff Concessions Gazette No 06/01 dated 11 January 2006.
The publication of the TCOs was followed by various applications to the CEO by Bruck Textiles Pty Ltd (Bruck), General Merchandise and Apparel Group Pty Ltd (General Merchandise) and the Australian Weaving Mills Pty Ltd (AWM). They variously applied for revocation of the TCOs. I have set these out in detail in a table later in these reasons. In summary, General Merchandise lodged six applications on 24 August 2006. It applied for review of the CEO’s decision to affirm decisions to revoke three TCOs and to revoke and reissue in narrower terms, a further three after Bruck had applied for their revocation. These applications are the Tribunal’s proceedings No. V200600759-764.
On 12 September 2006, General Merchandise lodged an additional seven applications in the Tribunal. Three of those applications sought review of the CEO’s decisions to revoke four TCOs and another three sought review of his decision to revoke and reissue in narrower terms a further three TCOs. The CEO made those decisions after reviewing earlier decisions made on an application for their revocation by AWM. On its application, I joined AWM as a party to proceedings
No 200601106-1112, which are the applications made by General Merchandise seeking review of the CEO’s decisions regarding AWM’s applications to revoke seven of the TCOs.
At the heart of the various applications is the question whether Bruck or AWM, as the case may be, were producers “in Australia of substitutable goods in relation to the goods covered by the …” relevant TCOs at the time they lodged their applications for revocation. The timing follows from s 269SC(1) of the Customs Act. In initially requesting revocation of nine of the TCOs,[1] Bruck claimed to be a producer in Australia of goods that were substitutable goods in relation to imported bed linen, being sheets, pillow cases and covers for quilts, doonas and duvets. In making his decision on that request in respect of bed linen, being sheets and pillow cases, the CEO relied on Bruck’s Broadcloth and, in respect of covers for quilts, doonas and duvets, relied on Bruck’s Santina range of products. In requesting revocation of TCO 0511357 and those listed in B and C of line 5 of the table at [8] below, AWM claimed to be a producer in Australia of goods that were substitutable goods in relation to either imported bed linen, being sheets, pillowcases, quilt covers or doona or duvet covers or to valances, ruffles or curtains.
[1] See line 5 of Table at [8] below
The hearing was listed to begin on 11 May 2009 when a request was made in the afternoon of 7 May 2009 on behalf of the CEO to issue a summons to Bruck. I refused that request on 8 May 2009 and give my reasons below.
With regard to the substantive matters, I have decided to revoke the CEO’s decisions. The effect of my decision is that TCOs 511452-5, 511357-61 and 511363 are reinstated in their original form as shown in [7] below.
BACKGROUND
Initial TCOs made by CEO on application of Sheridan
After Sheridan applied for various TCOs, the Australian Customs Service (Customs) invited three Australian manufacturers to lodge objections. Only one did so. That objection was later withdrawn and no further objections were received from other Australian manufacturers before the CEO made the TCOs and they were published in the Commonwealth of Australia Gazette (Tariff Concession) No. TC 06/01 (Gazette). They were:
| TCO number[2] | TCO wording | Customs Tariff Classification |
| TC0511452 | Bed linen, being any of the following: (a) sheets; (b) pillowcases; (c) quilt covers; (d) doona or duvet covers. | 6302.32.00 (relates to products made of man made fibres) |
| TC0511453 | Bed linen, being any of the following: (a) sheets; (b) pillowcases; (c) quilt covers; (d) doona or duvet covers. | 6302.39.00 (relates to products made of other textile materials) |
| TC0511454 | Bed linen, being any of the following: (a) sheets; (b) pillowcases; (c) quilt covers; (d) doona or duvet covers. | 6302.21.00 (relates to printed products made of cotton) |
| TC0511455 | Bed linen, being any of the following: (a) sheets; (b) pillowcases; (c) quilt covers; (d) doona or duvet covers. | 6302.22.00 (relates to printed products made of man made fibres) |
| TC511357 | Bed linen, being any of the following: (a) sheets; (b) pillowcases; (c) quilt covers; (d) doona or duvet covers. | 6302.10.00 (relates to knitted or crocheted goods) |
| TC0511358 | Bed linen, being any of the following: (a) valances; (b) ruffles; (c) curtains. | 6303.99.10 (relates to products made of other textiles) |
| TC0511359 | Bed linen, being any of the following: (a) valances; (b) ruffles; (c) curtains. | 6903.92.10 (relates to products made of synthetic fibres) |
| TC0511360 | Bed linen, being any of the following: (a) valances; (b) ruffles; (c) curtains. | 6903.91.10 (relates to products made of cotton) |
| TC0511361 | Bed linen, being any of the following: (a) sheets; (b) pillowcases; (c) quilt covers; (d) doona or duvet covers. | 6302.29.00 (relates to printed products made of other textile material) |
| TC0511363 | Bed linen, being any of the following: (a) sheets; (b) pillowcases; (c) quilt covers; (d) doona or duvet covers. | 6302.31.00 (relates to products made of cotton) |
[2] Notes to the notice published according to s 269SE(1) and (2) record that substitutable goods are produced in Australia by AWM in relation to the bolded TCO numbers and that there is partial manufacture by Bruck in relation to the italicised TCO numbers.
History of subsequent applications to the CEO
The applications to, and decisions of, the CEO may be summarised in the following tabular form:
| Date | Applicant and Application | CEO’s Decisions | TCO Numbers (TCOs) | Gazettal | Reissued TCO Number |
| 1. | Sheridan Australia Pty Ltd: application for various TCOs | ||||
| 2. 20 December 2005 | Make various TCOs | 0511452; 0511453 0511454; 0511455 0511357; 0511358 0511359; 0511360 0511361; 0511363 | |||
| 3. 11 January 2006 | Gazette TC 06/01 under Customs Act, s 269R(1)[3] | ||||
| 4. 21 February 2006 | Bruck’s application for revocation of nine TCOs: 0511452 0511453; 0511454 0511455; 0511358 0511359; 0511360; 0511361 0511363.[4] | ||||
| 5. 19 April 2006 (CEO’s decision re Bruck’s revocation application) | A. revoke:[5] 0511452 0511453[6] 0511363[7] B. not to revoke:[8] 0511358 0511359 0511360 C. revoke and reissue:[9] 0511454 0511455 0511361 | 0607137 0607143 0607144 | |||
| 6. 3 May 2006 | General Merchandise asks CEO to review decisions listed in A. of line 5 to revoke TCOs and decisions listed in C. of line 5 to revoke and reissue TCOs.[10] | ||||
| 7. 16 June 2006 | AWM applied for revocation of TCO 0511357 and those listed in B and C. of line 5.[11] | ||||
| 8. 28 July 2006 (CEO’s decision re General Merchandise’s application for reconsideration) | Affirmed decisions listed in A. and C. of line 5.[12] | ||||
| 9. 12 August 2006 (CEO’s decision re AWM’s revocation application) | D. revoke:[13] 0511357[14] 0607137[15] 0607144[17] E. revoke and reissue[18] | ] 0613070 | |||
| 10. 24 August 2006 | General Merchandise applied to Tribunal for review of CEO’s decision to affirm decisions in A. and C. of line 5 (decision in line 8) – AAT No. V200600759-764.[22] | ||||
| 11. 12 September 2006 | General Merchandise asked CEO to review decisions listed in D. and E. of line 9[23] | ||||
| 12. 2 November 2006 | Affirmed decisions listed in D. and E. of line 9.[24] | ||||
| 13. 17 November 2006 | General Merchandise applied to Tribunal for review of CEO’s decision to affirm decisions in D. and E. of line 9 (decision in line 12) – AAT No. V200601106-01112.[25] |
[3] T documents V2006/11106-1112 at 9-11
[4] T documents V2006/759 at 40-58 and T documents V2006/760 at 40-58. Revocation of TCO 0511357 not sought.
[5] T documents V2006/1106-1112 at 14 (Gazette No. TC 06/16 dated 26 April 2006)
[6] See also T documents V2006/759 at 95
[7] See also T documents V2006/760 at 95
[8] T documents V2006/1106-1112 at 13 (Gazette No. TC 06/16 dated 26 April 2006)
[9] T documents V2006/1106-1112 at 15 (Gazette No. TC 06/16 dated 26 April 2006)
[10] T documents V2006/759 and V2006/760 at 99-102
[11] T documents V2006/1106-1112 at 16-46
[12] T documents V 2006/760 at 110 and 111 and see also 113-114 (Gazette No. TC 06/29 dated 26 July 2006)
[13] T documents V 2006/760 at 165-166 (Gazette No. TC 06/32 dated 16 August 2006)
[14] T documents V2006/1106-1112 at 102-107
[15] T documents V2006/1106-1112 at 126-131
[16] T documents V2006/1106-1112 at 132-137
[17] T documents V2006/1106-1112 at 138-143
[18] T documents V 2006/760 at 167 (Gazette No. TC 06/32 dated 16 August 2006)
[19] T documents V2006/1106-1112 at 108-113
[20] T documents V2006/1106-1112 at 114-119
[21] T documents V2006/1106-1112 at 120-125
[22] T documents V2006/759 at 3-4 and V2006/760 at 3-4
[23] T documents V2006/1106-1112 at 144-145
[24] T documents V2006/1106-1112 at 146-164 and see also 168-169 (Gazette No. TC 06/44 dated 8 November 2006)
[25] T documents V2006/1106-1102 at 3-4
The TCOs revoked and reissued and described in lines 5 and 9 above were:
| Original TCO number | Reissued TCO number | TCO wording | Customs Tariff Classification |
| TC0511361 | TC0607137 | Bed linen, being any of the following: (a) sheets; (b) pillow cases. | 6302.29.00 (relates to printed products made of other textile material) |
| TC0511454 | TC0607143 | Bed linen, being any of the following: (a) sheets; (b) pillow cases. | 6302.21.00 (relates to printed products made of cotton) |
| TC0511455 | TC0607144 | Bed linen, being any of the following: (a) sheets; (b) pillow cases. | 6302.22.00 (relates to printed products made of other man made fibres) |
| TC0511358 | TC0613070 | Bed linen, being any of the following: (a) ruffles; (b) curtains. | 6303.99.10 (relates to products made of other textiles) |
| TC0511359 | TC0613067 | Bed linen, being any of the following: (a) ruffles; (b) curtains. | 6303.92.10 (relates to products made of synthetic fibres) |
| TC0511360 | TCO613064 | Bed linen, being any of the following: (a) ruffles; (b) curtains. | 6303.91.10 (relates to products made of cotton) |
LEGISLATION
General outline of the scheme for the imposition of customs duties
The Customs Act regulates the import of goods into Australia and their export. Part VIII provides for the payment and computation of the duty payable on those goods. In general terms in so far as the import of goods is concerned, the rate of any import duty payable on goods is the rate of the duty in force when they are entered for home consumption.[26] Import is payable at that time of entry.[27] Two relevant factors in assessing the amount of duty payable are the country from which they originated and their value. Part VIII of the Customs Act contains detailed provisions in relation to those factors.
[26] Customs Act, s 132(1)
[27] Customs Act, s 132AA(1), item 1
The Customs Act does not make provision for a third relevant factor and that is the rate of duty payable in respect of goods. That is left to the Customs Tariff Act 1995 (CT Act) which provides that it imposes duties on goods imported into Australia on or after 1 July 1996 and, if they were imported before that date, entered into Australia or again entered for home consumption on or after that day.[28] Although there are qualifications and exceptions, usually duty in respect of goods is worked out by reference to the general rate set out in the third column of the tariff classification under which the goods are classified.[29] For most purposes, those classifications are set out in Schedule 3 of the CT Act. Goods that originated in particular countries and that are imported into Australia are not considered against the classifications under Schedule 3 but under Schedules 5, 6 and 7. A reference in the CT Act to the tariff classification under which particular goods are classified is a reference to the heading or subheading in whose third column a rate of duty is set out and under which the goods are classified.
[28] CT Act, s 15
[29] CT Act, s 16(1)(a). Qualifications and exceptions are set out in the remaining provisions of s 16 and in ss 17, 18, 20 and 22.
Section 18 of the CT Act provides for the calculation of concessional duty (rather than under Schedules 3, 5, 6 or 7) if an item in Schedule 4 prima facie applies to the goods. Provision is made in Schedule 4 for concessions of three types: general concessions for prescribed persons, bodies, authorities or countries, general concessions for prescribed classes of goods and other concessions for prescribed goods.
The Customs Act requires the CEO on making a TCO, whether a standard TCO or a TCO for goods requiring repair, to declare that the goods the subject of the TCO application are goods to which a prescribed item specified in the order applies. A “prescribed item” is defined to mean “… an item in Schedule 4 to the Customs Tariff Act 1995 that is expressed to apply to goods that a TCO declares are goods to which the item applies.” [30] In this way, a TCO made under the Customs Act is given effect under the CT Act. Item 50(1) is the relevant item in this case. It is found in Part III of Schedule 4 and provides concessions for:
“50 Goods that a Tariff Concession Order declares are goods to which this item applies:
(1) Goods other than goods classified under subheading 3817.00.10 of Schedule 3 or heading 3819.00.00 of Schedule 3.” Free
[30] Customs Act, s 269B(1)
Making an application for a TCO
Division 2 of that Part sets out the manner in which an application for a TCO may be made and lodged with Customs.[31] Section 269FA provides:
“It is the responsibility of an applicant for a TCO to establish, to the satisfaction of the CEO, that, on the basis of:
(a)all information that the applicant has, or can reasonably be expected to have; and
(b)all inquiries that the applicant has made, or can reasonably be expected to make;
there are reasonable grounds for asserting that the application meets the core criteria.”[32]
[31] Customs Act, s 269F
[32] In some circumstances when the CEO thinks it desirable to consider making a TCO despite the absence of a TCO application, Part XVA has effect as if a TCO application had been lodged under s 269F: Customs Act, s 269J.
What are the “core criteria”?
The “core criteria” are the subject of s 269C:
“For the purposes of this Part, a TCO application is taken to meet the core criteria if, on the day on which the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business.”
The core criteria leave open two issues: the meaning of the expression “substitutable goods” and of “produced in Australia in the ordinary course of business”. I will refer to each of the statutory provisions expanding upon them as well as to the authorities that have considered them.
A. Substitutable goods
Section 269B(1) contains a definition of “substitutable goods”:
“substitutable goods, in respect of goods the subject of a TCO application or of a TCO, means goods produced in Australia that are put, or are capable of being put, to a use that corresponds with a use (including a design use) to which the goods the subject of the application or of the TCO can be put.”[33]
[33] A “TCO application” means a TCO application under s 269F, an application under that section as amended under s 269L or a proposal for the issue of a TCO that is to be taken under s 269J to be a TCO application: Customs Act, s 269B(1).
In Re Vulcan Australia Pty Ltd and Comptroller-General of Customs and Dimplex Australia Pty Ltd (Party Joined),[34] Messrs Woodard and McLean and I approached the identification of substitutable goods from the meaning of “use”:
[34] [1994] AATA 150; (1994) 20 AAR 116
“44. Many meanings of the word ‘use’ appear in the dictionaries. That meaning which is relevant in the Shorter Oxford Dictionary … is that of
‘A purpose, object, or end, esp. of useful or advantageous nature ...’. The Macquarie Dictionary … defines it, again in so far as it is relevant, as‘1. to employ for same purpose; put into service; turn to account:
use a knife to cut, use a new method. 2. to avail oneself of; apply
to one’s own purposes: use the front room for a conference ...’45. What is apparent from both of these definitions is that the focus of the word ‘use’ when used in isolation without reference to a context is upon the end result i.e. the purpose, object or service. It is not upon the means of achieving that purpose, object or service. If the word is intended to encompass those means, it must come from the context in which the word ‘use’ appears. When we look at the context in which the word is used in the Act, we can find nothing which suggests that we should give the word ‘use’ anything other than its ordinary meaning. The definition of substitutable goods refers to ‘a use (including a design use) to which (TCO) goods ... can be put’. Clearly, the definition is not simply confining itself to a use for which the TCO goods were designed but is looking to the use to which they can be put. There seems to be no suggestion in this that the means by which that use is achieved have any relevance at all.
46. We also note that the definition refers to the goods produced in Australia being ‘put to a use ... that corresponds with a use’ to which the TCO goods can be put. Again the emphasis is upon the ultimate use and not the means by which it is achieved and this is not altered by the use of the word ‘corresponds’. That word has been defined, again in so far as it is relevant, in the Shorter Oxford Dictionary as:
‘1. To answer to something else in the way of fitness; to agree
with; be conformable to; be congruous or in harmony with. 2. To
answer to in character or function ...’and in the Macquarie Dictionary as:
‘1. to be in agreement or conformity (aft. fol. by with or to): his
words and actions do not correspond. 2. to be similar or analogous;
be equivalent in function, position, amount etc ...’These definitions do focus in part on the function or process but that is not the appropriate focus of the word ‘correspond’ in the definition of ‘substitutable goods’. Reference must be made to the two things which must correspond. Those two things are the use to which the TCO goods can be put and a use of the substitutable goods. The ordinary meaning of ‘correspond’ in that context is that one use conforms with or is in harmony with the other use. It would be reading too much into the words ‘corresponds with’ to say that the function or process of the use of one must conform with or be in harmony with the other. It follows that, we can find no suggestion in the definition that the means by which the goods achieve any such use is of any relevance at all. We consider, therefore, that we should give the word ‘use’ its ordinary meaning.
47. Having done that, we must decide the use (including a design use) to which the goods described in the TCO can be put. We find that they are used for providing domestic space or room heating. In determining their use, we have not included a reference to their use of liquid fuel for that is the means by which they achieve that use and not the use itself. We have reached the same conclusion in respect of their connection to any external fuel although that aspect, in so far as it impinges upon portability, has caused us more concern. We have concluded, however, that the aspect of portability relates essentially to the way in which the TCO goods achieve their overall purpose of providing domestic heating of a space or room rather than to a use to which they can be put.”[35]
[35] [1994] AATA 150; (1994) 20 AAR 116 at 125-126
In Riverwood Cartons Pty Ltd v Chief Executive Officer of Customs &
Anor,[36] Goldberg J summarised the issue to resolve in this way:
“‘Substitutable goods’ are goods produced that are put to a use that corresponds with a use to which the relevant imported goods can be put. There is no requirement that the substitutable goods have only one use. The definition will be satisfied even if the substitutable goods (in this case, corrugated fibre board) have a number of uses, only one of which corresponds with a use to which the imported goods can be put.”[37]
[36] [1997] FCA 817; 77 FCR 493
[37] [1997] FCA 817; 77 FCR 493; at 820; 497
B.Produced in Australia
Section 269D explains when goods are taken to be “produced in Australia”:
“(1) For the purposes of this Part, goods, other than unmanufactured raw products, are taken to be produced in Australia if:
(a)the goods are wholly or partly manufactured in Australia; and
(b)not less than ¼ of the factory or works costs of the goods is represented by the sum of:
(i)the value of Australian labour;
(ii)the value of Australian materials; and
(iii)the factory overhead expenses incurred in Australia in respect of the goods.
(2)For the purposes of this Part, goods are to be taken to have been partly manufactured in Australia if at least one substantial process in the manufacture of the goods was carried out in Australia.
(3)Without limiting the meaning of the expression substantial process in the manufacture of the goods, any of the following operations or any combination of those operations does not constitute such a process:
(a)operations to preserve goods during transportation or storage;
(b)operations to improve the packing or labelling or marketable quality of goods;
(c)operations to prepare goods for shipment;
(d)simple assembly operations;
(e)operations to mix goods where the resulting product does not have different properties from those of the goods that have been mixed.
(4)For the purposes of this section, the CEO may, by instrument in writing published in the Gazette:
(a)direct that the factory or works cost of goods is to be determined in a specified manner; and
(b)direct that the value of Australian labour, the value of Australian materials or the factory overhead expenses incurred in Australia in respect of goods is to be determined in a specified manner;
and those directions have effect accordingly.
(5)The provisions of sections 48 (other than those in paragraphs (1)(a) and (b) and subsection (2)), 48A, 48B, 49A and 50 of the Acts Interpretation Act 1901 apply in relation to directions given under subsection (4) as if:
(a)references in those provisions to regulations were references to directions; and
(b)references in those provisions to the repeal of a regulation were references to the revocation of a direction.”
It is apparent that the term “producer in Australia” of substitutable goods is not defined but s 269D provides the instances in which goods are taken to have been “produced in Australia”. They are taken to be of that character if they have been “wholly or partly manufactured in Australia” and certain costs make up not less than one quarter of their cost. In Re Kenso Marketing (M) SDN BHD and Chief Executive Officer of Customs and Nufarm Australia Limited,[38] the Tribunal considered the meaning of “manufacture” in previous authorities at [10], [11] and [18]. It accepted that “… the essence of manufacturing is making ‘a different thing from that out of which it is made’.”[39] The meaning given to the word “manufacture” in common usage is “… 1 to make something from raw materials, especially in large quantities using machinery. …”.[40]
[38] [2008] AATA 42
[39] [2008] AATA 42 at [18]
[40] Chambers 21st Century Dictionary, revised edition, 1999, Chambers
Goods are taken to have been partly manufactured in Australia if at least one substantial process in the manufacture of the goods was carried out in Australia: s 269D(2). Although the expression “substantial process in the manufacture of goods” is not defined in the Customs Act, 269D(3) does exclude from its meaning five types of operations.
A “process” is not defined but, in its ordinary meaning, is a reference to “a series of operations performed during manufacture”.[41] Given the ordinary meaning of “manufacture” and the policy behind Part XVA of the Customs Act, to which I refer below, the word would seem to be used in its ordinary meaning.
[41] Chambers 21st Century Dictionary, revised edition, 1999, Chambers
Whether a process is a “substantial process” is another matter. In Kenso, Deputy President McPherson considered that the “… question whether under
s 269D(2) a process in the manufacture of goods is ‘substantial’ depends on the significance or importance of its contribution to the making of a new or different thing.”[42][42] [2008] AATA 42 at [21]
Much earlier, Northrop J had considered the meaning of the adverb “substantially”, rather than the adjective “substantial”, in Polypacific Pty Ltd v Comptroller-General of Customs.[43] He did so when considering s 269E as it was then enacted to give the Comptroller-General the power to refuse to make a concession order if the “making of the order would be likely to have a substantially adverse effect on the market for any goods produced in Australia.” Northrop J referred with approval to a consideration of the latter word in the phrase “a substantial benefit to the public” in s 90(5) of the Trade Practices Act 1974 by the Trade Practices Tribunal (TPT) in Re Howard Smith Industries Pty Ltd & Adelaide Steamship Industries Pty Ltd.[44] The TPT had adopted the meaning to be given to the word “substantial” by a differently constituted tribunal in Re Queensland Co-operative Milling Association Ltd; Re Defiance Holdings Ltd:[45]
“The benefit must be ‘substantial’. It must be ‘considerable’, ‘large’, or ‘weighty’. It need not, it is plain, be necessarily capable of quantitative assessment; but it should be sufficiently definable – have sufficient substance – as to permit some factual judgment of its relative importance.”[46]
[43] [1993] FCA 447; (1993) 45 FCR 238
[44] (1977) 28 FLR 385, Northrop J, JN Walker and Professor BL Johns
[45] (1976) 25 FLR 169, Woodward J, JAF Shipton and Professor MD Brunt
[46] (1976) 25 FLR 169 at 183 approved at [1993] FCA 447; (1993) 42 FCR 238 at [78]; 263
What amounts to a “substantial process” has to be considered in light of the policy behind Part XVA of theCustoms Act. Certainly, itprovides a method by which the normal tariff duties payable on particular goods are at a lower rate or reduced to nil. In a joint judgment in Comptroller-General of Customs v Kawasaki Motors Pty Ltd,[47] Hill and Heerey JJ explained that:
“…a TCO is of general application in the sense that, like theCustomsTariff itself, it applies to goods of a particular description regardless of the identity of the importer, the local manufacturer of competing goods, the suppliers, customers, employees or creditors of such persons or any other person who might be commercially affected.
…
The regime ofcustomsduties, including variations effected by TCOs, is at any given time the scoreboard of the enduring contest waged between the forces of free trade and protection. As well as the direct commercial interests of the kind mentioned, there are social, political and economic considerations affecting the whole Australian community. The rules of natural justice are in our opinion inapplicable in such a setting.”[48]
[47] (1991) 32 FCR 219; 103 ALR 661
[48] (1991) 32 FCR 219; 103 ALR 661; at 240-241; 682
While Northrop J’s interpretation was given in the context of a different provision, it was an interpretation of which Parliament can be taken to be aware when choosing to use the word in a later provision. It can also be taken to be aware of the ordinary meaning of the word. Having regard to the words of the particular section and the policy of the Customs Act, it seems to me that a “substantial process” is a process that is regarded as being “considerable in amount, extent, [or] importance …”[49] when considered in light of all of the processes that are undertaken in the manufacture of the goods. Is that process of relative importance when considered against the whole of the process of manufacture? That can only be judged by having regard to reference points which are determined by the particular processes leading to the manufacture of the particular goods under consideration. Those varying reference points could be monetary,[50] complexity, time or some other factor relevant to the particular manufacture of the goods or some combination of all of them. The reference points will depend very much on the goods said to be manufactured partly in Australia. Whether they are substantial can only be judged against an understanding of the whole process.
[49] Chambers 21st Century Dictionary, revised edition, 1999, Chambers
[50] I do not think that a monetary reference point is excluded by the fact that s 269D(1)(b) refers to a criteria based on cost. Its focus is upon the value of Australian labour, materials and overhead expenses and not upon the substantial nature of a process.
C. Ordinary course of business
Section 269E deals with the meaning of the expression “the ordinary
course of business”:
“(1) For the purposes of this Part, other than section 269Q, goods (other than made-to-order capital equipment) that are substitutable goods in relation to goods the subject of a TCO application are taken to be produced in Australia in the ordinary course of business if:
(a)they have been produced in Australia in the 2 years before the application was lodged; or
(b)they have been produced, and are held in stock, in Australia; or
(c)they are produced in Australia on an intermittent basis and have been so produced in the 5 years before the application was lodged;
and a producer in Australia is prepared to accept an order to supply them.
(2)For the purposes of this Part, goods that:
(a)are substitutable goods in relation to goods the subject of a TCO application; and
(b)are made-to-order capital equipment;
are taken to be produced in Australia in the ordinary course of business if:
(c)a producer in Australia:
(i)has made goods requiring the same labour skills, technology and design expertise as the substitutable goods in the 2 years before the application was lodged; and
(ii)could produce the substitutable goods with existing facilities; and
(d)the producer is prepared to accept an order to supply the substitutable goods.
(3)In this section:
made-to-order capital equipment means a particular item of capital equipment:
(a)that is made in Australia on a one-off basis to meet a specific order rather than being the subject of regular or intermittent production; and
(b)that is not produced in quantities indicative of a production run.”
The expression “ordinary course of business” has been considered in a number of previous authorities. They are not relevant in this case in which I am concerned only with the circumstances set out in s 269E(1). That provision defines and confines the meaning of “ordinary course of business” to two criteria. The first criteria may be any one of those set out in ss 269E(1)(a), (b) or (c) and the second must be that a producer in Australia “is prepared to accept an order to produce them”. Cases such as Amcor Ltd v Comptroller-General of Customs[51] and Re Amcor Ltd v Comptroller-General of Customs[52] considered the second criteria when it appeared in a different formulation of s 269B(7) of the Customs Act. It read:
“For the purposes of this Part, a person shall be taken to be capable of producing goods in the normal course of business if, in the normal course of business, he is prepared to accept orders for the supply of such goods that have been, are being, or are to be, produced by him.”
[51] [1988] FCR 225; (1988) 79 ALR 221
[52] [1991] FCA 622; (1991) 105 ALR 216; 33 FCR 200, Northrop, Gray and Heerey JJ
In Amcor Ltd v Comptroller General of Customs and Others,[53] the Full Court of the Federal Court constituted by Davies, Morling and Gummow JJ said:
“… [I]t is implicit in the requirement of preparedness to accept orders for particular goods in the normal course of business that the supplier has an ability in the normal course of business to attract such orders; otherwise, it would be difficult to see how the acceptance of such orders could be part of the norm. The supplier must be prepared to accept orders in a competitive environment and therefore to supply the goods of acceptable quality, at a competitive price, within a reasonable time and to comply with any other obligations placed upon suppliers of such goods in the normal course of trade. …”[54]
[53] (1988) 79 ALR 221, Davies, Morling and Gummow JJ
[54] (1988) 79 ALR 221 at 232
This approach did not find favour with a differently constituted Full Court when it later considered the same issue in Re Amcor Ltd v Comptroller-General of Customs. Specifically, it did not agree with the final sentence in this passage saying:
“ No doubt the requirement that the person must be prepared to accept orders for the supply of goods in question imports considerations of practical reality. It could not be met by a person saying that he could accept an order for delivery in 10 years’ time. Indeed the concept of accepting orders seems to be introduced by s 269B(7) to provide some practical yardstick against which alleged capability of production can be tested. However, we do not think that comparisons of price or quality are relevant.
The purpose of the Customs Act is to raise revenue and to protect Australian industry against competition from imports. When there is no comparable Australian product being manufactured, or capable of being manufactured, importers and consumers should not be burdened with the payment of duty at the full rate or in appropriate circumstances at all. Hence the mechanism of the TCO is provided by Pt XVA.
In the ordinary case where imports compete with Australian products, price and quality will vary. The imported product, even with a substantially greater price because of duty and other factors, may nevertheless be preferred by the purchaser over the local product because of other considerations such as perceived superior quality. This is a matter for the market place.
Where a TCO is sought, if the decision-maker is not satisfied that goods serving similar functions are not produced in Australia then that is the end of the matter: Comptroller-General of Customs v Kawasaki Motors Pty Ltd (1991) 103 ALR 661 at 677-9. It is not to the point that goods being produced in Australia, and identical to the imported goods the subject of the TCO application, are more expensive than, or inferior in quality to, the imported goods. Those are matters that are left to the market place.
Likewise, once it is established that although goods are not produced in Australia nevertheless identical goods are capable of being produced in Australia in the normal course of some person’s business, we think price and quality comparisons are not relevant.”[55]
[55] [1991] FCA 622; (1991) 105 ALR 216; 33 FCR 200; at 226; 209-210
The test in s 269E(1) as it now appears does not require that the person is prepared to accept orders for the supply of the relevant goods “in the normal course of business” or even “in the ordinary course of business”. All that is required is that the person is prepared to “accept an order to supply” goods that meet one or other of the three descriptions in ss 269E(1)(a), (b) or (c).
Given that s 269E(1)(b) provides that the goods need only have been produced, and held in stock, in Australia, it may be arguable that a person can be held to be prepared to accept an order to supply if able to do so from goods that were produced well before the two or five years referred to in ss 269E(1)(a) or (c) and that have been stockpiled. If that were the argument, presumably there would need to be evidence regarding such matters as whether the producer must be prepared to accept an order to supply an indeterminate number, volume or amount of substitutable goods or whether the producer’s preparedness must be ascertained against a background of an order to supply of the sort that would be expected in the normal course of business. That is not a question that I must determine in this case and I do no more than raise it.
The CEO’s obligation to screen the application
No later than 28 days after a person lodges a TCO application, the CEO must take the following steps prescribed by s 269H(1):
“Not later than 28 days after a TCO application is lodged, the CEO must:
(a)if he or she is satisfied:
(i)that the application complies with section 269F; and
(ii)that, having regard to the information disclosed in the application and to the particulars of the inquiries made by the applicant, there are reasonable grounds for believing that the applicant has discharged the responsibility referred to in section 269FA; and
(b)if he or she is not aware of any producer in Australia of substitutable goods;
by notice in writing given to the applicant, inform the applicant that the application is accepted as a valid application; and
(c)if he or she is not so satisfied; or
(d)if he or she is aware of such a producer;
by notice in writing given to the applicant, inform the applicant that the application is rejected and of the reasons for the rejection.”
If the CEO does not either accept or reject the application within the 28 day period after the application for a TCO is lodged, Part XVA has effect as if the CEO had, immediately before the end of the period, informed the applicant in writing that the application had been accepted as a valid application.[56]
[56] Customs Act, s 269H(2)
Processing the TCO application
As soon as possible after accepting a TCO application as a valid application, the CEO must publish a notice in the Gazette. That notice must include certain information including the fact that the application has been lodged, the identity of the applicant and a description of the goods including a reference to the Customs tariff classification that, in the opinion of the CEO, applies to the goods. The notice must also invite persons to make submissions if they consider there are reasons why the TCO should not be made. Those persons have 50 days after the date of the gazettal in which to make their submissions.[57] The CEO may not have regard to submissions made outside that period unless he or she invites that person to lodge the submission under s 269M.[58]
[57] Customs Act, s 269K(1)
[58] Customs Act, s 269K(4)
The CEO is obliged to reject a TCO application if, at any time between its receipt and the making of a TCO, he or she becomes satisfied that the goods to which the application relates are goods in respect of which s 269SJ(1) prevents the making of a TCO.[59] Section 269SJ(1) provides that the CEO must not make a TCO in respect of goods described in terms other than generic terms, described in terms of their intended end use or declared by the regulations to be goods to which a TCO should not extend.
[59] Customs Act, s 269HA(1)
Applicant may amend TCO application
If a person lodges a submission within the time limits prescribed, the CEO must give the applicant for a TCO a notice in writing. The CEO must do so within 14 days after the end of the 50 day period. The notice must set out the name and address of each person who has lodged a submission and give a short statement of the grounds on which each submission is based.[60] The applicant is given a period of 28 days after receiving the notice in which to notify the CEO of any proposal to amend the application by altering the description of the goods the subject of the application. If the applicant chooses to amend in this way, he or she must set out the proposed amendment.[61] In proposing the amendment, the applicant must not propose one that would cause the goods to which the application relates to be covered by a different Customs tariff classification to that identified by the CEO in the Gazette under s 296K.[62] The amendment may not do otherwise than narrow the description of the goods as set out in the application.[63]
[60] Customs Act, s 269L(1)
[61] Customs Act, s 259L(2)
[62] Customs Act, s 269L(3)(a)
[63] Customs Act, s 269L(3)(b)
The CEO must consider the proposed amendment within seven days of being notified of a proposed amendment of a TCO application. He or she must consider the proposed amendment to decide whether satisfied that the proposed amendment does not contravene s 269L(3) as described in the previous paragraph of these reasons. If not satisfied, the CEO informs the applicant to that effect[64] and must continue to consider the application as originally made.[65]
[64] Customs Act, s 269L(4)(b)
[65] Customs Act, s 269L(4A)
If satisfied, the CEO must notify the applicant to that effect.[66] He or she must also take steps to notify each person who made a submission of the amended application and must publish notice of it in the Gazette. The CEO must do so within 14 days of becoming satisfied that the proposed amendment does not contravene the requirements of s 269L(3).[67]
[66] Customs Act, s 269L(4)(a)
[67] Customs Act, s 269L(4B)
After being notified of a proposed amendment, a person who has lodged a submission may notify the CEO that he or she no longer objects to the application for a TCO.[68] If such a person does not notify the CEO to that effect, he or she is taken to wish to proceed with the submission as if it were a submission made in respect of the amended application.[69]
[68] Customs Act, s 269L(5)
[69] Customs Act, s 269L(6)
Customs may invite other submissions or seek other information, documents or material
Section 269M provides, in part:
“(1) If the CEO considers that, in relation to a particular TCO application, a person may have reason to oppose the making of the TCO to which the application relates, he or she may, by notice in writing, invite the person to lodge a written submission with the CEO within a period specified in the notice ending not later than 150 days after the gazettal day.
(2)…
(3)…
(4)If the CEO considers that, in relation to a particular TCO application, any person (including the applicant or a person who has lodged a submission with the CEO) may be able to supply information or produce a document or material relevant to the consideration of the application, the CEO may, by notice in writing, request the supply of the information in writing, request the supply of the information in writing or the production of the document or material within a period specified in the notice and ending not later than 150 days after the gazettal day.
(5)If a person refuses or fails to lodge a submission under subsection (1) or to supply information or produce a document or material under subsection (4) within the period allowed but subsequently lodges that submission, supplies the information or produces the document or material, the CEO must not take that submission, information, document or material into account in determining whether to make a TCO.
(6)At any time during the period of 150 days starting on the gazettal day, the CEO may, for the purpose of dealing with a TCO application, and despite section 16 of the Customs Administration Act 1985, give a copy of all, or of a part, of the application to a prescribed organisation with a view to obtaining the advice of the organisation in relation to the question whether there are producers in Australia of substitutable goods.”
Making a TCO
Section 269Q is concerned with the making of a TCO in respect of a TCO application in respect of goods sent out of Australia for repair. The making of a TCO in respect of all other applications is the subject of s 269P. As it is the more general situation with which I am concerned, I will refer only to s 269P. Once it has been accepted as a valid TCO application under s 269H:
“… the CEO must decide, not later than 150 days after the gazettal day, whether or not he or she is satisfied, having regard to:
(a)the application; and
(b)all submissions lodged with the CEO before the last day for submissions; and
(c)all information supplied and documents and material produced to the CEO in accordance with a notice under subsection 269M(4); and
(d)any inquiries made by the CEO;
that the application meets the core criteria.”[70]
[70] Customs Act, s 269P(1)
Section 269P(2) is concerned with the situation in which the CEO fails to make a decision under s 269P(1) within 150 days of the gazettal day. Should that situation occur:
“… the CEO is taken, for the purposes of subsection (1) , at the end of that period, to have made a decision that he or she is not satisfied that the application meets the core criteria.”[71]
[71] Customs Act, s 269P(2)
If satisfied that the application meets the core criteria, the CEO must make a written order declaring that the goods the subject of the TCO application are goods to which a prescribed item specified in the order applies.[72] 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 CEO, applies to the goods; and
(b)a statement of the day on which the TCO is to be taken to have come into force; and
(c)if subsection 269SA(1) applies in relation to the TCO – a statement of the day on which it ceases to be in force.”[73]
[72] Customs Act, s 269P(3)
[73] Customs Act, s 269P(4). Section 269SA(1) is concerned with a situation in which a TCO application meets the core criteria on the day on which it was lodged but substitutable goods in relation to the goods which are the subject of that application start to be produced in Australia on a day after it was lodged and before the CEO made a decision. If it were the case that the CEO would not have been satisfied that the application met the core criteria had production commenced on the day the TCO application was lodged, the TCO that is made continues in force only until the day the substitutable goods started to be produced.
The CEO must inform the applicant of the decision made under
s 269P(1) as soon as possible and must also publish it in the Gazette in order to inform all other interested persons.[74] Failure to do so does not affect the validity of the TCO.[75][74] Customs Act, s 269R(1) and (2)
[75] Customs Act, s 269R(3)
The general rule is that a TCO is taken to have come into force on the day on which the application for it was lodged or, if more than one application has been lodged, the day on which the earliest application was lodged.[76] A TCO will come into force from a later day if the CEO is satisfied of three things. The first is that the application does not satisfy the CEO that it meets the core criteria. The second is that, after the day the application was lodged but before the CEO made a decision on it, substitutable goods ceased to be produced in Australia. The third is that, had production of the substitutable goods ended on the day the application was lodged, the CEO would have been satisfied that the TCO application met the core criteria. The CEO must make the TCO in accordance with section 269P but the TCO is in force only from the day on which substitutable goods ceased to be produced in Australia.[77]
[76] Customs Act, s 269S(1)
[77] Customs Act s 269SA(2)
Revocation of TCOs
Section 269SB sets out the situation in which a person may apply for the revocation of a TCO. That situation is:
“If:
(a)a TCO is in force on a particular day; and
(b)a person claiming to be a producer in Australia of substitutable goods in relation to the goods covered by the order is of the view that if:
(i)the TCO were not in force on that particular day; and
(ii)that particular day were a day on which the TCO application was lodged;
the TCO would not have been made;
the person may request the CEO to revoke the order.”[78]
[78] Customs Act, s 269SB(1)
Section 269SC(1) goes on to provide for the manner in which the CEO must process a request for revocation of a TCO. No later than 60 days after lodgement of a request for revocation of a TCO and having regard to any information that he or she has requested under s 269SF:[79]
“… the CEO must decide whether or not he or she is satisfied:
(a)that, on the day of lodgement of the request, the person requesting the revocation of the TCO is a producer in Australia of goods that are substitutable goods in relation to the goods is the subject of the order; and
(b)that, if the TCO were not in force on that day but that day were the day on which the application for that TCO was lodged, the CEO would not have made the TCO.”[80]
[79] Section 269SF(1) provides that: “If the CEO considers that, in relation to a request for revocation of a TCO, any person (including the person who made the request) may be able to supply information or produce a document or material relevant to the consideration of the request, the CEO may, by notice in writing, request the supply of the information or the production of the document or material within a period specified in the notice and ending not later than 60 days after receiving the request.” Any information supplied must be in writing. If a person refuses or fails to supply the information or produce a document or material requested under s 269SF(1) within the period allowed but subsequently does so, the CEO must not take that information, document or material into account in determining whether to revoke a TCO: s 269SF(3).
[80] Customs Act, s 269SC(1)
If the CEO is satisfied of these matters, he or she must make an order revoking the TCO.[81] If satisfied of the matters but also satisfied that, if the TCO were not in force on the day the request for revocation were lodged and an application for a narrower TCO had been lodged in respect only of goods covered by the TCO that are not produced in Australia by the person making the request, he or she would have made that narrower TCO, he or she must revoke the TCO and, in its place, make a narrower TCO.[82] If not satisfied of the matters in s 269SC(1), the CEO must refuse the request.[83] The dates of effect of each decision are regulated by ss 269SC(6) to (8).
[81] Customs Act, s 269SC(3)
[82] Customs Act, s 269SC(4)
[83] Customs Act, s 269SC(5)
Section 269SD refers to revocation at the initiative of the CEO. The CEO may publish a notice in the Gazette that he or she intends to make an order revoking a TCO with effect from a particular day:
If:
(a)a TCO is in force on a particular day: and
(b)the CEO believes that if:
(i)the TCO were not in force on that day; and
(ii)that day were the day on which the application for the TCO was lodged;
the CEO would not have made the TCO;
the CEO may, not later than 14 days after that day, publish a notice in the Gazette:
(c)declaring his or her intention, subject to subsection (1AB), to make an order revoking the TCO with effect from that particular day (the intended revocation day); and
(d)inviting any person who might be affected by the revocation of that TCO to give a written submission to the CEO within 28 days of the notice concerning the proposed revocation.”[84]
[84] Customs Act, s 269SD(1AA)
Section 269SD(1) to (5) set out the circumstances in which the CEO may decide to revoke the TCO and s 269SE sets out the CEO’s obligations to inform the applicant of the decision and to publish a notice in the Gazette in order to inform all other interested persons.
Internal review: application in respect of decision on application for TCO or request for revocation of TCO
Section 269SH(1) provides that any affected person within the meaning of s 269SH(13) may apply to the CEO for reconsideration of his or her decision on an application for a TCO or on a request for revocation of a TCO. An “affected person” means:
“(a) in relation to a decision on a TCO application:
(i)the applicant for a TCO; or
(ii)any person who lodged a submission before the last day for submissions in relation to the TCO application; or
(iii)any person who, in the opinion of the CEO, was not reasonably able to lodge a submission in relation to the TCO application within 50 days of the gazettal day; and
(b) in relation to a decision on a request for revocation:
(i)the person requesting the revocation; or
(ii)any other person whose interests are affected by the decision made on the request.”[85]
[85] Customs Act, s 269SH(13)
The affected person making the application for the CEO’s reconsideration must do so within 28 days of gazettal of a decision on the TCO application or on the request for revocation of a TCO order.[86] The CEO must publish notice of the request for reconsideration in the Gazette giving full particulars of the request and of the TCO to which it relates.[87]
[86] Customs Act, s 269SH(1)
[87] Customs Act, s 269SH(3A)
Internal review: decision in respect of application for review of decision on application for TCO
Where the application is made for reconsideration of a decision made on a TCO application:
“… the CEO, having regard to:
(a)the TCO application; and
(b)the submissions, information, documents and materials which the CEO was entitled to take into account in considering the TCO application; and
(c)any new matter produced to the CEO by the applicant for reconsideration which, under subsection (7), the CEO is not prevented from taking into account for that purpose;
must decide, not later than 90 days after the last day for lodgement of the application for reconsideration, whether to affirm the original decision or to substitute any other decision that the CEO might have made.”[88]
Internal review: decision in respect of application for review of decision on request for revocation of TCO
[88] Customs Act, s 269SH(4)
Where the application is made for reconsideration of a decision on a request for revocation of a TCO:
“… the CEO, having regard to:
(a)the request for revocation; and
(b)the information, documents and materials which the CEO was entitled to take into account in considering the request; and
(c)any new matter produced to the CEO by the applicant for reconsideration which, under subsection (7), the CEO is not prevented from taking into account for that purpose;
must decide, not later than 60 days after the last day for lodgement of the application for reconsideration, whether to affirm the original decision or to substitute any other decision that the CEO might have made.”[89]
[89] Customs Act, s 269SH(5)
Should the CEO fail to make a decision on an application for reconsideration, the CEO is taken to have made a decision to affirm the decision and to have done so at the end of 90 or 60 days, as the case may be, after the application was lodged.[90]
Internal review: material to which CEO may have regard in reviewing either decision on application for TCO or request for revocation of TCO
[90] Customs Act, s 269SH(6)
Section 269SH(7) limits the material to which the CEO may have regard in reconsidering a decision made on a TCO application or on a request to revoke a TCO. It provides:
“For the purposes of subsections (4) and (5), the CEO must not take into account any new material that is not produced to him or her by the applicant for reconsideration of an original decision within the period of 28 days after notification of the original decision in the Gazette.”
Application to the Tribunal: decisions in respect of which an application for review may be made
Section 273GA(1) of the Customs Act provides that an application may be made to the Tribunal for review of, among others:
“…
(n)a decision of the CEO under section 269SH on a reconsideration of a decision of the CEO under subsection 269P(1);[[91]]
(o)-(p)…
(q)a decision of the CEO under section 269SH on a reconsideration of a decision of the CEO under subsection 269SC(1);[[92]]
(r)a decision of the CEO under section 269SH on a reconsideration of a decision of the CEO under subsection 269SC(4);[[93]]
(s)…”
[91] Decision by CEO that TCO application meets core criteria: see [41] above.
[92] Decision by CEO whether satisfied, in summary, that person making request a producer in Australia of substitutable goods and would not have made TCO: see [47] above.
[93] Decision by CEO that satisfied of matters in s 269SC(1) but also satisfied that, had request been made for TCO in respect only of goods not produced in Australia by person making request, he or she would have made a narrower TCO. In that case, the CEO revokes TCO and makes narrower TCO: see [47]-[48] above.
Application to the Tribunal: those who may apply to the Tribunal for review of decisions
Section 273GA(6A) goes on to provide that:
“An application may not be made to the Tribunal in respect of a decision under section 269SH on a reconsideration of a decision of the CEO under subsection 269P(1) … or 269SC(1) or (4) unless the person who makes the application to the Tribunal is:
(a)an affected person within the meaning of section 269SH; and
(b)is adversely affected by the decision on reconsideration.”
Section 269SHA(1) would appear to contradict s 273GA(6A) in so far as it concerns an application to the Tribunal in respect of a decision made under
s 269SH on a reconsideration of a decision made under s 269P(1). Section 269SHA(1) provides:
“For the purpose of an application to the Administrative Appeals Tribunal under section 273GA for review of a decision under subsection 269SH(1) or (4) (a reconsideration decision), application may be made by any person who is an affected person in relation to that decision within the meaning of subsection 269SH(13).”
The first difficulty that I have with this provision is its reference to
s 269SH(1). That subsection makes no reference to the CEO’s or anyone else’s being able to make a decision. All that it provides is that certain persons may apply to the CEO for reconsideration of a decision on either a TCO application or a request for revocation of a TCO. The CEO’s authority to make a decision comes in s 269SH(4).
The second difficulty that I have with s 269SHA(1) is that it provides that an application for review in respect of a decision made under s 269SH(4) may be made to the Tribunal by any person who is an affected person within the meaning of
s 269SH(13). Section s 269SH(4) refers to the decision made by the CEO when reviewing a decision made on an application for a standard TCO. A decision made on a TCO application must have been made under s 269P(1). Those who may apply to the Tribunal in respect of a decision under s 269SH on a reconsideration of a decision under s 269P(1) is already the subject of s 273GA(6A). The provisions of
s 273GA(6A) and of s 269SHA(1) are not compatible. Those of s 273GA(6A) are much narrower in that the person must not meet the criteria required by s 269SH, and so those required by s 269SHA(1), but must also be adversely affected by the decision under review.
I do not have the same difficulties in relation to an application to the Tribunal for review of a decision of the CEO reconsidering a decision made on a request for revocation of a TCO. There are two separate decisions made under
ss 269SC(1) and (4). Reconsideration of them is the subject of s 269SH(5). Those who may apply to the Tribunal for review of the decision made on a reconsideration of them is the subject of s 273GA(6A) alone. No similar provision appears in
s 269SHA(1) or elsewhere in s 269SHA.
Application to the Tribunal: those who may apply to the Tribunal to be made a party to the proceedings
Section 269SHA(3) applies to persons who have not applied to the
Tribunal for review of a reconsideration decision. It provides:
“Any person who had not applied under section 273GA for review of a reconsideration decision but whose interests are affected by the decision (whether or not that person is an affected person within the meaning of subsection 269SH(13)) may apply under subsection 30(1A) of the Administrative Appeals Tribunal Act 1975 to be made a party to the proceedings within 60 days of the publication under subsection (2) or within such further period as the Tribunal allows.”
Section 269SHA(4) limits the power that the Tribunal has to extend the period of 60 days.
Section 269SHA(1) gave the term “reconsideration decision” the meaning of “a decision under subsection 269SH(1) or (4)”. As I have said, it seems to me that no decision can be made under s 269SH(1). If that is correct, the provisions of s 269SHA(3) can apply only to an application for review of a reconsideration of a decision made in respect of an application for a TCO. An application for reconsideration of a decision on a request for revocation of a TCO is the subject of s 269SH(5).
Application to the Tribunal: documents on which a party to the proceedings for review intends to rely
Section 269SHA(5) again refers to proceedings before the Tribunal for review of a “reconsideration decision”. For the reasons I have given, it too must be limited to applications for review of a decision by the CEO reconsidering a decision under s 269SH(4) and so a decision on an application for review of a TCO.[94] Section 269SHA(5) provides:
“Any document on which a party to proceedings for review of a reconsideration decision before the Administrative Appeals Tribunal intends to rely must, subject to the provisions of the Administrative Appeals Tribunal Act 1975:
(a)be filed with the Tribunal; and
(b)be served on the other parties to the proceeding;
not less than 28 days before the date set for hearing, unless the Tribunal makes an order permitting the document to be filed and served within a lesser period or to be introduced at the hearing without being so filed or served.”
[94] Without analysing s 269SHA as I have in these reasons, I incorrectly assumed in Re General Merchandise and Apparel Group Pty Ltd and Chief Executive Officer of Customs [2007] AATA 1138 at [23] that the provisions of s 269SHA applies to all applications to the Tribunal under s 273GA.
The Tribunal’s discretion to make an order permitting the document to be “filed” may only be exercised if it has had regard to whether there was any reasonable cause for the document’s not being made available at least 28 days before the date of the hearing.
THE ISSUES
In reviewing each of the decisions either to affirm the decisions to revoke TCOs or to revoke TCOs and reissue them, I need to consider several issues under three main headings:
A.on the day a request for revocation of the relevant TCO was lodged:
1.was Bruck or AWM a “producer in Australia” of goods that are “substitutable goods” in relation to the goods that are the subject of the relevant TCO; and
B.if the answer to A.1 is “yes”:
1.had the TCO not been in force on that day but had an application for a TCO been lodged on that day, would the CEO not have made the TCO?
i.e.on that day, were “substitutable goods” “produced in Australia in the ordinary course of business” within the meaning of s 269SE(1) of the Act?
C.if the answer to B.1 is “yes” (because the CEO would not have made the TCO because s 269SE(1) was satisfied):
1.would the CEO have made a narrower TCO had an application been for that narrower TCO been lodged?
THE DOCUMENTS LODGED WITH THE CEO WHEN MADE DECISIONS
I will take TCO 0511452 as an example of the documents considered by the CEO when deciding the application made by Bruck to revoke nine TCOs. The letter from Bruck dated 21 February 2006 seeking revocation attached details of nine TCOs, the Tariff Code involved, a description of the goods covered and those of Bruck’s manufactured goods affected by the TCOs. Also attached were individual TCO revocation requests and product samples being cuttings and ready made product. The letter then went on to say:
“Bruck Textiles Pty Limited is Australia’s largest woven textile manufacturer which weaves, dyes, finishes, coats and contract makes soft furnishing as well as apparel fabrics and products. The above mentioned Tariff Concession Orders, if not revoked would have a significant detrimental effect on our business and in particular our manufacturing undertaken in Wangaratta Victoria. Bruck currently employs 400 plus employees of which 350 are directly involved in the manufacture, warehousing and distribution of products under the tariff codes in question. Should the tariff concession orders not be revoked a large portion of these jobs would be under threat as would the future viability of our manufacturing operations.
Anything other than immediate revocation of the tariff concession orders (or rewording of some of the TCO’s as suggested in the individual revocation requests) will as stated above result in significant business loss and subsequently job losses at Bruck, let alone the flow on effects to the Wangaratta and surrounding business community which rely upon Bruck for ongoing work whether it be engineering services and supplies, chemicals and raw materials right down to security and cleaning service.
We have also provided a copy of these revocations to the Textiles, Footwear Industry Association (TFIA) whom we understand will also be lodging objections on behalf of the textiles industry.
…”[95]
[95] T documents V2006/761 at T4, 40-41
The request for revocation of TCO 0511452 described the locally produced substitutable goods that were the subject of the request:
“Bruck manufactures two products that represent substitutable goods for goods that are covered under TCO 0511452. These products are:
1.BROADCLOTH – Bruck imports the raw base cloth and then dyes & finishes the fabric ready for use and sale as bed sheeting. The fabric is also suitable and is used for pillowcases. The constitution of the fabric is 50% cotton and 50% polyester.
2.SANTINA – Base cloth is purchased from another Australian company, B and is then made into bed covers/quilts. The goods are then sold to Australian retailers through our Wilsons wholesale division. The construction of the fabric is 45% polypropelene, 35% polyester, 20% cotton.”[96]
[96] T documents V2006/761 at T4, 44
The uses to which the goods claimed to be substitutable goods were put or were capable of being put were:
“1. BROADCLOTH – Goods are directly substitutable for imported bed sheets and pillow cases.
2.SANTINA – Goods are directly substitutable for imported quilt and doona covers.”[97]
[97] T documents V2006/761 at T4, 44
Questions whether the goods are wholly or partly manufactured in Australia and whether the total value of Australian labour, Australian materials and factory overhead expenses incurred in Australia represent at least 25% of the factory or works costs were answered in the affirmative. Instead of inserting the costs per unit for Australian labour, Australian materials, Australian factory overhead expenses and imported content and the percentage of the total costs each represented, reference was made to an Attachment. The costs referred to in the Attachment related to the period July 2005 to February 2006.[98] The first date on which Bruck was prepared to accept an order for goods still in production was 1 January 1998.[99]
[98] T documents V2006/761 at T4, 45
[99] T documents V2006/761 at T4, 46
The Attachment comprises pages 48 to 56 of the T documents V200600761. Their contents are subject to a confidentiality order but may be described as entries from Bruck’s computer or that of a related company showing the cost of fabric purchased, the manufacturing cost by an unrelated manufacturer and details of the finished item including the type of fabric, the type of item, its dimensions and its manufacturer. An invoice and packing list from another supplier of fabric was also submitted.[100]
[100] T documents V2006/761 at T8, 75-76
On 16 March 2006, Bruck sent invoices to the ACS by facsimile. Those invoices are also subject to the confidentiality order. Each set out the number of items supplied by a local manufacturer, the unit price and a description of each type of item. A coversheet summarised the products manufactured by each local manufacturer and set out the unit cost of each.[101] Similar information relating to another local manufacturer was provided on 5 April 2006.[102]
[101] T documents V2006/761 at T6-T7, 62-71
[102] T documents V2006/761 at T4, 72-74
The Executive Director of the Textile & Fashion Industries of Australia Limited wrote to the Australian Customs Service (ACS) on 28 February 2006 expressing its support for Bruck’s applications for revocation of the nine TCOs. The letter read in part:
“… Based on information provided by Bruck it clearly produces directly substitutable goods for the products covered under these TCO’s and based on further research undertaken by the Council there would seem to exist many small manufacturers of these products in Australia who could also be harmed by the TCO.
At the very least, if the Australian Customs Service (ACS) decides not to agree to the full revocation of the TFIA would argue that the reference to curtains (whether intended to be bed curtains or not) must be removed from the TCO’s 0511359; 0511358; and 0511360 to avoid any confusion. By removing this reference the TCO will, based on our understanding of the initial TCO application, accurately reflect its original intent. As such it will provide a benefit to the company importing the bed linen products covered whilst not harming the domestic TCF industry.”[103]
[103] T documents V2006/761 at T5-T7, 59-71
In response, the ACS was advised:
“The greige cost should have been used for the valance. This has also been updated in the attached cost figures mentioned in question 5.”[308]
[307] T documents V2006/1106-1112 at 50
[308] T documents V2006/1106-1112 at 46
The response to question 5 was to the effect that updated costs figures had been attached. The revised costs excluded duty and corrected the costs given for a single sheet. Among the attached cost figures was a cost sheet for a single valance.[309] It was the same as the first cost sheet in so far as Australian labour, materials and overheads continued to exceed 25% of the whole cost[310] but the figures were different. The figures shown in the second document for Australian labour, materials and factory overheads exceeded those in the first document by 6%, 3% and 7% respectively. They continued to show costs for dyes and chemicals and for dyeing labour and overheads. No explanation is given as to the way in which the cost of greige is said to be the cost for a valance rather than the cost of dyed fabric. Furthermore, figures are given for the cost of hemming overheads in relation to valances but there is no basis on which I can assess the way in which that figure is calculated.
[309] T documents V2006/1106-1112 at 56
[310] T documents V2006/1106-1112 at 56
Mr Komora submitted in relation to various aspects of the evidence and material to the effect that the material that satisfied the delegate should satisfy the Tribunal. It may be that the same material does lead to that result in particular cases. In cases such as this in which the CEO does not have the benefit of a third party analysing the material on which he must make a decision, it is understandable that he may accept material that the Tribunal may not. Unlike the CEO, the Tribunal generally has the benefit of all of the parties being aware of the material and assisting it by questioning it and analysing it. Questions and analysis may open lines of enquiry not immediately obvious on the material. Material that appears probative on its face may not be so after question and analysis.
If left unquestioned, the costings supplied by AWM might have seemed enough to establish that valances met the local content test. But they have been questioned and I think that the questions arise from the material itself. Section 269D(1)(b) requires that there be a finding regarding the costs of materials and the percentage represented by the value of Australian labour, materials and factory overhead expenses incurred in relation to the goods.
On the material that I have and given the questions that I have raised,
I am unable to make findings regarding the cost of Australian labour and materials.
In the absence of evidence relating to matters such as those, I am not satisfied that the valances manufactured by AWM satisfy the local content test. Therefore, I am not satisfied that they are goods produced wholly or partly in Australia.
A.3 Conclusion
In view of my findings under Heading A.1 and A.2, I find that the valances manufactured by AWM do not come within the description of “substitutable goods” as defined in s 269B(1).
B.Do AWM’s sheets and pillowcases meet the description “substitutable goods” - TCOs 0607137, 0607143 and 0607144?
In the following two sub-sections, I set out my reasons why I am not satisfied that AWM’s sheets and pillowcases are produced in Australia but am satisfied that they are put, or capable of being put, to a use that corresponds with a use (including a design use) to which the goods that are the subject of the TCO can be put.
B.1Are the sheets and pillowcases put, or capable of being put, to a use that corresponds with a use (including a design use) to which the goods the subject of the application or of the TCO can be put?
I have already made findings regarding the use of sheets and pillowcases and they are equally applicable to the sheets and pillowcases that are the subject of TCOs 0607137, 0607143 and 0607144 and that are put forward by AWM as substitutable goods. In view of that, I am satisfied that AWM’s sheets and pillowcases are put, or capable of being put, to a use that corresponds with a use (including a design use) to which the goods that are the subject of the TCOs can be put.
B.2Are the sheets and pillowcases manufactured in Australia?
On the basis of the statement in its request, I find that AWM makes sheets and pillowcases in Australia from imported fabric. Even though the fabric is imported, all of the processes to change that fabric from sheeting or lengths of cloth to the finished sheets and pillowcases occurred in Australia. The fact that the fabric was not made in Australia does not detract from the fact that the item manufactured from that fabric was manufactured wholly in Australia. Sheets and pillow cases are items quite different from the fabric from which they are made. Lengths of fabric may cover and protect a bed and a pillow as do sheets and pillow cases but, unhemmed, they would not be able to be washed and reused time after time and, in the case of pillow cases, they would not adequately protect the pillow. That means that the criterion specified in s 269D(1)(a) of the Customs Act is satisfied in that they are wholly produced in Australia.
The second criterion is the local content test specified in s 269D(1)(b). Included in the T documents is a cost sheet for various sizes of sheets and pillowcases. Unlike valances, the material does not contain a detailed analysis of the costs of dyeing and of shrinkage and waste. It does not contain an example showing costs claimed as Australian material, Australian overheads and Australian labour or their percentages of the total cost of production.
The first document shows additional detail such as the metres of fabric used and the way in which the dyeing labour and chemicals are calculated and assigned to the single valance. The cost per metre of fabric and the percentage assigned to waste match the figures used in a document showing the costs of all materials used in making valances. The costs of each item from the total cost of the dyed material used through such items as the label, stiffener, bag, inserts, carton, tape, bar code, thread and waste are given.[311] A figure is shown as the cost of the materials used in making a single bed valance. Those materials are not specified as Australian or as imported in that document.
[311] T documents V2006/1106-1112 at 42
Another sheet showed the minutes taken to hem individual items of bed linen including a single bed valance. The cost of dyes and chemicals used to dye various materials in various shades is found in another. The dyeing treatment is nominated and costs assigned for pre-treatment, dyeing costs, finishing cost and the total cost of dyes and chemicals per metre. Costings are then given for commercial bed linen. The fabric cost of imported greige which AWM has dyed is given according to the percentage of polyester and cotton in the fabric.
I have already set out my difficulties with the figures given for the cost of working out the dyehouse overhead costs and dyehouse labour costs. I did so in relation to valances but the difficulties remain the same in relation to sheets and pillow cases. That is the same for the way in which the costs of hemming overheads and factory overheads and the way in which labour have been worked out. I have no basis for knowing how they have been calculated. I have nothing showing me that accessories, for example, are Australian material just as there is none to show me that dyes and chemicals are also Australian material. AWM’s claims are not enough.
In the absence of evidence relating to matters such as those, I am not satisfied that the valances manufactured by AWM satisfy the local content test. Therefore, I am not satisfied that they are goods produced wholly or partly in Australia.
B.3 Conclusion
In view of my findings under Heading B.1 and B.2, I find that the sheets and pillowcases manufactured by AWM do not come within the description of “substitutable goods” as defined in s 269B(1).
C.Do AWM’s sheets and pillowcases meet the description “substitutable goods” - TCOs 0511357?
TCO 0511357 applies to bed linen being sheets, pillowcases, quilt covers and doona or duvet covers being knitted or crocheted goods. In the following two sub-sections, I set out my reasons why I am not satisfied that AWM’s sheets and pillow cases are produced in Australia but am satisfied that they are put, or capable of being put, to a use that corresponds with a use (including a design use) to which the goods that are the subject of the TCO can be put.
C.1Are the sheets or pillow cases put, or capable of being put, to a use that corresponds with a use (including a design use) to which the goods the subject of the application or of the TCO can be put?
Mr Niall submitted that the sheets or pillowcases manufactured by AWM are used as institutional bed linen and they cannot be regarded as being put, or capable of being put, to a use that corresponds with a use to which the goods in TCO 0511357 can be put. They have the durability to sustain high temperature washing typical of institutional use. On the basis of the evidence given by Mr Samuel and
Ms Collato, I find that bed linen used for institutional use is heavier than that used for domestic use and has a lower thread count per square centimetre or per square ten centimetres. Some of the documents in the confidential material contained in the
T documents are clearly referring to commercial bed linen. AWM’s submission to the Productivity Commission referred to its manufacturing both commercial and domestic bed linen. The advertisements attached to the AWMSFC appear to be referring to domestic bed linen.
Regardless of whether AWM’s bed linen is for institutional or domestic use, I consider that it can be put, or is capable of being put, to a use that corresponds with a use to which the goods in TCO 0511357 can be put. The use to which knitted or crocheted bed linen can be put is to cover and protect a bed or items on a bed as I have previously found. Certainly, it will only be able to be used in that way in a domestic setting but bed linen normally used in an institutional setting can be used in precisely the same way. It may be that it is not as dainty as the knitted or crocheted version but it will do the same job in a domestic setting as it does in an institutional setting. Its features that enable it to be washed at high temperatures may never be tested in many domestic situations but it has the same use.
My making that finding does not necessarily mean that the reverse is true. The task would be to work out the use to which the goods in TCO 0511357 can be put. Had the TCO referred to bed linen being sheets, pillow cases, quilt covers and doona or duvet covers of a minimum thread count of, say, 180 threads per 10 square centimetre and a maximum weight of 120 grams per square metre, I would have first worked out the use to which bed linen of that description can be put. The use would be for covering a bed or items on a bed in an institution given that their weight and thread count would render them more durable than bed linen used domestically. That is a finding that I can make on the evidence of Mr Samuel and Ms Collato. Presumably, that is not a use to which knitted or crocheted bed linen would be put or be capable of being put. I say “presumably” because I do not have any evidence on which I could make a finding that knitted or crocheted bed linen would not be as durable or would not meet the minimum thread count and maximum weight of bed linen used for institutional use were it relevant to do so. A contention was made in the GMSFC to that effect[312] but a contention is simply that – “a point that one asserts or maintains in an argument”.[313] It is not evidence and it is not material that could be regarded as having any probative value at all. As it is, it is not relevant to make that finding.
[312] See [92] above
[313] Chambers 21st Century Dictionary, 1999, reprinted 2004, Chambers
C.2Are the sheets or pillow cases manufactured in Australia?
On the basis of the statement in its application, I find that AWM makes sheets or pillow cases in Australia from imported fabric. Even though the fabric is imported, all of the processes to change that fabric from sheeting or lengths of cloth to the finished valances occurred in Australia. The fact that the fabric was not made in Australia does not detract from the fact that the item manufactured from that fabric was manufactured wholly in Australia. Valances are a decorative item quite different from the fabric from which they are made. That means that the criterion specified in
s 269D(1)(a) of the Customs Act is satisfied in that they are wholly produced in Australia.
The second criterion is the local content test specified in s 269D(1)(b). Section 269D(1)(b) requires that there be a finding regarding the costs of materials and the percentage represented by the value of Australian labour, materials and factory overhead expenses incurred in relation to the goods. AWM has supplied the figures but, apart from showing the calculation of the dyehouse labour and dyehouse overhead costs, has not supplied the basis on which those figures are calculated. Figures are given, for example, for the cost of hemming overheads in relation to valances but there is no basis on which I can assess the way in which that figure is calculated. Dyes, chemicals and accessories are claimed to be Australian materials but there is no basis on which I can assess that claim. There is, for example, no evidence of the source of those dyes, chemicals and accessories and none of their cost.
In the absence of evidence relating to matters such as those, I am not satisfied that the valances manufactured by AWM satisfy the local content test. Therefore, I am not satisfied that they are goods produced wholly or partly in Australia.
C.3 Conclusion
In view of my findings under Headings C.1 and C.2, I find that the sheets and pillowcases manufactured by AWM do not come within the description of “substitutable goods” as defined in s 269B(1).
If the valances, sheets and pillowcases were substitutable goods, was AWM a producer in Australia – TCOs 0511357, 0511358-60, 0607137, 0607143 and 0607144?
If, contrary to my findings, the goods are properly described as substitutable goods, the next question would be whether AWM is a producer in Australia of those goods. I have already set out what I understand to be the meaning of the word “producer”.
On the evidence, I am satisfied that AWM is a producer of valances, sheets and pillowcases. It manufactures these goods wholly in Australia even though it does so using imported fabric. It does so because, for the reasons I have already given, the valances, sheets and pillowcases are something different from the raw material, being the imported fabric, from which they are made.
Would the CEO not have made the TCOs had they not been in force and had an application been made for them - TCOs 0511357, 0511358-60, 0607137, 0607143 and 0607144?
Despite my conclusion that AWM is a manufacturer of the goods, my conclusion that the goods it manufactures are not substitutable goods would mean that its application for revocation must be refused. The criterion specified in
s 269SC(1)(a) has not been satisfied.
Lest that decision be incorrect, I have also looked at the second criterion that must be filled before the CEO may revoke the TCOs. That criterion, found in s 26SC(1)(b), is whether, if the TCOs had not been in force on 16 June 2006 but an application had been made on that day for them, would the CEO have not made the TCO.
In order to answer that question, it is necessary to ask the question whether an application for the TCOs would have met the core criteria on 16 June 2006. That follows from s 269P(1), which requires the CEO to consider that question once an application has been properly made and all submissions have been lodged and inquiries made in accordance with the Customs Act. The core criteria are focused on substitutable goods or, rather, the lack of them. It asks not whether the applicant for revocation produced them but whether any were produced in Australia in the ordinary course of business.
The focus of the enquiry is not solely upon production by the person applying for revocation of the TCOs but production by any person in Australia in the ordinary course of business. The time in respect of which the enquiry is made is not the time at which I am reviewing the decision. It is the time at which the application meets the core criteria. An application for a TCO is taken to meet the core criteria if, on the day it was lodged, no substitutable goods were produced in the ordinary course of business. Earlier time periods are relevant for the reference to goods’ being produced in the ordinary course of business requires reference to s 269E. Section 269E(1)(a), (b) and (c) all refer goods’ having been produced in periods prior to the application’s lodgement. The second aspect of s 269E(1) requires that “a producer in Australia is prepared to accept an order to supply them” (emphasis added). The use of the present tense must be taken as a reference to the day on which the application was lodged for that is the day on which the CEO is required to decide whether the application meets the core criteria.
In view of the fact that I have already found that the valances, sheets and pillowcases are not substitutable goods and reference is not made to any others,
I find that the core criteria were not met. Lest that be an incorrect finding, I have considered whether they were produced in the ordinary course of business on the basis that they were substitutable goods.
A.If the goods are substitutable goods, have they been produced in Australia within the prescribed time periods?
In view of the findings I have already made, I am not satisfied on the evidence that I have that there were any substitutable goods for any of the goods the subject of the TCOs regardless of when they were produced. Those produced by AMW are the only goods of which I have any evidence and, for the reasons I have given, I am not satisfied that they were “produced in Australia” as that expression is interpreted by s 269D. Consequently, I am not satisfied that they have been produced in Australia in either the two year period or, if produced on an intermittent basis, the five year period before 16 June 2006 or at any earlier time, and held in stock, in Australia. That means that the goods cannot be considered to have been produced in Australia in the ordinary course of business as that term is interpreted by s 269E(1).
If, contrary to my findings, the valances, sheets and pillowcases were goods produced in Australia, I would be satisfied on the basis of the orders and invoices, to which I refer in the following section, that AWM produced the goods in the two years before the application was lodged. On the basis of the 2005/2006 Budgets prepared by AWM, I would be satisfied that it was produced between July 2005 and June 2006 and so at a time in the two year period before 26 February 2006.
B.Was a producer in Australia prepared to accept an order to supply the goods?
The answers given to the ACS’s questions contained a statement that AWM did not retain orders for more than 12 months. Therefore, it was not able to produce invoices to support its claim. It did, however, have copies of ten order forms and ten tax invoices issued when the orders were filled. The numbers on each order can be cross matched with a number on the tax invoices. The first order was dated
31 October 2005 and the last 23 May 2006. A later one, dated 21 June 2006, was cancelled on 27 June 2006 but a matching tax invoice suggests that it was filled on
29 June 2006. The goods ordered and supplied were for a sheets, pillowcases, covers and valances. On the basis of this material, I am satisfied that AWM was prepared to accept an order to supply the goods.
C.Would the CEO not have made the TCO?
Therefore, had the goods been substitutable goods, I would have been satisfied that they were produced in Australia in the ordinary course of business within the meaning of s 269E. As I have decided that they are not substitutable goods, I am satisfied that a TCO application lodged on 16 June 2006 would not have met the core criteria as no substitutable goods were produced in Australia on that day. That would have led to the conclusion that a TCO would not have been made and, in turn, to the conclusion that the criterion in s 269SC(1)(b) would have been met.
Conclusion regarding AWM’s application for revocation - TCOs 0511357, 0511358-60, 0607137, 0607143 and 0607144?
In view of my findings, I am not satisfied that the criterion specified in s 269SC(1)(a) that AWM be a producer in Australia of goods that are substitutable goods in relation to the goods that are the subject of the TCOs has been met. As both criterion specified in s 269SC(1) must be met, s 269SC(5) prescribes the decision
I must reach. If not satisfied of the matters in s 269SC(1), I am required to refuse the request for revocation. As I am reviewing the CEO’s decision, that means that I must set aside the reconsideration decision to affirm the earlier decision to revoke TCOs 0511357 and to revoke and reissue TCOs 0511454, 0511455 and 0511361. That means that the TCOs are reinstated. As s 269SC(1) has not been satisfied, there is no basis on which I can consider whether a narrower TCO should have been made.
Decision
For the reasons I have given:
1. in respect of the respondent’s decisions:
(1) dated 28 July 2006:
(a)I note that the effect of my decision is to reinstate TCOs 0511452-5, 0511361 and 0511363; and
(b)I set aside the respondent’s decisions:
(i)to revoke TCOs 0511452, 0511453 and 0511363; and
(ii)to revoke TCOs 0511454, 0511455 and 0511361 and to reissue them as TCOs 0607137, 0607143 and 0607144 respectively; and
(2)dated 2 November 2006:
(a)I note that:
(i)the effect of my decision under (1) is that TCOs 0607137, 0607143 and 0607144 have been set aside and so do not remain to be reviewed in the context of the review of this decision; and
(ii)the effect of my decision is to reinstate TCOs 0511357-60; and
(b)I set aside the respondent’s decisions:
(i)to revoke TCO 051137; and
(ii)to revoke TCOs 0511358, 0511369 and 0511360 and to reissue them as TCOs 0613070, 0613067 and 0613064 respectively.
I certify that the preceding three hundred and seventy three paragraphs are a true copy of the reasons for the decision herein of
Deputy President S A Forgie,
Signed: .......................................................................
Kate Conners Associate
Date of Hearing 11 & 12 May 2009
Date of Decision 23 December 2009
Solicitor for the Applicant Andrew Hudson
Hunt & Hunt
Counsel for the Applicant Richard Niall
Solicitor for the Party Joined Louis Gross
Gross & Becroft Lawyers
Solicitor for the Respondent George Komora
AGS
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