Re Vestas Australian Wind Technology Pty Limited and Chief Executive Officer of Customs
[2013] AATA 721
•8 October 2013
CATCHWORDS – CUSTOMS – application for tariff concession order (TCO) – whether valid – whether at time of application material showed reasonable grounds for asserting that application meets core criteria – whether contained information required by TCO application form – whether included particulars of inquiries to assist in establishing there were reasonable grounds for believing no producers in Australia of substitutable goods – decision set aside
WORDS AND PHRASES – “have regard to”, “reasonable grounds for asserting”, “reasonable grounds for believing”, “aware” and “not aware”
DECISION AND REASONS FOR DECISION [2013] AATA 721
ADMINISTRATIVE APPEALS TRIBUNAL )
) 2012/4287
GENERAL ADMINISTRATIVE DIVISION )ReVESTAS - AUSTRALIAN WIND TECHNOLOGY PTY LIMITED
Applicant
AndCHIEF EXECUTIVE OFFICER OF CUSTOMS
Respondent
DECISION
Tribunal: Deputy President S A Forgie
Date: 8 October 2013
Place: MelbourneDecision:The Tribunal decides to:
(1)set aside the decision of the respondent dated 28 August 2012; and
(2)substitute for that decision a decision that the application lodged with Customs by the applicant on 14 August 2012 is accepted as a valid application under s 269H(1) of the Customs Act 1901.
_(sgd) S A Forgie_
Deputy President
Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336
Civil Aviation Safety Authority v Boatman [2006] FCA 460
Commissioner of Police for New South Wales v Industrial Relations Commission of New South Wales & Raymond Sewell [2009] NSWCA 198
Comptroller-General of Customs v Members of Administrative Appeals Tribunal [1994] FCA 1148; (1994) 32 ALD 463; 123 ALR 140
Cummings v Lewis (1993) 41 FCR 559; 113 ALR 285
Drake v Minister for Immigration and Ethnic Affairs (1979) 2 ALD 60; 24 ALR 577; 46 FLR 409
Dunn v Australian Crime Commission [2008] FCA 424; (2008) 101 ALD 110; 69 ATR 280
Fernandez v Government of Singapore (1971) 1 WLR 987
Fletcher v Ikeston Corporation (1931) 48 TLR 44
Freeman v Department of Social Security (1988) 19 FCR 342; 87 ALR 506; 15 ALD 671
George v Rockett (1990) 170 CLR 104
McGrath v Australian Naturalcare Products Pty Ltd [2008] FCAFC 2; (2008) 165 FCR 230
Metropolitan Gas Co. v Federal Commissioner of Taxation (1932) 47 CLR 621
Minister for Immigration and Ethnic Affairs v Wu Shan Liang [1996] HCA 6; (1996) 158 CLR 259; 136 ALR 481; 41 ALD 1
Parajuli v Minister for Immigration & Multicultural & Indigenous Affairs [2002] FCA 563
Re Kimberley-Clark Australia Pty Ltd and CEO of Customs [1999] AATA 175; (1999) 58 ALD 251
Re Oasis Flight Training Pty Ltd and Civil Aviation Safety Authority [2013] AATA 600
Re Target and Chief Executive Officer of Customs [2013] AATA 176; (2013) 59 AAR 514
Reg. v Hunt; Ex parte Sean Investments Pty Ltd (1979) 180 CLR 322
Repatriation Commission v Smith (1987) 74 ALR 537; 15 FCR 327; 12 ALD 798; 7 AAR 17
Shi v Migration Agents’ Regulation Authority [2008] HCA 31; (2008) 235 CLR 286; 248 ALR 390; 82 ALJR 1147; 48 AAR 345; 103 ALD 467
Shrestha v Minister for Immigration and Multicultural Affairs [2001] FCA 1578
Singh v Minister for Immigration and Multicultural Affairs [2001] FCA 389; (2001) 109 FCR 152; 194 ALR 599
Woollahra Municipal Council v Jeffries [1981] 1 NSWLR 377Acts Interpretation Act 1901, s 46A
Administrative Appeals Tribunal Act 1975, ss 25, 33, 37, 43
Administrative Decisions (Judicial Review) Act 1977
Civil Aviation Act 1988, s 30DB, 30DE
Criminal Code (Qld), s 679
Customs Act 1901, ss 4, 4A, 132, 269B, 269C, 269D, 269E, 269F, 269FA, 269H, 269HA, 269K, 269M, 269P, 269Q, 269SA, 269SB, 269SC, 269SD, 269SF, 269SG, 269SJ, 271, 273EB
Customs Tariff Act 1995, ss 16, 17, 18, 19, 20, 22, Schs 3, 4, 5, 6, 7
Fair Trading Act 1987 (NSW), s 41
Legislative Instruments Act 2003, ss 6, 7 and item 24, 9
Migration Act 1958, ss 4, 22AA, 54
Mutual Assistance in Criminal Matters Act 1987, s 14
National Health Act 1953, s 40AA
Social Security Act 1947
Trade Practices Act 1974, s 51A
Veterans’ Entitlements Act 1986, s 120Legislative Instruments Regulations 2004, r 7 and item 5 of Part 1 of Sch 1
Explanatory Memorandum to the Customs Amendment Bill 1996
Chambers 21st Century Dictionary, 1999, reprinted 2004, Chambers
Macquarie Dictionary, revised 3rd edition, 2001, The Macquarie Library Pty Ltd
Shorter Oxford English Dictionary, 5th edition, 2002, Oxford University Press, OxfordREASONS FOR DECISION
On behalf of its client, Vestas - Australian Wind Technology Pty Limited (Vestas), PricewaterhouseCoopers (PwC) lodged an application under s 269F of the Customs Act 1901 (Customs Act) for a tariff concession order (TCO) in respect of a class of goods that it described (TCO application). Broadly speaking, those goods may be described as wind turbine gearboxes. PwC lodged the TCO application on 14 August 2012.[1] On 28 August 2012, a delegate of the Chief Executive Officer of Customs (CEO) decided to reject the TCO application. He wrote to PwC explaining:
“Your[[2]] application has been rejected because insufficient evidence had been received in the application that showed on the day on which the TCO was lodged that there is no producer in Australia of substitutable goods as required by s 269F(3)(d) of the Customs Act. Hofmann Engineering Pty Ltd state that their Australian made gearboxes are substitutable for the gearboxes described in the TCO application.”[3]
[1] Documents lodged under s 37(1) of the Administrative Appeals Tribunal Act 1975 (AAT Act) (T documents): T4 at 57
[2] I note that, on the TCO application, Vestas is named as both the applicant and the importer with PwC as its agent. In its letters to various manufacturers and suppliers, PwC described itself as seeking a TCO. In view of that, the CEO’s reference to the application as PwC’s application is understandable.
[3] T documents; T8 at 67
2. As Mr Davies QC outlined in his outline of Submissions, Vestas’ application for review of the delegate’s decision raises three issues under the Customs Act:
(1)whether the TCO application complied with the requirements of s 269F of the Customs Act and, in particular, whether it contains:
“particulars of all inquiries made by the applicant (including inquiries made of prescribed organisations) to assist in establishing that there were reasonable grounds for believing that, on the day on which the application was lodged, there were no producers in Australia of substitutable goods.”: s 269F(3)(d);
(2)whether, it has established, to the satisfaction of the CEO (and so of the Tribunal) that there are reasonable grounds for asserting that the application meets the core criteria and has done so on the basis of all information that Vestas has, or can reasonably be expected to have and of all inquiries it has made or can reasonably be expected to make; s 269FA; and
(3)whether the CEO (and so the Tribunal) is aware of any producer in Australia of substitutable goods: s 269H(d).
3. I have decided to set aside the decision of the CEO and substitute a decision that the TCO application lodged by Vestas is accepted as a valid application under s 269H(1) of the Customs Act.
BACKGROUND
The application
4. In this section of my reasons, I will set out the information that Vestas provided in response to those parts of the application that were under scrutiny in the hearing. The application bears the identification mark of “B443” and the date of March 2010.
A. Description of the goods
5. I will begin with the description of the goods put forward by Vestas as the wording that should appear in the TCO if it were granted. That description is:
“GEARBOXES, CAST STEEL, WIND TURBINE NACELLE, where the wind turbines have a capacity NOT less than 3MW, having ALL of the following:
a)helical gears
b)integrated planet bearing races
c)case carbonised external gears
d)nitrided, or case carbonised ring gears
e)conforming to ALL of the following requirements/standards:
(i)ANSI/AGMA/AWEA 6006-A03
(ii)ISO-6336-1
(iii)ISO/IEC 81400-4
(iv)GL 2010: Guidelines for the Certification of Wind Turbines
f)integrated main bearing”[4]
[4] T documents; T3 at 20
6. The Tariff Classification to which the goods would be classified was identified as 8483 40 90 with a General Rate of Duty of 5%. The uses to which the goods can be put were described as:
“To convert the high torque power of a largescale wind turbine rotor to low torque power for use by the generator.”[5]
[5] T documents; T3 at 13
B. Illustrative material
7. Section 2 of the application required Vestas to:
“Attach technical and illustrative descriptive material (IDM) as well as any extracts from the relevant industry standard (if referred to in the description of the goods) and/or a sample to enable a full and accurate identification of the goods the subject of the application. This application will be rejected if insufficient or inadequate IDM is provided.
Please note that simply supplying a reference to a website is not acceptable.”[6]
[6] T documents; T3 at 13
8. In response, Vestas attached an overview of the way in which the nacelle of a wind turbine houses the majority of a wind turbine’s components such as the gearbox, generator and mainframe.[7] Before going on to attach technical information, including drawings, expanding upon its overview,[8] Vestas gave an overview of the way in which a wind turbine gearbox functions:
[7] T documents; T3 at 21-25
[8] T documents; T3 at 22-25
“… Inside the nacelle of a typical wind turbine, the rotor drives a large shaft into a gearbox, which steps up the revolutions per minute to a speed suitable for the electrical generator.
A wind turbine must be robust enough to handle the frequent changes in torque caused by changes in the wind speed. The power from the rotation of the wind turbine rotor is transferred to the generator through the power train, i.e. through the main shaft, the gearbox and the high speed shaft.
A gearbox converts slowly rotating, high torque power which comes from the wind turbine rotor to high speed, low torque power, to be used by the generator.
The gearbox in a wind turbine does not ‘change gears’. It normally has a single gear ratio between the rotation of the rotor and the generator.
The specific gearboxes the subject of this TCO application are highly specialised pieces of machinery which are designed to handle significant power loads in large-scale wind turbine generators.”[9]
C.Information regarding Australian manufacturers of substitutable goods or potentially substitutable goods
[9] T documents; T3 at 21
9. Question 5 of the TCO application form asked Vestas, as both the applicant and the importer, if it was aware of any Australian manufacturers or producers of goods that either are substitutable goods or potentially so. The box marked “Yes” was ticked in each case and further information provided at Attachments C and D to the application.
10. Attachment C has a heading “Contact List of Local Suppliers” under which the following information is set out:[10]
[10] T documents; T3 at 26 I have omitted email addresses and telephone numbers of the individuals contacted as that is not relevant information in this case. I have included their names as the identity of the persons contacted and, where known, the positions they held as this has some relevance.
“Name
Address
Contact
Enquiries made
Renolds [sic] Australia
508-520 Wellington Road, Mulgrave, Vic 3070
Steve Turner
Website says they assemble gearboxes in Melbourne factory and do not manufacture. Spoke to Steve Turner who confirmed this.
Brevini Power Transmission
38 Binney Rd, Kings Park, NSW 2148
Greg Bunn, Sales Manager
Called Greg Bunn (Sales Manager) and sent a letter on 20 July 2012. No reply received.
SEW-Eurodrive
27 Beverage Drive, Tullamarine, Victoria, 3043
Darren
Spoke to Darren who confirmed SEW-Eurodrive do not manufacture here.
IPS Australia
Level 15, Tower C, 300 Elizabeth Street, Surry Hills NSW, Australia 2010
N/A
According to its website, IPS don’t manufacture, they only service (see Attachment D)
Hoffman [sic] Engineering
3 Alice St, Bassendean, Perth 6054
Paul Thompson, Project Manager
Spoke to Paul Thompson (Project Manager) who requested letter. Letter sent on 20 July 2012. No response received.”
11. Attachment D included material printed from the website of each of the five suppliers named in Attachment C. I will give a brief summary of the relevant material from each website on 31 May 2012:
Supplier
Extract of relevant material from website
Renold Australia
“… Renold Australia has been manufacturing since 1949 …
Over the years, in response to customer demand, Renold Australia and Renold New Zealand have expanded their product ranges to include hydraulics, steel and plastic table top chains, roll-ring chain tensioners, large helical and beval/helical gearboxes and disc brakes. …
Renold today is much more than a catalogue of products. Importantly, we like to work closely with you in understanding your objectives and your problems, in order to provide the best engineered solution for your needs and reduce your total life cost.
…
Renold provides engineering solution for industry – total drive packages, covering the whole spectrum of mechanical and hydraulic power transmission – saving you time and money.
At the same time, we back you with an Australasian network of sales and service support teams to ensure you meet your deadlines – and we meet your expectations.”[11]
“Renold Australia is a supplier of quality transmission chains, conveyor chains, sprockets, gearboxes, hydraulic components and systems, shaft couplings and variable speed systems. It designs and manufactures conveyor chains, sprockets and hydraulic systems, and assembles gearboxes in its Melbourne Factory.”[12]
Brevini Power Transmission
“As part of the long term commitment to Australian industry, local content has been increasing continually as a matter of policy. …
Today, we build gearboxes in Australia, keep stocks of gear modules and a variety of locally produced housings, shafting and bearings.”[13]
SEW-Eurodrive
“Since introducing the gearmotor in 1931, we have been bringing the best drive technology to our customers. … Our extensive range has now expanded to include geared motors, frequency inverters, large industrial gear units, decentralised systems and servo technology, not to mention motion control and a range of related software.
…
… Millions of dollars of our German engineered components are stored in our Australian warehouses, ready to be assembled and delivered when they’re needed. …”[14]
IPS Australia
“IPS Australia’s main activities are the sales and service of plant and equipment for the petrochemical and mining industry, renewable energy industry (such as Concentrated Solar Power and Biomass) and the sales and service of rotating machinery incl. the service of wind turbines.”[15]
“IPS Australia now offers for wind turbines routine maintenance, gearbox overhaul and testing, generator overhaul, emergency breakdown support, upgrades, performance assessment and condition monitoring, and is preparing to extend the training of its engineers to encompass other models and OEMs.
In future, the Company will be looking to expand its offering into full cycle operations and maintenance for wind farm turbines.”[16]
Hofmann Engineering Pty Ltd (Hofmann)
Hofman (continued)
Hofmann (continued)
Material was downloaded from that appearing under “Gearing” which is located under the more general heading of “Products”. In particular, it was downloaded from “Gearbox Range” and “Gear Manufacture”. The Gearbox Range includes photographs of various drives and gearboxes. Each is accompanied by descriptive material. Under “Gearboxes Standard”, for example, the material reads, in part:
“Completely designed and manufactured in house using AGMA and DIN standards.”[17]
Under Gear Manufacture, the website has thirteen headings with descriptive material under each. These are:
DESIGN AND CONSULTING SERVICES.
Analyse and solve your particular gear or gearbox problem with our latest gear design software to either D.I.N., A.G.M.A., B.S. or Australian Gear Standards.
• Industrial gearbox and gear design.
• Onsite gear inspection and consultancy service.
• Computer aided drafting.
TURNING
A range of lathes both conventional and computer (CNC) controlled for turning of gear blanks and shafts to 12,000 mm long.
• Final grinding of shafts to 8,000mm long.
FABRICATION
Complete welding and fabrication facilities to 200 tonnes.
• Fabricated gearbox casings and gears.
• Rebanding worn gears via welding ring forging to original hub.
• Qualified welders with accredited welding procedures.
HORIZONTAL BORING
A range of both conventional and computer controlled (CNC) borers are available to 10,000mm x 3500mm.
• Machining of large gearbox housings.
GEAR HOBBING
Manufacture of high accuracy gears and worm wheels.
• Carbide skiving of case hardened gears.
• Computer (CNC) controlled accuracy (2000mm dia).
LARGE GEAR CUTTING
Internal and external gearing to 1500mm dia. x 2500mm face.
• Re-cutting of worn girth gears and slew rings.
• Full involute form carbide finish cutting of gears.
HEAT TREATMENT
One of Australia’s largest specialised heat treatment facilities encompassing:
• Oil quench & tempering, stress relieving.
• Gas carburising via pit furnace or fluid bed 1800mm dia. x 5000mm.
• Tool steel heat treatment.
INDUCTION HARDENING
Tooth by tooth full contour induction hardening to produce a hard wear resistant case up to 20mm deep supported by a tough impact resistant core.
• Mill pinions, slew bearing races.
• Traction gears.
• Spin hardening of pins and splines.
• 15,000mm dia. x 2500mm face.
LARGE GEAR CUTTING [repeated]
Internal and external gearing to 1500mm dia. x 2500mm face.
• Re-cutting of worn girth gears and slew rings.
• Full involute form carbide finish cutting of gears.[18]
GEAR GRINDING
Australia’s most comprehensively equipped gear grinding facilities with Niles, Höfler and Maag gear grinders.
• 3500mm dia x 1500mm face x 40Mn.
• Completely climate controlled area.
• Profile and lead modification facilities (tip/root relief and crowning).
• CNC Form grinding of both internal and external gearing to 2000mm dia.
GEAR INSPECTION LABORATORY
A climate controlled inspection area for the verification of all gear geometry parameters.
• Lead involute and pitch inspection.
• Calibrated inspection machines.
• Crack detection.
GEAR BOX TEST BED FACILITY
Every gearbox we manufacture or overhaul is test run and a detailed test run report compiled.
• Partial load testing.
• Back to back full load gearbox capability.
• DC stepless drive system.
CO-ORDINATE MEASURING MACHINE
3D machine with lead, involute and pitch software to enable the complete inspection of large gearing.
• Climate controlled laboratory environment.
• Gears to 15,000mm dia. X 2500mm face.
• Gearbox housings and complex shapes.”[19]
[11] T documents; T3 at 34
[12] T documents; T3 at 33
[13] T documents; T3 at 39
[14] T documents; T3 at 37
[15] T documents; T3 at 35
[16] T documents; T3 at 36
[17] T documents; T3 at 30
[18] T documents; T3 at 31
[19] T documents; T3 at 31-32
12. When asked, Vestas acknowledged membership of a relevant industry association. It identified the association as the Clean Energy Council. In the previous two years, Vestas had not attended any trade fairs or industry events where Australian manufacturers and producers of goods that might have been substitutable have been exhibitors. It had not participated in government and/or trade procurement processes which might have indicated the existence of Australian manufacturers or producers of goods that either are, or are potentially, substitutable for the goods that are the subject of the TCO application.[20]
D.Inquiries made by Vestas regarding local manufacturers of substitutable goods or potentially substitutable goods
13.Section 6 of the TCO application begins with a general statement that:
“The following questions require you to provide details of all inquiries that the applicant and/or importer have made to assist the CEO in establishing that there are reasonable grounds for believing that, on the day on which the application was lodged, there were no producers or manufacturers in Australia of substitutable goods, or potentially substitutable goods.”
[20] T documents; T3 at 14
14. The first question was directed to whether Vestas had “… asked a prescribed organisation to obtain advice about whether there are manufacturers or producers in Australia of substitutable goods, or of potentially substitutable goods.”[21] Vestas answered that it had not. Therefore, it was required to answer the next question, Question 6B. The question reads:
“If you have not obtained a report from a prescribed organisation, you must make inquiries in at least three databases to locate the possible existence of Australian manufacturers or producers of goods that may be substitutable for the goods the subject of the TCO application. Examples of these databases may include trade directories such as Kompass, search engines such as Google, and websites listing Australian products such as Please refer to ACN 2010/03 for guidance as to what Customs and Border Protection considers to be a reasonable search.”[22]
[21] T documents; T3 at 15
[22] T documents; T3 at 15
15. The Australian Customs Notice No. 2010/03 (ACN) gave:
“… Examples of what constitutes reasonable information and reasonable inquiries are:
∙It is reasonable to expect that an applicant (and importer where the importer is a different party to the applicant) will have information or industry knowledge about Australian businesses that produce, or potentially produce, substitutable goods.
∙It is reasonable to expect that this industry knowledge may have been obtained through trade fairs, membership of industry associations or normal business operations. This information should be disclosed to the CEO at question 5 of the application form.
∙Where a data base search for local manufacturers is used, it is reasonable to expect that the key word or key words should not be so narrow as to preclude a result. This is because the aim of the search is to identify manufacturers of substitutable goods with a corresponding use, not necessarily an identical use, and therefore should not be confined only to potential manufacturers of identical goods to the TCO application goods. For example, a search by a proprietary or trade-marked name will not be acceptable.
∙Searches are to be comprehensive and multiple searches using different key words would normally be expected. The terms ‘Australian’, ‘manufacturer’ and ‘[goods]’, not as a single phrase, would be expected in any search of an internet search engine such as Google. Searches of proprietary databases, such as Kompass, should follow advice provided by the database operators to determine the existence of potential manufacturers of substitutable goods.
Where a potential Australian manufacturer of substitutable goods is identified in the search, it must be contacted by the applicant in writing with details of the goods that will be the subject of the TCO application. The applicant will allow a minimum of ten working days for any responses before lodging the application. Any responses received after ten working days will be forwarded to Tariff Concessions section of Customs and Border Protection. A suggested format of the letter to the potential Australian manufacturer is attached to this ACN.”[23]
[23] Attachment to Respondent’s submissions
16. In response to Question 6B, Vestas provided details of three databases it had searched and the search terms it had used in each. At Attachment E to its application, it provided the results of those searches. The results may be summarised as:
Name of database
Search terms used in database
Results
[24] T documents; T3 at 43
[25] T documents; T3 at 42
[26] T documents; T3 at 46
[27] T documents; T3 at 45
[28] T documents; T3 at 44
[29] T documents; T3 at 47 and 48
wind turbine gearboxes australia
First 10 of about 1,760,000 results shown with one highlighted: “Fabricated Girth Gears WindTurbineGearboxes.pdf … services to Australia’s industry leaders … WIND TURBINE GEARBOXES – New and Rebuilt. -27-…”[24]
cast steel gearboxes australia
First 11 of about 1,220,000 results shown. None highlighted.[25]
gearbox
“A total of 1 results were [sic] found.
Hadbro Gearbox Gb and Egb Range by Hardman Bros Pty Ltd[26]
wind turbine gearboxes
“Sorry, your search query did not return any results.”[27]
gearboxes
“Sorry, your search query did not return any results.”[28]
turbine gearboxes
Search returned Indutek Scandinavia and Kraftmek Oy in Finland[29]
17. Also included in the material in Exhibit E to the TCO application are copies of PwC’s letters to Brevini Power Transmission and Hofmann. Each was written in the form suggested in an attachment to Australian Customs Notice No. 2010/03 issued on 1 March 2010 (ACN). Each attached copies of ss 269B, 269C, 269D and 269E of the Customs Act as suggested by the ACN. PwC began by advising the recipient of each letter that it was seeking a TCO for goods which it then described in terms corresponding with their description in the TCO application. It then wrote:
“In accordance with s.269FA of the Customs Act 1901, we are required to make inquiries as to whether there exists a potential local manufacturer of goods that meet the above description.
To decide whether or not to proceed with the TCO application, we would appreciate your guidance as to whether you believe you are a producer of goods which are substitutable for the goods described above and whether you, or any producer known to you, makes these goods in Australia in the ordinary course of business.
Could you please forward your response to me at the contact details below by 3 August 2012.
Any information you provide will be forwarded to the Chief Executive Officer of Customs and Border Protection to assist in the decision-making process.
A TCO may be granted if, on the day of lodgement of an application, no substitutable goods are produced in Australia in the ordinary course of business. All parties should ensure they are aware of the definitions of substitutable goods, produced in Australia, and in the ordinary course of business. These definitions are attached to this letter.
Please visit the Australian Customs and Border Protection’s website at for details of the TCO process and legislation.”[30]
[30] T documents; T3 at 49-56
18. Question 8 of the approved form is headed “Justification for Application” and then stipulates:
“Where potential Australian producers or manufacturers have been identified in questions 5, 6 or 7, please provide details as to why you believe that they do not produce substitutable goods in Australia in the ordinary course of business.
Please refer to the attached definitions for the legislative definitions of ‘core criteria’, ‘substitutable goods’, ‘goods produced in Australia’ and ‘the ordinary course of business’.”[31]
Vestas responded:
“Extensive searches were conducted and all known potential manufacturers have been contacted, either by phone or in writing, requesting confirmation of manufacture of substitutable goods produced in Australia in the ordinary course of business. Definitions of each of the legislative definitions of ‘core criteria’, ‘substitutable goods’, ‘goods produced in Australia’, and ‘the ordinary course of business’ have been read to or supplied to the manufacturers contacted. Vestas are well known for building and operating the infrastructure for wind turbine gearboxes. They have a reputable knowledge of other industry stakeholders and are not aware of any manufacturer or supplier that produces substitutable goods in the ordinary course of business.”[32]
[31] T documents; T3 at 16
[32] T documents; T3 at 16
The CEO’s consideration of the TCO application
19. Following its advice to PwC that it had received the TCO application on 14 August 2012, officers of the Australian Customs and Border Protection Service (ACBPS) conducted a search on for the terms “windturbine gearbox australian manufacturers”. It did so on 27 August 2012. Some 3,250,000 results were returned and ACBPS has included the first eleven in the T documents.
20. Of those eleven results, six were Australian websites. One, NewEn Australia, related to wind farm development and management and another to Australia’s Clean Energy Council. A third was a directory listing that referred to Hansen Transmissions International NV. Neither party suggested that company was a manufacturer in Australia. The other three results related to Hofmann with two from the website and one from Those three results read:
[33] T documents; T5 at 58
“Wind Turbine > Transmission – Hofmann Engineering Pty Ltd.
- CachedBASSENDEAN (Perth) … … AUDITING YOUR WIND TURBINE GEARBOX REPAIR SHOP. Do they have …”
“WIND TURBINE GEARBOXES
WindTurbineGearboxes.pdf - CachedWIND TURBINE GEARBOXES – New and rebuilt. … to Australia’s industry leaders … Do they have gear manufacturing facilities for producing improved …”
“Hofmann Engineering – Report – Business Review Australia
- CachedCompany Hofmann Engineering Industry Manufacturing/Heavy Engineering … rebuilding and re-engineering of wind turbine gearboxes for Vestas, a global …”[34]
[34] T documents; T5 at 58
21. Also on 27 August 2012, Mr Michael Perry of ACBPS wrote an email to Ms Gail Winsor[35] at Hofmann referring to their telephone conversation regarding a TCO application. He set out the description of the goods given by Vestas together with their stated use and then wrote:
“If this TCO is made, this would reduce the Customs Duty to zero and will make locally manufactured goods less price competitive.
In deciding whether to accept the application, I would be grateful if you could advise by return email whether your company:
1)Makes goods that are substitutable for the imported goods;
2)Is prepared to take an order for these goods;
3)Has made these goods in the past two years, or has produced them intermittently over the past five years; and
4)At least 25% of the factory costs, and a substantial process of manufacture, occur in Australia.
…”[36]
[35] Although it is easier to use names of those involved, I have considered whether privacy considerations should dissuade me from using the names of staff members of Hofmann’s. I have decided that they should not for the persons concerned are readily identifiable as employees of Hofmann’s through a search of the internet where the Summer Edition 2005/2006 of Hofmann’s newsletter is to be found at The same is true of Mr Michael Perry, who is readily identifiable in various editions of the Commonwealth Gazette of Australia as a delegate of the CEO.
[36] T documents; T6 at 59
22. Ms Winsor spoke with another member of Hofmann’s staff, Mr Mike Hill, and then wrote to Mr Erich Hofmann, Hofmann’s Managing Director on 28 August 2012. She forwarded Mr Perry’s email and wrote:
“… I have spoken with Customs regarding an application they have for Tariff Concession on a wind turbine gearbox, spec’s below. I have spoken with Mike Hill, he feels this is a bit large for us. The crux of the issue would be: Does this encroach on our market? Would we accept an order for this? Can you please let me know what you want me to tell him.”[37]
[37] T documents; T7 at 60
23. Mr Hofmann replied to Ms Winsor:
“Yes we would be able to do this 3mw gearbox and have done Similar [sic] for Vestas.
You can send them the newsletter of 2 years ago that shows 2off 3MW gearboxes that we designed and Made over 70% of the parts being full load test run.”[38]
Later on 28 August 2012, Ms Winsor forwarded to Mr Perry the emails she had exchanged with Mr Hofmann and a copy of the Hofmann Newsletter. She wrote:
“Answer from our MD below, yes we can do it and have done it in the last two years. (Newsletter attached.) We would accept an order based on this.
Please feel free to contact me if you need anything further. …”[39]
[38] T documents; T7 at 60
[39] T documents; T7 at 60
24. The Hofmann Newsletter attached to the email was Edition 7 of 2010 (Hofmann Newsletter). The relevant passage was written by Mr Mike Hill, who is the Gearbox Fitting Manager for Hofmann. It reads:
“For the first time in the Southern Hemisphere we have the facility to load test 3MW gearbox wind turbines. This test was conducted under the guidance of Søren Praestholm Senior Project Manager of Special Projects from Vestas in Europe. The gearbox was identified to have a history of problems with the primary planet stage which was reengineered to overcome these issues. After the gearbox’s successful test they will be located in Tasmania for field trials. We hope these will be the first of many. This gearbox load test rig comes with special sensors for evaluating: Vibration, Noise, Oil cleanliness, Temperature and a computer graph of results. These sensors are so precise that they can identify the slightest defect in any bearing or gear.”[40]
[40] T documents; T7 at 65
25. The CEO also noted other passages in the Hofmann Newsletter in his Submissions dated 29 August 2013. Putting those passages in their context, they are:
(1)Hofmann Bendigo commenced operations on 31 May 2010:
“… The immediate business focus has been to expand Hofmann’s specialist gear competence with an ‘East Coast’ manufacturing and refurbishment capability and expansion of mineral processing large mill shell manufacture. ….
Work has commenced with the overhaul of gearboxes and manufacture of mill shells, track pads, gear rack segments and provision of heat treatment.”[41]
(2)“In August 2009 Hofmann Engineering acquired the state-of-the-art engineering and manufacturing facility of Metaltec Precision in … Melbourne …”[42]
(3)Hofmann is a “Specialist in a number of key national and international markets including: ∙ Aerospace Defence ∙ Food & Packaging ∙ Cutting Tools ∙ Automotive ∙ Mining and Energy”.[43]
(4)“Hofmann Engineering designed and manufactured the 1MW planetary gearbox for Atlantis Resources to turn the generator on the world’s largest tidal turbine operating at a depth of approximately 30m below the surface.”[44]
(5)“… Hofmann Engineering … attained Aerospace Standard AS 9100 certification. It represents the high end and quality level that more and more customers request especially those being active in the aerospace and defence sector ….
AS 9100 is … a pre-requisite to tender successfully for contracts in the highly specialised and demanding aerospace industry.
Hofmann Metaltec’s completion of the first tooling for the Joint Strike Fighter is an impressive example demonstrating the company’s commitment to sustainable growth into the high end of engineering manufacturing in Australia.”[45]
(6)“In March of this year [2010] Hofmann Engineering in partnership with ASC, undertook a project to carry out repairs to the stators and rotors on two of HMAS Farncomb’s generators.”[46]
[41] T documents; T7 at 63
[42] T documents; T7 at 64
[43] T documents; T7 at 64
[44] T documents; T7 at 65
[45] T documents; T7 at 66
[46] T documents; T7 at 66
26. On 28 August 2012, a delegate of the CEO made the decision to reject the TCO application in the terms I have set out in the opening paragraph to these reasons.[47]
[47] T documents; T8 at 67
MAKING A TCO APPLICATION AND AN APPLICANT’S OBLIGATIONS
27. At Attachment A, I have summarised the structure of the provisions of Part XVA regulating the making of a TCO. They form an important part of the background to the issues that I must decide in this case but, for the moment, I will set out only those provisions relating to the contents of a TCO application and the obligations of an applicant in making an application for a TCO.
28. Section 269F(1) of the Customs Act provides that a person may apply to the Chief Executive Officer of Customs (CEO) for a TCO in respect of goods. I will set the section out in full:
“(1) A person may apply to the CEO for a tariff concession order in respect of goods.
(2) An application must:
(a)be in writing; and
(b)be in an approved form; and
(c)contain such information as the form requires; and
(d)be signed in the manner indicated in the form.
(3)Without limiting the generality of paragraph (2)(c), a TCO application must contain:
(a)a full description of the goods to which the application relates; and
(b)a statement of the tariff classification that, in the opinion of the applicant, applies to the goods; and
(c)if the applicant is not proposing to make use of the TCO to import the goods to which the application relates into Australia on the applicant’s own behalf – the identity of the importer for whom the applicant is acting; and
(d)particulars of all inquiries made by the applicant (including inquiries of prescribed organisations) to assist in establishing that there were reasonable grounds for believing that, on the day on which the application was lodged, there were no producers in Australia of substitutable goods.
(4)A TCO application may be lodged with Customs:
(a)by leaving it at a place that has been allocated for lodgement of TCO applications in Customs House in Canberra; or
(b)by posting it by prepaid post to a postal address specified in the approved form; or
(c)by sending it by electronic facsimile to a facsimile number specified in the approved form;
and the application is taken to have been lodged when the application, or facsimile of the application, is first received by an officer of Customs.
(5)The day on which an application is taken to have been lodged must be recorded on the application.”[48]
[48] The reference to an “approved form” in s 269F(2)(b) is a reference to a form that has been approved, by instrument in writing, by the CEO: Customs Act; ss 4(1) and 4A(1). Although s 4A(2) of the Customs Act provides that the instrument by which the form is approved under s 4A(1) is a disallowable instrument for the purposes of s 46A of the Acts Interpretation Act 1901 (AI Act), s 46A has been repealed. Section 6(d) of the Legislative Instruments Act 2003 (LI Act) provides that, subject to ss 7 and 9, an instrument declared to be a disallowable instrument for the purposes of s 46A of the AI Act is a legislative instrument.
29. In addition to complying with the requirements of s 269F with regard to the contents and lodgement of an application, an applicant for a TCO has a further obligation. It is imposed by s 269FA, which 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.”
30. The form of the TCO application was approved on 11 February 2010 for use from 29 March 2010. Its introduction was accompanied by the ACN to which I have referred being No. 2010/03.
CEO TO CONSIDER WHETHER TO ACCEPT TCO APPLICATION AS A VALID APPLICATION
The CEO’s obligation to screen each TCO application
31. The CEO has an obligation to screen each application. That obligation is set out in s 269H(1) of the Customs Act:
“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 s 269F; and
(ii)that, having regard to the information disclosed in the application and to the particulars of 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 the reasons for the rejection.”
32. The 28 day time limit specified in s 269H(1) is significant for:
“If the CEO has not, within that period, accepted or rejected the application, this Part [XVA] has effect as if the CEO had, immediately before the end of that period, informed the applicant, by notice in writing, that the application is accepted as a valid application.”[49]
[49] Customs Act; s 269H(2)
CEO’s obligation to reject application if prevented from making TCO by s 269SJ
33. The CEO must not make a TCO in respect of goods if he is satisfied under s 269SJ(1) that the goods the subject of the TCO are:
“…
(aa)described in terms other than generic terms; or
(a)described in terms of their intended end use; or
(b)declared by regulations to be goods to which a TCO should not extend.”
34. If, that is the case, s 269HA comes into play. Section 269HA(1) provides:
“If, at any time during the period starting from the receipt of a TCO application and ending with the making of a TCO, the CEO becomes satisfied that the goods to which the application relates are goods in respect of which, under section 269SJ(1), the CEO is prevented from making a TCO, the CEO must:
(a)reject the application; and
(b)by notice in writing given to the applicant, inform the applicant that the application is rejected and of the reason for the rejection.”[50]
[50] Section 269HA(2) provides for notification of the rejection in the Gazette i.e. the Commonwealth of Australia Gazette: AI Act; s 2B.
CONSIDERATION
The information or material to which reference may be made
A.General principles
35. On behalf of the CEO, Mr Millea submitted that I am not permitted to have regard to any material other than that included in the TCO application. In particular, he submitted, I should not have regard to the witness statements of Mr Daniel Kilka and Mr Thomas Murray. Mr Kilka is Vestas’ Operations Manager in the Asia Pacific Region and Mr Murray is its Service Director. Mr Millea relied on s 43 of the AAT Act and the principles set out in Drake v Minister for Immigration and Ethnic Affairs,[51] Shi v Migration Agents’ Regulation Authority[52] and Comptroller-General of Customs v Members of Administrative Appeals Tribunal.[53]
[51] (1979) (1979) 24 ALR 577; 46 FLR 409; 2 ALD 60
[52] [2008] HCA 31; (2008) 235 CLR 286; 248 ALR 390; 82 ALJR 1147; 48 AAR 345; 103 ALD 467
[53] [1994] FCA 1148; (1994) 32 ALD 463; Hill J
36. Section 43(1) of the AAT Act provides, in part, that “For the purposes of reviewing a decision, the Tribunal may exercise all the powers and discretions that are conferred by any relevant enactment on the person who made the decision …”. It necessarily follows that the Tribunal must exercise those powers and discretions within the boundaries set for their exercise by any relevant enactment. Section 43(1) may be added to, excluded or modified by Parliament[54] so that the Tribunal’s powers and discretions do not mirror those of the original decision-maker.
[54] AAT Act; s 25(6)
37. The essence of the authorities to which Mr Millea drew my attention is that, unless Parliament has provided to the contrary in the enactment under which the decision is made and has done so either expressly or by necessary implication:
“…The question for the determination of the Tribunal is not whether the decision which the decision-maker made was the correct or preferable one on the material before him. The question for the determination of the Tribunal is whether that decision was the correct or preferable one on the material before the Tribunal …”[55]
“… In the ordinary case, the tribunal is not confined to the material before the decision-maker.”[56]
“ When making a decision, administrative decision-makers are generally obliged to have regard to the best and most current information available. This rule of practice is no more than a feature of good public administration. When, therefore, the Tribunal elects to make ‘a decision in substitution for the decision so set aside’, as the Act permits, it would be surprising in the extreme if the substituted decision did not have to conform to such a standard.”[57]
“… [A] conclusion that, ordinarily, the Tribunal might have regard to new, fresh, additional or different evidence in reaching its own decision is reinforced by the apparent purpose of s 43 of the AAT Act. …”.[58]
“… [A] construction limiting the power and function of the tribunal should be adopted only where express words or necessary implication require it. …”;[59] and
“ Sometimes, it may be inherent in the nature of a particular decision that review of that decision is confined to identified past events. …”[60]
[55] Drake v Minister for Immigration and Ethnic Affairs (1979) 24 ALR 577; 46 FLR 409; 2 ALD 60; Bowen CJ, Smithers and Deane JJ at 589; 419; 68 per Bowen CJ and Deane J
[56] Comptroller-General of Customs v Members of Administrative Appeals Tribunal [1994] FCA 1148; (1994) 123 ALR 140; 32 ALD 463 at [46]; 150; 472 per Hill J
[57] Shi v Migration Agents’ Registration Authority [2008] HCA 31; (2008) 235 CLR 286; 248 ALR 390; 82 ALJR 1147; 48 AAR 345; 103 ALD 467 at [41]; 299-300; 400; 1156; 356; 477 per Kirby J
[58] Shi v Migration Agents’ Registration Authority [[2008] HCA 31; (2008) 235 CLR 286; 248 ALR 390; 82 ALJR 1147; 48 AAR 345; 103 ALD 467 at [39]; 299; 399; 1155; 355; 476 per Kirby J
[59] Comptroller-General of Customs v Members of Administrative Appeals Tribunal [1994] FCA 1148; (1994)123 ALR 140; 32 ALD 463 at [57]; 152; 474 per Hill J
[60] Shi v Migration Agents’ Registration Authority [[2008] HCA 31; (2008) 235 CLR 286; 248 ALR 390; 82 ALJR 1147; 48 AAR 345; 103 ALD 467 at [44]; 300; 400; 1156; 357; 477 per Kirby J
38. Care must also be taken to analyse the decision that is under review for it may impose various limits on the decision-maker. It may, for example, limit the time at which the decision may be made or may limit the evidence to which regard may be had. It will determine the evidence that is relevant. Analysis of the decision must also take place in the wider context of the enactment conferring power to make it and, ultimately, to review it. That analysis will be pertinent in deciding evidentiary issues and those of timing. It will be pertinent, for example, in deciding whether regard can be had to evidence about events that occurred subsequently to the date on which the original decision was made or whether it is limited to events that occurred before the decision was made or reflect on those events.[61]
B.Application of general principles to review of the decision under
s 269H(1)(a)(ii)[61] Shi is an example of an analysis that led to the majority of the High Court to conclude that the Tribunal was permitted to take into account facts and circumstances at the time of the review. Freeman v Department of Social Security (1988) 19 FCR 342; 87 ALR 506; 15 ALD 671(Davies J) is an example of a case in which the analysis led to the conclusion that the Tribunal was required to consider the circumstances as at the date of the cancellation of a widow’s pension under the Social Security Act 1947. Decisions regarding entitlement to a pension lead to the conclusion that regard can be had to circumstances at the date of the Tribunal’s decision on review: see examples at (1988) 19 FCR 342; 87 ALR 506; 15 ALD 671 at 343-344; 508-509; 673-674
B.1 Kimberly-Clark
39. Mr Millea submitted that Parliament has shown that decisions made under s 269H in first instance must be made at first instance and then reviewed by this Tribunal on the basis of the information in the TCO application. He relied on a passage from the reasons for decision of Mathews J as President of the Tribunal in Re Kimberly-Clark Australia Pty Ltd and CEO of Customs[62] (Kimberly-Clark) Her Honour said:
“ If is for the applicant to satisfy its obligation under s 269FA and to do so in the application itself. This is clear from the terms of s 269H. Mr Angel says that it frequently occurs during the course of the processing of a TCO application that additional information will come to light which will provide support for an applicant’s claim, and which will thus enable the applicant to meet its obligation under s 269FA. If this were to occur, it would be a windfall for the applicant concerned. But it does not detract from the applicant’s obligation to satisfy the requirements of s 269FA and to provide adequate grounds in the application form itself.”[63]
[62] [1999] AATA 175; (1999) 58 ALD 251
[63] [1999] AATA 175; (1999) 58 ALD 251 at [22]; 254-255
40. In Kimberly-Clark, the CEO had rejected a TCO application on the basis that it had “… failed to establish that there were reasonable grounds for asserting that it satisfied the core criterion, as there was ‘no evidence of research or approaches to potential local manufacturers of substitutable goods’.”[64] The information that the TCO applicant gave was set out in the approved form and was given in response to questions as happened in this case. It was that it had searched the Kompass directory “… for fabrics, breathable and there was no local manufacturer listed.”[65] When asked, in effect, to provide information showing that it had discharged its obligation under s 269FA, it wrote:
“To the best of our client’s knowledge there are no local manufacturers who either make or are capable of making a fabric of this type. This is supported by the granting of TC9701193 which covers identical goods except for slight weight difference.”[66]
[64] [1999] AATA 175; (1999) 58 ALD 251 at [7]; 252
[65] [1999] AATA 175; (1999) 58 ALD 251 at [2]; 252
[66] [1999] AATA 175; (1999) 58 ALD 251 at [4]; 252
41. The essential question decided by Mathews J was, as she described it:
“… is whether, in providing the information that it did on the form dated 21 May 1998, the applicant fulfilled its obligation under s 269FA of the Act of establishing, to the satisfaction of the CEO, that there were reasonable grounds for asserting that the core criterion set out in s 269C had been met, namely that there were substitutable goods produced in Australia in the ordinary course of business.”[67]
[67] [1999] AATA 175; (1999) 58 ALD 251 at [14]; 253 I respectfully disagree with the way in which Mathews J has formulated the task and will return to this below.
42. Mathews J concluded in Kimberly-Clark that reference could not be made to information leading to the making of TC9701193 or to the fact that no local manufacturer had applied for its revocation to support the TCO application. Had the goods described in the TCO application and those in the TCO been essentially the same, her Honour said, she would have thought that there would have been no obligation to make inquiries regarding Australian manufacturers. As it was, there were differences that were potentially significant. Those differences meant that merely specifying the existence of TC9701193 meant that there had been insufficient compliance with the obligation imposed by s 269FA. The obligation had to be satisfied in the application itself by providing adequate material to the CEO.
43. Her Honour’s conclusion would seem to be uncontroversial if she is understood to mean that evidence could not be led to expand upon the information given in the TCO application. It is uncontroversial if she is understood as saying that she could not go behind the reference to the particular TCO in the application and have regard to evidentiary material that led to the making of that earlier TCO when that information was not included in the TCO application. I think that her decision is uncontroversial because, on my reading of her Honour’s reasons, it seems to me that she does not intend to go any further on that point. In particular, Mathews J does not say that no evidence or other material at all can be led other than the material in the application. It was not a question that was raised for consideration in that case. It follows that I must go back to s 269H itself and see what it requires and what it permits.
B.2“Have regard to”
B.2.1 What does it mean?
44. Section 269H(1)(a)(ii) begins with the directive to the decision-maker that the criterion must be decided “having regard” to the matters it sets out. In its ordinary meanings that expression would seem to signify an obligation “to consider”, “to pay attention to or take notice of something”.[68] In some cases, the courts have interpreted the obligation to “have regard” to certain matters in a way that would seem to take it beyond merely considering or taking notice of certain matters to something that must be given fundamental consideration.
[68] Chambers 21st Century Dictionary, 1999, reprinted 2004, Chambers (Chambers)
45. Differences in meaning of the expression were explored in Reg. v Hunt; Ex parte Sean Investments Pty Ltd[69] (Ex parte Sean Investments). The proprietor of a nursing home had asked that the conditions on which its nursing home had been approved be altered by substituting another scale of fees approved by the Permanent Head of the Department of Health. Section 40AA(7)(c)(i) of the National Health Act 1953 provided that, in approving the scale of fees, the Permanent Head “… shall have regard to costs necessarily incurred in providing nursing home care in the nursing home.” Mason J, with whom Gibbs J agreed, considered the legislative provisions determining the manner in which nursing home fees would be fixed concluded that “… In the very nature of things, the costs necessarily incurred by the proprietor in providing nursing home care in the nursing home are a fundamental matter for consideration.”[70]
[69] (1979) 180 CLR 322; Gibbs, Mason and Murphy JJ
[70] (1979) 180 CLR 322 at 329 See also Commissioner of Police for New South Wales v Industrial Relations Commission of New South Wales & Raymond Sewell [2009] NSWCA 198 at [73] per Spigelman CJ, with whom Macfarlan and Young JJA agreed.
46. A case of this sort is to be contrasted with a case such as Singh v Minister for Immigration and Multicultural Affairs.[71] The Minister for Immigration and Multicultural Affairs (MIMA) had refused to grant Mr Singh a visa because he had not passed the character test set out in s 501(6) of the Migration Act 1958 (Migration Act). Mr Singh submitted that MIMA had not complied with s 54(1) of that legislation. It provides:
“The Minister must, in deciding whether to grant or refuse to grant a visa, have regard to all of the information in the application.”
[71] [2001] FCA 389; (2001) 109 FCR 152; 194 ALR 599; Sackville J
47. Sackville J noted that the expression “have regard to” could carry the meaning it was given in Ex parte Sean Investments but that it could also:
“… simply mean to give consideration to something (Shorter Oxford English Dictionary). In this sense a direction to a decision-maker to have regard to certain factors may require him or her merely to consider them, rather than treat them as fundamental elements in the decision-making process.”[72]
[72] [2001] FCA 389; (2001) 109 FCR 152; 194 ALR 599 at [54]; 163.; 610
48. His Honour also noted that legislation could, in various provisions, use the expression first in one sense and then the other. Its meaning is influenced by its particular context and to practical considerations associated with the decision-making process.[73] Those practical considerations included the fact that decisions were generally made by MIMA’s delegates rather than by MIMA personally. They also included the breadth of the information to which MIMA was required to have regard i.e “all of the information in the application”. Sackville J observed:
“… It could hardly have been contemplated by the drafters that every piece of information selected for mention by an applicant, no matter how marginal its relevance to the issues to be determined must be treated by the decision-maker as a ‘fundamental element’ in making the determination. The ordinary meaning of the words in s 54(1) does not suggest otherwise. Moreover, such a construction would render the decision-making process unworkable, not least because the minister would have to treat the matters referred to in s 501(6)(c) of the Migration Act and all the information in the application as fundamental elements in determining whether an applicant passes the character test.”[74]
[73] [2001] FCA 389; (2001) 109 FCR 152; 194 ALR 599 at [55]-[57]; 163-164; 610-611
[74] [2001] FCA 389; (2001) 109 FCR 152; 194 ALR 599 at [57]; 164; 610-611
49. These authorities are examples of two approaches that have been taken to the words “with regard to”. What they show is that the words themselves do not limit the material to which regard must be had. Regard must be had to that which is mentioned but whether it must be treated as of fundamental importance and whether regard may be had to other material and factors is determined by the provision and its context in the particular enactment under consideration.
B.2.1 Identifying the elements to which regard must be had
50. Before I decide whether they are not only required to be taken into account but given fundamental consideration, I must identify the factors to which s 269H(1) says I must expressly have regard. They are the “information disclosed in the application” and the “particulars of the inquiries made by the applicant”. What is clear when s 269H(3)(d) and the obligation in s 269FA are read together is that the inquiries must have been made before the TCO application was lodged and details of those inquiries included in the TCO application.
B.3 What must be determined having regard to information and inquiries?
B.3.1 Identifying the decision to be made by the CEO and this Tribunal
51. Putting aside the material on which the CEO may decide it, the issue that s 269H(1)(a)(ii) requires him to decide is whether, having regard to the material in the application and the inquiries made by the applicant, there are “reasonable grounds for believing” that the applicant has discharged the “obligation” in s 269FA. That is the decision that is to be made and I do not agree that the decision is that formulated by Mathews J in Kimberly-Clark at [25] of her decision i.e. “whether the application itself provided sufficient material to establish to the satisfaction of the CEO that there were reasonable grounds for asserting the matter in question …”.[75] Her formulation is consistent with the way in which she had described the applicant’s task as being “… to satisfy its obligation under s 269FA and to do so in the application itself”[76] but it seems to me that ss 269H and 269FA require the question to be formulated in a different way.
[75] [1999] AATA 175; (1999) 58 ALD 251 at [25]; 255
[76] [1999] AATA 175; (1999) 58 ALD 251 at [22] 254 and see […] above
52. There is no doubt that an applicant is under an obligation imposed by s 269FA. Any failure to meet that obligation does not automatically lead to the conclusion that its TCO application can be disregarded on the basis that it does not meet it. That is not the power given to the CEO under s 269H. A TCO application can only be disregarded or not considered if it can be treated as not being a valid application. Its not being treated as a valid application can only happen in one of the three circumstances set out in s 269H(1).
53. The relevant circumstance in this case is that in s 269H(1)(a)(ii). Regard must be had to the words of that provision. When that is done, it is seen that the CEO is not required to be satisfied that, on the basis of the material referred to in s 269FA, the applicant has reasonable grounds for making the assertion. What he is required to do is to be satisfied whether, having regard to the material in the TCO application and the inquiries made, there are reasonable grounds for believing that the applicant has reasonable grounds for making the assertion. That is a decision that is one step back from the decision, that Mathews J would have the CEO make and that was a decision whether he is satisfied that the applicant has those reasonable grounds.
54. Putting it colloquially and not in any way intending to substitute this as the test for the provisions, what ss 269FA and s 269H are saying is this. The CEO must be satisfied that an applicant has put enough of what it knows or should know in the TCO application to show that it is reasonable for the CEO to process it. Processing necessarily incurs costs of advertising the TCO application to put Australian manufacturers on notice of it. If they want to put forward a case that they manufacture, or potentially manufacture, substitutable goods, those Australian manufacturers will incur costs, even if only in the form of time, in responding to it. It is not reasonable to expect the Australian community, through the CEO, or Australian manufacturers to carry that cost if the applicant has not made a fair effort to find out what it can and to decide for itself that there is a reasonable basis for making the claim that its application will meet the core criteria.
55. Before any step will be taken to process its TCO application, the applicant has to make an effort to gather what it can reasonably be expected to gather and to think about whether it is reasonable to assert that its TCO application meets the core criteria. If it makes that effort and can satisfy the CEO that, on the basis of what it has gathered or should have gathered, it has reasonable grounds for making its claim that its application meets the core criteria, it will have satisfied its obligation under s 269FA. The CEO’s task is not to satisfy himself whether those reasonable grounds exist. All that he has to be satisfied of is that there are reasonable grounds for believing that there are reasonable grounds for the applicant’s assertion. That decision arises under s 269H(1)(a)(ii) and not under s 269FA at all.
56. As the Explanatory Memorandum to the Customs Amendment Bill 1996, which led to the enactment of these provisions,[77] said of that obligation:
“… It is intended to prevent the situation which regularly arises at the moment where, after importing the relevant goods, TCO applicants lodge applications with Customs which are technically complete (and therefore must be processed to completion) but have little information of substance. These applications do nothing more than fix a commencement date for a concession in the event the gamble that no local manufacturers proves to be the case.”[78]
[77] Customs Amendment Act 1996: s 3, Schedule 1, Item 7 and see also Item 8
[78] Explanatory Memorandum; Item 6
B.3.2 How is the obligation imposed by s 269FA to be determined?
57. If Mr Millea’s submission that I am confined to that material is correct, I will have to be able to determine the nature of the obligation from that material. That will limit the material on which I can determine the nature of the obligation to that an applicant might reasonably be expected to have or inquiries an applicant might reasonably be expected to have made.
58. In practice, the CEO has not acted consistently with his own submission for he has tendered a further page from a website already identified by Vestas as well as material in email correspondence and a page from another website drawn to his attention that in correspondence with Hofmann. He cannot be criticized for that for his making further inquiries directed to whether Vestas could have reasonably found other material seems to me to be consistent with the nature of the task he has. No provision in Part XVA permits him to make that inquiry and, equally, no provision forbids him from doing so. His doing so would seem to be a power implicit in the task Parliament has given him to do under s 269H.
59. He cannot complete that task until he has first worked out the precise nature of an applicant’s obligation under s 269FA. The parameters of that obligation are, of course, set out in the provision itself but what defines the obligation in the case of a particular applicant can only be determined in relation to that particular applicant.
60. First, the precise obligation can only be determined by reference to all of what that applicant knew and all of the inquiries that it made as well as by what it could reasonably be expected to know or to have inquired about. That information and those inquiries will vary from applicant to applicant as no two will start from the same knowledge base. Their particular circumstances will be relevant in deciding whether they can reasonably be expected to have certain information or be reasonably expected to have made inquiries.
61. There may be occasions when the information in the application form may lead a decision-maker to conclude that he or she knows that the applicant has disclosed all information (and inquiries) it would hold (or would have made) or could reasonably be expected to have found (or to have made). There will be others when the information will not, on its face, lead a decision-maker to that conclusion. Evidence or material will then be required in order to establish those matters. There is nothing in s 269FA that prevents regard being had to that evidence or material for that purpose.
62. Once the issues surrounding the identification of the information and inquiries have been resolved, it must be remembered that the applicant’s obligation is to satisfy the CEO on the basis of that information that there are reasonable grounds for asserting that the application meets the core criteria. Under s 269H, the CEO does not decide whether the applicant has actually met those criteria. What the CEO has to decide, having regard to the, possibly, more limited information in the application and inquiries made by the applicant, is that he is reasonably satisfied that there are reasonable grounds for believing that the applicant has done that.
63. The fact that the question under s 269H is limited in this way does not limit the task that must first be completed under s 269FA. When the CEO makes his decision initially, it is understandable that he may not go back to an applicant for further information regarding matters arising under s 269FA but that does not mean that he cannot, as he has done, ascertain the nature of the obligation under s 269FA before making a decision on the limited basis prescribed by s 269H.
B.4 The Tribunal’s role
64. In my reasons for decision in Re Target and Chief Executive Officer of Customs,[79] I considered whether the scheme of review provided under Part XVA of the Customs Act altered the way in which the Tribunal would ordinarily conduct a review of a reconsideration decision in relation to a TCO application and the evidence and material on which it would normally rely. I concluded that the Tribunal could permit the parties to provide further material and could exercise its power to require a party to provide further material. It would, of course, have to do so taking into account the time limit within s 269SHA(5) of the Customs Act and its power to extend that time limit. The material that may be provided will have to be relevant and probative to the issues in dispute but, apart from that qualification and that of time, there would seem to be no others in Part XVA of the Customs.
C.Application of general principles to review of the decision under
s 269H(1)(a)(i) and (b)[79] [2013] AATA 176; (2013) 59 AAR 514 at [35]-[54]; 525-530
65. Any restrictions appearing in s 269H(1)(a)(ii) apply to that criterion alone. Kimberly-Clark did not suggest that it had any wider application and, in particular, did not suggest that it applied to the criteria in ss 269(H)(1)(a)(i) or (b). I respectfully suggest that it could not for those provisions must be analysed separately having regard to their terms, the whole of s 269H and to their place in the scheme of decision-making and review provided in the Customs Act.
66. In light of its own terms, the information in the application form could be expected to be crucial in deciding whether the criterion in s 269H(1)(a)(i) to comply with s 269F has been met. There is, however, nothing in the way in which that criterion is expressed to suggest that a decision must be based solely on that information or that regard may not be had to information that was not available to the CEO at the time a decision was made under s 269H.
67. Take, for example, the obligation in s 269F(2)(b) to make the application in an approved form. Whether it has been made in such a form depends on information that lies outside the form itself. That information is found in the written instrument made by the CEO under s 4A approving the particular form for use. Section 269F(3)(d) provides another example. It requires that the TCO application include particulars of all the inquiries it has made to assist in establishing that there were reasonable grounds for believing that, on the day the application was made, there were no producers in Australia of substitutable goods. The applicant may have included details of inquiries it has made but the CEO receives information that it has made other inquiries, to which it made no reference. Relying on that information, the CEO might not be satisfied that the TCO application complies with s 269F and might reject it as a valid application under s 269H(1). On the face of s 269H generally and of s 269H(1)(a)(i) specifically, there is nothing to suggest that the applicant would not be permitted to produce evidence to the Tribunal refuting that information and providing further details of the inquiries it had made to establish that it had complied with s 269F(3)(d).
68. I reach the same result when I look at s 269H(1)(b). Nothing in that provision suggests that it is, in any way limited to information available in the TCO application or to information available to the CEO at the time the decision was made. Awareness or otherwise of a producer in Australia of substitutable goods will clearly be a changing state of mind. The TCO scheme recognises that circumstances and knowledge change. Section 269SA, for example, recognises that the CEO may be satisfied that substitutable goods commence to be produced in Australia at a date after a TCO application was lodged but before a TCO decision is made. The TCO that the CEO makes in those circumstances is of limited duration ending on the day production commenced. Section 269SD permits revocation of TCOs on the CEO’s own initiative as well as on the application of another s 269SB.
Does the TCO application comply with s 269F?
69. There was no dispute between the parties that Vestas’ TCO application complies with ss 269F(2)(a), (b) and (d) and with ss 269F(3)(a), (b) and (c). The only issues in dispute in this part of the case is whether the TCO application complies with ss 269F(2)(c) and (3)(d).
70. The delegate’s notification of the original decision advised that:
“Under section 269F of the Customs Act, an application must on an approved form, contain such information as the form requires and that there were reasonable grounds for believing that, on the day on which the application was lodged, there was no producer in Australia of substitutable goods.”[80]
[80] T documents; T8 at 67
71. It may be that the notification was not intended to suggest that s 269F required that there were reasonable grounds for believing that, on the day on which the application was lodged, there was no producer in Australia of substitutable goods. If it was intended to suggest that s 269F required that, I do not agree with it. As Mr Davies submitted on behalf of Vestas, it is important to identify the responsibility imposed by s 269F generally and each of ss 269F(2)(c) and (3)(d), in particular. Section 269F is a provision directed to gathering information that will be used by the CEO in first screening the information and, if it passes that stage successfully, then in processing it. It does no more than that. In particular, whether read alone or with s 269H(1)(a)(i) requiring that a TCO application comply with s 269F, s 269F does not go so far as to require, or permit, the CEO to assess the information at that stage.
72. Sections 269F(2) and (3) are directed to gathering information of a specific type. As I said, only two of these specific provisions are in issue in this case. Section 269F(2)(c) obliged Vestas to contain “such information as the form requires”. The same was true of the obligation imposed by s 269F(3)(d). It obliged Vestas to provide details of all the inquiries it had made.
73. Mr Millea submitted that that Vestas had not complied with the ACN. In his written submissions, the heading to a passage directed to s 269FA, and to which I will return, reads “Applicant’s inquiries did not comply with the CEO’s directions on reasonable inquiries” (emphasis added).[81] If it is suggested that the ACN has some mandatory qualities about it, I have been unable to find any legislative basis for that assertion. The CEO may make by-laws in relation to certain custom tariff matters under s 271 of the Customs Act and, under s 273EB, may make business rules applying to those wishing to enter import or export information contracts. None of these gives the CEO power to make directions on matters that should be addressed in a TCO application form or the way in which an applicant should comply with the obligation under s 269FA.
[81] Respondent’s submissions at 15
74. The CEO’s power, or perhaps duty, to approve a form for the purposes of s 269F(2)(b) by instrument in writing cannot be read to extend to approval of something beyond that form. The Minute dated 4 February 2010 to the then CEO attaching the revised B443 form for his approval does not include the ACN as part of the form or suggest that he must approve it. The ACN is attached for information only and the CEO’s approving the recommendation that the revised B443 form for TCO applications must be read as limited to that form. The approved form has a cover page drawing an applicant’s attention to ss 269F and 269FA, which it sets out, and to its obligation to answer each of questions 1 to 8. Under that heading, it advises that:
“Failure to supply the information required by this form will result in rejection of the application (and in the loss of operative date).”[82]
[82] T documents; T 2 at 11
75. While the ACN is a valuable guide to applicants wishing to meet their obligations, it cannot extend or alter the obligations imposed by s 269F. Vestas’ obligation under s 269F(3)(d) was to include particulars of “all the inquiries” (emphasis added) it had made to assist in establishing that there were reasonable grounds for believing that, on the day on which the application was lodged, there were no producers in Australia of substitutable goods. If it turns out that Vestas should have made further inquiries, that is not decided in the context of a decision after the screening process imposed by s 269H(1)(a)(i) but in the context of s 269H(1)(a)(ii) in light of the obligation under s 269FA.
76. The obligation under s 269F(3)(d) does not extend to including information that an applicant has at hand that has not come to it as a result of inquiries it has made. An obligation of that sort arises when regard is had to Question 5 on the application form. A copy of that question appears in the copy of the approved form at Attachment B to these reasons. It can be seen that the heading is stated in broad terms:
“Information that the applicant and importer has regarding Australian manufacturers of substitutable goods or potentially substitutable goods.
The following questions require the applicant and importer (if a different party to the applicant) to provide details of all information they have with regard to the presence of Australian manufacturers of substitutable goods or potentially substitutable goods.”[83]
[83] T documents; T2 at 14
77. The heading suggests that the questions that follow will draw that information from the applicant or, at least, provide it with an opportunity to provide it. Instead, the form asks very specific questions directed to very specific areas of the applicant’s knowledge. Question 5A is an example of the specificity in them all when it asks:
“In considering the goods which are the subject of this TCO application, is the applicant aware of any Australian manufacturers or producers of substitutable goods, or of potentially substitutable goods?
□ YES □ NO If YES, please provide the names of these Australian manufacturers or producers.
………………………………………………………………………………………………………………………….
…………………………………………………………………………………………………………………………”[84]
[84] T documents; T3 at 14
78. In view of the specificity of the questions in the form, I do not think it can be suggested that the first seven questions on the approved form give an applicant room to set out all of the information that it may have or that the general heading to each suggests should be included. The only opportunity comes in question 8 when those applicants who have identified potential Australian producers or manufacturers of substitutable goods are asked to provide details of why they believe that they do not do so in the ordinary course of business. Their attention is drawn to the definitions in ss 269B, 269C, 269D and 269E set out at the end of the approved form.
79. Vestas has answered question 8 as well as the previous seven questions in the approved form. In doing so, I am satisfied that it has met the requirements of s 269F(2)(c) to contain “such information as the form requires”. The information they have given is responsive to the questions asked of Vestas. It has met s 269F(3)(d) to include “particulars of all inquiries” it has made. Whether it should have made further inquiries is not the point in considering its compliance with s 269F.
Identifying Vestas’ obligation under s 269FA
A.Information Vestas has or can reasonably be expected to have
80. Information that Vestas can be said to have is that set out in its TCO application. Mr Millea submitted that Vestas could reasonably be expected to have had other information. He referred to its not having used the word “manufacture” in its internet searches. This, he submitted, was despite the directions in the ACN. I have already explained why I do not consider the ACN to have the force of a binding direction. Even if it did, it is written in terms of what would “normally be expected” of the searches made by an applicant. If it does not do so, this does not require an applicant to explain why it has not done so. Its failure, though, will require some thought to be given to whether it could reasonably be expected to gather further relevant information had it done so. When I do that, I find that the information that Vestas found and that which the CEO found is the same. Both found the reference to Hofmann’s website containing the words “WIND TURBINE GEARBOXES – New and Rebuilt”. It is of no consequence that Vestas found it by using “wind turbine gearboxes australia” and it was returned under the heading of “Fabricated Girth Gears” and that the ACBPS found it by using “windturbine gearbox australian manufacturers” and it was returned under the heading of “WIND TURBINE GEAR BOXES”.[85] Both contain the relevant information that Hofmann said that it manufactured new gearboxes for wind turbines.
(a)any provisions in the relevant enactment expressly prescribing those circumstances; and
(b)any that may be implied from the framework of legislative provisions in which the particular provision must operate.
115. Again, the degree of “satisfaction” that the CEO must reach in making a decision under s 269H(1)(a)(ii) is not that of the balance of probabilities but his degree of certitude must be greater than surmise or conjecture. The evidentiary material must show objective circumstances that point to the applicant’s having discharged its responsibility under s 269FA. It need not go so far as to satisfy the CEO that the applicant actually has discharged its responsibility under s 269FA for s 269H(1)(a)(ii) does not go that far. It goes only so far as to require the CEO, having regard to the information in the application and the inquiries made, to be reasonably satisfied that there are reasonable grounds for believing that Vestas has discharged its responsibility under s 269FA. To repeat what was said by the High Court in George v Rockett:
“The objective circumstances sufficient to show a reason to believe something need to point more clearly to the subject matter of the belief, but that is not to say that the objective circumstances must establish on the balance of probabilities that the subject matter in fact occurred or exists: the assent of belief is given on more slender evidence than proof. Belief is an inclination of the mind towards assenting to, rather than rejecting, a proposition and the grounds which can reasonably induce that inclination of the mind may, depending on the circumstances, leave something to surmise or conjecture.”[126]
[126] [1990] HCA 26; (1990) 170 CLR 104; 93 ALR 483 at [14]; 116; 491
B. Section 269H(1)(a)(ii)
116. I have canvassed the material that Vestas revealed in its TCO application and have examined the material that it did not include from the CEO’s point of view but which is in fact included even if in a slightly different format. Of the omitted material, the only material potentially having consequence is that contained in Mr Murray’s statement setting out details of the work it has done in Australia and setting the background for its claim that:
“… Vestas are well known for building and operating the infrastructure for wind turbine gear boxes. They have a reputable knowledge of other industry stakeholders and are not aware of any manufacturer or supplier that produces substitutable goods in the ordinary course of business.”[127]
[127] T documents; T3 at 16
117. On behalf of the CEO it is said that this “… reasoning is inadequate” and that “… it puts the applicant in the shoes of the CEO. It is for the CEO to be satisfied – not the applicant …”.[128] I do not see the statement in this light but rather as a statement of Vestas’ belief and a statement of what its belief is based on. That is to say, it is evidentiary material just as the email correspondence from Mr Hofmann to ACBPS is evidentiary material. Vestas is not attempting to assert any matters of which the CEO should be satisfied. All that it is stating is that it has a wide knowledge of the industry and it is not aware of any manufacturer or producer of substitutable goods. That is very different from saying that it is satisfied that there are no such manufacturers or producers.
[128] Respondent’s submissions dated 29 August 2013 at [61]-[62]
118. The material in the TCO application reveals that Hofmann is a manufacturer of new gearboxes as well as rebuilt gearboxes for wind turbines. The material included from the Gearing > Gear Manufacture page of Hofmann’s website shows that Hofmann is well positioned to manufacture gearboxes and, in particular, large gearboxes. The information in the TCO application shows that Hofmann manufactures new gearboxes for wind turbines.
119. What the information in the TCO application shows also is that Vestas wrote to Hofmann setting out the description of the gearbox for which it seeks a TCO. Vestas asked for its guidance as to whether it believed it was a producer of goods substitutable for those goods or whether it knew of any producer making them in the ordinary course of business. When it did not receive a response either to its letter or its earlier telephone conversation with Mr Thompson, Hofmann’s Project Manager, it had grounds for thinking that Hofmann did not believe that it was a producer of substitutable goods. If it were, it would have been reasonable for it to respond, if only to make the assertion without any material to support its position.
120. Given that Vestas understood that it had only asked Hofmann to carry out repair and refurbishment work on its gearboxes in accordance with its Purchase Orders, Vestas could reasonably be expected to know that Hofmann would describe its work at its highest level but its description has to be read in its context. The description of the goods that Vestas set out in its TCO application and that is set out at [5] above, suggests that the gearbox for which the TCO is sought comprises more than the planetary gears. The Hofmann Newsletter refers to reengineering the primary planetary stage but makes no mention of working on the helical gears or the case carbonised external gears or the nitrided or case carbonised ring gears that also comprise the gearbox.
121. It is not my task to decide whether Hofmann can indeed manufacture substitutable goods and I do not try to do so. I have looked at the information that Vestas has disclosed in its TCO application and looked at what it did find out in its telephone inquiries and on its internet searches as well as from the lack of responses it received to its letters to Brevini Power Transmission and Hofmann. The lack of response is as much relevant information as the information that was actually found and included. I have come to conclusions about the information that Vestas had and should have had and the inquiries they have made and should have made.
122. When I have regard to all of that information, I am satisfied that there is objective material pointing to Vestas’ having reasonable grounds for asserting that its TCO application met the core criteria. There is evidence that it is a knowledgeable participant in the industry and would, in that position, be expected to know the capabilities of other participants. That is not in any way determinative but it is relevant. It is supported by the fact that its searches revealed five potential manufacturers but it set out the results of its inquiries leading to the conclusion that three were not engaged in manufacture. Of the remaining two, Brevini Power Transmission has not featured in the CEO’s submissions but, like Hofmann, it did not respond to Vestas’ letter of inquiry. Hofmann would seem to be a large and sophisticated manufacturer. Its failure to respond becomes even more significant for it could reasonably be expected to want to protect its position in the industry from the outset and to minimise its costs by asserting that it is a manufacturer of substitutable goods at the outset and, possibly, nipping the TCO application in the bud rather than waiting to make submissions in response to the notice later published in the Gazette.
Section 269H(1)(b) and whether aware of any producer in Australia of substitutable goods
123. Section 269H(1)(b) does not require the CEO to be “satisfied” of anything but to determine whether he is “not aware” of any producer in Australia of substitutable goods. If he is “aware” of one, then he must reject the TCO application as a valid application under s 269H(1)(d).
A. What is meant by being “aware”?
124. Section 269H(1) refers to the CEO’s being “aware” or “not aware”, as the case may be, of there being in Australia a producer of substitutable goods. The ordinary meanings of the word “aware” include “… Conscious, sensible, not ignorant, having knowledge, (of, that); …”.[129] These all amount to “know”. Is the CEO, and so the Tribunal, “aware” or “not aware”, as the case may be, of there being in Australia a producer of substitutable goods? Section 269H(1)(b) does not qualify the word “aware” by a words such as “on reasonable grounds” or similar. In view of that and in view of the selection of the word “satisfied” and the expression “reasonable grounds for believing” in the s 269H(1)(a), it seems to that the word “aware” should be given its ordinary meaning of “know”.
[129] Shorter Oxford English Dictionary, 5th edition, 2002, Oxford University Press, Oxford
125. In deciding whether he is aware of any producer, the CEO is not limited to information contained in the TCO application. Awareness may come about from any material or information that the CEO has to hand.
B.Am I aware of any producer of substitutable goods?
126. The CEO points to the email from Mr Hofmann to the ACBPS and to the Hofmann Newsletter and to the statement on Hofmann’s website that it manufactured new wind turbines. The CEO was placed “in a position of doubt”, it was submitted.[130] A position of doubt is not, in my view, a position of awareness or lack of awareness and is not a position permitted by s 269H(1)(b) or its correlative provision, s 269H(1)(d). I have to decide whether I am aware or not aware and nothing in between.
[130] Respondent’s submissions dated 29 August 2013 at [89]
127. In coming to a decision on that matter, I have kept in mind what it means to be a “producer in Australia of substitutable goods” for that is the issue of which I must be either aware or unaware. I have set out the relevant provisions of ss 269B, 269D and 269E at Attachment A and will not repeat them here. They do form the basis for the following paragraph.
128. Substitutable goods are goods produced in Australia. Hofmann produces goods in Australia. Of that I am aware on the material to which I have referred. The goods that it produces must be 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 TCO application can be put. I have evidentiary material to the effect that Hofmann make gearboxes for wind turbines but I also have evidentiary material from Mr Murray that gear boxes for wind turbines vary. Whether Hofmann can produce goods capable of being put to the use of the goods that are the subject of the TCO application, I do not know on the evidence.
129. Even if it can produce such goods, Hofmann will only be taken to have produced the goods in Australia if the goods satisfy the criteria in s 269D. That means that they must be wholly or partly manufactured in Australia and not less than one quarter of the factory or works costs is represented by the sum of value of Australian labour, Australian materials and factory overhead expenses incurred in Australia in respect of the goods. That requires an examination of financial records of Hofmann and the criteria are not satisfied by a claim by Mr Hofmann that Hofmann made 70% of the parts two years ago when they “designed and Made over” two of Vestas’ gearboxes. To be fair to Mr Hofmann, he does not claim that he meets the financial criteria set out in s 269D. If it turns out that they are not manufactured in Australia in their entirety, I must be satisfied that at least one substantial process of manufacture takes place in Australia before I can be satisfied that they are partly manufactured in Australia. I have no evidence about that and can come to no view about it.
130. It follows that I have concluded that I am not aware of any producer in Australia of substitutable goods in respect of the goods that are the subject of the TCO application.
CONCLUSION
131. For the reasons I have given, I have decided that I am satisfied that the TCO application lodged by Vestas with the CEO meets the criteria set out in ss 269H(1)(a). I am also not aware of any producer in Australia of substitutable goods. It follows from s 269H(1) of the Customs Act that the TCO application is a valid application. Therefore, I set aside the decision of the CEO dated 28 August 2012 and substitute a decision that the TCO application lodged by Vestas on 14 August 2012 is accepted as a valid application under s 269H(1) of the Customs Act.
LEGISLATIVE SCHEME
132. Australia regulates the importation of goods for a variety of reasons. Among them is the regulation of importation to comply with its quarantine laws. Other reasons include economic and commercial considerations. They have foundations in social and community considerations that, in turn, underpin the country’s social and economic infrastructure. Reasons of that sort lead to the enactment of a variety of laws. The Customs Act is one example.
General outline
133. Part VIII of the Customs Act provides for the payment and computation of any import duty payable on imported goods. If the rate of import duty has varied, generally the rate is that in force when the goods entered Australia for home consumption.[131] Import duty is payable at that time of entry.[132] The rate of import duty payable in respect of goods is not dealt with in the Customs Act but in the Customs Tariff Act 1995 (CT Act). 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.[133] For most purposes, those classifications are set out in Schedule 3 of the CT Act or, in relation to goods that originated in a number of specified countries, under Schedules 5, 6 and 7.
[131] Customs Act, s 132(1)
[132] Customs Act, s 132AA(1), item 1
[133] 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.
134. 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 appears at first sight to apply to the goods. Provision is made in Schedule 4 for concessions. Among them are goods subject to a TCO. Part XVA of the Customs Act regulates TCOs.
Criteria for determining whether a TCO will be made
A. Core criteria
135. The CEO will not make a TCO unless the application for it meets the core criteria. That is the effect of s 269P, which is found in Part XVA of the Customs Act. Section 269C sets out what is required in order to meet the core criteria:
“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.”
Other provisions expand on the three sub-criteria that must be met on the day the application was lodged: i.e. there were (1) no substitutable goods; (2) produced in Australia; (3) in the ordinary course of business.
B.Sub-criteria
B.1Sub-criterion: substitutable goods
136. The expression “substitutable goods” is defined in s 269B(1):
“.. 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.”
B.2Sub-criterion: goods produced in Australia
137. Section 269D sets out the meaning of the expression “goods produced in Australia”.[134] The general principles are set out in s 269D(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; and
(ii)the value of Australian materials; and
(iii)the factory overhead expenses incurred in Australia in respect of the goods.”
[134] Customs Act; s 269B(1)
B.2.1Sub-criterion: goods produced in Australia – partly manufactured in Australia
138. For the purposes of Part XVA of the Customs Act, “… 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.”[135] The expression “substantial process in the manufacture of the goods” is not defined but s 269D(3) makes it clear that certain operations do not constitute a substantial process in the manufacture of the goods:
[135] Customs Act; s 269D(2)
“Without limiting the meaning of the expression substantial process in the manufacture of the goods any of the following operations or 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.”
The CEO may direct that these costs and value are determined in a specified manner by making a written instrument and publishing it in the Gazette.[136] I am not aware that the CEO has chosen to do so.
B.2.2Sub-criterion: goods produced in Australia – calculating factory or works costs of the goods
[136] Customs Act; ss 269D(4) and (5)
139. The CEO may publish directions in the Gazette that the way the factory or works cost of goods, value of Australian labour, Australian material or factory overhead expenses incurred in Australia in respect of goods are to be determined in a specified manner.[137]
[137] Customs Act; s 269D(4) and see also s 269D(5) providing, in effect, that they are to be interpreted by reference to those rules applicable to regulations. Since the repeal of s 48 of the AI Act, the interpretation of regulations has been determined according to the Legislative Instruments Act 2003. Section 13(1)(a) of that legislation provides that the AI Act applies to their interpretation as if they were an Act.
B.3Sub-criterion: “in the ordinary course of business”
140. Section 269E provides for the circumstances in which goods, which are the subject of a TCO application, are taken to be produced in Australia in the ordinary course of business for the purposes of Part XVA other than those in s 269Q.[138] Those circumstances vary according to whether the goods are made-to-order capital equipment but I will set out only that provision relating to goods other than made-to-order capital equipment. Section 269E(1) provides:
“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.”
[138] Section 269Q is concerned with goods requiring repair and that is not relevant in this case.
141. Section 269E(2) applies if the goods that are substitutable goods are made-to-order capital equipment. That is a reference to:
“… 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.”[139]
[139] Customs Act; s 269E(3)
Goods that 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.”
Making a TCO application
142. A TCO is made under the Customs Act and not under the CT Act. Section 269F(1) provides that a person may apply to the Chief Executive Officer of Customs (CEO) for a TCO in respect of goods. I have set the section out in full at [28] above.
CEO’s obligation to screen a TCO application
143. The CEO has an obligation to screen each application under s 269H(1) of the Customs Act. That provision, and related provisions, are set out at [31]-[34] above.
Processing a valid application
144. I will not set out all of the provisions relating to the CEO’s obligations in processing a valid application. It is, however, important to have a sketch of those provisions for they provide the wider context in which the CEO screens a TCO application under s 269H.
A. Giving notice of the TCO application
145. As soon as practicable after accepting a TCO application as a valid application, the CEO must publish a notice in the Gazette setting out the information required by s 269K(1). Included in that information is the fact that the application has been lodged, the identity of the applicant and the proposed importer of the goods if not the applicant.[140] The notice must also provide:
“… a description of the goods to which the application relates including a reference to the Customs tariff classification that, in the opinion of the CEO, applies to the goods; …”[141]
[140] Customs Act; s 269K(1)(a), (aa) and (ab)
[141] Customs Act; s 269K(1)(b)
146. Finally, the notice must invite:
“… any persons who consider that there are reasons why the TCO should not be made to lodge a submission with the CEO not later than 50 days after the gazettal day.”[142]
In the case of a TCO application that has not been reprocessed under s 269N, the “gazettal day” is a reference to the day on which the CEO publishes a notice in respect of the application in the Gazette under s 269K(1).[143]
B.Avenues by which submissions may be made to the CEO by third parties in respect of the TCO application
[142] Customs Act; s 269K(1)(c)
[143] Customs Act; s 269B(1)
147. Any submission that is lodged with the CEO as a result of the notice in the Gazette must comply with the requirements of ss 269K(2) and (3). Those requirements relate to the form of the submission, its content and the manner of its lodgement with the CEO. They mirror the requirements set out in s 269F(2) and (4) in relation to a TCO application. Once lodged, the submission is taken to have been lodged on the same day as the TCO application. The time within which a person must lodge any submission is effectively 50 days after the notice published in the Gazette. That follows from s 269K(4), which provides:
“If a person lodges a submission later than 50 days after the gazettal day in respect of a TCO application without being invited by the CEO to do so under section 269M, the CEO must not take the submission into account in determining whether to make a TCO.”
148. Section 269M(1) provides a way in which the CEO may invite a submission to be made:
“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.”
The submission must comply with the requirements to s 269M(2) and be lodged in the same manner as is specified in relation to the application for a TCO. Once lodged, it is taken to have been lodged on the same day as that TCO application.[144] These provisions mirror the requirements of those relating to submissions made in response to the notice in the Gazette under s 269K. So too does s 269M(5) when it provides that if a person refuses or fails to lodge a submission within 150 days after the gazettal day, the CEO must not take that submission into account in determining whether to make a TCO.
[144] Customs Act; s 269M(3)
C.Avenues by which the CEO may request information
149. Section 269M also gives the CEO power to request information when it provides in s 269M(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 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.”
150. If a person receives an invitation to supply information or produce a document but refuses or fails to respond within the time period but does so at a later time, “… the CEO must not take that submission, information, document or material into account in determining whether to make a TCO.”[145]
[145] Customs Act; s 269M(5)
151. For the purposes of dealing with a TCO application, the CEO has a further power to obtain information provided the power is exercised within 150 days starting on the gazettal day. It is a power to:
“… give a copy of all, or 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.”[146]
[146] Customs Act; s 269M(6)
As with an invitation to make a submission, the CEO may not take any submission into account if it is lodged later than 150 days after the gazettal day.
Making a standard TCO
A.The steps
152. Section 269P sets out the steps the CEO must follow once he has accepted the TCO application as a valid application. The CEO has to 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 by the CEO;
that the application meets the core criteria.”
B.CEO’s failure to make a decision
153. If the CEO does not make a decision in respect of a TCO application within 150 days of the gazettal day, the CEO is taken to have decided that he is not satisfied that the application meets the core criteria.[147]
[147] Customs Act; s 269P(2)
C.What happens when CEO decides TCO application meets core criteria
154. If the CEO decides that a TCO application meets the core criteria, he must first make a written order declaring that the goods that are the subject of that application are goods to which an item in Schedule 4 of the CT Act provides.[148] The TCO must include a description of the goods including a reference to the customs tariff as declared by the CEO. In addition, it must include a statement of the day on which it is taken to have come into force or, if s 269SA applies, the date it came into force and then ceased to be in force.[149]
[148] Customs Act; s 269P(3) when read with 269B(1)
[149] Customs Act; s 269P(4). Section 269SA(1) provides that, if the CEO is satisfied that substitutable goods commenced to be produced between the date the application for the TCO was lodged and the date of the decision on that application, and that he would not have been satisfied that the application met the core criteria had production commenced on lodgement day, the TCO continues in force only until substitutable goods commenced production.
Operation of a TCO
155. In the case of a single application for a TCO and the core criteria having been met throughout the period from the date on which the application was lodged and the date the TCO was made, the TCO comes into force on the day the TCO was lodged.[150] If there is more than one application, the day the TCO comes into operation is the day on which the earliest application was lodged.[151]
[150] Customs Act; s 269S(1)(a)
[151] Customs Act; s 269S(1)(b)
156. In most cases, a TCO applies to goods that are the subject of a TCO that were or are first entered for home consumption on or after the day on which the TCO is taken to have come into force.[152]
[152] Customs Act; s 269S(2) A qualification is found in s 269SG in relation to the effect of revocation of a TCO on goods in transit and capital equipment on order.
Revocation of a TCO
157. Revocation of a TCO may come about either through the means of an application by a person claiming to be a producer of substitutable goods in relation to the goods covered by the TCO on a particular day[153] or at the initiative of the CEO.[154] Both begin with a belief that, if the TCO were not in force on that particular day and the application for the TCO had been made on that day, the TCO would not have been made.
[153] Customs Act; s 269SB(1)
[154] Customs Act; s 269SD
158. The first means is provided for under s 269SB. The application is based on the producer’s having the requisite belief.[155] The producer must provide the information required and follow the procedures set out in s 269SB. Section 269SF provides for the CEO to gather his own information but it must be in writing.[156] The CEO’s authority is found in s 269SF(1):
“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.”
[155] Customs Act; s 269SB(1)
[156] Customs Act; s 269SF(2)
If, within the period of time allowed, a person refuses or fails to supply information or produce a document or material as requested but then supplies the information, document or material, the CEO must not take it into account in determining whether to revoke a TCO.[157]
[157] Customs Act; s 269SF(3)
159. The CEO’s obligation to make a decision on the request for revocation of a TCO is set out in s 269SC(1):
“Not later than 60 days after lodgement of a request for revocation of a TCO, and after having regard to the request and to any other information, document or material given to the CEO under section 269SF, 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 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.”
160. If it is the CEO who has the requisite belief, he may publish a notice in the Gazette declaring his intention, subject to s 269SD(1AB), to revoke the TCO from a particular day and inviting any person who might be affected by the revocation to give him a written submission within 28 days.[158] The CEO has 60 days from the date of the publication of the notice within which to make a decision. He must do so:
“… after consideration of the matters raised in any submissions made in response to the invitation and of any other relevant matters:
(a)decide whether or not he or she is satisfied of the matters referred to in paragraph (1AA)(b); and
(b)if the CEO is so satisfied – make an order revoking the TCO with effect from the intended revocation day.”[159]
[158] Customs Act; ss 269SD(1AA)(c) and (d)
[159] Customs Act; s 269SD(1AB)
The remaining provisions in s 269SD go on to make provision for variations of the decisions the CEO might make.
Review of the CEO’s decisions to reject a TCO application
161. Section 273GA(1)(m) provides that applications may be made to the Tribunal for review of a decision under s 269H(1) to reject an application for a TCO.
I certify that the one hundred and sixty one preceding paragraphs are a true copy of the reasons for the decision herein of
Deputy President S A Forgie,Signed: .......(sgd)................................................
Leah Berardi Associate
Date of Hearing 29 August 2013
Date of Decision 8 October 2013
Counsel for the Applicant Mr G Davies QC and Mr J Slonim
Solicitor for the Applicant Mr S Small and Ms W Wong
PricewaterhouseCoopers
Solicitor for the Respondent Mr J Millea
Customs Legal Unit
If an instrument is a legislative instrument, it must be registered in the Federal Register of Legislative Instruments established under s 20 of the LI Act. Certain consequences, set out in ss 31 and 32, follow from a failure to register as required under either Division 2 or 3 of Part 4 of the LI Act.
Section 6(d) is subject, however, to the qualifications in s 9 (relating to Rules of Court) and, more relevantly in this context, s 7(1). The table set out in s 7(1) describes instruments that are not legislative instruments for the purposes of the LI Act. Item 24 describes “Instruments that are prescribed by the regulations for the purposes of this table.” Regulation 7 of the Legislative Instruments Regulations 2004 (LI Regulations) prescribes the instruments mentioned in Schedule 1 to it for the purposes of Item 24 of s 7(1). Item 5 of Part 1of Schedule 1 of the LI Regulations prescribes “An instrument prescribing or approving a form”.
As a written instrument by the CEO approving a form under s 4A(1) of the Customs Act is an instrument approving a form, it comes within Item 5 with the result that the CEO’s approval of the TCO application is not a legislative instrument.
The path to this conclusion is easy enough to follow if the reader is aware that s 4A(2) of the Customs Act does not mean what it says and is aware that any reference to s 46A of the AI Act necessarily requires a visit to the LI Act and the Legislative Instruments Regulations 2004 (LI Regulations) to work out the status of the instrument. It is not easy if the reader is not well versed in those matters. If s 4A(2) were repealed, it would be a straighter path and one without the distraction of a provision that would seem to have no legal or practical effect.
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