Renault Australia Pty Ltd v The Chief Inspector, Valuation Administration, Bureau of Customs

[1977] FCA 69

ADL1INISTRATIVE APPEALS TRIBONAI,

No. 77/104

Re: RENATJLT (AUSTRALIA) PTY. LTD.

And:	THE CHIEF INSPECTOR,
VALUATION N ) M I N I ~ T I O X , -
BUREAU O F CUSTOXS.

DECISION

The Tr ibuna l dec ldes t o r e v i e w t h e demand made

b y t h e Collector f o r t h e payment of customs duty amounting

I

to $38 ,920 .57 which R e n a u l t (Wholesa l e ) P ty . L td . pa id

I '

u n d e r p r o t e s t a n d w h i c h was p a l d i n r e s p e c t of c e r t a i n

I

C .K.D. cars r e f e r r e d t o i n warrant number 007161 and

d e t e r m l n e s t h a t t h e p r o p e r d u t y p a y a b l e i n r e s p e c t of

t h o s e goods is $38,669.75.

D a t e d e i g h t h t h i s d a y of September 1977

, ,

/ ' 2 Member

,

Member

i

!

2.

REASONS FOR THE DECISION

The ques t lon which fa l l s f o r t h e T r i b u n a l ' s

de t e rmina t ion is t h e v a l u e f o r d u t y o f a shipment of Renaul t

motor vehic les which were e n t e r e d f o r home consumption on

26 A p r i l 1977 by Renaul t Wholesa le P ty . L td . , a company

which is t h e s o l e c o n c e s s i o n a i r e i n Aus t ra l ia for a l l

Renault mo to r veh ic l e s expor t ed t o t h i s c o u n t r y b y t h e

French manufac turers , Regie N a t i o n a l e d e s U s i n e s Renaul t .

We s h a l l refer t o t h e first of these compzn ies a s t he

Vholesale company, and t o t h e s e c o n d as Renault France. The

Wholesale company is a l s o t h e sole c o n c e s s i o n a i r e f o r

Peugeot vehlcles exported by Peugeot Automobile ,	a	French
c o r p o r a t i o n a s s o c i a t e d w i t h R e n a u l t F r a n c e .

Renaul t France is a large corpora t ion which h a s

a t l eas t two A u s t r a l i a n s u b s i d i a r i e s o r s u b - s u b s i d i a r i e s ,

namely the Wholesa l e company and Renaul t Aus t ra l ia P t y . L t d .

( t o which we s h a l l refer as R e n a u l t A u s t r a l i a ) . R e n a u l t

France makes the wel l -known motor vehicles and motor vehicle

par ts which bear i ts name and which are s o l d i n many

c o u n t r i e s . R e n a u l t v e h i c l e s a r e advertised f o r sa le a n d s o l d

t h r o u g h o u t A u s t r a l i a u n d e r t h e b r a n d name or f o r e i g n t r a d e

mark "Renault". They are i m p o r t e d i n a "comgletely lrnocked

down" or d i sa s sembled cond i t ion . These veh ic l e s are known

as C.K.D. v e h i c l e s , a term which d is t inguishes them f rom

C.B.U. , o r " c o m p l e t e l y b u i l t up" v e h i c l e s . The Wholesale

company u s u a l l y acts as the impor t e r , t hough Renault

A u s t r a l i a s o m e t i m e s i m p o r t s t h e v e h i c l e s . After i m p o r t , t h e

,. r.. - --L:.:.-

I ! r' 8 '.L- C.K.D. v e h i c l e s are assembled, using soae components of

Aust ra l ian manufac ture . The compara t ive va lue of t h e

and domestic components is ag reed between t h e

app l i can t and r e sponden t . Af t e r a s sembly , t he veh ic l e s

I

. . . /3.

3.

are d i s t r i b u t e d t o d e a l e r s who se l l t h e m by r e t a i l t o t h e

p u b l i c . Some d e a l e r o u t l e t s are owned b y t h e R e n a u l t

o r g a n i z a t i o n , others are n o t . A n e x t e n s i v e a d v e r t i s i ~ ~ g dud.

promot ion campa ign keeps the Renau l t b rand and the cu r ren t

models of Renaul t v e h i c l e s b e f o r e t h e p u b l i c , a n d i t is

common g round tha t adve r t l s ing and p romot ion (wh ich we

aggregate as " a d v e r t i s i n g " ) is e s s e n t i a l t o t h e w i n n i n g

a n d r e t e n t i o n m a r k e t f o r t h e of a s h a r e of t h e A u s x r a l i a n market. The

var ious b rands of new cars is marked by

in t ense compe t i t i on , and by ex tens ive adve r t i s ing wh ich

commends	e i t h e r t h e b r a n d	or brand and model	of	new	motor
v e h i c l e s .

The c o s t of Australian a d v e r t i s i n g i s borne € o r

t h e m o s t p a r t b y R e n a u l t A u s t r a l i a . We have no evidence

as t o why a d v e r t l s e s t h e v e h i c l e s i m p o r t e d , the Wholesa l e company imports and Xenaul t A u s t r a l i a

but i n our view t h e

d i f f e r e n c e i n f u n c t i o n is not important . Each company is

part o f t h e R e n a u l t c h a l n o f d i s t r i b u t i o n a n d w e s h a l l

refer t o t h e m c o l l e c t i v e l y as t h e A u s t r a l i a n S u b s i d i a r i e s .

A c o n t r i b u t i o n is made by d e a l e r s t o a f u n d f o r

" c o - o p e r a t i v e a d v e r t i s i n g " w h i c h a d v e r t i s e s t h e b r a n d a n d

cur ren t models and also t h e l o c a t i o n o f t h e d e a l e r s '

premises . On o c c a s i o n s , d e a l e r s a t t h e i r own expense

pub l i sh adve r t i s emen t s wh ich desc r ibe Renau l t veh ic l e s and

which s e t out p a r t i c u l a r s o f t h e i r d e a l e r s h i p s . R e n a u l t

France makes	no	f i n a n c i a l c o n t r i b u t i o n t o a d v e r t l s i n g
expend i tu re .

A d v e r t i s i n g i n A u s t r a l i a is t h e r e f o r e p a i d for by

, ,,~

t h e A u s t r a l i a n s u b s i d i a r i e s a n d by local d e a l e r s o f R e n a u l t

v e h i c l e s . I t is t h e t o t a l i t y of t h i s a d v e r t i s i n g w h i c h creates

and he lps t o s u s t a i n a favourable marke t sen t iment and

. . . /4.

4.

thereby assists i n s e l l i n g of Renau l t veh ic l e s . The cost

o f a d v e r t i s i n g is b o r n e b y t h e c o m p a n i e s i n t h e c h a i n of

d i s t r i b u t i o n a n d is set off a g a i n s t t h e r e v e n u e e a r n e d i n

t h e s e l l i n g o f v e h i c l e s . T h e p r o f i t s c;f t h e A u s t r a l i a n

s u b s i d i a r i e s are a f f e c t e d b y t h e i r e x p e n d i t u r e on

a d v e r t i s i n g ; l i k e w i s e i n t h e case o f t h e d e a l e r s .

A l t h o u g h t h e c o s t o f a d v e r t i s i n g is r e f l e c t e d

i n t h e p r i c e w h i c h t h e p u b l i c p a y s €or t h e cars which they

b u y , a d v e r t i s i n g is no doubt thought to increase t h e

number of v e h i c l e s s o l d a n d t o s u p p o r t t h e p r i c e s c h a r g e d .

If a d v e r t i s i n g effects an i n c r e a s e i n sales, i t f ac i l i t a t e s

t h e a l l o c a t i o n of f i x e d costs over a l a r g e r number of

veh ic l e s and may p e r m i t r e s u l t a n t d i m i n u t i o n i n u n i t costs

t o b e r e f l e c t e d i n t h e p r ice c h a r g e d f o r e a c h v e h i c l e .

Whatever be the economics of a d v e r t i s i n g

expend i tu re , however , t he f ac t is t h a t t h e e x p e r i e n c e d

management of t h e R e n a u l t c h a i n o f d i s t r i b u t i o n f i n d s i t

d e s i r a b l e t o e x p e n d s u b s t a n t i a l a m o u n t s on a d v e r t i s i n g i n

Australia. The A u s t r a l i a n s u b s i d i a r i e s a n d t h e local

d e a l e r s n o d o u b t c o n c e i v e t h e e x p e n d i t u r e t o be j u s t i f i e d

because they make t h e J u d g m e n t t h a t a d v e r t i s i n g i n c r e a s e s

t h e i r g r o s s p r o f i t s . I t may be i n f e r r e d t h a t t h e c o s t o f

a d v e r t i s i n g is r e c o u p e d b y s e l l i n g new R e n a u l t v e h i c l e s ,

I a n d t h a t t h e a d v e r t i s i n g cost i n c u r r e d b y t h e A u s t r a l i a n

I s u b s i d i a r i e s is recouped i n t h e p r i c e s c h a r g e d f o r v e h i c l e s

bought from them. I t may also b e i n f e r r e d t h a t t h e

...I I a d v e r t i s i n g c o s t i n c u r r e d b y d e a l e r s is r e c o u p e d i n t h e

prices c h a r g e d b y t h e m f o r t h e v e h i c l e s b o u g h t b y t h e p u b l i c

I t may b e f u r t h e r i n f e r r e d t h a t , a s sa les t a k e p l a c e , t h e

prices charged are a s o u n d i n d i c a t i o n of t h e value of t h e

v e h i c l e s s o l d . A u s t r a l i a n a d v e r t i s i n g b e n e f i t s Renaul t

1

. . . j 5 .

. c

5 .

: j ' . . .

1 France not mere ly by adding t o o r m a i n t a i n i n g its

s u b s i d i a r i e s ' p r o f i t s b u t b y j n c r e a s i n g o r m a i n t a i n i n g t h e

t u r n o v e r of Renaul t F r a n c e ' s e x p o r t i n g b u s i n e s s . R e n a u l t

F r a n c e d e r i v e s a b e n e f i t , a n d its s u b s i d i a r i e s p a y t h e c o s t .

I n a d d i t i o n t o t h e c o n t r o l w h i c h R e n a u l t F r a n c e

may exercise over the I ' iholesale company's a c t i v i t i e s , Renaulz

France e n t e r e d i n t o a c o n t r a c t with the Wholesa l e company

gove rn ing the r e l a t ionsh ip be tween them as e x p o r t e r a n d

impor t e r of motor vehic les . The TYholesale company is the reby

g r a n t e d t h e e x c l u s i v e r l g h t t o sell R e n a u l t v e h i c l e s i n

Australia a n d t h e u s e o f t h e R e n a u l t t r a d e mark f o r t h a t

purpose . Renaul t France is g i v e n t h e b e n e f i t o f a number

o f con t r ac tua l unde r t ak ings by the Wholesa l e company ,

i n c l u d i n g u n d e r t a k i n g s w i t h r e s p e c t t o after-sales

warranties a n d a d v e r t i s i n g . A t r a n s l a t i o n o f t h e A d v e r t i s i n g

Clause ( c l . XV) r e a d s :

I t

The Importer and RENAULT c o n s i d e r t h a t e x t e n s i v e

a n d w e l l - e x e c u t e d a d v e r t i s i n g i s e s s e n t i a l n o t o n l y

t o t h e r e a l i s a t i o n o f optimum sales f i g u r e s , b u t a l s o

t o t h e successful enhancement of t h e D u b l i c image -~ b o t h

of RENAULT as a whole	and	of	t h e l o c a i r e p r e s e n t a t i o n
of RENAULT.

RENAULT w i l l s u p p l y t h e I m p o r t e r w i t h t h e

necessary a d v e r t i s i n g a n d sales promotion material.

The Impor t e r unde r t akes to supp ly RENAULT, a t t h e

beg inn ing o f t he commerc ia l yea r , w i th a d e t a l l e d

e s t i m a t e , c o m p l e t e with e x p l a n a t o r y n o t e s , o f h i s

a d v e r t i s i n g e x p e n d i t u r e .

Fur thermore , t h e Importer and RENAIiLT agree t h a t

a cer ta in u n i t y of s t y l e i n t h e c r e a t i o n a n d

p r e s e n t a t l o n o f a d v e r t i s i n g i n its var ious forms is

e s s e n t i a l t o e n s u r e t h e m o s t e t f e c t i v e i m p a c t of such

adve r t i s ing th roughou t t he wor ld , each pa r ty d rawing

bene f i t f r o m t h e c o m b i n e d e f f o r t s o f t h e RENAULT

network T h e r e l a t i o n s h i p , b o t h c o r p o r a t e a n d c o n t r a c t u a l , i n a l l parts of the wor ld ."

between Renau1.t France and t h e Aus t ra l ian s u b s i d i a r i e s

p e r m l t s , i n t h e commercial i n t e r e s t s o f t h e g r o u p , the

ar rangement and co-ord ina t ion of the bus iness of expor t jng ,

. . . /6 .

! . . ' . 6.

1 . i m p o r t i n g , a s s e m b l i n g , d i s t r i b u t i n g , a d v e r t i s i n g a n d , n

some cases, r e t a i l s e l l i n g o f Renau l t veh ic l e s . The g r o u p ' s

arrangements cast t h e c o s t s of a d v e r t i s i n g upon Renault

Austral ia . These cos ts might have been cast upon t h e

Wholesale company o r upon any o t h e r A u s t r a l i a n s u b s i d i a r y

of Renaul t France or, f o r t h a t matter, upon Renault France.

I t d o e s n o t matter f o r t h e p u r p o s e s of de te rmining; the

' ! value -for duty of t h e i m p o r t e d v e h i c l e s , w h e t h e r t h e c o s t

o f a d v e r t i s i n g was borne by one o r o t h e r s u b s i d i a r y - what

1s r e l e v a n t is t h a t t h e cost of a d v e r t i s i n g R e n a u l t v e h i c l e s

u n d e r t h e R e n a u l t t r a d e mark was borne i n A u s t r a l i a b y

someone by arrangement with R e n a u l t France and was not borne

by R e n a u l t France. The r e l e v a n c e of t h a t fact t o t h e v a l u e

f o r d u t y a p p e a r s f r o m a c o n s i d e r a t i o n o f t h e s t a t u t o r y

hypothes is which	must	b e a d o p t e d i n o r d e r t o d e t e r m i n e	t h e
v a l u e f o r d u t y .

The d e t e r m i n a t i o n o f t h e v a l u e f o r d u t y is

governed b y t h e p r o v i s i o n s of S. 154 of t h e Customs A c t 1901.

a

i

I I T h a t s e c t i o n was inse r t ed by the Cus toms Amendment Act 1976

and came i n t o o p e r a t i o n on l Ju ly 1976 , Subs .154(2 ) r eads

' l as f o l l o w s :

I! ( 2 ) S u b j e c t t o s u b - s e c t i o n (3), t h e v a l u e

o f a n y i m p o r t e d g o o d s s h a l l , f o r t h e p u r p o s e s o f

t h e Customs Ta r i f f Act 1966-1976 (except in a case

where t h i s Act or t h a t Act p r o v i d e s o t h e r w i s e ) b e

t h e amount a s c e r t a i n e d i n a c c o r d a n c e w i t h t h e

Convention D e f i n i t i o n of Value."

I Ccnv The Defini t ion nt ion f Value is s e t o u t i n

l Schedule V I I , wh ich cons i s t s of two P a r t s . P a r t I is t h e

, ..v. .

I -'. -- -.. . .

,c	+c	I L	'	I	E n g l i s h t e x t	of	Annex	I	- Def in i t i on o f Va lue	-	adopted by
I . .

on t h e V a l u a t i o n of Goods f o r Customs

s i g n e d a t Brusse ls on 15 December 1950; and Dart I1

t e x t o f Annex I1 - I n t e r p r e t a t i v e N o t e s t o

t h e D e f i n i t i o n o f V a l u e . The Convention provisions ('CO which

. . . / 7 .

1

7.

we refer as t h e B r u s s e l s D e T l n i t i o n ) were in t ended for

adopt ion by the cus toms laws of the s igna to ry powers .

On i n c o r p o r a t l o n i n t o t h e A u s t r a l i a n Customs

Act, i ts a p p l i c a t i o n was m o d i f i e d b y c e r t a i n amendments t o

i t s terms i n c o r p o r a t i o n i n t h e S c h e d u l e o f t h e B r u s s e l s D e f l n i t i o n e n a c t e d i n s u b s . 154(3), b u t t h e v e r b a t i m

is

a clear i n d l c a t i o n of P a r l i a m e n t ' s i n t e n t i o n t o enact, as

t h e b a s i s o f A u s t r a l i a n c u s t o m s v a l u a t i o n law, t h e p r l n c i p l e s

which were commonly accep ted by the s igna to ry powers .

Article I(1) o f t h e B r u s s e l s D e f i n i t i o n p r o v i d e s :

I t (1) For t he pu rposes o f l evy ing ad va lo rem

d u t i e s o f c u s t o m s , t h e v a l u e of any goods imported

f o r home use s h a l l b e t a k e n t o b e t h e normal p r l c e ,

t h a t is t o s a y , t h e p r i c e w h i c h t h e y mould f e t c h a t

t h e time when the duty becomes payable on a sa le i n

the open marke t be-cween a buyer and a se l le r

independent of e a c h o t h e r . "

A nurnber o f t h e c o n c e p t s i n t h i s Art ic le are

e x p a n d e d i n o r a f f e c t e d b y s u b s e q u e n t p r o v l s l o n s of the

. B r u s s e l s D e f l n i t l o n b u t s u f f i c i e n t a p p e a r s i n t h i s Artjcle

t o show t h a t t h e B r u s s e l s D e f i n i t i o n p o s t u l a t e s a sale i n

c i rcumstances which may b e q u i t e d i s s i m i l a r f r o m t h e

c i r cums tances a t t endan t upon an a c t u a l sale.

I'lhen goods are s o l d b y a n e x p o r t e r t o an impor t e r

i n c i r c u m s t a n c e s o r upon terms which do not coincide w i t h

t he c i r cums tances and terms w h i c h t h e B r u s s e l s D e f i n i t i o n

assumes ( A r t i c l e s I ( 2 ) a n d 111) and p re - supposes (Ar t i c l e

I I ( l ) ) , t h e v a r i a t i o n i n c i r c u m s t a n c e s a n d terms may need

t o b e r e f l e c t e d i n	a	d i f f e r e n c e b e t w e e n t h e	actual	a n d t h e
. . ./g.

8 .

which may b e i m p o r t e d i n c i r c u m s t a n c e s a n d upon terms which

are a l m o s t i n P i n i t e l y v a r l o u s . I n a s c e r t d i n i n g t h e n o r m a l

pr ice , i t is t h e r e f o r e n e c e s s a r y t o p o s t u l a t e a n o t i o n a l

sale of the goods , and t o modify any ac tua l sale o f t h e

goods t o t h e i m p o r t e r b y e l i m i n a t i n g o r adding c i rcumstaaces

and terms s o t h a t t h e r e s u l t i n g n o t i o n a l sale is c o n s i s t e n t

w i th the a s sumpt ions and p re - suppos i t i ons expres sed i n t h e

B r u s s e l s D e f i n i t i o n . T h e n o t i o n a l sa le is, of c o u r s e ,

a r t i f ic ia l and its a r t i f i c i a l i t y will a p p e a r t h e more

s t r i k i n g as t h e circumstances and terms OP t h e n o t i o n a l

sale vary from t h e circumstances and terms o f t h e actual

sale . A l t h o u g h a r t i f i c i a l i t y is i n e v i t a b l e I f d i v e r s e

i m p o r t i n g t r a n s a c t i o n s are t o b e b r o u g h t t o a common base,

t h e p o s t u l a t e s o f t h e n o t i o n a l sa le may seem i n some cases

t o b e q u i t e u n r e a l . . T h i s is such a case.

I t is t o be assumed t h a t t h e R e n a u l t v e h i c l e s are

imported by a buyer who is independent of Renaul t France

and who b u y s t h e s h i p m e n t " i n t h e open marke t " (Ar t i c l e

I ( 1 ) ) . ' T h e price which the not iona l buyer would pay is

"presupposed" to be uninf luenced by "any commercial ,

f i n a n c i a l or o t h e r r e l a t i o n s h i p " w i t h R e n a u l t F r a n c e

( A r t i c l e I I ( l ) ( b ) ) , a n d t o b e " t h e sole cons ide ra t ion" €o r

t h e p u r c h a s e p r e - s u p p o s i t l o n s w h i c h c h a r a c t e r i z e ( A r t i c l e I I ( l ) ( a ) ) . The assumptions and

t h e "open market"

d i s t i n g u i s h i t f rom the real t r a d i n g s i t u a t i o n i n which t h e

sub jec t sh ipmen t was s o l d . To a s c e r t a i n w h e t h e r t h e " o p e n

market" condi t ions would occasion an adjustment in t h e p r i c e

a c t u a l l y p a i d , i t is n e c e s s a r y t o p o s t u l a t e a t r a d i n g

s i t u a t i o n w h e r e t h e r e is no commerc l21 , f inanc ia l or o t h e r

r e l a t i o n s h i p b e t w e e n t h e se l le r and t he buye r . In such a

p o s t u l a t e d t r a d i n g s i t u a t i o n , t h e b u y e r d o e s n o t h a v e t h e

. . ./g.

9.

s o l e c o n c e s s i o n f o r t h e i m p o r t a t i o n a n d sale of Renaul t

' veh ic l e s , and he compe tes wl th o the r s t o buy those veh lc l e s

i n " i h e open marke t " ( o r , t o adapt thc? T r e n c h t e x t o f t h e

Conven t ion , i n c i r cums tances o f " fu l l compe t i t i on" ) . I n

such a p o s t u l a t e d t r a d i n g s i t u a t i o n , t h e b u y e r is f r e e d

from any c o n t i n u i n g o b l i g a t i o n s t o R e n a n l t F rance ( e .g .

as t o i n f l u e n c e a d v e r t i s i n g or a f t e r - s a l e s s e r v i c e ) w h i c h w o u l d

t h e pr ice o f t h e v e h i c l e s . A l t h o u g h t h e n o t i o n a l

buyer 1s assumed t o b e e n t i t l e d t o m a r k e t t h e v e h i c l e s

wh ich he buys unde r the Renau l t t r ade mark (Ar t i c l e I I I ) ,

he d o e s n o t h a v e a n e x c l u s i v e r i g h t t o t h e use of t h e

t r a d e mark t h e seller (who may be assumed t o b e

Renaul t France) is p r e s u p p s s e d t o s e l l t h e s u b j e c t v e h i c l e s

on the open marke t , a t a p r l ce wh ich does no t reflect any

o b l i g a t i o n n o t t o s e l l t o o t h e r s i n t h e m a r k e t o r n o t t o

p e r m i t o t h e r s t o u s e t h e t r a d e mark.

The t r a d i n g s i t u a t i o n w h i c h is p o s t u l a t e d b y

the Brusse l s Conven t ion may be conceded t o b e a r t i f i c i a l ,

b u t t h e p o s t u l a t e s are s u f f i c i e n t l y clear t o e n a b l e t h e

s t a t u t o r y v a l u a t i o n t o b e u n d e r t a k e n . I f t h e n o t i o n a l

buyer were veh ic l e s , he wou ld no t unde r t ake i n c o m p e t i t l o n w i t h o t h e r i m p o r t e r s o f R e n a u l t

the same r e s p o n s i b i l i t y

for , a n d i n c u r t h e same costs o f , a d v e r t i s i n g as Renaul t

Austral ia now does . Adver t i s ing of t h e same kind would no

doubt cont inue , w o u l d n e c e s s a r i l y b e b o r n e b y t h e or s u b s t a n t i a l l y c o n t i n u e , bu t i ts c o s t

8 ,

company which would benef i t

by t h e e x p e n d i t u r e , v i z . , R e n a u l t France. Renaul t France ,

w i thou t a n Aus t r a l i an subs id i a ry impor t e r , wou ld unde r t ake

t h e defence and development of t h e A u s t r a l i a n market for

Renault v e h i c l e s , d e r i v i n g s u c h a s s i s t a n c e as it could f rom

t h e u n r e l a t e d i m p o r t e r s a n d f r o m t h e v a r i o u s d e a l e r s .

! . . ./IQ.

' I I

10.

Renaul t France w o u l d s e e k t o r e c o v e r t h e c o s t o f its

* a d v e r t i s i n g i n t h e prJ.ce of t h e vehicles s o l d To t h e

n o t i o n a l b u y e r . The B r u s s e l s D e f i n i t i o n wonld t h e r e f o r e

i n c l u d e i n t h e " n o r m a l p r i c e " o f each v e h i c l e a p r o p o r t i o n

of t h a t c o s t t r a d i n g s i t u a t i o n , R e n a u l t F r a n c e w o u l d b e a r . of a d v e r t i s i n g w h i c h , i n t h e h y p o t h e t i c a l

Th i s conc lus ion acco rds i n p r i n c i p l e w i t h t h e

conclus ion which the Cour ts of t h e U n i t e d Kingdom, France

and Germany h a v e a r r i v e d a t i n a p p l y i n g laws which, it

seems, are similar i n c o n c e p t t o S. 154. In Rolex Watch Co.

Ltd . v . - Commissioner of Customs and Excise (1956) 2 A l l E . R .

5 8 9 , t h e i n v o i c e pr ice of Rolex matches imported into

England by a sole c o n c e s s l m a i r e was u p l l f t e d t o g ive a

"norma l p r i ce" wh ich r e f l ec t ed t h e c o s t of E n g l i s h

adve r t i s ing . Denn ing L . J . ( a s h e t h e n w a s ) s a i d ( a t p .

591) :

"The i n v o i c e p r i c e , i n s o fa r as i t reflects t h e

i n t e r n a t i o n a l a d v e r t i s i n g , is r e f l ec t ing t h e va lue

of t h e g o o d s , b u t t h e i n v o i c e price does no t i nc lude

t h e c o s t o f t h e E n g l i s h a d v e r t i s i n g . I t h i n k t h a t

i t o u g h t t o b e i n c r e a s e d so as t o re f lec t t h e c o s t

of t h e E n g l i s h a d v e r t i s i n g . I t 1s on lg as a r e s u l t

of t h e E n g l i s h a d v e r t i s i n g , c o u p l e d w i t h t h e

i n t e r n a t i o n a l a d v e r t i s i n g , t h a t t h e Rolex watches

have the va lue which they have . Therefore (as t h e

referee h e l d ) , t h e v a l u e of the goods shou ld

i n c l u d e t h e a p p r o p r i a t e sum t o r e p a y t h e c o s t of

t h e a d v e r t i s i n g s p e n t i n m a k i n g a n d m a i n t a i n i n g t h e

market . "

I t was n o d o u b t r i g h t t o s a y t h a t R o l e x w a t c h e s

o n l y h a d t h e value t h a t t h e y h a d b e c a u s e of a d v e r t i s i n g , b u t

the measure of u p l i f t was n o t a r r i v e d a t by enqu i r ing whe the r

t h e va lue of each watch was enhanced by a p a r t i c u l a r p i e c e

of a d v e r t i s i n g . The u p l i f t was a r r i v e d a t b y " i n c l u d i n g t h e

a p p r o p r i e t e sum t o r e p a y t h e c o s t of t h e a d v e r t i s i n g s p e n t

making and main ta in ing the mar l te t" . The up l i f t is

t o ref lect t h e a s s u m p t i o n t h a t t h e c o s t of

I

. . . I l l .

* ’ 11.

a d v e r t i s i n g i n c u r r e d I n m a k i n g a n d m a i n t a i n i n g a market

‘ fo r b rand goods	is a cost which would be borne by the
manufac turer of	t h e b r a n d gvvds and Lhus reflected i n the

p u r c h a s e p r i c e p a i d by t h e n o t i o n a l b u y e r . The r e a s o n i n g

is c l e a r l y e x p r e s s e d b y the Federal Financ;! Court of the

Republ ic of West Germany, i n a Judgment ( re f . No. V I 1

74/58S) d e l i v e r e d on 15 October 1959:

I ,

Brand a d v e r t i s i n g is, because of its

c o n t e n t s , s o s t r o n s l y €ocused on an o b j e c t ,

i . e . t h e branded i tem a lone , and s o impersonal

i n i t s methods, t h a t it can be done by any f i r m ,

even one whlch is n o t i n v o l v e d i n t h e marke t ing

p r o c e s s of the a r t i c l e , and is therefore n o t

part of the t r a d i n g side of it a t a l l , e . g.

a d v e r t i s i n g a g e n c i e s , e tc . The e f fec t o f b r a n d

a d v e r t i s i n g a l w a y s r e m a i n s t h e same, however,

namely expans ion or main tenance of the market

for the branded item and t h e r e b y f o r t h e

manufac turer o r trade-mark owner. T h i s is

e v i d e n t , f o r e x a m p l e , when a merchan t ac t ive

i n t h e marke t ing p rocess (o f a branded a r t ic le )

retlres from the d i s t r i b u t i o n c h a i n . The

success achieved by h i s p r e v i o u s e f f o r t s i n the

area o f b r a n d a d v e r t i s i n g , r e m a i n s as expansion

o r maintenance of t h e market €or t h e branded

a r t i c l e a n d t h e r e f o r e f o r t h e market of the

manufac turer o r t rade-mark owner. The merchant

has merely t a k e n o v e r t h e marke t ing func t ion of

the manufac turer o r trade-mark owner, and

w i t h o u t this there would be n o p o i n t I n t h e

l a t t e r d i s t r i b u t i n g t h e i r goods as branded goods.

I t 1s obvious t h a t the economic equivalent of

c a r r y i n g o u t these g u a r a n t e e a n d a d v e r t i s i n g

f u n c t i o n s m u s t b e l o n g t o t he normal price of

such goods , w i thou t cons ide r ing whether t h e

m a n u f a c t u r e r o r trade-mark owner carries o u t

these f u n c t i o n s d i r e c t l y himself, or has them

c a r r i e d o u t by o t h e r s , who t o t h i s e x t e n t t a k e

o v e r h i s f u n c t i o n s . I’

The Court considered and adhered t o these p r i n c i p l e s i n t h e

fo l lowing year ( Judgment - ref. No. V I 1 40/60S d e l l v e r e d

on 19 October 1960).

’ I t does n o t f o l l o w , of c o u r s e , t ha t t h e sum

ac tua l ly expended on adve r t i s ing by a s o l e c o n c e s s i o n a i r e

who impor ts branded goods furn ishes w i t h mathematic

p r e c i s i o n the amount which is t o be a l l o c a t e d for u p l i f t i n g

t h e i n v o i c e p r i c e t o t h e n o r m a l p r i c e . The facts of the

. . -112.

n

12 .

. a

may, - a d j u s t m e n t f o r r e a s o n s o t h e r f o r exrvnple, show t h a t t h e i n v o i c e p r i c e r e q u i r e s

case

t h a n t h e r e c o u p m e n t o f

a d v e r t l s i n g e x p e n d i t u r e , or therc may bc some cxpcnd l tu rc

wh ich wou ld no t o rd ina r i ly be met by a manufac turer o r

t r a d e mark owner. Or t h e h y p o t h e t i c a l t r a t i i n g s i t u a t i o n

may r e q u i r e o t h e r a d j u s t m e n t s w h i c h may d iminish or o f f s e t

t h e u p l i f t f o r d o m e s t i c a d v e r t i s i n g . In t h e R o l e s Case,

P a r k e r L. J . reviewed a r e f e r e e ' s a s s e s s m e n t w h i c h a t t r i b u t e d

a p r o p o r t i o n o n l y of t h e a d v e r t i s i n g expenses as p r o p e r € o r

i n c l u s i o n i n the normal pr ice . He s a i d ( ( 1 9 5 6 ) 2 A l l E .R .

a t p . 594):

I t

To my mind, it is n o t i n e v e r y case . . . t h a t

a d v e r t l s i n g e x p e n d l t u r e o f t h i s s o r t will r e s u l t

i n ?A u p l i f t ; still less t h a t it will r e s u l t i n

a n u p i i f t a r r i v e d a t by a pure ly ma themat i ca l

c a l c u l a t i o n , a p p l y i n g t h e f u l l amount o f t h e

pu rchases . . . . ~f t he vendors t hemse lves had

borne t h e c o s t o f a d v e r t i s i n g i n t h i s c o u n t r y ,

t hey wou ld have sough t t o r ecove r a t l e a s t t h o s e

costs i n t h e p r i c e , as i n d e e d t h e y d i d w i t h t h e i r

i n t e r n a t i o n a l a d v e r t i s l n g , a n d , a l t h o u g h t h e r e is

no d i r e c t f i n d i n g o n t h e p o i n t , h a v i n g r e g a r d t o

that very wide margin between	s e l l e r ' s	p r i c e a n d
re ta i l p r i c e i n t h i s c o u n t r y ,	i t seems	t o me t h a t

they would have recovered such expenses . B u t ,

q u i t e a p a r t f r o m t h a t , t h e h y p o t h e t i c a l b u y e r s

w o u l d s u r e l y s a y t o t h e m s e l v e s ' I f t h e c o m p l a i n a n t s ,

as s o l e c o n c e s s i o n a i r e s , can a f f o r d t o pay X by way

o f l n v o i c e p r i c e a n d Y by way o f a d v e r t i s i n g a n d

stlll make a p r o f i t , t h e n s u r e l y I c a n a f f o r d t o

pay X p l u s Y ' . That may be o v e r s i m p l i f y i n g t h e

p o s l t i o n , b u t I see no answer t o it."

There may be an answer i n some cases i f t h e s o l e

c o n c e s s i o n a i r e is a s u b s i d i a r y of t h e e x p o r t e r a n d t h e

i n v o i c e pr ice h a s b e e n i n f l a t e d t o d i r e c t t h e w h o l e of t h e

p r o f i t i m m e d i a t e l y I n t o t h e h a n d s o f t h e e x p o r t e r ; b u t o n

,,-~.?:-.- the e v i d e n c e b e f o r e u s t h a t is n o t h e p r e s e n t case. I n

p r e s e n t case, t h e a d v e r t i s i n g e x p e n d i t u r e was i n c u r r e d

r e s p e c t OP various k i n d s o f a d v e r t i s i n g w h i c h was, i n

greater p r o p o r t i o n , u n d e r t a k e n by Renaul t A u s t r a l i a

, -

a t a n a t i o n a l l e v e l t o p r o m o t e t h e R e n a u l t t r a d e mark and

l

. . ./13.

I .

13.

R e n a u l t v e h i c l e s . A d v e r t i s i n g of t h i s k i n d , i n t h e n o t i o n a l

' t r a d i n g s i t u a t i o n p o s t u l a t e d by t h e B r u s s e l s C o n v e n t i o n ,

would bc undcrtakcn by Renaul t France. We a r r i v e a t t h j S

conc lus ion because we i n f e r t h a t t h e a c t u a l a d v e r t i s i n g

programme was the programme r e q u i r e d t o make and main ta ln

t h e m a r k e t a n d b e c a u s e , i n t h e n o t i o n a l t r a d i n g s i t u a t i o n ,

t h e i m p o r t e r - t h e n o t i o n a l b u y e r - would have had no

c o m m e r c i a l j u s t i f i c a t i o n f o r u n d e r t a k i n g a n e x t e n s i v e

campaign t o a d v e r t i s e t h e b r a n d o r t r a d e mark. After a l l ,

an impor t e r , exclusive whose i n t e r e s t s are no t s a fegua rded by an

concession agreement , would sharpen competi t lon

against h i m s e l f b y e x t e n s i v e b r a n d a d v e r t i s i n g .

The ma jo r i ty o f t he expend i tu re on edve rc l s ing

u n d e r t a k e n b y t h e s o l e c o n c e s s i o n a i r e of a b rand p roduc t

will u s u a l l y b e r e f l e c t e d i n t h e n o r m a l p r i c e . The r e l e v a n t ;

enqu i ry is w h e t h e r , i n t h e a b s e n c e o f a s o l e c o n c e s s i o n a i r e ,

t h e e x p e n d i t u r e on a d v e r t i s i n g w o u l d b e met b y t h e

manufac turer ( o r , i n a p p r o p r i a t e cases, t h e owner o f the

brand t rade mark) The . same conc lus ion was r e a c h e d i n

F rance by the Cour t o f Cassa t ion i n d e l i v e r i n g Its Judgment

on 4 November 1965 a l lowing an appea l by t h e Customs

a u t h o r i t i e s a g a i n s t t h e a c q u l t t a l o f one B e r t o l a f o r

unde r s t a t emen t of value. The Court s a i d :

I ,

. . . f o r a d v e r t l s i n g e x p e n s e s t o b e r e g a r d e d as

h a v i n g b e e n i n c u r r e d i n t h e i n t e re s t of t h e f o r e i g n

se l le r - w h e t h e r I n f u l l o r i n a propor t ion whlch

t h e p a r t i e s must e s t a b l i s h a n d , i n case of

d i sag reemen t , wh ich the Judge ru l ing on t h e facts

m u s t assess - it s u f f i c e s f o r s u c h e x p e n s e s t o

have been incu r red a t n a t i o n a l l e v e l b y t h e s o l e

d i s t r i b u t o r who h a s i n f a c t u n d c r t a k e n t o e s t a b l i s h

or m a i n t a i n a m a r k e t f o r t h e products and goods

s o l d u n d e r the t r a d e mark o f t h e f o r e l g n s u p p l i e r ,

i n t h e l a t t e r ' s s t e a d , w i t h o u t i t b e i n g n e c e s s a r y

t o a s c e r t a i n o r e s t a b l i s h t h a t t h e d i s t r i b u t o r

h a s d e r i v e d a n y p r o f i t from s u c h a d v e r t i s i n g . "

We t u r n now t o t h e specif ic h e a d s o f a d v e r t i s i n g

. . ./14.

14.

e x p e n d i t u r e i n c u r r e d by R e n a u l t A u s t r a l i a l n o r d e r t o

ascertain how much of that expendl-cure would have been met

by Renau l t P rance i f t he goods Impor t ed had been so ld in the

circumstances assumed and upon the terms pre-supposed by

the Brusse e x p e n d i t u r e u n d e r v a r i o u s h e a d s a n d , l s Conven t ion . The p a r t i e s h a v e d i s s e c t e d t h i s

f o r r e a s o n s upon which

we are n o t c o n c e r n e d t o comment, the p a r t l e s h a v e a g r e e d t h a t

some items b e e x c l u d e d f r o m c o n s i d e r a t i o n i n t h e c a l c u l a t i o n

of an u p l i f t upon t h e i n v o i c e p r i c e . Some items have been

appor t ioned so t h a t o n l y a propor t ion has been exc luded f rom

c o n s i d e r a t i o n . Where t h e p r o p o r t i o n h a s b e e n a g r e e d , we

adopt it w i t h o u t comment. The q u e s t i o n s f o r o u r d e t e r m i n a t i o n

re la te t o t h e d i s p u t e d p r o p o r t l o n o f c e r t a i n items v:hich, i n

t h e a p p l i c a n t ' s s u b m i s s i o n , o u g h t n o t t o b e t a k e n i n t o

account a t a l l o r , i n t h e case of some Items, o u g h t n o t t o

be t a k e n i n t o a c c o u n t t o t h e e x t e n t w h i c h t h e r e s p o n d e n t

proposes . I t is necessa ry t o refer t o these items seriatim.

Media A d v e r t i s i n g

The a p p l i c a n t s u b m i t s t h a t t h e r e is a large

p r o p o r t i o n of t h i s e x p e n d i t u r e w h i c h s h o u l d be exc luded , Tor

it is Renaul t " logo" i n c u r r e d f o r a d v e r t l s l n g w h i c h , t h o u g h i t c o n t a i n s t h e

or t r a d e mark o r c o n t a i n s a pho to o r o t h e r

r e p r e s e n t a t i o n o f a R e n a u l t v e h i c l e , is c a l c u l a t e d t o

f a c i l i t a t e r e c o g n l t i o n of t h e d e a l e r ' s p r e m i s e s w h e r e t h e

v e h l c l e s may be i n spec ted and t e s t -d r iven . The t e s t vthlch

i s i m p l i c i t l y p r o p o s e d i n t h e a p p l l c a n t ' s s u b m i s s i o n is

<,-~:CLy!?-- w h e t h e r t h e p r i m a r y o b j e c t i v e o f t h e a d v e r t i s i n g is t o

p r o m o t e t h e t r a d e m a r k o r w h e t h e r t h e p r i m a r y o b j e c t i v e i s

t o draw a t t e n t l o n t o t h e p l a c e s w h e r e R e n a u l t v e h i c l e s may

be found f o r in spec t lon and sale. An a d v e r t i s i n g a g e n t

whom t h e a p p l i c a n t c a l l e d s a i d t h a t " t h e a v a i l a b i l i t y of

, ,

I .

i / ... 115

I I

' I

15.

t h e car t h e i n s p e c t i o n o f t h e v e h l c l e a t f o r i n s p e c t i o n is t e r r i b l y i m p o r t a n t ” , a n d no doubt

the d e a l e r ‘ s p r e m l s e s is a

c r l t i c a l s t e p i n a p u r c h a s e r ’ s d e c i s i o n w h e t h e r t o b u y . E u t

i n t h e p o s t u l a t e d t r a d i n g s i t u a t i o n , t h i s v e r y f a c t o r w o u l d

r e q u i r e a d v e r t i s i n g of t h e s u b J e c t l r l n d t o be under taken ,

and the manufac turer mlght reasonably be e x p e c t e d t o e n s u r e

t h a t it a d v e r t i s i n g , b u t w h e t h e r was. The t e s t is n o t the purpose or o b j e c t i v e o f t h e

- t h e a d v e r t l s i n g c l e a r l y b e l n g

d e s i r a b l e as a n a i d t o m a r k e t i n g - t he cos t wou ld be bo rne

I n t h e n o t i o n a l t r a d l n g s i t u a t i o n b y t h e m a n u f a c t u r e r who

I

owns the t h e n o t i o n a l b u y e r , m l g h t t rade mark . Perhaps the uncommit ted impor te r ,

do some a d v e r t i s i n g o f t h i s k l n d

t o assist t h e d e a l e r s -who buy €rom him; or p e r h a g s t h e

d e a l e r s m l g h t c o n t r i b u t e a l i t t l e more than they present l !

do t o r e g i o n a l contends for t h e inclusion of o r n a t l o n a l a d v e r t i s i n g . The respondent

75% o f t h i s e x p e n d i t u r e , a n d

i n o u r CO-operat ive Advert is ing view t h e p r o p o r t i o n s h o u l d n o t b e less t h a n this.

A d v e r t i s i n g o f t h i s k i n d is i n o n e respect

d i s t ingu i shab le f rom med ia adve r t i s ing . . I t is p a i d for by a

8 . .

f u n d t o w h i c h t h e d e a l e r s c o n t r i b u t e t h e major p a r t , and

which has a s t r o n g e r o r l e n t a t i o n t o w a r d s l d e n t l f y l n g d e a l e r s ,

t h e i r premises a n d s e r v l c e s i n l o c a l areas. I n the n o t l o n a l

t r a d i n g s l t u a t i o n , t h e r e sponden t has a s sume6 tha t Renau l t

F rance wou ld con t r lbu te less t o t h l s f u n d t h a n t h e

A u s t r a l i a n s u b s i d i a r i e s c o n t r i b u t e , a n d h a s e x c l u d e d 75%

f r o m c a l c u l a t i o n . T h a t assessment a p p e a r s , i n o u r v l e w , t o

b e generous, b u t as no more is s o u g h t t o b e i n c l u d e d we

adopt 25% €or u p l i f t p u r p o s e s .

B rochures , P romot iona l D i sp lays , Sa l e s P romot ion , Exh ib l t i ons ,

Competi t ions,	Audience	Test	ing,	Research,	Technlcal	Costs	and-
Misce l laneous

The respondent would exclude 755 of t h e s e costs,

176

16.

and the a p p l i c a n t seeks t o e x c l u d e 100%. These c o s t s are

more closely related t o the m a r k e t i n g a c t i v i t i e s c o n d u c t e d

by dealers. Brochures are handed out by dealers; d i s p l a y s

a n d e x h i b i t i o n s may b e o r g a n i z e d a n d s t a f f e d b y dealers,

sales promotions may include programmes "mplemented w i t h i n

t he dealer network". In t h e n o t i o n a l t r a d i n g s i t u a t i o n ,

however , Senaul t France wou ld necessa r i ly assume the c o s t

of these a c t i v i t i e s t o t h e e x t e n t t o vrhich t h e n o t i o n a l

buyer and t h e dealers would not defray t h e c o s t s which t h e

A u s t r a l i a n s u b s i d i a r i e s now meet. 25% of these c o s t s is a

conse rva t ive estimate.

The c o s t s o f c o m p e t l t i o n s , t e s t i n g , research,

t e c h n i c a l c o s t s a n d m i s c e l l a n e o u s are cos t s wh ich t h e

d e a l e r s w o u l d n o t b e a r , a n d there seems t o be l i t t l e r eason

f o r p o s t u l a t i n g t h a t w h o l e s a l e i m p o r t e r s o p e r a t i n g i n a

f u l l y c o m p e t i t i v e market, uncommit ted in a n y way t o t h e i r

sellers ( excep t f o r t h e payment of a pr ice) w o u l d c o n t r i b u t e

s u b s t a n t i a l l y t o these k i n d s of expendi ture , and one would

i

c e r t a i n l y n o t e x p e c t that such f r e e l a n c e c o m p e t i t o r s would

cont r ibu te	75%.
We t h e r e f o r e decline t o r e d u c e t h e r e s p o n d e n t ' s
i n c l u s i o n	of components under these heads in t h e assessment

o f the v a l u e f o r d u t y .

S igns

The A u s t r a i l a n s u b s l d i a r i e s c o n t r i b u t e t o t h e c o s t

of erecting signs on dealers' premises . These s i g n s n o d o u b t

assist i n the marke t ing of Renaul t vehlc les , and they are,

one would think, a s i g n i f i c a n t means of b r i n g i n g p o t e n t i a l

b u y e r s t o t h e place where t h e y may i n s p e c t t h e v e h i c l e s .

The expense of a s s i s t i n g t h e dealers i n t h i s way is a normal

expense which might be borne - a t least t o some e x t e n t - b y

. . . /17.

L

17.

i

a p a r t y whose interests c o n s i s t c o t so much i n s e l l i n g

I

I

l Renaul t vehicles by wholesale i n c o m p e t i t i o n wi th o t h e r

' I w h o l e s a l e r s , p r o m o t i n g i n b u t the sales of all Renaul t

# l v e h i c l e s i r r e s p e c t i v e o f t h e w h o l e s a l e r who s u p p l i e s t h e m

t o t h e d e a l e r . s i t u a t i o n t o a t t r i b u t e a t I t is r e a s o n a b l e i n t h e n o t i o n a l t r a d i n g

least some c o s t o f s i g n s t o t h e

I

sel ler who s e l l s t o t h e wholesaler. 25% of t h e c o s t j s

I

' i

s o u g h t f o r i n c l u s i o n i n t h e v a l u e f o r d u t y a n d we a l l o w

-.-

t h i s p e r c e n t a g e as b e i n g well w i t h i n a r easonab le marg in .

Before c a l c u l a t i n g the a p p r o p r i a t e p e r c e n t a g e s

of u p l i f t upon t h e f i n d i n g s we have made, i t is necessary t o

refer t o t h r e e f u r t h e r ma tze r s .

1

i a p p l i c a n t t h e u p l i f t f i g u r e r o p o s e s t h e F i r s t , a d i s c o u n t i n g f

1	t o re f lec t	t h e p r o p o r t l o n	of	t o t a l u n i t
1

sales made th rough company-owned d e a l e r s h i p s . \'le see no

r eason suppor t ing such a d i scoun t ing . The price p a i d by t h e n o t i o n a l b u y e r i n t h e n o t i o n a l t r a d l n g s i t u a t i o n w o u l d b e qu i t e una f fec t ed by Renau l t F rance ' s owner sh ip of re ta i l

i	d e a l e r s h i p s .
I

I	Second, it is agreed	between	t h e p a r t i e s	t h a t	the
I

1

I

u p l i f t

s h o u l d

be

d i scoun ted

ag r

an

by

p

ed

rcen tage

accoun t

t o

I

1 for the

components domest ica l ly of a s sembled the v h ic l e s wh ich are

p roduced . A s t h a t a g r e e m e n t l e a d s u s t o r e f r a i n

I f r om c ns ide r ing ques t ions wh ich migh t have been r a i sed

i wi th respect t o t h e e f f e c t o f d o m e s t i c a s s e m b l y a n d p a r t

p roduc t ion of b r a n d g o o d s , t h e T r i b u n a l r e s e r v e s t h e s e

t< q u e s t i o n s €or c o n s i d e r a t i o n i f t hey shou ld i n f u t u r e be

canvassed before it .

The t h i r d matter re la tes t o t h e u s e of t h e i n v o i c e

1 prices of t h e SUbJeCt shipment as t h e basis for t h e u p l i f t

. /18.

1s.

c a l c u l a t i o n . T h e par t ies a g r e e d t h a t t h e l n v o l c e prices,

when u p l i f t e d b y t h e a p p r o p r i a t e p e r c e n t a g e , wlll cor re spond

w i t h t h e normal price. We do no t ques t ion that agreenwnL

e x c e p t t o n o t e t h a t t h e u p l i f t i n g of t h e i n v o i c e p r i c e

o c c a s i o n s a n i n c r e a s e i n d u t y , t h e b u r d e n df vrhich f a l l s

i

I ,

upon t h e n o t i o n a l b u y e r ( A r t l c l e T ( ~ ) ( c ) ) . I t may be t hough t

t h a t t h e b u r d e n o f i n c r e a s e d duty w o u l d a f f e c t t h e p r i c e

w h i c h t h e n o t i o n a l b u y e r w o u l d b e p r e p a r e d t o p a y a n d t h a t ,

by some k i n d of c i r c u l a r a d j u s t m e n t , t h e no rma l p r i c e o n c e

a r r i v e d a t m u s t b e t r e a t e d as p r o v i s i o n a l o n l y a n d l i a b l e

t o downward a d j u s t m e n t t o c o m p e n s a t e t h e n o t i o n a l b u y e r for

t h e i n c r e a s e d d u t y . S u c h a downward adJus tmen t wou ld r e su l t

' I ' I

i n t he du ty be ing bo rne i n p a r t b y t h e sel ler and such a

hypo thes i s i s n o t c o n s i s t e n t with t h e B r u s s e l s D e f i n i t i o n .

The ma themat i ca l ca l cu la t ions wh ich , I n t h e l i g h t

o f our f i n d i n g s , we nom make are se t out i n t h e se t s of

co r re spond lng f igu res p rov lded by the parties t o t h e T r i b u n a l

af ter t h e c l o s e of h e a r i n g . Most o f t h o s e f i g u r e s are drawn

from documents or evidence in respect of which we made a n

o r d e r u n d e r s . 3 5 ( l ) ( b ) , a n d i t is unnecessa ry to r ep roduce

them i n t h e s e reasons. We a c c e p t t h e a g r e e d f l g u r e s , n o t l n g

t h a t t h e p a r t i e s agree t h a t t h e combined Renault and

P e u g e o t f l g u r e s s u p p l y t h e a p p r o p r i a t e b a s e s f o r c a l c u l a t l o n .

We d e t e r m l n e t h a t t h e a p p r o p r i a t e p e r c e n t a g e o f u p l i f t is

1.84% The r e s u l t is t h a t t h e v a l u e f o r d u t y s h o u l d b e

$110,4S5.00 upon whlch duty is t o b e a s s e s s e d a t 35%.

1

The a p p l i c a n t , n o t i n g t h a t t h e r e s p o n d e n t c o n t e n d e d

'I

* :'

.I

. I

i ,,.. . .

, \ >

f o r a n u p l l f t f i g u r e of 1.849, addressed an argument t o us

I .

I . .

c o m p a r e d t h e r e l a t l v e s i t u a t i o n s of an A u s t r a l i a n

who a d v e r t i s e s i n Austral ia , and a €ore ign

manufacturer who a d v e r t i s e s i n A u s t r a l i a or who p r o c u r e s

1

. . . 119.

19.

its s u b s l d i a r y 'manufac tu re r bea r du ty t o do so. The goods of t h e f o r e i g n

upon t h e amount expended on domesric

adverLisulg, Lhe goods 01 Lhe A u s t l a l i d n m a n u f ~ c t u r e r do n o t .

A s it Def in i t ion which would seems t o us, t h a t r e s u l t is i n t e n d e d b y t h e B r u s s e l s

b r m g t o d u t y t h e c d s t s of t h e

f o r e i g n m a n u f a c t u r e r i n e s t a b l l s h i n g a n d m a l n t a l n i n g h i s

market I n t he impor t lng coun t ry . The B r u s s e l s D e f l n i t i o n

i n t e n d s t o p r e v e n t t h e f o r e i g n m a n u f a c t u r e r f r o m a v o l d i n g t h e i n t e n d e d l i a b i l i t y by n o t i o n a l l y a n n i h l l a t i n g t h e

I

p a r t i c u l a r a r r a n g e m e n t s b y which he may p r o c u r e a company

w i t h i n t h e I m p o r t i n g c o u n t r y t o meet t h e c o s t s o f

e s t a b l i s h i n g a n d m a l n t a i n l n g h i s m a r k e t i n c o m p e t i t i o n

w i t h t h e d o m e s t i c m a n u f a c t u r e r . ? : h e t h e r t h a t c o n c l u s i o n

j u s t is n o t a r e l e v a n t c o n s i d e r a t i o n for t h i s T r i b u n a l .

I n t h e r e s u l t , we de termlne the amount of duty a t

$38,669.75.