RPB2 Pty Ltd trading as Reliance Pacific and Chief Executive Officer of Customs
[2012] AATA 694
•9 October 2012
[2012] AATA 694
Division GENERAL ADMINISTRATIVE DIVISION File Number(s)
2012/0782
Re
RPB2 Pty Ltd trading as Reliance Pacific
APPLICANT
And
Chief Executive Officer of Customs
RESPONDENT
Decision
Tribunal Deputy President J W Constance
Date 9 October 2012 Place Melbourne The reviewable decision of the Chief Executive Officer of Customs made 11 March 2011 (set out in Tariff Advice Number 20063300) to classify the subject goods under Tariff Classification 3923.90.00, is affirmed.
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Deputy President J W Constance
Catchwords
CUSTOMS - classification of goods - entitlement to Tariff Concession Order 9501125 - of polymers of propylene - articles for the conveyance or packing of goods, of plastics - Smartpads - decision under review is affirmed.
Legislation
Customs Tariff Act 1995, s 7(1), sch 2, sch 3, ch 39
Cases
Chinese Food and Wine Supplies Pty Ltd v Collector of Customs (Vic) (1987) 72 ALR 591
Collector of Customs v Agfa-Gevaert Limited (1995-96) 186 CLR 389
Re Tridon Pty Ltd and Collector of Customs (1982) 4 ALD 615REASONS FOR DECISION
Deputy President J W Constance
facts
Unless otherwise stated the following findings of fact are based on the evidence of Edward Stubbs, the Managing Director of Loadhog Limited.
Loadhog Limited is a company operating in the United Kingdom and which “specialises in the design and manufacture of products designed to solve handling and logistics problems within the supply chain for a wide range of industries from postal to retail.”[1]
[1] Exhibit A1 para.4.
One of the products manufactured by Loadhog Limited is the Smartpad. This product is imported into Australia by the applicant.
A common method of transporting a large number of glass products, such as bottles, is to stack them in layers on pallets. The Smartpad is used to separate the layers. It is manufactured from polypropylene and has rounded corners and a profiled edge. The profiled edge is angled at 60 degrees to the horizontal with a pitch of 15mm and a thickness of 7.5mm. The thickness of the remainder of the pad (which is a very large proportion of its total area) is approximately 3mm, with a variation + or – 0.5mm. The pads are imported in two different sizes being 1420mm x 1090mm and 1000mm x 1200mm.
The following diagrams appear in the patent documents relating to the Smartpad. They show the waved edge of a pad and its use in a stack of bottles[2].
[2] Exhibit A1, attachment B.
Smartpads are manufactured by injection moulding in a single process. Once the pad is removed from the mould it is a complete product and no further manufacturing process is required.
Within the trade in which Smartpads are used, they are variously referred to as “slip sheets”, “sheets”, “layer pads” or “divider boards”.
In his statement made 24 May 2012[3], Mr Stubbs described the use of the pads as follows:
Smartpads can be placed underneath and above rows of bottles in a stack and the profiled edge provides stability by causing the bottles to move to the centre of the sheet. The profiled edge of the sheet acts as a barrier to drop and impact forces and eliminates bottle scuffing.
[3] Exhibit A1 para.11.
In marketing material issued by Loadhog Limited the Smartpad is described as follows:
Used on both short and tall packs, the Layerpads are equally re-useable, recyclable, hygienic and directly interchangeable.
Where Smartpad™ differs from conventional pads is its profile. The waved edge not only provides stability, but it also encourages bottles to migrate to the centre of the pad when subject to the vibration seen during transit.
In addition the Smartpad™ profile acts as a barrier when the pallet is subject to both drop and impact forces. The design also facilitates unparalleled efficiency within the filler, improves the safety of pack movement pre-strapping, and is a significant factor in the elimination of bottle scuffing.[4]
[4] Exhibit A1, attachment A.
issues for determination
It is necessary to determine the following:
(a)What is the correct classification of the Smartpad under the Customs Tariff Act 1995 for the purpose of determining the customs duty payable (if any) in respect of the importation of the goods?
(b)Depending on the classification of the Smartpad, are the goods entitled to the benefit of Tariff Concession Order 9501125?
the dispute between the parties and the relevant classifications
The applicant claims that the correct classification of the goods is under Schedule 3, Chapter 39, 3920.20.00 which reads:
3920 OTHER PLATES, SHEETS, FILM, FOIL AND STRIP, OF PLASTICS, NON-CELLUAR AND NOT REINFORCED, LAMINATED, SUPPORTED OR SIMILARLY COMBINED WITH OTHER MATERIALS
……………………………………
3920.20.00 – Of polymers of propylene 5%
Further it is argued that if this is the correct classification the applicant is entitled to claim the benefit of Tariff Concession Order 9501125 and duty is not payable.
The respondent argues that the correct classification is under Schedule 3, Chapter 39, 3923.90.00 which reads:
3923 ARTICLES FOR THE CONVEYANCE OR PACKING OF GOODS, OF PLASTICS; STOPPERS, LIDS, CAPS AND OTHER CLOSURES,OF PLASTICS:
…………………………………..
3923.90.00 – Other 5%
the act AND RULES
The various classifications, including those set out above, are contained in Schedule 3 of the Customs Tariff Act.
Subsection 7(1) of the Act provides :
The Interpretation Rules must be used for working out the tariff classification under which goods are classified.
The Interpretation Rules are set out in Schedule 2 of the Act. They relevantly provide:
Classification of goods in Schedule 3 shall be governed by the following principles:
1. The titles of Sections, Chapters and sub-Chapters are provided for ease of reference only; for legal purposes, classification shall be determined according to the terms of the headings and any relative Section or Chapter Notes and, provided such headings or Notes do not otherwise require, according to the following provisions:
…
3. When by application of Rule 2(b) or for any other reason, goods are, prima facie, classifiable under two or more headings, classification shall be effected as follows:
(a)The heading which provides the most specific description shall be preferred to headings providing a more general description. However, when two or more headings each refer to part only of the materials or substances contained in mixed or composite goods or to part only of the items in a set put up for retail sale, those headings are to be regarded as equally specific in relation to those goods, even if one of them gives a more complete or precise description of the goods.
…
(c)When goods cannot be classified by reference to 3(a) or 3(b), they shall be classified under the heading which occurs last in numerical order among those which equally merit consideration.
Schedule 3 Chapter 39 includes a number of Notes to assist with classification. Note 10 reads:
In 3920 and 3921, “plates, sheets, film, foil and strip” applies only to plates, sheets, film, foil and strip (other than those of Chapter 54) and to blocks of regular geometric shape, whether or not printed or otherwise surface-worked, uncut or cut into rectangles (including squares) but not further worked (even if when so cut they become articles ready for use).
principles applicable
The following principles are applicable in determining the issues in dispute in this application.
1)Classification under Schedule 3 of the Act is to be determined in accordance with the Rules set out in Schedule 2.[5]
2)As a first step the subject goods should be objectively identified in the condition in which they are imported; identification is not determined by the intention of the importer in importing the goods or of the manufacturer in producing them.[6]
3)Visual inspection will not necessarily be sufficient to identify the goods; further evidence may be required “to ascertain the relevant characteristics of the goods.”[7]
4)Identification of the goods “cannot be controlled by the description of the goods adopted in the nomenclature of the Tariff.”[8]
5)Evidence of how goods are described by those who trade in or use the goods may be relevant, but not conclusive, in identifying the goods.[9]
6)In identifying the goods reference may be had to their design features.[10]
7)Once the goods have been identified it is then necessary to match the goods as identified to the correct classification in Schedule 3.
8)“All the descriptive terms, both specific and generic, by which the goods may fairly be identified may be relevant to the classification of the goods within the Tariff”.[11]
9)In classifying the goods evidence of the characteristics of the goods and/or the use to which the goods are to be put after importation may be relevant, depending upon the wording of the classification heading.[12]
consideration
[5] Customs Tariff Act 1995 (Cth) s7(1).
[6] Chinese Food and Wine Supplies Pty Ltd v Collector of Customs (Vic) (1987) 72 ALR 591 at 599.
[7] Chinese Food and Wine Supplies Pty Ltd v Collector of Customs (Vic) supra.
[8] Re Tridon Pty Ltd and Collector of Customs (1982) 4 ALD 615 at 620.
[9] Re Tridon Pty Ltd and Collector of Customs (1982) supra at 620.
[10] Re Tridon Pty Ltd and Collector of Customs (1982) supra at 621.
[11] Re Tridon Pty Ltd and Collector of Customs (1982) supra at 620.
[12] Re Tridon Pty Ltd and Collector of Customs(1982) supra at 621.
Identification of the goods
In this case an inspection of the goods without more would not necessarily result in their accurate identification. It is necessary to take into account the evidence of Mr Stubbs and the evidence in the documents attached to his statement to accurately identify the goods. However the identification of the goods is not in issue.
Based on the evidence of Mr Stubbs, I am satisfied that the goods are properly identified as polypropylene pads which are utilised to separate layers of glass products, such as bottles, during their transportation on pallets.
Classification of the goods
I am satisfied that the Smartpads are properly classified as coming within 3923, i.e. that they are “articles for the conveyance or packing of goods, of plastics”. My reasoning is as follows.
The goods are described by Mr Stubbs, the Managing Director of the manufacturing company, as having the following purposes in addition to being a means of separating layers of bottles:
·the profiled edge provides stability by causing the bottles to move towards the centre of the Smartpad;
·the profiled edge acts as a barrier to drop and impact forces;
·the profiled edge eliminates bottle scuffing.
This description is consistent with that contained in the marketing material attached to Mr Stubb’s statement.[13] The description in the marketing material points out that the Smartpad differs from conventional pads, (for which one could read “sheets”), “ín its profile”[14] (emphasis added). The material refers to an additional difference in that it improves the safety of pack movement pre-strapping.[15] I note also that the Smartpads are described as “contoured layer pads”[16] (emphasis added).
[13] Exhibit A1,attachment A, p.4.
[14] Exhibit A1,attachment A, p.4.
[15] Exhibit A1,attachment A, p.4.
[16] Exhibit A1,attachment A, p.3.
A third source of description of the goods is contained in the United Kingdom patent granted in respect of the pads.[17] The pad is recognized as an invention and states that “[the] object of the invention is to provide slip sheets that inhibit ‘walking’ and prevent slipping upon shock loading.”[18] The nature of the invention is described as follows:
Therefore, the slip sheet 62 as shown in Figures 16 to 19 and in accordance with the present invention comprises a flat substantially rectangular board 63 having marginal portions 64 formed with corrugations 66, 66 extending perpendicularly from their edges and merging into the general plane of the board.
In use, the downwardly projecting corrugations 65 restrain the tops of the bottles 20 (or cans) in a layer L on which the slip sheet 62 is placed, then the bottoms of the next layer of bottles can slide down the upwardly projecting corrugations 66 along one side of the slip sheet 62 as that layer is pushed laterally en masse on to the board 63, whereafter the upwardly projecting corrugations 66 restrain the bottoms of those bottles, while their tops are restrained by the downwardly projecting corrugations 65 of the next slip sheet 62.
From curved corner portions of the board 63 radiate diverging corrugations 65X, 66X to ensure that ‘walking’ of bottles 20 from the corners of layers L is not possible.[19]
[17] Exhibit A1 attachment B.
[18] Exhibit A1 attachment B p.2 of the text.
[19] Exhibit A1 attachment B, p.9 of the text
Considering the various descriptions of the goods I am satisfied that they come precisely within classification 3923 in that they are articles for both the conveyance of goods and for the packing of goods and are of plastics. The pads as described fulfil the purpose of conveyance in that they are designed to prevent the escape of items and the collapse of stacks on movement. They fulfil the purpose of packing in that they separate the levels of, and contain the movement of, items. There is nothing in the evidence before me to suggest that the goods have alternative uses.
It is argued on behalf of the applicant that “the Smartpads are sheets, film and/or strips of regular geometric shape”[20] and thus come within classification 3920. The applicant relies on note 10 in referring to the pads being “blocks of regular geometric shape.”
[20] Statement of Facts and Contentions of the Applicant filed 24 May 2012 para.43.
I do not agree that the pads are properly classified as sheets, film or strips. A sheet connotes an item of uniform thickness, be it very thin as a bed-sheet, or of much greater thickness, as a sheet of building material. In this case it is the very feature of the waved edge which gives the goods their special character and which causes the pad to cease to be properly described as a “sheet”. The edge is of greater thickness than the remainder of the pad; without the edge the goods could properly be described as “sheets.” It is illogical to describe an invention in respect of which a patent has been granted as a mere “sheet”.[21] The granting of the patent highlights the true nature of the goods; it is inconceivable that a patent would be granted in respect of a sheet of polypropylene.
[21] In Collector of Customs v Agfa-Gevaert Limited (1995-96) 186 CLR 389 at 402 the High Court referred to the need to apply logic and common sense.
By reason of their thickness in proportion to their area and the waved edge the pads cannot be classified as “film”. The Oxford English Dictionary defines film as “a membrane” and membrane as “any thin, often pliable, sheet or layer, esp. one forming a barrier or lining.”
The goods are not properly classified as “strip” as their width is too great in comparison to their length. The Dictionary defines strip as “a narrow piece (previously of textile material, paper, or the like; hence gen.) of approximately uniform breadth.”
The waved edge of the pads prevents their being properly described as a regular geometric shape.
The applicant argued that “the types of goods classified into heading 3923.20 are goods which can be considered ‘primary’ packing goods. That is, goods of a type which:
(a)you place a product within in order to bring it to the end user;
(b)are required to contain a product (ie stoppers, lids, caps or other closures).”[22]
I do not accept this argument. The word “primary” does not appear in heading 3923 and there is no reason to read the heading down in the way proposed by the applicant. Furthermore, there is a semi-colon rather than a colon after “PLASTICS” where it first appears in the heading. This indicates that the reference to “STOPPERS, LIDS, CAPS AND OTHER CLOSURES” is a separate description of goods in addition to “ARTICLES FOR THE CONVEYANCE OR PACKING OF GOODS” rather than a qualification of the meaning of the preceding words.
[22] Statement of Facts and contentions of the Applicant dated 24 May 2012 para.51.
Further it was argued on behalf of the applicant that at the point of importation the goods had the appearance of rectangular sheets of plastic and therefore the application of any further tests, especially in relation to the use to which they may be put, is unnecessary. I do not accept this argument. Clearly, even on observation, the goods are more than simply rectangular sheets of plastic. The approach advocated by the applicant is too simplistic and fails to take into account all of the principles to which I have referred.
I conclude that the Smartpads are properly classified under 3923.
Even if I was satisfied that the goods are prima facie classifiable under both 3923 and 3920 (which I am not), in accordance with Rule 3(a) the more specific heading (i.e. 3923) is to be preferred over the more general. If the goods could not have been classified in accordance with Rule 3(a), they would have been classified under 3923 as being the later of the two competing possible classifications (Rule 3(c)).
Tariff Concession Order 9501125
As I have concluded that the goods are to be classified under 3923 it is unnecessary that I decide whether this Tariff Concession Order is applicable. However had I decided that 3920 was applicable I would have decided that the order did not apply for the reasons put forward by the respondent in the Respondent’s Statement of Facts, Issues and Contentions filed 7 June 2012 and at the hearing. These reasons are that the pads cannot be properly described as “boards”, they do not have a “planed surface” and they do not have a thickness of 4.5mm.
conclusion
The reviewable decision of the Chief Executive Officer of Customs made 11 March 2011 (set out in Tariff Advice Number 20063300) to classify the subject goods under Tariff Classification 3923.90.00, will be affirmed.
I certify that the preceding 35 (thirty five) paragraphs are a true copy of the reasons for the decision herein of Deputy President J W Constance.
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Associate
Dated 9 October 2012
Date(s) of hearing 13 September 2012 Counsel for the Applicant Mr Richard Niall SC Solicitor for the Applicant Mr Andrew Hudson, Hunt & Hunt Advocate for the Respondent Mr James Millea Solicitor for the Respondent Mr Roger Northcote, Customs Legal Services Branch
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