Solu Pty Ltd and Comptroller-General of Customs
[2019] AATA 2584
•15 August 2019
Solu Pty Ltd and Comptroller-General of Customs [2019] AATA 2584 (15 August 2019)
Division:TAXATION & COMMERCIAL DIVISION
File Number(s):2014/0549-0551; 2014/1055; 2014/3295-3304
Re:Solu Pty Ltd
APPLICANT
AndComptroller-General of Customs
RESPONDENT
DECISION
Tribunal:Senior Member A Poljak
Date:15 August 2019
Place:Sydney
The decisions under review are set aside and remitted to the Respondent for the appropriate calculation of duty and/or refund payable for the subject goods having regard to the following directions:
i.The Shadow Lines, Profile Handles and CD and DVD Rack are to be classified as BASE METAL MOUNTINGS, FITTINGS AND SIMILAR ARTICLES FOR FURNITURE … within the first part of heading 8302 (classification 8302.42.00);
ii.The Mounting Track is to be classified as a “BRACKET” within the second part of heading 8302 (classification 8302.50.00);
iii.The Aluminium Rails, Aluminium Edge Profiles and Cabinet Finger Recess are to be classified under heading 9403 as FURNITURE…PARTS (classification 9403.90.00); and
iv.TCO 0823641 applies to the Shadow Lines and Profile Handles.
.......................[sgd].............................................
Senior Member A Poljak
CATCHWORDS
CUSTOMS AND EXCISE – customs duty – duty paid under protest – tariff classification of subject goods – aluminium extrusions in profile – interpretation of Customs Tariff Act 1995 – identity of goods in their condition as imported – whether cutting subject goods to size after importation affects classification – whether subject goods are materials not parts – specific design features and characteristics of subject goods for intended use - application of tariff concession order – decision under review set aside and remitted
LEGISLATION
Customs Act 1901 (Cth) ss 163, 167, 269TG, 269TJ
Customs Tariff Act 1985 (Cth) s 7, Schs 2, 3
Customs Tariff (Anti-Dumping) Act 1975 (Cth)Customs Regulations 1926 (Cth) reg 126(1)(e)
CASES
Comptroller-General of Customs v Pharma-A-Care Laboratories Pty Ltd [2018] FCAFC 237
Re Acrow Australia Ltd and Collector of Customs (NSW) [1985] AATA 234
Re Acrow Australia Limited v The Collector of Customs of New South Wales [1986] FCA 208
Re Gissing and Collector of Customs (1977) 1 ALD 144
Re National Panasonic (Australia) Pty Limited and Collector of Customs, (New South Wales) [1985] AATA 132 (5 June 1985)
Re Tridon Pty Ltd and Collector of Customs (1982) 4 ALD 615
Times Consultants Pty Ltd v Collector of Customs (QLD) (1987)16 FCR 449
Tubemakers of Australia Pty Ltd and B.T.M. Agencies and Collector of Customs [1980] AATA 64Vernon-Carus Australia Pty Ltd and Thomas Creevey and Associates v Collector of Customs [1995] FCA 1283
SECONDARY MATERIALS
Commonwealth of Australia Gazette (No. TC 04/01, 14 January 2004)
Commonwealth of Australia Gazette (No. TC 08/42, 22 October 2008)
World Customs Organization, Harmonized Commodity Description and Coding System – Explanatory Notes (Fifth edition, 2012)REASONS FOR DECISION
Senior Member A Poljak
15 August 2019
These proceedings concern the tariff classification of aluminium extrusions in profile form imported by the Applicant, Solu Pty Ltd (“Solu”) from China (“the subject goods”) under Schedule 3 of the Customs Tariff Act 1985 (Cth) (“Tariff Act”).
The decisions under review are several decisions:
i.To demand ordinary duty imposed by the Tariff Act that was paid under protest pursuant to section 167 of the Customs Act 1901 (Cth) (“Customs Act”); and
ii.To refuse refunds of duty (including duty imposed by the Anti-Dumping Act) sought under section 163 of the Customs Act and the Customs Regulations 1926 (Cth) (“Regulations”).
The issues to be determined in these proceedings are:
i.The classification of each subject good under the Tariff Act as imported (“the classification issue”); and
ii.If any of the subject goods are of the classification 8302.42.00 as contended by the Applicant: whether either one of two Tariff Concession Orders (“TCOs”), namely TCO 0312463 or TCO 0823641 applies (“the TCO issue”).
THE CLASSIFICATION ISSUE
Section 7(1) of the Act requires that the Interpretation Rules, found in Schedule 2, be used for working out the tariff classification under which the goods are classified. Schedule 3 divides the tariff classifications into Sections, Chapters and sub-Chapters. Within Sections or Chapters there are often Section Notes and Chapter Notes and within Chapters, there are headings and subheadings, sometimes accompanied by their own Notes. The proper procedure is to enquire whether the subject goods fall within a heading, and then to check that the goods fall within one or other of the subheadings.
The correct heading must be determined applying Interpretative Rule 1 and, if applicable, Interpretative Rule 2(a) in Schedule 2 to the Tariff Act. Interpretative Rule 1 relevantly requires that “…classification shall be determined according to the terms of the headings and any relative Section and Chapter Notes…”.
Interpretative Rule 2(a) relevantly provides:
“Any reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as presented, the incomplete or unfinished article has the essential character of the complete or finished article. It shall also be taken to include a reference to that article complete or finished (or falling to be classified as complete or finished by virtue of this Rule), presented unassembled or disassembled”.
As to subheadings, Rule 6 provides:
“For legal purposes, the classification of goods in the subheadings of a heading shall be determined according to the terms of those subheadings and any related Subheading Notes and, mutatis mutandis, to the above Rules, on the understanding that only subheadings at the same level are comparable. For the purposes of this Rule the relative Section and Chapter Notes also apply, unless the context otherwise requires”.
The following (four figure) headings, subheadings and (eight figure) classifications of the Tariff Act are the likely possibilities for the classification of the subject goods:
7604
ALUMINIUM BARS, RODS AND PROFILES:
7604.10.00
- Of aluminium, not alloyed
7604.21.00
-- Hollow profiles
7604.2
- Of aluminium alloys:
7604.29.00
-- Other
8302
BASE METAL MOUNTINGS, FITTINGS AND SIMILAR ARTICLES SUITABLE FOR FURNITURE, DOORS, STAIRCASES, WINDOWS, BLINDS, COACHWORK, SADDLERY, TRUNKS, CHESTS, CASKETS OR THE LIKE; BASE METAL HAT-RACKS, HAT-PEGS, BRACKETS AND SIMILAR FIXTURES; CASTORS WITH MOUNTING OF BASE METAL; AUTOMATIC DOOR CLOSERS OF BASE METAL:
8302.4
- Other mountings, fittings and similar articles:
8302.41.00
-- Suitable for buildings
8302.42.00
-- Other, suitable for furniture
8302.49.00
-- Other
8302.50.00
- Hat-racks, hat-pegs, brackets and similar fixtures
9403
OTHER FURNITURE AND PARTS THEREOF:
9403.90.00
- Parts
The Respondent contends that the correct heading is 7604. Solu contends the correct heading is 8302 or 9403. The parties agree that, due to the combined effect of the Section and Chapter Notes referred to below, the Tribunal should consider the three headings in contention in the following order: 8302; then 9403; then lastly 7604:
i.Note 1(d) to Chapter 94 excludes from that Chapter “Parts of general use as defined in Note 2 to Section XV, of base metal…”. That Note 2 to Section XV defines “parts of general use” as meaning, relevantly, “… (c) Articles of …8302.” Therefore any goods classifiable under 8302 cannot be classified under 9403.
ii.Note 2 to Section XV (which includes Chapters 76 and 83) also provides: “the articles of Chapters 82 or 83 are excluded from Chapters 72 to 76”. Therefore goods classifiable under 8302 cannot be classified under 7604.
iii.Note 1(k) to Section XV excludes from that section: “(k) Articles of Chapter 94”. That certainly means that any goods classifiable under 9403 cannot be classified under 7604. However, the parties agree that Note 1(d) to Chapter 94 creates an exception. Goods excluded from Chapter 94 by that Note, including articles of 8302, are not “Articles of Chapter 94” for the purposes of Note 1(k) to Section XV.
Agreed Facts In Relation To The Subject Goods
The subject goods are the following profiles illustrated in the Applicant’s Product Catalogue 2011.03 Updated (“Catalogue”):
(i)Aluminium Shadow Lines;
(ii)Aluminium Shadow Lines - Cabinet Finger Recess;
(iii)Aluminium 2x1 Rail;
(iv)Bold Line Profile Handles;
(v)Slim Line Profile Handles;
(vi)Aluminium Edge Profiles;
(vii)Aluminium CD Rack For Drawers;
(viii)Aluminium DVD Rack For Drawers; and
(ix)Shelf Supports - Aluminium Mounting Track.
All the subject goods except for the mounting track are designed to be used, and will be used after importation, almost always after being cut into suitable length pieces, for installation into wooden furniture. Such furniture will include kitchen cabinets which are often designed to be “built-in”, free-standing cabinets and units, and shelfing units. All such furniture if imported would be classified under heading 9403.
The Shadow Lines, illustrated at page 2.01 of the Catalogue:
i.are imported in lengths of 2.4m, 3.6m and 4.4m;
ii.are rarely installed in furniture in the lengths imported, but rather will almost always be cut after importation to the length(s) required for installation by the user;
iii.may be cut on an angle if installed into a corner;
iv.are designed to be installed by means of clips, no drilling of the profile is required for such installation;
v.when installed provide the furniture with structural support, a recess enabling the grasping of the edge of a door or drawer adjacent to the installed profile, eliminating the need for a handle and are an attractive aluminium feature; and
vi.are described as “handle free solutions” in the Catalogue and are not handles.
The Shadow Lines - Cabinet Finger Recess illustrated at page 2.04 of the Catalogue:
i.are imported in lengths of 2.4m, 3.0m and 3.6m;
ii.are rarely installed in furniture in the lengths imported, but rather will almost always be cut after importation to the length(s) required for installation by the user;
iii.are designed to be installed by cutting a slot into the edge of the furniture, lining the slot with glue, and forcing the tongue into the slot;
iv.when installed provide a recess enabling the grasping of the edge of a door or drawer adjacent to the installed profile, eliminating the need for a handle, and protect the edge of the furniture; and
v.are described as “handle free solutions” in the Catalogue and not as “handles”.
The Aluminium 2x1 Rail illustrated at page 2.05 of the Catalogue:
i.are imported in lengths of 3.6m;
ii.are rarely installed in furniture in the lengths imported, but rather will almost always be cut after importation to the length(s) required for installation by the user;
iii.may be cut on an angle if installed into a corner;
iv.are designed to be installed either flat or inverted by means of clips, no drilling of the profile is required for such installation; and
v.when installed provide the furniture with significant structural support, and an attractive aluminium feature. They may be installed immediately under a heavy benchtop, and behind the top of drawers or doors.
The Bold Line Profile Handles, illustrated at pages 2.07 – 2.08 of the Catalogue, and the Slim Line Profile Handles, illustrated at page 2.09 of the Catalogue:
i.are imported in lengths of 2.4m;
ii.are rarely installed in furniture in the lengths imported, but rather will almost always be cut after importation to the length(s) required for installation by the user;
iii.the one tongue models are designed to be installed on an edge of a drawer or door by cutting a slot into the edge of the door or drawer, lining the slot with glue, and forcing the tongue into the slot;
iv.include a two-tongue Boldline model and a two-tongue Slimline model. These models are installed by cutting slots into the two edges they will be installed on, filling those slots with glue, and pushing the tongues into the slots. That may result in the profile piece being installed in the middle of a completed door or drawer, rather than on an edge of a door or drawer as per the one-tongue models;
v.when installed, are intended to provide a recess along the entire edge which may be grasped to open or close the door or drawer; protects the edge of the furniture and provides an attractive aluminium feature; and
vi.are described as “handle free solutions” in the Catalogue, as well as “Boldline Handles” and “Slimline Handles”.
vii.(The Applicant considers the goods to be recessed handles. The Respondent disputes that these profiles are “handles” at all, on the basis that they are installed along an entire edge of a door or drawer, and considers the other Catalogue description “handle-free solutions” as being accurate.)
The Aluminium Edge Profiles, illustrated at pages 4.01 and 4.02 of the Catalogue:
i.are imported in lengths of 2.4m, 3.0m and 3.6m;
ii.are rarely installed in furniture in the lengths imported, but rather will almost always be cut after importation to the length(s) required for installation by the user.
iii.are designed to be installed by cutting a slot into the edge of the furniture, lining the slot with glue, and forcing the tongue into the slot; and
iv.when installed protect the edge of the furniture, provide an attractive aluminium feature, and may provide the furniture with structural support.
The CD and DVD Racks illustrated at page 5.02 of the Catalogue:
i.are imported in lengths of 2.4m;
ii.are rarely installed in furniture in the lengths imported, but rather will almost always be cut into several pieces after importation to the length(s) required for installation;
iii.are usually installed after cutting to length, merely by placing them in the bottom of a drawer. They may also be placed on a shelf or a cabinet benchtop; and
iv.are designed to hold CDs or DVDs in an upright position, placed into the grooves.
The Mounting Tracks, illustrated at page 5.07 of the Catalogue:
i.are imported in 3.6m lengths;
ii.may be installed in their imported lengths, if used to mount a 3.6m or greater shelf, or otherwise will be cut to the length(s) required for installation after importation by the user;
iii.are designed to be used with the Arm Blocks, illustrated on the same page, to support “floating shelves”, which are shelves installed on walls without exposed bracket supports;
iv.a Mounting Track piece must be drilled before being fixed to a wall with screws, then two or more Arm Blocks are slid into the Mounting Track. A shelf is then installed by sliding holes in it over the Arm Blocks, and fixing each Arm Block with a screw.
Other Evidence
Mr Zhi Heng Li (Andrew Li), founder and Managing Director of Solu, provided evidence in these proceedings orally at hearing and by way of a written statement dated 26 October 2017. Mr Li advised at hearing that he designed the subject goods. The Shadow Lines, Mounting Track, Profile Handles, CD and DVD Rack designs were granted patents (now ceased).
In regards to the Shadow Lines, Mr Li explained that they were designed for use in the manufacture of cabinets and that the whole purpose of the Shadow Lines was to give a streamlined look and eliminate the need for traditional handles that protrude from the face of doors or drawer fronts. When installed the Shadow Lines may act as a structural support for the cabinet. They can be installed in their imported length, or cut to length with no further fabrication, depending on the dimensions of the cabinet. In his written statement, Mr Li explained that “the Shadow Lines remove the need for handles on cabinet doors or draws as they create a recess in the front of the cabinet at the top of the door or drawer that allows the doors or draws to be opened by grasping the top of the door or drawer. They provide the cabinet with a sleek no handles look”.
The Register of Patents describes the Shadow Lines (in various terms) as designed for construction in cabinets and also to create a handle free look for a cabinet.
In regards to the Bold Line Profile Handles and Slim Line Profile Handles, Mr Li’s evidence is that they are designed for use in doors or drawers of kitchen or lounge room cabinets. They are usually cut to length, required for installation, but do not require any further work prior to installation. They are installed in the cabinet or drawers without the need for any security screws or other attaching devices, as they have a tongue that is designed as part of the Bold Line or Slim Line Handles, and a slide is cut in the top of the door or drawer. The slide is lined with glue and the tongue of the Bold Line Profile Handle or Slim Line Profile Handle is inserted into the groove and is held fast by compression and glue. Once installed, they act as a handle permitting the drawers or door of the cabinet to be opened without the need of separate handles. They provide the cabinet with a sleek no handles look.
The description of Profile Handle in the Register of Patents states, “an open aluminium section for framework also functions as a handle”.
Mr Li gave evidence that the Aluminium Edge Profiles were designed for use in the manufacture of kitchen and lounge room cabinets, and that they were designed to dress the edges of the cabinets and protect and decorate the edges from being damaged by bumps and scrapes.
In regards to the Aluminium Rails, Mr Li’s evidence is that they are designed to be installed in kitchen or lounge room cabinets and are designed to serve as a strengthening member in the construction of cabinets to support heavy cabinet tops (for example marble tops, sinks, etc.). It is also used as a strengthening member when longer spans are required. Mr Li advised that at the same time it formed a decorative part of the cabinetry.
In regards to the Cabinet Finger Recess, Mr Li gave evidence that they are designed to be installed in kitchen or lounge room cabinets. Once installed to the cabinet base or side, the Cabinet Finger Recess acts as a handle permitting the drawers or doors of the cabinet to be opened without the need for separate handles. They provide the cabinet with a sleek no handles look. They can be installed in the length as imported or cut to size, with no further fabrication, depending upon the length of the cabinet doors.
Mr Li’s evidence is that the goods described as CD Rack and DVD Rack are cut to length prior to installation in a cabinet drawer and are designed to hold CDs and DVDs in an upright position.
In regards to the Aluminium Mounting Track, Mr Li’s evidence is that it is designed for the wall mounting of shelves. Once installed the Mounting Track and Arm Block (also patented) are hidden from view behind and within the shelf so that the shelf appears to be “floating”. They can be installed in the length as imported or cut to the required length, depending on the shelf with which it is used. The Register of Patents describes the Mounting Track (together with the Arm Block) as a “floating shelf track, block and arm is designed for fitting thick shells to walls with no exposed bracket system. The track is designed to pick up as many studs behind the wall on the block and arm is to hold the shelf to the track with adjustment”.
Consideration
The identity of the goods in their condition as imported is the starting point in resolving questions of tariff classification. In Re Gissing and Collector of Customs (1977) 1 ALD 144 the Tribunal said at 146:
“Although it will frequently be possible to apply a descriptive word to the combination which is established as the entity, the naming of the entity is not an essential step in the process of identification. Identification is concerned with goods, not with the description of goods”.
The classification of goods for tariff purposes is a practical “wharfside” task. In some instances it is necessary to obtain information to enable identification of the goods but “It ought to normally be possible to classify goods merely by looking at them and by considering their nature and the function which they were designed to serve”; Times Consultants Pty Ltd v Collector of Customs (QLD) (1987)16 FCR 449 at 463.
A useful (non-exhaustive) summary of principles relevant to the question of identification of the subject goods is set out in the Full Tribunal decision in Re Tridon Pty Ltd and Collector of Customs (1982) 4 ALD 615 at 620–621 (paragraph 15). Those principles include that identification must be objective, having regard to the characteristics which the goods, on informed inspection present; in the identification of the goods, knowledge of how those who trade in the goods describe them will usually be relevant, but not necessarily conclusive; all of 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; and identification will frequently extend to characterisation of goods by reference to their design features…, or by reference to their suitability for a particular use where those characteristics emerge from informed inspection of the goods as imported. The extent to which these characteristics may be relevant to the ultimate classification of the goods and whether evidence of the use to which the goods are put after importation is relevant, will depend upon the language of the Tariff Nomenclature.
In Vernon-Carus Australia Pty Ltd and Thomas Creevey and Associates v Collector of Customs [1995] FCA 1283, Justice Northrop stated at [20]:
“…In performing the task of identifying goods for classification, it is essential to have regard to the relevant classification heading. Some heading classifications make specific reference to a form or to a purpose. Where this is so, a “practical wharf-side” task, may not be appropriate. Evidence may need to be received relating to the formal purpose of the goods. In cases of this kind, the heading will need to be construed properly in order to determine what evidence is relevant to identify the goods”. [Emphasis added]
Heading 8302 - Mountings or Fittings
Solu contends that all the subject goods except the Aluminium Mounting Track are BASE METAL MOUNTINGS, FITTINGS AND SIMILAR ARTICLES FOR FURNITURE … within the first part of heading 8302 (classification 8302.42.00), and that the Mounting Track should be classified as parts for BASE METAL HAT-RACKS, HAT-PEGS, BRACKETS AND SIMILAR FIXTURES within the second part of heading 8302 (classification 8302.50.00). It is agreed that the subject goods are all made of aluminium and aluminium is a “base metal” and that the subject goods (except the Mounting Track) are “for furniture”, but otherwise the application of the heading is in dispute.
The correct approach in a court and in this Tribunal to the construction of an ordinary English word was recently summarised in the Full Federal Court decision in Comptroller-General of Customs v Pharma-A-Care Laboratories Pty Ltd [2018] FCAFC 237 at [24], [26] and [35]. I have been referred to the general dictionary definitions of ‘fitting’ and ‘mounting’ as defined by the Macquarie Dictionary.
Mounting
Noun
2. something that serves as a mount, support, setting, or the like.
Fitting
5. anything provided as equipment, parts, accessories, etc.
6. (plural) furnishings, fixtures, etc.
The Explanatory Notes of the Harmonized Commodity Description and Coding System (“Harmonized System Explanatory Notes”) provide some guidance in considering Heading 8302. They state:
This heading covers general purpose classes of base metal accessory fittings and mountings, such as are used largely on furniture, doors, windows, coachwork, etc. Goods within such general classes remain in this heading even if they are designed for particular uses (e.g., door handles or hinges for automobiles). The heading does not, however, extend to goods forming an essential part of the structure of the article, such as window frames or swivel devices for revolving chairs.
…
(E) Mountings, Fittings and similar articles suitable for furniture
This group includes:
(1) Protective studs (with one or more points) for legs of furniture, etc.; metal decorative fittings; shelf adjusters for book cases, etc.; fittings for cupboards, etc.; keyhole plates.
(2) Corner braces, reinforcing plates, angles, etc.
(3) Catches (including ball spring catches), bolts, fasteners, latches, etc. (other than key-operated bolts of heading 83.01).
(4) Hasps and staples for chests, etc.
(5) Handles and knobs, including those for locks or latches.
(G) Hat-racks, hat-pegs, brackets (fixed, hinged or toothed, etc.) and similar fixtures such as coat racks, towel racks, dish-cloth racks, brush racks, key racks.
Having regard to the relevant sub-headings; the Interpretive Rules; the relevant definitions and guidance provided by the Harmonized System Explanatory Notes; and the nature of the goods at the time of importation I am satisfied that the Shadow Lines, Profile Handles and CD and DVD rack, as imported, are identifiable as ‘similar articles’ to mountings and fittings for furniture on an informed inspection and by considering their nature and the function which they are designed to serve. With the adaptation of cutting to smaller lengths as required, the Shadow Lines and Profile Handles are ordinarily used for a purpose similar to mountings or fittings. The innovative design of the Shadow Lines and Profile Handles is such that they are incorporated into drawers or cabinets providing a sleek “handle free” solution. While they eliminate the need for traditional handles they nonetheless perform the function of a handle, just in a less obvious fashion. They are more than simply aluminium profiles. Likewise with the CD and DVD rack, they are innovatively designed to fit within the drawers of furniture for storage of DVD and CDs in an upright position. The innovative design of these subject goods is further supported by the grant of patents. There is no other persuasive evidence before me that these subject goods have any other use than that for which the Applicant contends. The design features and characteristics of these subject goods establish their dedicated use by Solu as similar articles to mountings and fittings for furniture.
The Respondent takes great issue with the fact that the subject goods are often cut to size after importation and that they are imported in large lengths; albeit of varying degrees. Firstly, heading 8302 does not provide that the classification of goods under this heading must be of a specific length or size. Secondly, while the subject goods are often cut to size after importation, the process of cutting the subject goods to size or at an angle after importation does not alter the design or use of the goods, and does not affect the classification of these goods as the complete or finished good; Tubemakers of Australia Pty Ltd and B.T.M. Agencies and Collector of Customs [1980] AATA 64 (24 October 1980) (“Tubemakers”); Re Acrow Australia Ltd and Collector of Customs (NSW) [1985] AATA 234 and Re Acrow Australia Limited v The Collector of Customs of New South Wales [1986] FCA 208. No further modification or working of the goods is required. They are merely glued into place on installation (except for the Mounting Track) and in some instances they can be installed into furniture in the size as imported.
The Shadow Lines, Profile Handles and CD and DVD rack ought to be classified as BASE METAL MOUNTINGS, FITTINGS AND SIMILAR ARTICLES FOR FURNITURE … within the first part of heading 8302 (classification 8302.42.00).
The Aluminium Mounting Track is part of an innovative and unique design, which together with the Arm Block was granted a patent. The Mounting Track and Arm Block work together to form a wall mount to support a shelf. It is designed so that the wall bracket is hidden from view and gives the illusion of a “floating shelf”. The evidence does not support a finding that the Mounting Track has any other use other than that contended by the Applicant; as part of a wall bracket system. The Mounting Track, together with the Arm Block can be installed in the length as imported or cut to the required length, depending on the shelf for which it will be used. Cutting the Mounting Track to size does not alter the essential character, design or function of the good. Having regard to the relevant sub-headings; the Interpretive Rules; the relevant definitions and guidance provided by the Harmonized System Explanatory Notes; and the nature of the goods at the time of importation I am satisfied that on an informed inspection and by considering the nature and the function which it is designed to serve, the Aluminium Mounting Track is identifiable as part of a bracket and ought to be classified as a BRACKET within the second part of heading 8302 (classification 8302.50.00).
In regards to the Aluminium Rails, I do not find that they are, in their imported condition, fittings or mountings or similar articles under heading 8302. The primary design function of the Aluminium Rails is to provide structural support in cabinetry for heavy bench tops and sinks. It forms an essential structural component.
I am not convinced that the Aluminium Edge Profiles are, in their imported condition, fittings or mountings or similar articles under heading 8302. The Aluminium Edge Profiles were designed to address the edges of the cabinets and decorate and protect the edges from damage. I am not convinced on the available evidence that the design features of this good are such that it falls within the heading 8302 as a fitting or mounting or similar article.
Similarly, I am not convinced that the Cabinet Finger Recess is, in its imported condition, fittings or mountings or similar articles under heading 8302. Solu contends that this good, once installed to the cabinet base or side, acts as a handle permitting the drawers or doors of the cabinet to be opened without the need for separate handles. The recess that the Cabinet Finger Recess creates in the cabinet frame where the cabinet door or drawer abuts the cabinet frame allows a person to get their fingers behind the door or drawer to open it. Unlike the Shadow Lines and Profile Handles, it is not a specific design feature of the good but merely a consequence of installing the Cabinet Finger Recess and by creating a recess.
I am not satisfied that the Aluminium Rails, Aluminium Edge Profiles and Cabinet Finger Recess are identifiable at the time of importation, even on an informed inspection, as fittings or mounting or similar articles for furniture; nor as an incomplete or unfinished article do they have the essential character of the complete or finished article placing them within the genus of “BASE METAL MOUNTINGS, FITTINGS AND SIMILAR ARTICLES FOR FURNITURE”.
Heading 9403 - Furniture Parts
As I have found that the Aluminium Rails, Aluminium Edge Profiles and Cabinet Finger Recess are not classified under heading 8302, I will next consider if they are to be classified under heading 9403 as FURNITURE …PARTS (classification 9403.90.00).
In Tubemakers the word “part” was considered. The Tribunal construed the word according to its ordinary English meaning and stated; “The word “part” normally connotes something which is a constituent of a whole entity”. Put simply, when a complete good is disassembled into its components, those components are the “parts” of the good.
The Respondent contends that the subject goods, relevantly the Aluminium Rails, Aluminium Edge Profiles and Cabinet Finger Recess, may be identified as “materials” which are used to produce parts, and ultimately furniture, but not as “parts”. The Respondent submits that firstly, a material used in the manufacture of another good is substantially transformed or worked before it is incorporated into the whole good. Secondly, the Respondent submits that the presence or absence of a definite numerical relationship to a finished good at any point in time is what defines a “material” from a “part”. A “part” is incorporated, in its entirety, into the whole. A good which is a “material” may be used for making multiple parts. The Respondent relies on the decision in Re National Panasonic (Australia) Pty Limited and Collector of Customs, (New South Wales) [1985] AATA 132 (5 June 1985) (“Panasonic”) in which the Tribunal states at [23]:
“Finally, we consider that there is some further support for our conclusion in the consideration that there would seem to be implicit in the meaning of both "part" and "accessory" that there is a recognized, predetermined and relatively fixed numerical relationship between the necessary number or numbers of part or accessory, on the one hand, and the equipment or other principal operating unit with which a particular part or accessory is intended to be used at any one time, on the other”.
Panasonic concerned the consideration of whether video tape cassettes were “parts” or “accessories” for video cameras. The Tribunal found that there was an “infinite numerical relationship between such cassettes and a single VCR” which was largely dependent on the owner.
The Aluminium Rails are used in the construction of cabinetry and provide the furniture with significant structural support, and an attractive aluminium feature. They may be installed immediately under a heavy benchtop, and behind the top of drawers or doors. The Aluminium Edge Profiles were designed to dress the edges of cabinets and protect and decorate the edges from damage. The Cabinet Finger Recess once installed to the cabinet base or side, acts as a handle permitting the drawers or doors of the cabinet to be opened without the need for separate handles. The Aluminium Rails, Aluminium Edge Profiles and Cabinet Finger Recess may be installed in furniture in the lengths imported, albeit rarely. They will almost always be cut after importation to the length(s) required for installation by the user.
Cutting to size does not change or alter the design or use of the Aluminium Rails, Aluminium Edge Profiles and Cabinet Finger Recess. As presented, at the time of importation, the incomplete or unfinished article has the essential character of the complete or finished article. The goods are not substantially transformed or worked before installation into cabinetry and are as such not “materials” but “parts” for furniture. Panasonic is distinguishable to the circumstances in this matter as there is not an infinite numerical relationship between the Aluminium Rails, Aluminium Edge Profiles and Cabinet Finger Recess and cabinetry. They are not a usable and replaceable good. Once cut to size and used in the construction of cabinetry, there is a fixed numerical relationship between the Aluminium Rails, Aluminium Edge Profiles and Cabinet Finger Recess and the cabinet in which they are installed. For example, if the cabinet requires two lengths of the Aluminium Rail, when the cabinet is disassembled into its components, two Aluminium Rails will be found.
The Aluminium Rails are attached to the cabinet frame by way of clips (brackets) which slide into a void specifically designed in the back of the Aluminium Rails. They are not themselves drilled or further worked on installation. The Aluminium Edge Profiles and Cabinet Finger Recess are installed without the need of any securing screws or other attaching devices and are incorporated into the cabinet frame by way of a ‘tongue’ that is part of the design of the goods. A rebate is cut into the cabinet frame, lined with glue, and the tongue is inserted into the rebate. The goods are more than mere aluminium profiles. These specific design characteristics of the goods make them suitable for their intended use in cabinetry. There is no other persuasive evidence before me that the Aluminium Rails, Aluminium Edge Profiles and Cabinet Finger Recess have any other use than that for which the Applicant contends.
Having regard to the relevant sub-headings; the Interpretive Rules; the relevant definitions and guidance provided by the Harmonized System Explanatory Notes; and the nature of the goods at the time of importation I am satisfied that the Aluminium Rails, Aluminium Edge Profiles and Cabinet Finger Recess, as imported, are identifiable as parts for furniture on an informed inspection and by considering the nature and the function which they are designed to serve. They ought to be classified under heading 9403 as FURNITURE…PARTS (classification 9403.90.00).
Heading 7604 - Aluminium Profiles
As all of the subject goods are classifiable under either heading 8302 or 9403, it is not necessary for me to consider the classification of the goods under heading 7604.
TARIFF CONCESSION ORDERS
The Tariff Concession Orders (“TCOs”) claimed by Solu are TCO 0312463 and TCO 0823641. If either TCO applies, the ordinary duty rate is 0%. Both the claimed TCOs are restricted to goods of tariff classification 8302.42.00.
No TCO is claimed for goods under classification 9403.90.00.
TCO 0823641
Gazette No. TC 08/42, Wednesday, 22 October 2008, provides that TCO 0823641 applies to:
HANDLES OR KNOBS, FURNITURE OR CABINET
“Handle” is relevantly defined in the Macquarie Dictionary as “a part of a thing which is intended to be grasped by the hand in using or moving it”.
The Shadow Lines and Profile Handles are incorporated into drawers or cabinets providing a sleek “handle free” solution. The design is such that fingers can grab the edge/groove on a door or drawer to open them. While they eliminate the need for traditional handles they nonetheless perform the function of a handle, just in a less obvious fashion. In my mind this matches the description contained in TCO 0823641 of a “handle”. As such, I am satisfied that TCO 0823641 applies to the Shadow Lines and Profile Handles.
This TCO does not apply to the other subject good classified under 8302.42.00, namely, the CD and DVD rack, as they do not fall within the description of HANDLES OR KNOBS, FURNITURE OR CABINET.
TCO 0312463
As I have already decided TCO 0823641 applies to the Shadow Lines and Profile Handles, I will only consider TCO 0312463 in regards to the CD and DVD rack.
Gazette No. TC 04/01, Wednesday, 14 January 2004, provides that TCO 0312463 applies to:
MOUNTINGS AMD/OR FITTINGS, CABINET, being ANY of the following:
(a) brackets;
(b) plates;
(c) cabinet profiles;
(d) carcase profiles;
(e) drawer dividers.
Solu claims that the goods are either “cabinet profiles” or “carcase profiles”. There is no fixed definition for what these terms mean in the context of this TCO. Solu has attempted to break down the terms by providing dictionary meanings for carcase and cabinet and the Respondent has submitted that “cabinet profiles” or “carcase profiles” are terms in the industry referring to parts of drawer runners or slides. I requested that the parties provide further evidence and submissions on the industry meaning or trade usage of the terms “cabinet profiles” or “carcase profiles”. Both parties advised that they were not aware of any trade usage of the terms. In any event, I am satisfied that the CD and DVD Rack do not fall within either of these descriptors. It does not form part of the cabinet structure or alter the profile of the cabinet.
The CD and DVD Rack do not fall within the descriptor of “drawer dividers”. The Macquarie Dictionary provides that to divide something is to “separate into parts”. While the CD and DVD Rack is made up of a number of evenly spaced grooves which enable CDs and DVDs to be stored upright in a drawer, it does not “separate” the drawer into parts.
TCO 0312463 does not apply to the CD and DVD Rack.
ANTI-DUMPING ACT
All classifications under heading 7604, if exported from China, are subject to additional duties imposed by the Customs Tariff (Anti-Dumping) Act1975 (Cth) (“Anti-Dumping Act”) as a result of declarations made by the Minister under section 269TG and section 269TJ of the Customs Act. Such duties were demanded for the subject goods and paid by the Applicant. The Applicant has sought refunds of duties paid under the Anti-Dumping Act.
There is no dispute between the parties that the relevant refund circumstance prescribed in reg. 126(1)(e) of the Regulations that “duty has been paid through manifest error of fact or patent misconception of the law” would be made out in respect of the dumping duty paid for any goods the Tribunal determines were not classified under heading 7604. The Respondent has agreed that in a remitter, it would calculate and pay refunds due on the subject goods not classified under heading 7604.
DECISION
The decisions under review are set aside and remitted to the Respondent for the appropriate calculation of duty and refund payable for the subject goods having regard to the following directions:
i.The Shadow Lines, Profile Handles and CD and DVD Rack are to be classified as BASE METAL MOUNTINGS, FITTINGS AND SIMILAR ARTICLES FOR FURNITURE … within the first part of heading 8302 (classification 8302.42.00);
ii.The Mounting Track is to be classified as a “BRACKET” within the second part of heading 8302 (classification 8302.50.00);
iii.The Aluminium Rails, Aluminium Edge Profiles and Cabinet Finger Recess are to be classified under heading 9403 as FURNITURE…PARTS (classification 9403.90.00); and
iv.TCO 0823641 applies to the Shadow Lines and Profile Handles.
I certify that the preceding 66 (sixty-six) paragraphs are a true copy of the reasons for the decision herein of Senior Member A Poljak
........................[sgd]............................................
Associate
Dated: 15 August 2019
Date of hearing: 4 June 2018 Advocate for the Applicant: Mr M McAuliffe, JJ Lawson Customs & Freight Brokers Pty Ltd
Solicitors for the Respondent: Mr R Northcote, Department of Home Affairs
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