STI TYRES AS TRUSTEE FOR ON TRACK TYRE TRUST Applicant And CHIEF EXECUTIVE OFFICER OF CUSTOMS
[2009] AATA 877
•13 November 2009
Administrative Appeals Tribunal
DECISION AND REASONS FOR DECISION [2009] AATA 877
ADMINISTRATIVE APPEALS TRIBUNAL )
) Nos 2007/5450 and 2009/1252
GENERAL ADMINISTRATIVE DIVISION ) Re
STI TYRES AS TRUSTEE FOR ON TRACK TYRE TRUST
Applicant
And
CHIEF EXECUTIVE OFFICER OF CUSTOMS
Respondent
DECISION
Tribunal Mr G. L. McDonald, Deputy President
Mr E. Fice, MemberDate13 November 2009
PlaceMelbourne
Decision The Tribunal determines that the decision in as far as it:
(a) decides the tyres the subject of the application do not qualify under the terms of TCO No 9613014 is affirmed; and
(b) the case is otherwise remitted to the respondent to recalculate the duty payable at the rate of 5%.
..............................................
Deputy President
CUSTOMS – Import of tyres – whether ‘off-road’ tyres qualify under TCO ‘tyres, off‑road, motor car circuit or drag racing’ – construction and interpretation of TCO – reference to the Gazette to ascertain use in order to determine whether substitutable goods produced in Australia – duty payable on imported tyres – decision remitted.
Acts Interpretation Act 1901 ss 15AA, 15AB and 46
Customs Act 1901 ss 269C, 269K and 269SJ
Customs Tariff Act 1995 Item Number 4011.10.00 Schedule 3 and Item 53C Schedule 4
Legislative Instruments Act 2003 ss 5 and 13
Customs Regulations 1926 regs 184 and 185Collector of Customs v Agfa-Gevaert Ltd (1995) 186 CLR 389
REASONS FOR DECISION
13 November 2009 Mr G. L. McDonald, Deputy President
Mr E. Fice, MemberThe Application
1. The applicant has two applications before the Tribunal for the review of decisions of a delegate of the respondent refusing to grant a tariff concession for 26 motor vehicle tyres.[1] In as far as the decision relates to this issue the Tribunal has decided to affirm the decision under review. A further issue, the applicable rate of duty, regardless of the tariff concession claimed, was raised during the proceeding and has been resolved by consent between the parties. The Tribunal has addressed this latter aspect in paragraphs 46 and 47 of these reasons.
[1] The specifications for the subject tyres is set out in paragraph nine of the respondent’s written submissions, filed 2 September 2009, and described in document 1 of Exhibit A2.
2. The applicant imports and distributes Maxxis brand tyres for use on four wheel drive, and what are described as off-road, vehicles. It is claimed that the height of the wall of the subject tyres makes them generally unsuitable for use on passenger motor vehicles and that they are predominately used on off-road vehicles.
3. The applicant claims that the TCO 9613014 applies to the 26 types of tyres which it imports on the basis that the TCO extends to cover ‘off-road tyres’. The TCO is as follows:
TYRES, OFF-ROAD, MOTOR CAR CIRCUIT OR DRAG RACING, pneumatic, with tyre marking having reference to the following features:
(a)section width;
(b)outside diameter;
(c)type of tyre;
(d)rim diameter.
4. The applicant submits that the TCO applies to ‘off-road tyres, motorcar circuit tyres and drag racing tyres’. The respondent denies that the TCO is applicable to ‘off-road tyres’. The respondent claims that the tyres which the TCO covers are limited to tyres used in motor car circuit and drag racing, when those events are conducted at off-road venues.
Description of the Goods
5. The goods which are the subject of the two applications before the Tribunal are described in an attachment to the witness statement of Mr Ian Allpress, who is the National Sales and Purchasing Manager of the Tyremax Group which includes STI. Although initially 27 different types of tyres were the subject of the applications, one of those was conceded by STI prior to commencement of the hearing. The 26 tyres the subject of the applications before the Tribunal bear the following markings:
MARKINGS
TREAD TYPE
P265/70 R15 110S
HT750
P215/75 R15 102S
MA751
P225/75 R15 105S
MA751
P235/75 R15 108S
MA751
LT235/75 R15 6PR
MT753
LT235/75 R15 6PR
MT762
215R15
MA751
30X9.50 R15LT 6PR
MA751
31X10.50 R15LT 6PR
MA751
31X10.50 R15LT 6PR
MT753
31X10.50 R15LT 6PR
MT762
P225/70 R16 102S
MA751
235/70 R16 105S
MA751
245/70 R16 111S
MA751
255/70 R16 109S
MA751
265/70 R16 112S
MA751
275/70 R16 114S
MA751
LT265/75 R16 10PR
MA751
LT265/75 R16 10 PR
MT753
LT265/75 R16 10 PR
MT762
110/108Q
MT753
215/85 R16 8PR
MA751
LT235/85 R16 10PR
MA751
LT 235/85 R16 10PR
MT762
LT255/85 R16 8PR
MT762
P275/65 R17 115T
HT760
6. The markings on the side wall of the tyres are of some significance because of the description set out in the TCO. A number of tyres the subject of this dispute have the prefix P or LT. The letter P identifies a P-type radial ply tyre. The prefix LT identifies a tyre primarily intended for use on light trucks. The number following the prefix is a reference to the nominal section width of the tyre. The width of the tyre is measured from outer wall to outer wall. The number following the / refers to the nominal aspect ratio which is expressed as a percentage of the nominal section width. Therefore, the figure 75 after the / indicates that the height of the tyre above the rim is 75% of the nominal section width. The letter R which follows the aspect ratio is the construction symbol indicating a radial tyre. The number following the construction symbol refers to the rim diameter in inches. The next number, if it is above 50, refers to the load index. For example, the number 108 refers to a load carrying capacity of 1000 kilograms. The letter S after the load index number is the speed symbol. The letter S indicates that the maximum speed for the type of tyre is 180 kilometres per hour.
7. Some light truck tyre markings use imperial measurements. An example of this is the tyre marked 30X9.50 R15LT 6PR. The figure 30 in this marking refers to the nominal overall diameter of the tyre in inches. The figure 9.50 refers to the nominal width of the tyre in inches. The letter R refers to the radial ply construction and the figure 15 following that letter refers to the diameter of the wheel rim in inches. The letters LT refer to it being generally a light truck tyre and the final descriptor, 6PR, is reference to the ply rating.
8. According to Mr Allpress, who the Tribunal accepts as having broad industry experience, the tyres in question are not those ordinarily used on passenger motor vehicles. He said they are, in effect, what might be called taller tyres. They would not fit into the wheel arch of an ordinary passenger motor vehicle. Rather, they are designed for use in 4WD vehicles which have additional space in their wheel arches allowing for greater suspension travel. In his opinion, these tyres should be described as off-road tyres. He said the construction of the majority of the tyres referred to is more robust and the side wall and tread ply rating is greater than that found on a passenger motor vehicle tyre.
TCO 9613014
9. The first issue which needs to be resolved regarding the TCO is its proper construction. Customs contended that there are three possible interpretations of the description set out in the TCO, namely:
(a)the TCO applies to three different kinds of tyres, that is, off‑road tyres, motorcar circuit racing tyres and drag racing tyres;
(b)the TCO applies to three different kinds of racing tyres, that is, off‑road racing tyres, motorcar circuit racing tyres and drag racing tyres; and
(c)the TCO applies to two different kinds of off-road racing tyres, that is, motorcar circuit racing tyres and drag racing tyres.
10. Mr Roger Northcote, who appeared on behalf of Customs, submitted that the three possible interpretations described by the original decision-maker cannot be correct because they each described the goods in terms of their intended end use. Section 269SJ of the Customs Act 1901 (the Act) relevantly provides:
269SJ TCOs not to apply to goods described by reference to their end use or certain goods.
(1) The CEO must not make a TCO in respect of goods:
(aa) described in terms other than generic terms; or
(a) described in terms of their intended end use; or
(b)declared by the regulations to be goods to which a TCO should not extend.
11. While the Tribunal accepts that the description contained in the TCO must necessarily refer to the generic nature of the tyres, it is reasonably clear that the generic description has been constructed principally by reference to the use to which it is envisaged the tyres would be put.
12. STI contended that the description of the goods in the TCO was reference to three discrete groups of tyres, namely, off-road tyres, motor car circuit racing tyres and drag racing tyres. Customs contended that the correct interpretation of the description of the goods is that the TCO applies only to motor car circuit racing tyres and drag racing tyres. The reference to off-road should be understood as a reference to not on public roads or not suitable for use on public roads. According to Mr Northcote, the reference to off-road is used simply to distinguish the tyres from those ordinarily used on public roads.
Construction and Interpretation of the TCO
13. There can be little doubt that the TCO is a legislative instrument. Even prior to the introduction of the Legislative Instruments Act 2003, the High Court of Australia found that to be the case. TCOs were then referred to as Commercial Tariff Concession Orders (CTCOs). The High Court said, in Collector of Customs v Agfa-Gevaert Ltd[2]:
It is convenient at this stage to note that, for the purposes of interpreting the relevant phrases, the CTCOs should be considered as a species of delegated legislation. (34) The general principles relating to the interpretation of Acts of Parliament are equally applicable to the interpretation of delegated legislation. (35)
[2] (1995) 186 CLR 389 at 398.
14. The expression legislative instrument is defined in the Legislative Instruments Act. Section 5 of the Legislative Instruments Act provides that a legislative instrument is an instrument in writing that is of legislative character and made in the exercise of the power delegated by the Parliament. Subsection (2) provides:
(2)Without limiting the generality of subsection (1), an instrument is taken to be of a legislative character if:
(a)it determines the law or alters the content of the law, rather than applying the law in a particular case; and
(b)it has the direct or indirect effect of affecting a privilege or interest, imposing an obligation, creating a right, or varying or removing an obligation or right.
15. What the TCO does is to alter the content of the Customs Tariff Act 1995 (the Tariff Act) insofar as it applies to item number 4011.10.00 in Schedule 3 dealing with new pneumatic tyres made of rubber. Tyres of a kind used on motor cars, including station wagons and racing cars, attract duty unless they fall within the TCO.
16. There can be no doubt that the TCO in question was made pursuant to the exercise of the power delegated by Parliament. The drafting and approval of TCOs is authorised by Part XVA Division 1 of the Act.
17. The interpretation of legislative instruments is dealt with in s 13 of the Legislative Instruments Act. In essence, unless there is a contrary intention disclosed in the Act:
(a)the Acts Interpretation Act 1901 applies to any legislative instrument so made as if it were an Act and as if each provision of the legislative instrument were a section of an Act; and
(b)expressions used in any legislative instrument so made have the same meaning as in the enabling legislation; and
(c)any legislative instrument so made is to be read and construed subject to the enabling legislation, and so as not to exceed the power of the rule-maker.
The provisions set out in s 13 of the Legislative Instruments Act are replicated in s 46 of the ActsInterpretation Act 1901 (Interpretation Act).
18. Section 15AA of the Interpretation Act provides:
(1)In the interpretation of a provision of an Act, a construction that would promote the purpose or object underlying the Act (whether that purpose or object is expressly stated in the Act or not) shall be preferred to a construction that would not promote that purpose or object.
19. Section 15AB of the Interpretation Act provides that, when interpreting a provision of an Act, if any material which does not form part of the Act is capable of assisting in the ascertainment of the meaning of the provision, consideration may be given to that material to determine the meaning of the provision when:
…
(i)the provision is ambiguous or obscure; or
(ii)the ordinary meaning conveyed by the text of the provision taking into account its context in the Act and the purpose or object underlying the Act leads to a result that is manifestly absurd or is unreasonable. …
20. The leading words of the TCO (TYRES, OFF‑ROAD, MOTOR CAR CIRCUIT OR DRAG RACING) are susceptible to at least three meanings. The essence of the dispute hinges around the meaning which should be given to the expression OFF‑ROAD. The structure of the TCO by itself does not make it clear as to whether the expression OFF-ROAD is a reference to a discrete group of motor car tyres which have nothing whatsoever to do with any form of motor vehicle racing, or whether, in some obscure way, the expression is related to motor car racing. Quite clearly, the expression taken as a whole and read in the context of the TCO, leaves the unavoidable impression that the words are certainly obscure and possibly ambiguous. Accordingly, the Tribunal is of the view that in interpreting the TCO, the Tribunal should examine extrinsic material which may assist in the ascertainment of the meaning of the expression in question.
21. Section 15AB(2) of the Interpretation Act, while not limiting the generality of sub-s (1), sets out some of the material which may be considered in assisting with the interpretation of the provision of an Act. It does not limit the material to which resort may be had.
22. The extrinsic document relied on by Customs to assist in the interpretation of the TCO is the Notice of Gazettal of the application for the TCO. The application was gazetted in the Commonwealth of Australia Gazette (the Gazette) on 15 January 1997, and the generic description of the goods set out in that notice is precisely the same as that which eventually appeared in the approved TCO. This is not a document referred to in s 15AB(2) of the Interpretation Act.
23. Under s 269K the Act, if Customs accepts a TCO application as a valid application, the Chief Executive Officer (CEO) must publish a notice in the Gazette which sets out, amongst other things, a description of the goods to which the application relates including a reference to the Customs Tariff Classification that, in the opinion of the CEO, applies to the goods. Although it does not appear to be a mandatory requirement to set out the stated use of the goods which are the subject of the TCO, it is a factor which must be considered by Customs when determining whether goods produced in Australia are capable of being put to a use corresponding to a use to which the goods the subject of an application for a TCO can be put. It is a core criterion of a TCO that on the day on which the application is lodged, there must be no substitutable goods being produced in Australia in the ordinary course of business[3]. The stated use in the gazetted notice of the TCO in question is:
Use on vehicles engaged in motor car circuit or drag racing.
[3] s 269C.
24. Although Mr Gross objected to the Tribunal making use of the gazetted notice for the purpose of interpreting the TCO, it seems to the Tribunal that in the context of the Act, an applicant for a TCO must indicate the intended use of the goods in order that Customs can determine whether those goods can properly be the subject of a TCO. For example, if the expression OFF-ROAD was intended by the applicant for a TCO to include a discrete group of tyres not used for motor vehicle racing, that use would need to be put to Customs in the application for the TCO to enable Customs to determine whether there are substitutable goods produced in Australia which correspond with a use to which the goods the subject of the application for the TCO can be put. In fact, the gazetted notice itself states:
To assist Local manufacturers, the use(s) to which the goods can be put follows the description of the goods.
25. It follows, in our opinion, that the stated use set out in the gazetted application for the TCO in respect of the tyres in question is significant and relevant when it comes to interpreting the TCO. It clearly discloses the types of tyres intended by the applicant to be the subject of the TCO and the basis upon which Customs determined that the goods in question were eligible for the TCO.
26. Mr Northcote also submitted that the evidence given by Mr Burkhard Kabelitz, the National Technical Field Service & Product Planning Manager of Bridgestone Australia Ltd, supports Customs’ interpretation of the description of the goods which fall within the TCO. Mr Kabelitz said that until the end 2008, there were two tyre manufacturers in Australia, Bridgestone and South Pacific Tyres. After South Pacific Tyres closed its factory, Bridgestone has been the sole Australian manufacturer of tyres. According to Mr Kabelitz, Bridgestone manufactures a range of tyres in Australia including tyres described as highway terrain and all terrain models suitable for fitting to a wide range of 4WD vehicles and sports utility vehicles (SUVs). According to Mr Kabelitz, the fitment of tyres designated light truck tyres covers a wide range of vehicles including 4WD, utilities, light trucks and vans. Mr Kabelitz’s evidence regarding the manufacture of tyres in Australia was not controverted by any of the other witnesses.
27. Therefore, in the context of approving a TCO in accordance with the Act, Mr Kabelitz’s evidence suggests it is unlikely that the expression OFF-ROAD in the TCO was intended to refer to a discrete group of tyres, which are commonly used on 4WD vehicles. If these tyres were being manufactured in Australia by Bridgestone and/or South Pacific Tyres at the time of making the TCO, then it is unlikely that the TCO was intended to cover that range of tyres.
28. Mr Louis Gross, who appeared on behalf of STI, in propounding the correct meaning of the expression off-road, submitted that the expression distinguished between sealed roads and those which are not sealed. As the Tribunal understood Mr Gross’ submission, the tyres referred to in the TCO are tyres for off-road use or for use in motor car circuit racing, or for use in drag racing. According to Mr Gross, this is based on a common sense reading of the TCO. He also submitted that its structure conforms with the guidelines published by Customs dealing with the correct formulation of TCOs.
29. The description of the goods in question in the legislative instrument must be construed in accordance with the statutory and common law principles of statutory interpretation. The description must also fit comfortably within the context in which TCOs are approved by Customs. This will ensure a construction which will promote the purpose of the TCO. The Tribunal does not agree with Mr Gross that the interpretation pressed by Customs leads to a nonsensical conclusion. Further, in our opinion, the guidelines for drafting TCOs, the purpose of which is stated to be to assist persons to lodge TCOs, do not add anything to the interpretation of this particular TCO.
30. Mr Gross also submitted that it would be a contradiction in terms to interpret the expression in question such that it referred to off-road motor car circuit racing and drag racing.That is because racing on a circuit or drag racing is conducted on a sealed surface and therefore cannot be described as off-road. Mr Gross relied on the evidence of Mr Kabelitz who said that the term off-road meant use on public roads which are not sealed.
31. The problem with this submission is that the expression off-road can have a variety of meanings. For example, the Macquarie Dictionary defines the adjective off‑road as:
1.of or pertaining to the functioning, etc., of a motor vehicle when it is not being driven.
2.of vehicles, usu. four-wheel drive, designed for work or recreational use in rugged conditions.
32. A broader description is given by Chambers 21st Century Dictionary (Chambers Dictionary) which describes the adjective off-road as:
1.said of vehicle use: not on public roads; especially on rough ground or terrain.
2.said of a car, bike or other vehicle: suitable for such use.
33. The Tribunal prefers the definition set out in the Chambers Dictionary. The reason is that the Macquarie Dictionary simply describes the nature of a vehicle said to be an off-road vehicle. It does not describe how the expression can be used in a more general sense. The broader description provided by the Chambers Dictionary is, in the Tribunal’s opinion, more appropriate in this case. Rather than being used to distinguish between sealed and unsealed roads, which is sometimes the way the expression is used colloquially to distinguish the two, the broader description not on public roads more accurately fits the context in which the expression appears in the TCO. As Mr Northcote submitted, it is also consistent with the definition of on-road as set out in the Macquarie Dictionary relating to the functioning of a motor vehicle when being driven on public roads. Also, it distinguishes the expression off-the-road as described by Mr Kabelitz. According to Mr Kabelitz, that term is used in the tyre industry to refer to locations that are inaccessible to the public.
34. While the American manufacturer’s ‘catalog’[4] applied the description of “off road tyres” to some tyres it manufactures, not any of the tyres the subject of this application were so described. Not any of the applicant’s price list setting out the tyres it sells, Australian catalogues, motoring magazine or newspaper articles referred to in the course of the hearing referred to ‘off-road tyres’ as an expression which is accepted and commonly used in the industry. The Tribunal is satisfied that while the term may conveniently describe tyres of a type used on off-road vehicles, the term ‘off-road tyres’ is not one accepted for use in the tyre industry. That such a term has no accepted industry meaning lends weight to the use of the word in the TCO as not extending to a separate category as claimed on behalf of the applicant.
[4] Exhibit R4.
35. In our opinion, the expression off-road was not intended to refer to a discrete group of tyres, distinct from circuit motor racing or drag racing tyres. It refers to tyres designed specifically for motor circuit racing and drag racing. That form of motor vehicle operation is conducted strictly off public roads. Furthermore, the tyres are frequently of such a construction that they have no tread at all. They are referred to as slicks. Such tyres are clearly not permitted on public roads as minimum standards exist regarding tyre tread depth required for use on a public road.
36. Furthermore, that construction sits within the context of the legislation which enables Customs to make a TCO. The uncontradicted evidence of Mr Kabelitz was that both Bridgestone and South Pacific Tyres, at least until the end of last year, manufactured tyres in Australia which are suitable for fitment to a wide range of 4WD vehicles and SUVs. Both highway terrain and all terrain tyres manufactured by Bridgestone are described as 4WD tyres on its website. Bridgestone describes its Dueller range of premium 4WD tyres as delivering the ultimate in off-road strength and durability and the all terrain tyre range as giving the best of both worlds (that is on and off-road). It would be contrary to the Act if a TCO was made where the use to which the goods are put is already catered for by goods manufactured in Australia. Accordingly, the Tribunal finds that the tyres which fit the description set out in the TCO must fit the description motor car circuit racing or drag racing tyres. Tyres simply described as 4WD tyres or off-road use tyres do not fit the description of the tyres the subject of the TCO.
Tyre Markings
37. There is a further aspect of the description of the goods set out in the TCO which supports our conclusion regarding its construction. That is, the TCO requires the tyres in question to be marked having reference to, amongst other matters, their outside diameter.
38. Mr Gross submitted that because the tyres in question had the aspect ratio marked on the side wall, that marking satisfied the requirements of the TCO regarding tyre diameter markings. According to Mr Gross, the Macquarie Dictionary defines with reference to as concerning; with regard to. Mr Gross submitted that the TCO does not say with the following tyre markings, as it could have done if it was intended for the items listed to be actually specified. He submitted that by using the term with reference to the intention was to allow greater flexibility in what was actually required to be marked on the tyre.
39. According to Mr Gross, the marking on the side wall of a tyre of its nominal width and aspect ratio together with the diameter of the wheel rim enables the tyre diameter to be calculated by a simple formula. The formula involves multiplying the nominal width of the tyre by twice its aspect ratio and adding the wheel diameter. As the nominal width is usually indicated in millimetres and the wheel diameter in inches, a conversion needs to be made to one or other in order that the resultant reflects the tyre diameter in either metric or imperial measurement. According to Mr Gross, this is a common method of calculating tyre diameter in the market. Mr Allpress’ evidence was that his company, TyreMAX Group, utilises a ready reckoner to enable the tyre diameter to be calculated. Mr Kabelitz said that use of the formula was common in the tyre industry. The question before the Tribunal is whether utilising the formula to calculate the outside diameter of the tyre by reference to its aspect ratio, the section width and rim diameter satisfies the description in the TCO.
40. The expression in the TCO uses the word having rather than, as Mr Gross suggested, the word with. The difference appears to be that use of the word having, the past participle of have, which is a verb meaning to possess or own or to possess as a characteristic or quality, has as its object the word reference which, in this context, means a mention of it.[5] Therefore, the markings on the side of the tyre must directly mention the dimensions set out in (a) to (d) of the TCO. If, as was submitted by Mr Gross, the expression used in the TCO was with reference to, that, in our opinion, might support his submission regarding use of the formula to enable the tyre diameter to be calculated. Use of the preposition with gives the expression a wider meaning including: by means of; using[6]. Therefore, using any of the dimensions mentioned in (a) to (d) in the TCO, and applying the formula which is commonly used to calculate the outside diameter of the tyre, would satisfy that expression. However, as the Tribunal has said, that is not the expression used in the TCO. Therefore, the Tribunal finds that the expression having reference to the following features is limited to tyres expressly marked with the diameter of the tyre, even though there may be no direct reference to the fact that the number on the tyre is its diameter.
[5] Chambers Dictionary.
[6] Chambers Dictionary.
41. This interpretation is consistent with our interpretation of the TCO as referring solely to racing tyres. As Mr Kabelitz said in his evidence, a different tyre marking system is frequently used on racing tyres. In fact, he gave the example of the marking 235/620R17. In that tyre marking, the figure 620 indicates the overall diameter of the tyre in millimetres. Another example may be found in the Maxxis 2009 tyre catalogue. There, a tyre described as the Victra Z9 is a tyre recommended for dry road racing applications only. Its side wall marking is 195/50R15. In that case, the tyre diameter is 50 centimetres or 22.7 inches.
42. By way of distinction, as is set out in the Standards Manual (2008 Edition) of the Tyre and Rim Association of Australia, passenger car tyres are usually marked with a prefix designator; the nominal section width in millimetres; the nominal aspect ratio (as a percentage of the nominal section width); the construction symbol (designating either a radial or diagonal ply); and a speed symbol indicating the maximum recommended speed for the tyre. These tyres do not normally have a marking which refers to the tyre diameter.
43. Some light truck and truck tyre markings refer to the nominal overall diameter in inches. An example is the marking 30X9.50 R15LT 6PR. The number 30 is a reference to the overall diameter of the tyre in inches. The number 15 refers to the rim diameter. The letters LT are a reference to light truck tyre. Therefore, arguably, tyres having this type of marking do satisfy the tyre marking requirements set out in the TCO. However, they are clearly not racing tyres as they are designed for use on vehicles which are generally described as light trucks, utilities or SUVs.
44. One of the light truck tyres the subject of this review simply has the marking 110/108Q. That is a Maxxis tyre referred to as the MT-753.[7] The MT-753 range of Maxxis tyres is what is described in its catalogue as a radial mud terrain tyre. It is designed for light trucks. It is certainly not a racing tyre.
[7] Page 33 of the Maxxis brochure.
45. It is clear from the descriptions of the tyres the subject of this review and the markings on the side wall of those tyres, that not one of these types of tyres can be described as a racing tyre. Therefore, the Tribunal finds that no tyre the subject of this review satisfies the description of the goods set out in TCO 9613014. Having made this finding, it serves no purpose for the Tribunal to deal with the extensive submissions that were made by both parties about whether the tyres in question can be described as off‑road tyres.
Application of Regulation 185
46. Regulation 185 of the Customs Regulations 1926 (the Customs Regulations) places restrictions on making TCOs. Regulation 184 provides that the expression TCO in reg. 185 has the same meaning as it has in Part XVA of the Act. Regulation 185 provides that subject to sub-reg. (2), and for the purposes of s 269SJ(1) of the Act, a TCO should not extend to goods to which the general rate of customs duty specified in the Tariff Act is 10%. Section 269SJ of the Act provides that the CEO of Customs must not make a TCO in respect of goods declared by the regulations to be goods to which a TCO should not extend.
47. Item 53C in Schedule 4 of the Tariff Act provides that goods entered for home consumption on or after 1 January 2005 in respect of which, but for Item 53C, would be subject to the general rate of duty of 10%, are deemed to have a 5% rate of duty except for goods of a kind used as components in passenger motor vehicles. Therefore, Mr Gross submitted, because the Tariff Act makes a distinction between passenger motor vehicles and off‑road vehicles, and in his view, the tyres in question are components of off‑road vehicles, the TCO can be made in respect of the tyres in question. Customs did not disagree with that interpretation of the effect of reg. 185 of the Customs Regulations. In fact, as Mr Northcote submitted, the Tribunal should adopt a construction that would not result in the TCO extending the goods of a kind used as passenger motor vehicle components. Given that the Tribunal has found that goods in question are not goods which are used on passenger motor vehicles, Item 53C of Schedule 4 applies to racing tyres and they would, but for the TCO, be subject to a 5% rate of duty. Therefore, the TCO in question does not offend s 269SJ(1)(b) of the Act.
Conclusion
48. In the Tribunal’s opinion, not one of the types of tyres in the list of 26 tyres the subject of these applications falls within the description of the goods the subject of the TCO. The TCO is a legislative instrument which is subject to statutory and common law rules of statutory interpretation. It must be construed having regard to the provisions of the Act, the Tariff Act and the Customs Regulations. The description of the goods in the TCO is ambiguous and obscure. There are at least three possible interpretations of the description given in the TCO. Therefore, in accordance with s 15AB of the Interpretation Act, the Tribunal may consider extrinsic material which is capable of assisting the Tribunal in determining its proper meaning. The Tribunal should also prefer a construction which promotes the underlying purpose or object of the TCO.
49. TCOs are approved following an application made by the importer of the goods which are intended to be the subject of the TCO. The Act makes it clear that TCOs cannot be made in respect of goods which are already being produced in Australia or where there are substitutable goods produced in Australia. In fact, a TCO must meet the core criteria as that expression is defined in s 269C of the Act. In other words, on a day on which an application for a TCO is lodged, there must be no substitutable goods produced in Australia in the ordinary course of business. In order to establish whether there are substitutable goods produced in Australia at the time an application for a TCO is made, the CEO of Customs publishes a notice in the Gazette pursuant to s 269K(1) of the Act which states the use to which the goods can be put.
50. The stated use of the goods the subject of this review is said to be on vehicles engaged in motor car circuit or drag racing. Quite clearly, if, at the time the application was gazetted, there were manufacturers of tyres in Australia which could generally be described as off-road tyres, but which were not tyres used for motor car circuit or drag racing, there would have been no reason why such producers or manufacturers would have been alerted by the gazetted notice that a TCO was being sought in respect of tyres which could be used on unsealed roads. That would have defeated the very purpose of gazettal of the TCO which is to give manufacturers of substitutable goods the opportunity of making submissions regarding the intended TCO. Therefore, there can be no question that the statement of intended use published in the Gazette is capable of assisting in the ascertainment of the meaning of description of the goods in question. It is the Tribunal’s opinion, relevant and permissible to use that document for purpose of determining the meaning of the TCO.
51. The Tribunal has found that the goods the subject of the TCO are off‑road tyres, used for motor car circuit or drag racing. That interpretation is supported by the required tyre marking features. One of those features is the outside diameter of the tyre, which is commonly found on racing tyres and not other motor vehicle tyres. Although some light truck tyres have a reference to the outside diameter of the tyre, they are clearly not racing tyres and therefore do not fall within the TCO.
52. The meaning the Tribunal has attributed to the description of the tyres the subject of the TCO does not offend the restrictions applied to the making of TCOs set out in s 269SJ of the Act.
53. The decisions made by Customs in respect of the 26 types of tyres on which duty has been paid under protest were correct. The Tribunal decides that the decision in as far as it:
(a)decides the tyres the subject of the application do not qualify under the terms of TCO No 9613014, is affirmed; and
(b)the case is otherwise remitted to the respondent to recalculate the duty payable at the rate of 5%.
I certify that the fifty-three [53] preceding paragraphs are a true copy of the reasons for the decision herein of
Mr G. L. McDonald, Deputy President, and
Mr E. Fice, Member.Signed: .....................................................................................
Personal AssistantDates of Hearing 1 and 2 September 2009
Date of Decision 13 November 2009
Solicitor for the Applicant Mr Louis Gross,
C/- Gross and Becroft Lawyers
Solicitor for the Respondent Mr Roger Northcote,
C/- Australian Government Solicitor
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