Sulo MGB Australia Pty Ltd and Chief Executive Officer of Customs
[2016] AATA 78
•17 February 2016
Sulo MGB Australia Pty Ltd and Chief Executive Officer of Customs [2016] AATA 78 (17 February 2016)
Division
GENERAL DIVISION
File Number
2015/2533
Re
Sulo MGB Australia Pty Ltd
APPLICANT
And
Chief Executive Officer of Customs
RESPONDENT
DECISION
Tribunal Egon Fice, Senior Member
Date 17 February 2016 Place Melbourne The Tribunal sets aside the decision and in substitution determines that Sulo’s wheels or its mobile garbage bins are correctly classified to subheading 8716.90.00. The Tribunal also finds that Sulo’s wheels or its mobile garbage bins are eligible for concessional entry under TCO 0512190.
.[sgd].......................................................................
Egon Fice, Senior Member
IMMIGRATION AND BORDER PROTECTION-- customs and tariffs-- tariff classification of goods under Customs Tariff Act 1995 -- correct classification of wheels on wheelie bins manufactured by Sulo MGB Australia Pty Ltd-- whether bins are properly classified as non-mechanically propelled vehicles-- whether the wheels are suitable for use solely or principally with Sulo’s wheelie bins-- Decision set aside and substituted.
Legislation
Acts Interpretation Act 1901
Customs Act 1901
Customs Tariff Act 1995Cases
Anite Networks Pty Ltd v Collector of Customs [1999] FCA 26
Barry R Liggins Pty Ltd v Comptroller-General of Customs and Others (1991) 103 ALR 565
Gardner Smith Pty Ltd v Collector of Customs, Victoria (1986) 66 ALR 377
Re Gissing and Collector of Customs (1977) 1 ALD 144
Re Toyota Tsusho Australia Pty Ltd and Nippondenso Australia Pty Ltd v Collector of Customs [1992] FCA 211
Re Tridon Pty Ltd and Collector of Customs (1982) 4 ALD 615
Times Consultants Pty Ltd v Collector of Customs (Qld) (1987) 76 ALR 313
Vernon-Carus Australia Pty Ltd and Another v Collector of Customs (1995) 21 AAR 450Secondary Materials
Explanatory Notes to the Harmonized Commodity Description and Coding System
REASONS FOR DECISION
Egon Fice, Senior Member
Sulo MGB Australia Pty Ltd (Sulo) is a manufacturer of mobile garbage bins commonly known as wheelie bins. The wheels for those bins are imported by Sulo.
The Comptroller of Customs (Comptroller) disagreed with Sulo about the tariff classification for those wheels, described as plastic wheel with a non-inflatable rubber tyre. Sulo paid duty under protest in accordance with s. 167 of the Customs Act 1901 (Customs Act). Then, on 22 May 2015, Sulo lodged an application with the Tribunal pursuant to s. 273GA(2) of the Customs Act seeking a review of the Comptroller’s decision.
The Comptroller has conceded that Sulo imports the goods in question for use with its Sulo mobile garbage bins and that the goods are used as parts for those bins.
Sulo contends that the correct tariff classification of the goods is subheading 8716.90.00 of the Customs Tariff Act 1995 (the Tariff Act). Furthermore, Sulo claims that it is entitled to the benefit of a Tariff Concession Order (TCO) (0512190) which is keyed to subheading 8716.90.00. The Comptroller accepts that if the goods are properly classified to subheading 8716.90.00, then the goods come within the terms of TCO 0512190.
However, the Comptroller formed the view that the goods in question are not properly classified to subheading 8716.90.00, but rather, should be classified either to subheading 3926.90.90 or 4012.90.00. The Comptroller also suggested that subheading 3924.90.00 was a possibility.
I must first determine the correct classification of the imported goods. If I should find that they are correctly classified to subheading 8716.90.00, then I need not examine whether they fit the description set out in TCO 0512190. Otherwise, given that the TCO in question is keyed to subheading 8716.90.00, it will simply be a case of declaring that the goods do not fit the description of goods in that TCO.
IDENTIFICATION
The starting point in resolving questions of tariff classification is, as always, to identify the goods in their condition as imported (Re Gissing and Collector of Customs (1977) 1 ALD 144). The process of identification is conveniently summarised in the Tribunal decision Re Tridon Pty Ltd and Collector of Customs (1982) 4 ALD 615. The Tribunal said, at 620 – 621 (references omitted):
(i) Identification must be objective, having regard to the characteristics which the goods, on informed inspection, present:…
(ii) the identification of goods cannot be controlled by the descriptions of goods adopted in the nomenclature of the Tariff:…
(iii) Nevertheless in identifying goods it is necessary to be aware of the structure of the nomenclature, the basis on which the goods are classified and the characteristics of the goods which may be relevant to the frequently complex task of classification:…
(iv) In the identification of goods, knowledge of how those who trade in the goods described them will usually be relevant, but not necessarily conclusive:…
(v) 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:…
(vi) Descriptive terms may be of varying degrees of specificity … Generic descriptions may be made by reference to the materials or substances from which the goods are manufactured:…
(vii) Identification will frequently extend to characterisation of the 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…;
(viii) Composite goods, notwithstanding that they have components which are separately identifiable, may nevertheless be identifiable in combination as a new entity if the identity of the separate units is subordinated to the identity of the combination:…
The approach adopted by the Tribunal in Tridon was cited with approval by the Federal Court. In the unreported decision of the Full Court of the Federal Court of Australia (Einfeld, Carr and Lehane JJ) in Anite Networks Pty Ltd v Collector of Customs [1999] FCA 26, the Court said, at [26]:
We accept the general proposition put by counsel for the appellant that the first step for the Tribunal was to identify the goods, as a matter of fact, notionally as a “wharfside” process. Classification (including any necessary application of the Interpretation Rules) was a later step, to be undertaken only once the Tribunal had decided what the Goods were.
The Full Court of the Federal Court of Australia (Northrop, Jenkinson and Branson JJ) in Vernon-Carus Australia Pty Ltd and Another v Collector of Customs (1995) 21 AAR 450 at 454, explained that in determining the classification of particular goods, a two-stage process is involved. First, the goods must be identified. Secondly, the relevant heading must be construed properly and applied to the goods as identified.
Northrop J referred to what was said by Morling and Wilcox JJ in
Times Consultants Pty Ltd v Collector of Customs (Qld)(1987) 76 ALR 313 at 328:
It must always be remembered that the classification of goods for tariff purposes is a practical ‘wharf-side’ task. Upon some occasions it will be necessary for the classifier to obtain information to enable identification of the goods but it is entirely inappropriate that he or she should enter into inquiries upon matters such as cost, commercial advantage and purchaser preference which the Tribunal undertook. It ought 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...
After referring to the principles set out in the Tridon case, Northrop J said, at 455 – 456:
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 form or 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. This is such a case where purpose forms an essential part of the classification.
Mr J Millea, a Senior Lawyer with the Legal Services Branch of the Department of Immigration and Border Protection, who appeared on behalf the Comptroller, in his written submissions conceded that Sulo imported the subject goods for use with its Sulo mobile garbage bins and that the goods were used by Sulo as parts for its garbage bins. In his Statement of Facts and Contentions the Comptroller stated that the subject goods as imported were plastic wheels fitted with a solid rubber tyre having a diameter of 200 mm. Furthermore, the Comptroller contended that it was clear from the illustrative descriptive material and the sample provided by Sulo that the subject goods comprised a plastic wheel with a solid rubber tyre.
I had in evidence an example of an item the subject of this case. While I agree with the description and identification offered by Mr Millea, I wish to add two further observations. As was stated in Tridon, in identifying the goods in question, I may have regard to their design features and their suitability for a particular use where that appears from inspection. The wheel itself has, as an integral component, a hollow stub axle housing into which the axle is inserted. In addition, that stub axle housing has, at its far end, a steel spring-loaded pin. I have no doubt that an informed observer would conclude that the steel spring-loaded pin is designed to fit into a particular axle which has a groove cut into it to accommodate the pin. That would prevent the wheel from working its way off the axle as the wheel is rotated. In other words, the wheel, tyre and axle housing have been specifically designed to fit onto a purpose-built axle, and not designed for any other use.
In addition, I had in evidence the assembly instruction for Sulo’s plastic mobile garbage bins. It depicts the wheel with its spring-loaded locking pin being pushed onto a steel axle at the base of the bin so that the locking pin retracts as the wheel is pushed on and then returns to its original position as it slips into the groove in the axle. The outer end of the axle on the base of the Sulo bins is machined to a conical taper so as to allow the wheel to lock into place when pushed onto the axle in the course of assembly.
Given the fixed size of the stub axle housing and its locating steel spring-loaded pin, there can be little room for doubt that the item in question was made specifically for the purpose of being fitted to a mobile garbage bin manufactured by Sulo. There was no evidence that it could have any other use in the condition it was imported. While I have indicated that the item itself is comprised of two essential components, the solid rubber tyre moulded onto a plastic rim from which is extruded a hollow stub axle housing, I find that the correct identification of the item is that it is a plastic wheel.
The solid rubber tyre is not obviously able to be removed from the plastic rim. Although Mr Millea in his written submissions contended that the goods as imported should be described as a plastic (high density polyethylene) wheel fitted with a solid rubber tyre, use of the word fitted may imply that it is capable of being removed as is a tyre on an ordinary motor vehicle wheel rim. However, in this case, it is firmly moulded to the rim. It plainly cannot be removed except by destruction. In fact, in his written submissions (paragraph 27), Mr Millea submitted that the subject goods comprised two different components; the wheel and the solid rubber tyre fixed permanently together to form a whole. The hollow stub axle housing simply facilitates mounting the wheel onto an axle so that it can perform its intended function. It is also clear from examination of the wheel, and in any event is conceded by the Comptroller, that the wheel has been made for the purpose of being fitted to a mobile garbage bin manufactured by Sulo.
Mr Millea at first submitted it was important I consider the imported goods in question as not comprising a combination of a wheel and a rubbish bin, but only as a plastic wheel with a solid rubber tyre; and that in order for Sulo to establish that the subject goods are a part of Sulo’s rubbish bin, it must first establish that the garbage bin is a vehicle and that the imported goods are parts of that vehicle. Respectfully, I cannot agree. Sulo is the manufacturer of mobile garbage bins. There was no dispute about that. Either Sulo has grossly mis-stated the nature of its garbage bins or, as is more likely, it is a manufacturer/assembler of garbage bins with wheels fitted in order to make them mobile. The evidentiary material before me describes Sulo’s bins as a 2 Wheel Metal Container. There was no evidence before me which indicated that Sulo made bins without wheels attached. In his oral submissions I understood Mr Millea to concede that the wheels in question were parts of mobile garbage bins. I find that the wheels are a part of Sulo’s wheelie bins. The evidence does not suggest that the wheels may have other applications. The fact that they are manufactured independently of the bins does not alter my finding.
CLASSIFICATION
According to the Comptroller, the only headings and subheadings found in the Tariff Act which are likely possibilities are:
3924TABLEWARE, KITCHENWARE, OTHER HOUSEHOLD ARTICLES AND HYGIENIC OR TOILET ARTICLES, OF PLASTICS:
3924.90.00-Other
3926OTHER ARTICLES OF PLASTICS AND ARTICLES OF MATERIALS OF 3901 TO 3914.00.00:
3926.90.90-Other
4012RETREADED OR USED PNEUMATIC TYRES OF RUBBER; SOLID OR CUSHION TYRES, TYRE TREADS AND TYRE FLAPS, OF RUBBER:
4012.90.00-Other
8716TRAILERS AND SEMI--TRAILERS; OTHER VEHICLES, NOT MECHANICALLY PROPELLED; PARTS THEREOF:
8716.90.00-Parts
Section 7 of the Tariff Act deals with the rules for classifying goods in Schedule 3 which sets out the classification of goods under various headings and subheadings and the special rates of duty which apply. Relevantly, it provides:
(1) The Interpretation Rules must be used for working out the tariff classification under which goods are classified.
(2) …
(3) A reference in the Interpretation Rules to Notes includes a reference to Additional Notes.
Note 1: The text in Schedule 3 is based on the wording in the Harmonized Commodity Description and Coding System that is referred to in the International Convention on the Harmonized Commodity Description and Coding System done at Brussels on 14 June 1983.
Note 2: …
The general rules for the interpretation of Schedule 3 are set out in s. 7 of Schedule 2 of the Tariff Act. The relevant passages are:
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:
2. (a) …
(b) Any reference in a heading to a material or substance shall be taken to include a reference to mixtures or combinations of that material or substance with other materials or substances. Any reference to goods of a given material or substance shall we take into include a reference to goods consisting wholly or partly of such material or substance. The classification of the goods consisting of more than one material or substance shall be in accordance to the principles of Rule 3.
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 affected as follows:
(a)The heading which provides 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 the set foot 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.
(b)Mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets for retail sale, which cannot be classified by reference to 3 (a), shall be classified as if they consisted of the material or component which gives them their essential character, in so far as this criterion is applicable.
(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.
4. Goods which cannot be classified in accordance with the above Rules shall be classified under the heading appropriate to the goods to which they are most akin.
5. …
6. 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.
There was no dispute that the goods in question were comprised of at least two and possibly three discrete materials, that is, rubber, plastic and a small component of steel. Accordingly, the wheel or goods in question should be classified according to the principles of Rule 3.
The goods in question are, as Mr Millea submitted, composite, consisting of different materials and, in fact, made up of different components. There is the moulded rubber tyre fitted permanently to the plastic wheel rim which includes a hollow stub axle housing and a steel pin to retain the wheel to its designed axle. In those circumstances, I should accept the classification which gives those goods their essential character. Given the integral nature of the different materials, and their sole purpose being to construct a functioning and usable wheel, their essential character is that of a plastic wheel. Even if I am wrong about that and Rule 3(a) applies, I should apply the heading which provides the most specific description rather than headings which provide a more general description. That application would have the same outcome.
Headings 3924 and 3926
These headings fall within Chapter 39 which deals with plastics and articles thereof. However, the Chapter 39 Notes state:
2.-This Chapter does not cover:
(a)…
(t)Parts of aircraft or vehicles of Section XVII;…
Given the above exclusion, before further examining these headings, I need to refer to the exclusions noted in the Section XVII Notes. The relevant note is as follows:
2.-“Parts” and “parts and accessories” do not apply to the following articles, whether or not they are identifiable as goods of this section:
(a) Joints, washers or the like of any material (classified according to their constituent material or in 8484) or other articles of vulcanised rubber other than hard rubber (4016);…
Heading 8716, which is relied on by Sulo, deals with vehicles which are not mechanically propelled and it includes parts of such vehicles. However, the wheels which I have identified as the goods in question do not appear to fall within the exclusions set out in Note 2 (a) of the Section Notes. While there is a rubber component to the wheels, it is not vulcanised rubber. It is plainly hard rubber which is not excluded. Although there is no definition as to what constitutes vulcanised rubber, vulcanisation (vulcanization) is defined in The Shorter Oxford English Dictionary as:
The method or process of treating crude India-rubber with sulphur and subjecting it to intense heat, by means of which it is rendered more durable and made adaptable for various purposes.
The Chapter 40 Notes make a distinction between rubber products, whether vulcanised or hard. The clear inference is that vulcanised rubber is not hard rubber but rather is rubber which has been treated such as to allow it to be extended beyond its original length, returning to its original length when pressure is released. The hard rubber moulded tyre fitted to the wheel in question is plainly not capable of being stretched. Therefore, I find it does not fall within the exclusion set out in Note 2 of the Section XVII Notes.
Heading 8716
Mr L Gross, the solicitor acting for Sulo, correctly submitted that the first step is to establish whether the goods come within Section XVII, and if they do, Chapter 39 does not apply. Sulo’s contention is that the goods fall within the sub-heading which refers to parts of other vehicles, not mechanically propelled. For that contention to be correct, the goods must not fall within the exclusions set out in the Section XVII Notes and in particular Note 3 which states:
3.-References in Chapters 86 to 88 to “parts” or “accessories” do not apply to parts or accessories which are not suitable for use solely or principally with the articles of those Chapters. A part or accessory which answers to a description in two or more of the headings of those Chapters is to be classified under that heading which corresponds to the principal use of that part or accessory.
Although the Comptroller conceded that the wheels in question imported by Sulo were for use with its mobile garbage bins as parts thereof, he does not concede that the mobile garbage bins are non-mechanically propelled vehicles; nor does he concede that the goods are suitable solely or principally for mobile garbage bins. Therefore, Mr Millea submitted that the wheels are not parts solely or principally suitable for use with articles in Chapters 86 to 88. In other words, the exclusion in Note 3 applied in this case.
The first question which needs to be addressed, therefore, is whether Sulo’s mobile garbage bins are properly classified as non-mechanically propelled vehicles. The second question is whether the wheels are suitable for use solely or principally with Sulo’s wheelie bins.
The word vehicle is not defined in any of the relevant notes to the Tariff Act. Accordingly, Mr Millea submitted that it should be given its ordinary meaning. Although Mr Millea did not do so, this submission ought to have indicated that a word should be given its ordinary meaning taking into account the context in which it appears in the legislation in question. While the word vehicle has a number of meanings given by various dictionaries, relevantly, The Shorter Oxford English Dictionary provides the following:
3. A means of conveyance provided with wheels or runners and used for the carriage of persons or goods; a carriage, cart, wagon, sledge etc. 1656. 3. A receptacle in which anything is placed in order to be moved 1678.
The Macquarie Dictionary Online relevantly defines vehicle as:
noun 1. any receptacle, or means of transport, in which something is carried or conveyed, or travels.
2. A carriage or conveyance moving on wheels or runners.
Mr Millea submitted that simply because an item has wheels, does not make it a vehicle within the ordinary meaning of that word. While that is undoubtedly correct, it does not take into account the context in which the word is used. The problem with articles listed under the Tariff Act is that context is, frequently, difficult to determine with any accuracy. That is because the Tariff Act does not list articles by using anything that resembles correct grammatical construction. However, some indication may be available by examining all of the headings which appear under a particular Chapter.
Chapter 87 deals with vehicles other than railway or tramway rolling-stock, and parts and accessories thereof. If one were to apply a dictionary definition to the word vehicles, the list would be very broad indeed. The Headings include tractors, carriages for disabled persons whether or not motorised or otherwise mechanically propelled, baby carriages and parts thereof, trailers and semi-trailers. Then there are also other vehicles, not mechanically propelled. This description may include a plethora of devices used to assist in moving unwieldy and or heavy objects.
Mr Millea submitted that the essential character of a vehicle is something which transports goods or people. In fact, he went further and submitted that if the transporting of goods or people is only a subsidiary or incidental function, the good is not a vehicle within the ordinary meaning of the word vehicle. With respect to Mr Millea, that is not necessarily correct. For example, tractors have numerous uses the least of which is the transport of goods or people. In fact the Chapter Note states: For the purposes of this Chapter, “tractors” means vehicles constructed essentially for hauling or pushing another vehicle, appliance or load, whether or not they contain subsidiary provision for the transport, in connection with the main use of the tractor, of tools, seeds, fertilisers or other goods. Nevertheless, they plainly fall within Chapter 87.
Essentially, Mr Millea submitted that the character of Sulo’s mobile garbage bin is that of a rubbish bin to hold rubbish and not to transport people or goods. That is because modern household bins are larger than in the past and have wheels to assist in moving them, and the rubbish they hold, to the rubbish collection point. Mr Millea explained that did not mean the rubbish was being transported any more than a hospital bed with wheels, an office cabinet with wheels or luggage with wheels were vehicles used for transporting their contents or occupants.
Despite the somewhat unclear distinctions drawn by Mr Millea regarding what can be described as a vehicle and what should or should not be described as a vehicle based on its essential character, he nevertheless submitted that extrinsic materials, such as the Explanatory Notes to the Harmonized Commodity Description and Coding System (HSEN) should not be used in this case to aid construction. He directed my attention to
s. 15AB of the Acts Interpretation Act 1901 (the Interpretation Act) which relevantly provides:
15AB Use of extrinsic material in the interpretation of an Act
(1) Subject to subsection (3), in the interpretation of a provision of an Act, if any material not forming part of the Act is capable of assisting the ascertainment of the meaning of the provision, consideration may be given to that material:
(a)to confirm that the meaning of that provision is 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; or
(b)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.…
According to Mr Millea, common sense and experience should inform the Tribunal that moving a garbage bin is a subsidiary or incidental function and does not provide the essential character of the good in question. A rubbish bin without wheels remains a rubbish bin.
Respectfully, the obvious problem with Mr Millea’s contention is that the goods in question are parts of a purpose-built rubbish bin, described as a wheelie bin. It is not simply a rubbish bin. If a person wished to acquire a bin for storing rubbish, they would not necessarily pay for a purpose-built wheelie bin. The converse is also true. If the person wished to acquire a rubbish bin for the purpose of moving rubbish on a regular basis, they would acquire one which was capable of transporting that rubbish without lifting and carrying it. Furthermore, because rubbish is collected from the curb-side on most properties, it is difficult not to conclude that the purpose of a wheelie bin is to convey rubbish to the curb-side so that it can be collected. It is not only a storage device. If one wished to store one’s rubbish, and not have it removed through a regular collection, then there would be no purpose in acquiring a wheelie bin.
On the other hand, Mr Gross submitted that it would be appropriate in this matter to refer to the HSEN to assist in the interpretation of the words other vehicles. He referred to the Full Court of the Federal Court of Australia (Keely, Neaves and Wilcox JJ) decision in Gardner Smith Pty Ltd v Collector of Customs, Victoria (1986) 66 ALR 377. The Court was required to determine the meaning of the words or otherwise modified in respect of certain imported vegetable oil. It referred to s. 15AB of the Interpretation Act and in particular the Applicant’s contention that the words or otherwise modified were not ambiguous or obscure or, if given their ordinary meaning, would lead to a result that was manifestly absurd or unreasonable (383). The Court said, at 383 – 384:
But is (sic) is plain that, to limit the use of extrinsic material to such circumstances – circumstances obviously referable to para 1(b) of s. 15AB of the Acts Interpretation Act 1901 – is to deprive para 1(a) of that section any operation.… It would, as we think, have been open to the Tribunal to consider the explanatory notes in order to confirm the meaning which, on the other material available to it, it considered the expression bore having regard to its context in the Tariff Act.
A subsequent Full Court of the Federal Court of Australia (Lockhart, Beaumont and Gummow JJ) in Barry R Liggins Pty Ltd v Comptroller-General of Customs and Others (1991) 103 ALR 565 also gave consideration to the use of the HSEN when interpreting the Tariff Act. Beaumont J said, at 573:
However, although the Customs Tariff Act 1987 refers to the International Convention of the Harmonised Commodity Description and Coding System done at Brussels in June 1983 (see Sch 2, adopting the “General Rules for the Adoption of the Harmonised System”), the 1987 Act makes no reference to the Brussels Notes. It follows, in my opinion, that the problem discussed by Mason J in Henderson’s case still remains. That is, that although it may be permissible to refer to extrinsic material with the statute is ambiguous, it does not follow that the extrinsic material can be used to contradict the meaning of the language of an Act of Parliament, that meaning being taken from its proper statutory context.
The Full Court of the Federal Court of Australia (Black CJ, Gray and Heerey JJ) again addressed this issue in Re Toyota Tsusho Australia Pty Ltd and Nippondenso Australia Pty Ltd v Collector of Customs [1992] FCA 211 (unreported, 14 May 1992). The issue in that case was the meaning of the word machinery conveyed by the text of Heading 8419. The Court explained that the machinery to which heading 8419 applied was machinery which had a purpose. It noted that as used in that Heading, it was done so in a sense which would not readily be used in everyday speech. To that extent, it is not dissimilar to the problem with which I am faced. The appellant sought to rely on the HSEN as an aid in the construction of Schedule 3 of the Tariff Act. While not denying that the HSEN was capable of being used for such a purpose, the respondents contended it was inappropriate to use the HSEN because the meaning was clear and unambiguous. Again, the similarities with this case should be apparent.
The Court, after examining the prior decisions of the Full Courts (to which I have referred above) regarding the use of the Explanatory Notes, said, at [25] – [28]:
The limitations on the use of extrinsic materials must of course be kept in mind. In Barry R. Liggins Pty. Ltd. v Comptroller-General of Customs 573, Beaumont J., with whom Lockhart and Gummow JJ. agreed, quoted with approval a passage from E.J. Cooper, Customs and Excise Law (Cumulative Supplement to 30 June 1985 at 9) where it is said:
“… (The Brussels Notes) are a secondary guide only and cannot displace the plain words of the statute… Or be used when there is no ambiguity in the legislation, e.g. a doubt cannot be created by the use of the explanatory notes and then have the doubt settled by reference to the same notes.”
Beaumont J. also drew attention to the observations of Mason C.J., Wilson and Dawson JJ. in Re Bolton; Ex parte Beane [1987] HCA 12; (1987) 162 CLR 514 at 517-8 about the use of extrinsic material.
The appellant sought to rely upon the Explanatory Notes to confirm that the meaning of the relevant provision was the ordinary meaning conveyed by the text (s.15AB(1)(a)) but they contended that if there was any ambiguity (the respondent contended that there was none) then reference might be made to the Explanatory Notes to determine the meaning of the ambiguous provision (s. 15AB(1)(b)(i)).
In our view, the Explanatory Notes are of assistance in confirming that the meaning of heading 8419 and the relevant sub-heading is the ordinary meaning conveyed by the text of the provision taking into account its context.
Mr Gross submitted that because the expression under consideration is other vehicles, the Tribunal needed to establish exactly what is intended to be included in the expression other vehicles, not mechanically propelled, which fit within the subheading. Given the very broad application which that expression may have, even considering the context in which it appears in the Tariff Act, I accept Mr Gross’ submission regarding the use of the HSEN. The somewhat terse description applied to articles listed in the Tariff Act, and the numerous exclusions which appear in most if not all Chapters, are evidence that ambiguity is a constant problem in the process of classification. As Mr Millea pointed out, there are many other devices which are equipped with wheels and which may be used to transport goods or materials. Nevertheless, they would most likely not fall within any of the headings or subheadings of Chapter 87. While the word vehicle when used in everyday expression may not be ambiguous, it is usually applied to a self-propelled machine. It is not, in the use of everyday language, ordinarily applied to trailers, caravans and carts or the like. These are usually referred to as I have stated. Therefore, while Mr Millea submitted that I should apply common sense and experience in aid of classification, as will become apparent presently, that is unlikely to provide the correct answer.
The Explanatory Notes, Fifth edition, (2012), refer to Heading 8716 and state the following (emphasis in original):
This heading covers a group of non-mechanically propelled vehicles (other than those of the preceding headings) equipped with one or more wheels and constructed for the transport of goods or persons. It also includes non-mechanical vehicles not fitted with wheels (e.g., sledges, special sleds running on timber trackways).
The vehicles of this heading and designed to be towed by other vehicles (tractors, lorries, trucks, motor cycles, bicycles, etc.), to be pushed or pulled by hand, to be pushed by foot or to be drawn by animals.
The heading includes:
(A)…
(B) Hand-or foot-propelled vehicles.
This group includes:
(1)Trucks and trolleys of various kinds including those specialised to use in particular industries (in the textile or ceramic industries, in dairies, etc.).
(2)Wheelbarrows, luggage-trucks, hopper-trucks and tipping-trucks.
(3)Food carts, buffet trolleys (other than the type falling in heading 94.03), of a kind used in railway stations.
(4)Hand-carts, e.g., for waste disposal.
(5)…
(6)Small insulated barrows for use by ice cream vendors.
(7)Tradesman’s barrows of all kinds. These lightweight vehicles are sometimes fitted with pneumatic tyres.…
As I have said, many of the items referred to above would not normally be described as a vehicle. In fact items such as food carts and buffet trolleys are not only used to convey goods but are also frequently used to store goods. Nevertheless, they are intended to be classified as not mechanically propelled vehicles. On the other hand, as Mr Millea submitted, luggage bags with wheels would not fall within the description of vehicle. In fact, such items appear in the Explanatory Notes as an exclusion. Under the Hand or foot-propelled vehicles heading, one finds the exclusion stated as follows:
This heading does not cover:
(a)Walking aids known as “walker-rollators”, which generally consist of a tubular metal frame on three or four wheels (some or all of which may swivel), handles and handbrakes (heading 90.21).
(b)Small wheeled-containers (e.g., wheeled-baskets) of basketwork, metal, etc., not incorporating a chassis, of a kind used in shops (classification according to their constituent material).
It appears to me that the exclusion of small wheeled containers not containing a chassis points to a significant difference between an article which falls within the classification in Heading 8716 and one which does not. That is, Heading 8716 is intended to apply to vehicles which have significant load-bearing capacity. Ordinarily, that is what one would understand by the expression vehicle. While the dictionary definitions simply refer to the transport of persons or goods, underlying that definition is the understanding that those persons or goods are not items which can be readily lifted and carried to the intended destination. Usually, wheels are used to facilitate the movement. The word chassis is defined in the Macquarie Dictionary Online as: 1. the frame, wheels, and machinery of a motor vehicle, on which the body is supported.
Generally, the chassis of a vehicle is purpose-built, dependent upon the load it is intended to carry. The wheels are attached to the chassis (sometimes with suspension devices to limit shock induced by uneven ground and sometimes without suspension devices) and not to the body or any other part of the vehicle. Hence, for example, a wheelbarrow generally has a metal or wooden chassis to which is attached the barrow or receptacle to hold the goods intended to be transported. The wheel is attached to the frame or chassis, not to the barrow. That arrangement is quite different to items such as luggage bags or suitcases with wheels attached. The wheels in those applications often are not attached to a chassis or frame and are not designed to be load-bearing. That is, whatever is placed in such items can reasonably be carried. The wheels simply provide a more convenient means of moving the article and its contents from time to time, over relatively short distances.
While the Sulo wheelie bins are a moulded plastic bin incorporating a handle and a fitted lid, an examination of the Assembly Instruction which was in evidence discloses solid plastic extrusions at the base of the bin designed to hold the axle to which the wheels are fixed. It is not unrealistic to describe those extrusions as forming a chassis onto which the bin is moulded. Were the axle simply inserted through the walls of the bin, which are clearly not designed to support load, constant pounding forces transmitted through the wheel to the axle when the load is moved over uneven ground would cause it to fail in a very short period of time. It is the chassis which makes the wheelie bin a load-bearing article. In fact, Sulo’s wheelie bins have substantial load-bearing capacity. The materials which were in evidence before me describe the maximum load, which varies with the size of the bin, to be between 48 and 96 kg. The wheelie bins are described as having multiple applications, including commercial and industrial waste. They are also described as being able to withstand exposure to high levels of mechanical stress. In fact Sulo also manufactures what is described as a Bin Hitch which enables its bins to be attached to the towbar of a motor vehicle for the purpose moving heavy loads, particularly up steep inclines.
In my opinion, the items referred to in the HSEN are entirely consistent with those articles described by Heading 8716 of the Tariff Act. The fact that small-wheeled containers without a chassis are excluded from the classification is also consistent with the items of Heading 8716 in the Tariff Act. They are all load-bearing devices which, necessarily, have the wheels attached to a chassis. With respect to Mr Millea, the distinction is not whether the device was constructed for the purpose of transport rather than a receptacle. There is no reason why devices falling within the classification of Heading 8716 could not be designed for both purposes. Food carts and buffet trolleys present a good example. In light of the above analysis, I find that the evidence supports Mr Gross’ contention that Sulo’s wheelie bins are a vehicle, not mechanically propelled. They are properly classified under Heading 8716. The only remaining question is whether the wheels, being the imported goods, should be classified to subheading 8716.90.00 which refers to Parts.
The Section XVII Notes contain the exclusion relating to parts which I have set out at [26]. Mr Millea submitted, in the alternative, that if I were to find that the mobile garbage bins were vehicles, then the subject goods were not suitable solely or principally for mobile garbage bins. Therefore, they could not be regarded as parts of the Sulo mobile garbage bins. That is because the wheels were a standard fitting size and had no objective characteristics to show that they were solely or principally for vehicles of Chapter 87 rather than for any mobile equipment or objects not classifiable in Section XVII. Mr Millea referred to plastic storage containers of Chapter 39; metal cases, drums and other containers of Section XV; mobile equipment of Section XVI; wheeled apparatus of Chapter 90; wheeled furniture of Chapter 94; wheeled toys of Chapter 95; or any other good with wheels. Mr Millea annexed to his written submissions numerous images of wheeled items, I assume, for the purpose of indicating that the imported wheels were suitable for the applications shown in the images.
With respect to Mr Millea, not one of the images attached to his written submissions discloses wheels identical to, or even similar to, Sulo’s imported wheels. As I have already pointed out in [13] above, there are at least two features which may distinguish Sulo’s wheels from others. The Sulo wheel has an integral hollow stub axle housing which is of a specified internal diameter and length. It has an internal diameter of 22 mm and an overall length of 100 mm. The wheel diameter is 200 mm. While the wheel diameter may not be significant in every case, the remaining two dimensions will be. That is because in order to be able to be used in any other application, the wheels can only be fitted to an axle of an external diameter slightly less than 22 mm. The axle itself of course needs to be retained by some mechanism, usually a chassis or frame. Because the chassis needs to be constructed to allow a particular diameter axle to be fitted, it would be entirely fortuitous to find another vehicle which has a chassis constructed to fit precisely that diameter axle.
The second problem with Mr Millea’s contention is the length of the stub axle. In order to be able to fit the Sulo wheel to a usable axle, assuming the internal diameter is suitable, the distance between the chassis or frame housing the axle and the end of that axle must be at least 100 mm and, most likely, not much in excess of that dimension. Otherwise, the wheel would not operate in a satisfactory manner. I had no evidence before me, including the attached images to Mr Millea’s submissions, which so much as suggests that the Sulo wheel would be suitable to use in the applications shown in those images. Only one image depicts a wheel with an integral hollow stub axle housing. It is a metal wheel with what appears to be a solid rubber tyre affixed by means of the steel wheel itself which is comprised of two halves bolted together. I am not able to discern its internal diameter and in any event, its length is substantially less than the Sulo wheel.
The third and possibly most significant problem for Mr Millea’s contention is the spring-loaded steel pin which is designed to secure the wheel to the axle. There was no evidence before me that any of the images attached to Mr Millea’s submissions have such a device. In addition, the axle to which the Sulo wheel is affixed is machined so that it tapers at its end to allow the pin to slide upwards against the spring when the wheel is pushed onto the axle. When the pin passes into the groove immediately beyond the taper, the spring forces it downwards into the machined groove. That mechanism is used to retain the wheel on the axle while it rotates. While I am unable to measure the dimension and depth of the groove or the steel pin, it is obvious that the pin must fit neatly into the groove. In other words, the chassis or frame, axle and wheel with their retaining mechanisms, have all been designed specifically to function on the Sulo wheelie bin. There was no evidence before me of an alternative use. Given the above evidence, I find that not only are the wheels the subject of this application parts of Sulo’s wheelie bins, but they are parts which are suitable solely or principally for use with those bins. The exclusion set out in Note 3 of the Section XVII Notes does not apply.
Heading 4012
For the sake of completeness, I should say something briefly about this Heading. Mr Millea submitted in the alternative that if I could not see either component of the wheel, that is the plastic wheel or the hard rubber moulded tyre, as giving the goods their essential character, then I should apply Interpretive Rule 3(c). With respect to Mr Millea, as I have already said in identifying the goods in question, while they are undoubtedly made up of composite materials, the essential character is plain - they are plastic wheels. Describing the goods as solid or cushion tyres is not the most specific description. Interpretive Rule 3(b) should be applied. In that case, I find the goods cannot be classified under Heading 4012.
CONCLUSION
Contrary to the contentions put forward on behalf of the Comptroller, I have found that Sulo’s wheelie bins are correctly classified as vehicles, not mechanically propelled. They fall to be classified to Heading 8716. Although the Comptroller conceded that the imported goods formed a part of Sulo’s wheelie bins, he did not concede that they were suitable for use solely or principally with those goods. However, I have found that the unique nature of those wheels, when combined with the axle required to be used with those wheels and installed on the moulded frame or chassis of the wheelie bin, identifies the articles as suitable for use solely or principally with the Sulo wheelie bin. Therefore, I have found that goods should be classified to subheading 8716.90.00.
As I said at the outset, if I were to find as I have regarding the classification of the goods in question, TCO 0512190 applies. The parties agreed that should be the case. That TCO is keyed to subheading 8716.90.00 and therefore the imported wheels should be eligible for concessional entry.
I find that the decision made by the Comptroller on 28 January 2015 classifying the wheels for Sulo’s mobile garbage bins to subheading 4012.90.00 of the Tariff Act and denying the application of TC 0512190 was not the correct decision. I set aside that decision and in substitution determine that Sulo’s wheels for its mobile garbage bins are correctly classified to subheading 8716.90.00. I also find that Sulo’s wheels for its mobile garbage bins are eligible for concessional entry under TCO 0512190.
I certify that the preceding 54 (fifty-four) paragraphs are a true copy of the reasons for the decision herein of Egon Fice, Senior Member [sgd]........................................................................
Associate
Dated 17 February 2016
Date of hearing 24 November 2015 Solicitor for the Applicant Louis Gross Solicitors for the Applicant Gross & Becroft Lawyers Solicitor for the Respondent James Millea Solicitors for the Respondent Secretary, Department of Immigration and Border Protection
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