Toro Australia Group Sales Pty Ltd and Chief Executive Officer of Customs
[2014] AATA 187
[2014] AATA 187
Division GENERAL ADMINISTRATIVE DIVISION File Number
2013/3542
Re
Toro Australia Group Sales Pty Ltd
APPLICANT
And
Chief Executive Officer of Customs
RESPONDENT
DECISION
Tribunal Egon Fice, Senior Member
Date 4 April 2014 Place Melbourne The Tribunal affirms the decision made by Customs following internal review on
28 March 2013.........[sgd Egon Fice]................................................................
Egon Fice, Senior Member
CUSTOMS – Tariff Concession Order – Tariff classification – Interpretation of Tariff Concession Order – Specialised trade meaning or ordinary meaning – composite goods – garden hoses – hoses with fittings – hoses with plastic fittings – hoses with metal fittings
Legislation
Customs Act 1901 (Cth) ss 167, 269C, 269F, 269K, 269SJ, 273GA
Customs Legislation (Tariff Concessions and Anti-Dumping) Amendment Act 1992 (Cth)
Customs Tariff Act 1995 (Cth)
Cases
Cameron Australasia Pty Ltd and Chief Executive Officer of Customs [2012] AATA 865
Greig Novelties Pty Ltd and Chief Executive Officer of Customs [1996] AATA 355
Re Tridon Pty Ltd and Collector of Customs (1982) 4 ALD 615
Robert Bosch Australia Pty Ltd and Collector of Customs [1986] AATA 250
Sheldon & Hammond Pty Ltd and Chief Executive of Customs [2007] AATA 1929
Voxson Sales Pty Ltd v Collector of Customs (1993) 19 AAR 129
Secondary Materials
Tariff Concession Order 0804831
The Shorter Oxford English Dictionary (3rd ed, 1983)
REASONS FOR DECISION
Egon Fice, Senior Member
4 April 2014
Toro Australia Group Sales Pty Ltd (Toro) is the supplier of a range of irrigation products to the landscape, agricultural, turf care and domestic household garden markets.
On 19 June 2012 Mainfreight International Pty Ltd (Mainfreight), a licensed customs broker acting for Toro, lodged an application for a tariff advice in respect of a number of garden hoses in the following four categories:
·Category A – hoses without fittings
·Category B – hoses with plastic fittings
·Category C – hoses with brass fittings
·Category D – hoses with fittings and a handspray
There was no dispute between the parties that the hoses were different models of garden hoses which are polyester reinforced; made from varying percentages of polyvinylchloride (PVC); and are all flexible.
On 19 June 2012 Mainfreight lodged an application for a tariff advice with the Chief Executive Officer of Customs (Customs) in respect of the four categories of hoses referred to in paragraph [2]. Mainfreight claimed the hoses fell under tariff classification 3917.39.90. Chapter 39 of the Customs Tariff Act 1995 (the Tariff Act), Schedule 3, is concerned with plastics and articles thereof. In particular, Mainfreight contended that the goods in question fell under heading 3917 which deals with TUBES, PIPES AND HOSES, AND FITTINGS THEREFOR (FOR EXAMPLE, JOINTS, ELBOWS, FLANGES), OF PLASTICS:… Mainfreight also contended that Tariff Concession Order (TCO) 0804831 should be considered.
On 7 August 2012 Customs issued its tariff advice (No. 20468300). Customs determined that the appropriate sub-heading was 3917.39.90. Customs also determined that the TCO was not applicable because the hoses consisted of nylon yarn whereas the TCO specified PVC and polyester reinforcement only as well as the fact that some of the hoses were fitted with connectors which were not specified or included in the TCO.
On 17 September 2012 Mainfreight requested an internal review of Customs’ tariff advice decision. The decision maker considered some 30 goods separated into the
4 categories to which I have referred above.
Customs’ internal review decision was handed down on 28 March 2013. Applying the general rules for the interpretation of Schedule 3, which are found in Schedule 2 of the Tariff Act, the decision maker found that all of the goods in each of the 4 categories referred to above were goods properly classified to 3917.39.90. However, the decision maker found that only the hoses which fell within Category A were eligible to claim the TCO.
Following that decision, Toro paid under protest the duty demanded by the Collector in accordance with s 167(1) of the Customs Act 1901 (the Customs Act). On 18 July 2013 Toro lodged an application with the Tribunal pursuant to s 273GA(5) of the Customs Act which allows the owner of goods to make such an application where the owner has paid under protest the sum demanded by the Collector. That application was made within the six-month time limit set out in s 167(4) of the Customs Act.
Prior to the commencement of hearing this matter, Toro’s legal representatives confirmed that those goods described under Category A and Category D were not subject to its application before the Tribunal. The hearing before me was only concerned with those goods which fall into Category B and Category C. They are described as follows:
Category B – hoses with plastic fittings (both crimped and push on style)
Jackaroo – 1011500, 1011504
Tricoflex – 1011526, 1011533
Superflex – 1011460, 1011461
Armourflex – 1011446, 1011457
Spectrum – 1011570, 1011579, 1011439, 1011486, 1011447
Category C – hoses with metal fittings (crimped)
Premium – 1011563, 1011565 (brass)
Marine – 1011444 (nickel plated brass)
The only question which I am required to determine is whether the models of garden hoses imported by Toro which fall into Category B and Category C were eligible for concessional entry under the TCO.
TARIFF CONCESSION ORDERS – GENERALLY
Part XVA of the Customs Act deals with TCOs. Section 269C of the Customs Act provides that a TCO application is taken to meet the core criteria if, on the day on which the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business. The general rate of duty on goods classified to subheading 3917.39.90 is 5%. If the relevant TCO applies to the hoses in question, the rate of duty is prescribed as free.
The CEO of Customs must not make a TCO in respect of goods under certain circumstances. Section 269SJ relevantly provides:
269SJ TCOs not to apply to goods described by reference to the 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.
Because of the restriction referred to in s 269SJ of the Customs Act, the description of the goods in a TCO is typically terse, the goods themselves described by a noun followed by a brief adjective or two qualifying the noun. That, frequently, leads to difficult interpretive decisions. This matter is no different.
TARIFF CONCESSION ORDER 0804831
The TCO in question simply states:
HOSE AND/OR TUBING, polyvinylchloride, polyester reinforced, flexible
The nature of a TCO means that the goods referred to in the TCO must necessarily fall into one of the classifications of goods set out in Schedule 3 of the Tariff Act. In fact,
s 269F(3)(b), which deals with the making of a TCO application, expressly requires the application to contain a statement of the tariff classification that, in the opinion of the applicant, applies to the goods. The applicant is of the opinion that the correct tariff classification for its goods is found in subheading 3917.39.90 of Schedule 3. Customs agrees with that classification. The relevant heading and subheadings are as follows:
3197TUBES, PIPES AND HOSES, AND FITTINGS THEREFOR (FOR EXAMPLE, JOINTS, ELBOWS, FLANGES), OF PLASTICS:
…
3917.3 – Other tubes, pipes and hoses:
…
3917.39 – Other:
…
3917.39.90 – Other
After considering the technical drawings provided to Customs by Toro, Customs said in its statement of findings on material questions of fact and reasons for decision dated
19 August 2013 that:
… it was reasonable to assume that the products are polyvinylchloride (PVC), have polyester reinforcing and are flexible.
The problem, according to Customs, is the fittings attached to the hoses.
I had in evidence samples of the hoses with fittings attached. The Jackaroo, Tricoflex, Superflex, Armourflex and Spectrum 12 mm hoses are fitted with a 12 mm hose connector at each end with one removable tap adapter fitted to the end of the hose which connects to the tap. The tap adapter screws into that connector allowing it to be fitted to 2 different diameter taps. The two hose connectors are crimped to the ends of the hoses and are not readily removable unless the hose is cut. The Spectrum range of hoses also comes in an 18 mm size hose with two 18 mm hose connectors and one tap adapter. However, the 18 mm hose connectors are not crimped to the hose but slide onto the hose and are secured by a screw-on collar. They are readily removable. The Premium and Marine hoses are both 12 mm hoses fitted with two hose connectors and one tap adapter. The only difference between those hoses is that the fittings on the Premium hose are made of brass, both fittings being crimped on to the ends of that hose, while those on the Marine hose are made of nickel plated brass, one being crimped on to the end and the other fixed by some means which is not apparent due to a plastic cover over that section of the hose. It appears to be permanently fixed. Each of the hoses is 15 m in length.
In essence, Toro contended that the addition of plastic or metal connector fittings did not change the essential character of the products which remained hoses within the meaning of the TCO. It accepted that the imported goods must precisely meet the criteria set out in the TCO, which it said they did. Toro rejected the contention that the word hose was used in the TCO with a trade or technical meaning which differed from its ordinary meaning, and that the evidence did not establish that any trade usage was narrower or more limited than its ordinary meaning.
Mr Horan of counsel, who appeared on behalf of Toro, submitted that I should determine whether the goods in question fell within the description of the TCO by reference to the ordinary meaning of the word hose. He submitted that the sole question before the Tribunal was whether or not the attachment of connector fittings to facilitate the primary function or purpose of the hose is an additional feature, which does not prevent the goods from being identified and described as a hose. There are no words of exclusion expressed in the TCO to indicate that hoses with connector fittings were excluded.
Mr Northcote, special counsel with the legal services branch of Customs, while agreeing that those goods in dispute which have a crimped fitting were correctly classified to subheading 3917.39.90, pointed to the fact that fittings of plastics are classified to 3917.40.00 under the subheading Fittings. Brass and other nickel plated brass fittings were not classified under heading 3917, but are found in different chapters of Schedule 3 of the Tariff Act. Mr Northcote also submitted that the General Rules for the interpretation of Schedule 3 only apply when considering the classification of goods under the Tariff Act. They do not apply to the interpretation of a TCO.
Mr Northcote pointed out that Customs had not previously considered the classification of hoses with fittings and a tap connector. Nevertheless, he said that Toro considered that the hose provides the essential character of the hose set and the classification to 3917.3 by applying Interpretive Rule 3(b). Mr Northcote submitted that while the TCO used similar terms to the tariff heading under 3917, the words hose and tubing appearing in both, the word fitting or fittings was omitted from the TCO. Given the narrower terms used in the TCO, Mr Northcote submitted that it was intended that the TCO be interpreted more narrowly than tariff heading 3917 which specifically referred to fittings. He also pointed to the fact that the TCO did not apply to composite goods or to a hose set. Most of the goods in dispute had four separate components, being the hose, two hose connectors and a tap connector. Mr Northcote submitted that the goods in dispute should be identified as a hose with fittings, being composite goods where the fittings are crimped to the hose, and a hose set where the fittings are non-permanent.
Customs also relied on the evidence of Mr Garry Jackson, who it put forward as an expert based on his experience in the hose industry. Essentially, Mr Jackson’s evidence was:
(a)the hose and the fittings can be sold together as a tap ready hose (a fitted hose) or as separate goods;
(b)fitted hoses may be equipped with crimped fittings or readily removable fittings;
(c)fittings are manufactured and sold separately from a hose;
(d)there is a good market for the sale and purchase of separate fittings;
(e)in the hose industry, the word hose refers to the flexible tube itself and not to the fittings and attachments;
(f)the hose fittings are not hoses and/or tubing, polyvinylchloride, polyester reinforced nor are they flexible; and
(g)a hose fitting is likely to have a limited guarantee when compared to the hose itself as it is likely to be subject to greater wear.
Mr Northcote also relied on s 269F of the Customs Act which deals with making a TCO application on an approved form. In particular, he referred to the statement made on the approved form to the effect that an application must provide a full description of the goods, including the physical features of the various components of the goods. It should not describe the goods in terms of what they do. Mr Northcote submitted that the description of the goods in a TCO must therefore be a full and complete description of the goods including any components thereof. There being no reference in the TCO to any attachments or fittings, it could not have been intended to apply to fitted hoses.
INTERPRETATION OF TCO 0804831
The starting point for this analysis appears to be the association between the tariff classification of the goods in question and the TCO. As I have already stated at paragraph [15], s 269F(3)(b) requires an application for a TCO to contain a statement of the tariff classification which applies to the goods. This requirement is repeated at
s 269P(4)(a) of the Customs Act. The consequence of this association was discussed by Spender J in Voxson Sales Pty Ltd v Collector of Customs (1993) 19 AAR 129. In that case, his Honour was concerned with cordless telephones which were then properly classified to heading 8517.10. The TCO which was keyed (linked) to that classification was TCO 8437846. His Honour said, at 135:
The effect of this keying is that, an imported good, a cordless telephone, which is properly classified under heading 8517.10, will be eligible for concessional duty if, and only if, it falls within the description of TCO 8437846.
There was no issue in this matter that all of the goods in question were properly classified to heading 3917. Therefore, they are eligible for concessional duty only if they fall within the description of TCO 0804831. However, as Mr Northcote correctly submitted, the interpretive rules set out in Schedule 2 of the Tariff Act only govern the classification of goods in Schedule 3. That is clear from the opening paragraph in Schedule 2 which states:
Classification of goods in Schedule 3 shall be governed by the following principles:…
Furthermore, this Tribunal in Greig Novelties Pty Ltd and Chief Executive Officer of Customs [1996] AATA 355 (8 October 1996) said, at [17]:
No matter how attractive and logical it would be to have a unified system of interpretation across both the provisions of the Customs Tariff Act 1987 and Customs Act 1901 in regard to the tariff system that they establish mutually, the reality is that the General Rules for the Interpretation of the Harmonized System apply only to the provisions of the Customs Tariff Act 1987 and in particular to the interpretation of the classification of goods in Schedule 3. They do not and cannot be applied to the TCO system which is set up under a different statute and which has a very different origin and purpose.
I accept that to be an accurate statement of the operation of the General Rules for the Interpretation of the Harmonized System.
Mr Northcote explained why Customs concluded that the goods in question, being a hose with fittings and tap connector, were classified to 3917.39.90. Interpretive Rule 1 provides that 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 Interpretive Rule 2 (a) and (b).
The goods in question satisfy 3917 at a heading level as they are hoses and fittings therefor. Interpretive Rule 6 is then applied to determine the classification of goods in the subheadings on the understanding that only subheadings at the same level are comparable. At the five digit subheading level there are two headings which could apply – 3917.3 Other tubes, pipes and hoses and 3917.4 Fittings.
To determine the appropriate subheading level, regard must be had to Interpretive Rule 3 which deals with the circumstances where goods are, prima facie, classifiable two or more headings. Interpretive Rule 3 (a) provides that when two or more headings each refer to part only of the materials or substances contained in mixed or composite goods or to part only of the items in a set put up for retail sale, those headings are to be regarded as equally specific in relation to those goods even if one of them gives a more complete or precise description of the goods. Therefore, the classification must be determined under Interpretive Rule 3 (b) or, if that is not applicable, Interpretive Rule 3 (c). Interpretive Rule 3 (b) provides that where mixtures or composite goods made up of different components and goods put up in sets for retail sale cannot be classified by reference to Interpretive Rule 3 (a), they are to be classified as if they consisted of the material or component which gives them their essential character, insofar as that criterion is applicable. Applying that rule, Customs considered that the hoses in question had the essential character of a hose set and therefore the five digit subheading level appropriate to the classification was 3917.3. At the six digit level (3917.31), the subheading refers to flexible tubes, pipes and hoses, having a minimum burst pressure of 27.6 MPa. However, the hoses in question are not the kind used as components in passenger motor vehicles and therefore they finally fall under the classification 3917.31.90 – Other.
I have no doubt that the classification of the goods in question has been correctly stated by Customs. That classification relies on the component which gives them their essential character, namely the flexible tube which is generally referred to as a hose. However, it is sufficiently clear from the hoses which were produced by Toro that the subject goods are not simply hoses, but are either a composite product or a set. Those hoses with crimped fittings are probably properly classified as composite goods or they may also satisfy the description of a set put up for retail sale. The descriptive material attached to the hoses describes them as tap ready. The 18 mm Spectrum hose with the readily removable slide-on fittings may be more accurately described as a set put up for retail sale. In fact, for the purposes of determining whether the goods fall within the description set out in the TCO, it matters not whether the hoses are classified as composite goods or a set put up for retail sale.
The interpretation of the TCO is a different matter. It being agreed that the TCO was correctly keyed to the classification of the goods, there was no issue between the parties that in order to fall within the concession, the goods must precisely meet the criteria set out in the TCO. The adjective precise is relevantly defined in The Shorter Oxford English Dictionary as: 3. Exact; neither more nor less than; perfect, complete; opp. to approximate 1571. The acceptance by the parties that the goods in question must precisely meet the criteria set out in the TCO is supported by the requirement to provide a full description of the goods to which the application relates when making an application for a TCO (s 269F(3)(a) of the Customs Act). The expression, a full description, necessarily means that the description must be precise, the goods in question satisfying every element of the description without any additional features.
There are two issues which arise for determination regarding whether the goods precisely meet the criteria set out in the TCO. The first is whether the words hose and/or tubing used in the TCO have a specialised trade or technical meaning. If those words do not have a specialised trade or technical meaning, the ordinary meaning should be applied. As Spender J said in the Voxson Sales case, at 137:
On the question then “does the cellular mobile telephone fall within the terms of the TCO as properly construed”, the principles of construction have long been settled. One applies the ordinary rules of construction, and if notwithstanding this doubt still remains as to the meaning of the words to be interpreted, one resolves that doubt in favour of the taxpayer. In determining the meaning of the words, one gives them their ordinary meaning unless it is proved that they have acquired some generalised secondary meaning through trade and usage in commerce. If that is so, that meaning is to be preferred:…
If the goods in question have not acquired a specialised or trade meaning, I then need to determine whether, applying the ordinary meaning of the words used in the TCO, the goods precisely meet the criteria set out in the TCO regardless of the fact that there is no reference in the TCO to fittings or hose connectors or any such expression.
Has the word hoses acquired a specialised trade meaning
Mr Jackson, who described himself as having 40 years’ experience in the hose industry, provided two witness statements which were taken into evidence. He also gave oral evidence in the course of the hearing. Although Mr Horan submitted that I should give little weight to Mr Jackson’s evidence because of a failure to comply with the Tribunal’s Guidelines for Persons Giving Expert Evidence and Opinion Evidence (the Expert Guidelines), and that he was not an independent expert witness because he was the owner of a business which was, at least to some extent, in competition with Toro, for reasons which I set out below I need not make any findings in respect of those issues.
Mr Jackson’s evidence was that the word hose in the industry was a reference to the tube itself and not the various fittings or the attachments that can be used which are crimped to the hose. He testified that garden hoses were generally sold in Australia in three ways: as an unfitted hose with no accessories or fittings; as a fitted garden hose with either crimped fitting or a removable fitting; or as a pack with a hose and fittings together but not assembled. He said that hoses sold with the fitting attached were generally described in the industry as a fitted hose. They are also described in the industry as a fitted garden hose, a hose with fittings, or a tap ready hose. He confirmed that a hose and a fitting are manufactured separately and can be and are sold separately in Australia. Mr Jackson also testified that the plastic fittings on all of the hoses in question were not made of polyvinylchloride but rather ABS Plastic and Poly Pro material.
However, attached to Mr Jackson’s first witness statement were a number of pages from a catalogue from Barfell (Barfell Industries Pty Ltd), his company which manufactures hoses. Amongst those pages was a page describing a new product release referred to as an Aquamate II Garden Hose. While the description refers simply to a garden hose, the included photograph clearly shows that it is a fitted hose. Furthermore, under a description of the features of that garden hose is the statement that the hose comes complete with BRASS Garden Fittings. Also, the advertising material attached to all the hoses which I had in evidence simply refer to the item as a garden hose, and in the case of the Marine hose, simply those words. They all describe the hoses as tap ready.That evidence seems to run contrary to Mr Jackson’s statement that the word hose in the hose industry refers to the tube itself and not to the various fittings and attachments. Accordingly, I find that the word hose does not have an established trade or specialised meaning. In fact, it appears to be used in a colloquial sense and may come with or without fittings. That also accords with the description given under the heading and subheadings of classification 3917.
The ordinary meaning of the word hose
The Shorter Oxford English Dictionary relevantly defines the word hose as: 3. A flexible tube or pipe for conveying water or other liquid where it is wanted 1495. As Mr Horan submitted, the dictionary definition is primarily functional in nature and although it is impermissible for TCO goods to be described by the intended use, that does not mean the functional purpose of the hoses are irrelevant to its ordinary meaning. In fact, according to Mr Horan, the inclusion of attached connector fittings does not mean that the goods are not properly described as a hose in accordance with its ordinary meaning. He submitted that a lay person or consumer intent on purchasing such a product would readily describe the fitted hoses in question simply as a hose or possibly a garden hose.
Mr Horan also submitted that the word hose cannot be equated to unfitted hose. To do so would be to read words of exclusion or limitation into the description which do not form part of the TCO. Furthermore, to refer to a hose as an unfitted hose would be tautologous.
While both parties referred me to a number of cases which supported their views, they were, in the main, cases determined by this Tribunal which are not binding in any event. Furthermore, they are readily distinguishable on their own facts and the state of the legislation at the time when they were decided. They provide little if any assistance in this case.
For example, Mr Horan referred to the case Robert Bosch Australia Pty Ltd and Collector of Customs [1986] AATA 250. The goods in question in that case were described as hot air guns which used electrically generated heat energy emitted as hot air through a nozzle for wide-ranging purposes including paint removal, heat sealing by a shrinkage process and drying. The TCO, which gave the description Blowing machines, air 50, was keyed to a tariff classification which referred to tools for working in the hand with a self-contained electric motor. The Tribunal described the appearance of the hot air gun as looking somewhat like a robust hairdryer. The argument put against the applicant in that case was that the gun did more than blow air, because it heated the air as well. The Tribunal concluded, at [22]:
Certainly the gun does more than blow air, for it heats air as well, but blow air it does we can see nothing in the wording of the Order to indicate that it was intended that an article which does precisely what the Order says should be excluded because it does more.… It follows that reading the item and the description in the Order cumulatively, what is contemplated is a tool, being an air blowing machine, for working in the hand with a self-contained electric motor. It is not in our opinion possible to exclude from the Order and article that fulfils this description and does no more by way of addition than heat the air in question.
The first point to observe about this case is that the principal argument was about classification and not about whether the air gun satisfied the description set out in the TCO. Customs in that case argued that the correct classification was that dealing with electro-thermic domestic appliances. The Tribunal simply concluded that the hot air gun was properly classified as a tool and therefore fell within the classification to which the TCO was keyed. It then made the comment which I have quoted above. There is no evidence of any serious argument about the possibility that the description Blowing machines, air 50 in the TCO was a reference to a different type of good to one which was designed to blow air heated to a substantial degree. The word machine seems to have been treated as equivalent to the word tool. However, not every tool can be properly described as machine. A glance at any dictionary would raise a serious question about whether that is correct. Furthermore, the classifications also provide for machines and mechanical appliances discrete from tools. Perhaps more significantly, the addition of a heating element in the hot air gun only changed the temperature of the air which the gun was able to blow. It did not affect its ability to blow air.
By way of factual distinction, the addition of fittings to a hose enables it to function as a hose, i.e. a device for conveying water or liquid. Without those fittings, it is not capable of performing its stated function. They are, as Mr Northcote submitted, not merely an additional function or feature of the hose but rather they are additional goods.
Since the Robert Bosch case was decided, there have been significant amendments to the Customs Act and the Tariff Act. Section 269F dealing with the making and processing of TCO applications was introduced in 1992 (see Customs Legislation (Tariff Concessions and Anti-Dumping) Amendment Act 1992 (No. 89, 1992)). That introduction resulted in an applicant being required to set out the full description of the goods to which the application relates. Furthermore, the Tariff Act commenced on 1 July 1996. While the predecessor Customs Tariff Act 1966 also set out interpretation rules based on the Convention on Nomenclature for the Classification of Goods in Customs Tariffs (the Brussels Convention), it was not entirely consistent with it (see Re Tridon Pty Ltd and Collector of Customs (1982) 4 ALD 615, at 624). The Customs Tariff Act 1995 introduced the Interpretation Rules now found in Schedule 2 which were adopted from the General Rules for the Interpretation of the Harmonized System provided for by the International Convention on the Harmonized Commodity Description and Coding System done at Brussels on 14 June 1983.
The Interpretation Rules in Schedule 2 now deal more clearly and succinctly with composite goods or to part only of items in a set put up for retail sale. The introduction of the amended rules regarding interpretation and the reference in s 269F to providing a full description of the goods to which an application for a TCO applies necessarily means that those matters were not the subject of argument in the Robert Bosch case. Yet, they are clearly relevant and important factors to consider in this matter. Mr Horan also referred to a number of other cases which relied on the decision in Robert Bosch. They of course suffer from the same problem. This was alluded to by the Tribunal in Sheldon & Hammond Pty Ltd and Chief Executive of Customs [2007] AATA 1929 at [3].
Mr Horan also distinguished what the Tribunal said in Cameron Australasia Pty Ltd and Chief Executive Officer of Customs [2012] AATA 865 at [50] – [51]. The Tribunal in that case was considering whether the goods in question, described as umbilicals wound onto mechanical reels for deployment in the subsea environment, fell within a TCO. The TCO referred to umbilicals, hydraulic, gas, being either for use on shore or subsea. TCO did not refer to the reel. The reel itself simply provided a means of storing the umbilical and the means of assisting its installation. It was discarded following installation of the umbilical. However, the Tribunal found that the goods were a combination or set and that the reel constituted an additional good. Therefore, it found that the goods imported did not fit within the TCO description. Mr Horan submitted that the connector fittings attached to the hoses the subject of this proceeding should be characterised as an additional feature and not as an additional good. He submitted that the fittings did not give a hose different character nor did they prevent its proper description as a hose.
While I have some serious reservations about the reasons given by the Tribunal in that case, particularly as the reels appear to be simply storage devices to enable transport and installation of the goods in question, the connector fittings are of a completely different nature to the reels in the Cameron Australasia case. They enable the hoses to function as hoses and most certainly are not discarded nor are they simply storage or installation devices. They are also available for retail sale as discrete items.
Mr Horan submitted that the absence of any reference to connectors or fittings in the description of the goods in the TCO can be explained on the basis that the goods were intended to encompass all hoses, both unfitted and fitted. Simply because the goods had additional features to those set out in the TCO did not mean that the goods fell outside the TCO. On the other hand, Mr Northcote submitted that the absence of any reference in the TCO to connectors or fittings indicated clearly that the TCO was not intended to apply to connectors or fittings. It is of some interest to note what Spender J said in Voxson Sales about the relationship between the description in the TCO and the classification. He said, at 140:
It is fallacious to say that because Cellvox is within 8525.20 and the TCO was keyed to that heading, the Cellvox is within the TCO. The items covered by a TCO generally constitute a subset of the items with which the keyed heading deals, although the possibility exists that the set of the goods within the description of the TCO might consist of precisely the same goods as a set of the goods within the keyed heading.
The words used in the TCO in this case describe the goods in a generic sense rather than their intended end use. While it may be argued that the TCO description refers to hoses with or without fittings, in my opinion, that would be incorrect. In fact the TCO does more than simply use the generic expression HOSE AND/OR TUBING. It specifies the very nature of the hose or tubing referred to by requiring those goods to have the properties polyvinylchloride, polyester reinforced and flexible. Furthermore, the TCO is keyed to classification 3917 which refers to tubes, pipes and hoses, and fittings therefor… of plastics. On its face, the TCO appears to refer to a subset of the items with which the keyed heading deals. Fittings are dealt with in heading 3917 but no reference is made to them in the TCO. Given the precise way in which the goods in the TCO must be described, had it intended to include fittings, I have no doubt it would have said so. In any event, especially having regard to the brass fittings attached to some of the hoses in question, the TCO could not have been keyed to heading 3917 alone.
My view of the proper construction of the TCO is further supported by the fact that the fittings in this case are made of plastic and metal. They do not fit the description given to the goods in the TCO. Metal fittings also fall outside heading 3917 which refers only to goods made of plastics. The description in the TCO of the goods refers to specific types of plastics as well as the characteristic flexible. The plastic fittings on the hoses plainly do not fit that descriptor.
Finally, both parties agreed and it has been frequently stated in cases dealing with TCOs that the goods must precisely fit the description set out in the TCO. To say that goods fit the description precisely does not permit a finding that in addition to the description set out in the TCO, the goods have other characteristics or components. To fit the description precisely means that the goods must have no more or no less of the characteristics set out in the description. It is of no assistance to Toro to point to heading 3917 and claim that fittings are intended to be included under that heading and hence they must fit the description in the TCO because, generically, a hose or tubing may come with or without fittings. As I have already said, the goods in question are composite goods or are a set put up for retail sale. While for classification purposes they may be classified by the material or component which gives them there essential character, that does not apply to a TCO. As Spender J said in Voxson, it is not uncommon for the TCO to refer simply to a subset of the goods referred to in the keyed heading.
The reason for that and for the particularity with which the goods are described for the purposes of the TCO appears to be that it can only apply where, on the day on which the application for the TCO was lodged, no substitutable goods were produced in Australia. The process of granting a TCO application involves publication of the application in the Government Gazette which must invite any persons who consider there are reasons why the TCO should not be made to lodge a submission with the Chief Executive Officer of Customs within a specified time (Customs Act, s 269K). If there were manufacturers of hose fittings in Australia at the time the application was lodged, the notice in the Gazette would not have alerted those manufacturers that the TCO applied to hose fittings. Given the different nature of the fittings and their material composition, the reader of the TCO in question could not possibly have assumed that plastic or metal tap fittings were included. That, in my opinion, is a very compelling reason why a TCO must describe the goods with clear and full particulars. It does so in the case in question. Fittings are not included in the description under TCO 0804831. They cannot be the subject of the TCO.
CONCLUSION
For the reasons I have set out above, I find that all of the garden hoses particularised at paragraph [9] above are composite goods or items in a set put up for retail sale. TCO 0804831, which provides a full description of the goods to which the TCO applies, only describes the hoses and not the attached or attachable fittings. In other words, the TCO describes a subset of the goods which are keyed to heading 3917 of the Tariff Act. It does not apply to Toro’s goods the subject of this application. That is because they include connector fittings which are not the subject of the TCO.
I find that the decision made by Customs following internal review on 28 March 2013 was correct. I affirm that decision.
I certify that the preceding 53 (fifty -three) paragraphs are a true copy of the reasons for the decision herein of Egon Fice, Senior Member ..[sgd]......................................................................
Associate
Dated 4 April 2014
Date of hearing
12 March 2014
Counsel for the Applicant
Mr C Horan
Solicitors for the Applicant
Hunt & Hunt Lawyers
Representative for the Respondent
Mr R Northcote
Solicitors for the Respondent
Australian Customs and Border Protection Service, Legal Services Branch
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