Winterhalter (Australia) Pty Ltd and Comptroller-General of Customs
[2021] AATA 4407
•29 November 2021
Winterhalter (Australia) Pty Ltd and Comptroller-General of Customs [2021] AATA 4407 (29 November 2021)
Division:TAXATION AND COMMERCIAL DIVISION
File Number(s): 2019/6219; 2019/6221
Re:Winterhalter (Australia) Pty Ltd
APPLICANT
AndComptroller-General of Customs
RESPONDENT
DECISION
Tribunal:The Hon. Dennis Cowdroy AO QC, Deputy President
Date:29 November 2021
Place:Sydney
The Tribunal finds that the correct or preferable decision is that the warewashers do not satisfy the requirements of the TCO and that the decision under review should be affirmed.
...................................[SGD].....................................
The Hon. Dennis Cowdroy AO QC, Deputy President
CATCHWORDS
CUSTOMS - tariff concession order – meaning of cycle – meaning of program - decision under review affirmed
LEGISLATION
Acts Interpretation Act1901 (Cth) ss 15AA, 15AB
Customs Act 1901 (Cth) s 269F
Customs Tariff Act 1995 (Cth)
CASES
Becker Vale Pty Ltd v CEO of Customs [2015] FCA 525
Brand Developers Aust Pty Ltd and CEO of Customs [2015] AATA 215
Collector of Customs v Agfa-Gevaert Limited (1996) 186 CLR 389
Collector of Customs v Pozzolanic Enterprises Pty Ltd (1993) 43 FCR 280
Federal Commissioner of Taxation v Consolidated Media Holdings Ltd (2012) 87 ALJR 98
On Track Tyre Trust and Chief Officer of Customs [2009] AAT 877
Toro Australia Group Sales Pty Ltd and Chief Executive Officer of Customs [2014] AATA 187
SECONDARY MATERIALS
General Rules for the Interpretation of Schedule 3 to the Customs Tariff Act 1995
Second Reading Speech to the Customs Legislation (Tariff Concessions and Anti-Dumping) Amendment Bill 1992, Senate Hansard 28 May 1992
REASONS FOR DECISION
The Hon. Dennis Cowdroy AO QC, Deputy President
29 November 2021
By application for review filed on 30 September 2019, Winterhalter (Australia) Pty Ltd (the Applicant) seeks review of a decision made by a delegate of the Respondent. By such decision, the Respondent, by Internal Review of Tariff Advice Numbers 22242300 and 22242900, found that Tariff Concession Order 1612840 (“the TCO”) does not apply to the Applicant’s commercial dishwashers.
The Applicant contends that the decision is incorrect and submits that a decision should be made that the TCO does apply to the Applicant’s commercial dishwashers.
FACTS
The Applicant is the Australian subsidiary of Winterhalter Gastronom GmbH in Germany. The Applicant imports warewashing systems for sale in the retail market, one of the imports being commercial warewashers (“the warewashers”). The warewashers are available in four models and configurations. The warewashers that are subject to these proceedings are known as the UC series; PT series; UF series; and Classeq Duo “undercounter” and “passthrough”.
Each model has programs and cycles as part of its design. The standard wash programs available in the warewashers (“the Programs”) that are the subject of these proceedings are:
(a) light;
(b) normal; and
(c) heavy.
The Applicant asserts that two washing cycles (“cycles”) are available with the warewashers, namely:
(a) wash (with water and detergent): this cycle is designed to wash the dishes and/or glasses bypassing hot water with detergent over the contents.
(b) rinse (freshwater and hot water with rinse aid): upon completion of the wash cycle, the rinse cycle rinses the contents to ensure no soap or other residue is left on the articles being washed.
The intensity of the cycles varies according to the Program selected by the user. The programs do not change the central function of the wash and rinse cycles.
OPERATION OF TCO
The relevant TCO is entitled Commercial Warewashing Machine. The TCO was lodged under section 269F of the Customs Act 1901 (Cth), and was published on 6 July 2016 in the Commonwealth of Australia Gazette TC 16/25 under the heading “TCOs Made”. The TCO is keyed to 8422.19.00. Its specifications are relevant for present purposes in respect of the requirement contained in the keyed wording as follows:
KITCHENWARE AND OR TABLEWARE WASHING MACHINES, under counter OR pass through OR front loading OR rack conveying, one OR two OR four cycle, having ALL of the following:…
DECISION UNDER REVIEW
The Respondent’s decision entitled Internal Review of Tariff Advice Number 22242300 is dated 8 May 2019 and is identified as follows:
Issue: TCO Eligibility
Goods: Winterhalter Commercial Dishwashers – UC series
Relevantly, the decision contained the following:
The term ‘cycle’ as described in the heading of TCO 162840 has acquired a specific trade meaning in the context of dishwashers. The term ‘cycle’ is used to define the dish washing programs. It is agreed with the applicant that the terms ‘cycle’ and ‘program’ can be used interchangeably.
The applicant contends that the machines “all run a single cycle per operation which is made up of two sub-cycle processes being a wash cycle and a rinse cycle.”
However my research on the manufacturer’s website shows that there are 3 standard wash cycle [sic]: light, medium or heavy. Depending on the cycle chosen the machine automatically adjusts the components responsible for the dishwashing process such as water pressure, time, detergent and temperature. Whilst the machine runs a single was [sic] cycle per operation there are three available wash cycles to select.
The UC product brochure (refer figure 3) explicitly states that “every machine has 3 programmes which adapt to the shape and size of the wash items and the level of soiling.”
The Operation instructions confirm that there are three defined standard programs that can be selected using the symbols on the touchscreen of the washer (refer to figure 4 and 5).
The decision made the following determination:
Based on all the above product information the goods have 3 standard programs or wash cycles. Therefore the goods do not meet the TCO criteria which requires they have one or two or four cycles. The goods are not eligible for TCO 1612840.
ISSUE FOR DETERMINATION
The only issue for determination identified by the Applicant is whether TCO 1612840 applies to a set of Winterhalter warewashers in four models (UC series, PT series, UF series and Classeq Duo “undercounter” and “passthrough”) (together, warewashers).
There is no dispute as to the applicable tariff classification under tariff heading 8422.19.00, as TCO 1612840 applies to the following:
TCO 1612840 applies to the following (emphasis added):
8422.19.00 KITCHENWARE AND/OR TABLEWARE WASHING MACHINES, under counter OR pass through OR front loading OR rack conveying, one OR two OR four cycles, having ALL of the following:
(a) rack chamber height NOT less than 205mm and NOT greater than 800 mm;
(b) rack sizes NOT less than 400 mm x 400 mm and NOT greater than 1 320 mm x 700 mm;
(c) width NOT less than 460 mm and NOT greater than 1 750 mm;
(d) depth NOT less than 520 mm and NOT greater than 1 600 mm;
(e) height NOT less than 700 mm and NOT greater than 1 930 mm.
Therefore, the sole issue for determination is whether the warewashers have “one Or two OR four cycles”.
THE EVIDENCE BEFORE THE TRIBUNAL
Applicant’s Principal Contention
It is the Applicant’s contention that the warewashers comply with the definition of the TCO because they have two cycles.
The Applicant refers to the definition of “cycle” as contained in the Macquarie dictionary, that which relevantly defines this term as:
“[a]ny round of operations or events; a series which returns upon itself; any complete course or series”.
Accordingly, the Applicant states that the warewashers have two “cycles”: namely the wash and rinse cycles, each of which is a complete course or series in which the wash functions and the rinse functions are carried out. The Applicant maintains that the wash and rinse cycles can also be considered to be rounds of operations, including maintenance of water temperature and release of detergent and rinse aid.
In support of its contention, the Applicant relies upon a witness statement of Mark Hutchinson signed on 1 September 2021 (first statement).
Mr Hutchinson is the National Service Manager at Winterhalter (Australia) Pty Ltd, and is a qualified electrical and mechanical technician with 22 years’ experience and holding the following qualifications:
1.6 I am a qualified electrical and mechanical technician, with 22 years’ experience and the following qualifications:
(a) NVQ Level 2 in Electrical and mechanical engineering;
(b) Australian trade recognition in appliance servicing;
(c) Supervisor Certificate 87135s; and
(d) White Card (General Construction Induction Course).
Relevantly, Mr Hutchinson’s statement includes the following:
The Warewashers
3.4 Each model has programs and cycles built into its design. As discussed further below programs and cycles are different functions of the Warewashers.
3.5 The standard wash programs available with the Warewashers the subject of this application are:
(a) light;
(b) normal; and
(c) heavy,
(together, the Programs)
3.6 The Programs are tailored to address the needs of the user based on the level of soiling of the dishes and glasses to be cleaned. For example, dishes with heavily baked on or burnt food residue may require a heavy program while wine glasses may require a light program.
3.7 There are two cycles available with the Warewashers being:
(a) wash (with water and detergent); and
(b) rinse (fresh water and hot water with rinse aid), (together, Cycles)
Annexed to this Statement and marked “MH-1” is a copy [of] a letter from Winterhalter’s parent company confirming the wash programs and wash cycles.
3.8 The Cycles are designed to wash the dishes and/or glasses by passing hot water with detergent over the contents. Once the wash cycle has removed the food or beverage residue the rinse cycle rinses the contents to ensure no soap or other residue is left on the contents.
3.9 The Cycles vary their intensity based on the Program selected by the user. The Warewashers are also designed with particular functionalities which ensure the water remains clean during the wash and rinse cycles including filtering out large food particulates. The functions of the Warewashers are described in detail in the product specifications and manuals discussed below and annexed to this Statement.
3.10 Cycles represent the basic functionality of the Warewashers. The Programs are designed to control the intensity of the wash and rinse Cycles however, do not change the central function of the wash and rinse Cycles.
3.11 The Warewashers are able to be adapted to the needs of the user including by taking into account the level of soiling of the dishes or glasses to be washed. The Warewashers are also designed to be economical in power and water usage with Programs and Cycles specifically tailored to achieve the required results while maintaining efficiency.
3.12 The Warewashers also include the ability to self-clean and “de-scale” (as a result of heavy water in certain areas) and are equipped with diagnostic capabilities for the purpose of servicing the machine and responding to errors.
3.13 The Warewashers the subject of this application are standard models. Winterhalter is able to customise warewashers, as indicated in the promotional material annexed to this statement. This is done at the request of the customers. However, the Warewashers the subject of this application were imported in their standard form.
Industry Use of the Terms Cycle And Program
The Applicant submits that the terms “cycle” and “program” refer to different functions of the warewashers. Mr Hutchinson states:
4.1 As discussed above, cycles and programs are separate and distinct functions of warewashers. However, there can be some confusion in the promotional and other material in relation to how those words are used.
4.2 Industry usage can result in the terms programs and cycles being used interchangeably, particularly when promotional material has been translated from languages other than English, such as German as in this case.
4.3 Further, promotional material is written with the consumer market in mind and is not intended to provide technical and industry-based definitions of particular terms.
4.4 Promotional material and manuals will also in some instances refer to the entire function of the Warewasher (that is, the wash and rinse cycles and the programs operating together) as a “cycle”. This is not intended to be a technical term and is simply industry parlance for the overall operation of warewashers.
4.5 However, industry understanding of the actual functional operation of a cycle as compared to a program is consistent. Cycles are a necessary basic function of a warewasher whereas programs are a manner of varying the intensity of the basic wash and rinse Cycles.
4.6 In my experience, it is not an accepted position in the industry that cycles are the same as programs from an inherent functionality point of view. There may be some variation in terminology used in promotional material but the operational purpose of wash and rinse cycles as compared to programs are understood consistently throughout the industry. Cycles are not interchangeable with programs as a matter of inherent function even if the terminology used in certain promotional material confuses those two terms.
Function of Wash Cycles and Programs
In further amplification of the functions of the warewashers, Mr Hutchinson refers to the Engineers Manual for Under Counter Machines which refers to the operation of the wash and rinse cycles in the Classeq Duo machines and undercounter and passthrough machines as follows:
5.4 Section 8.2 of the US Series Service Instructions describes the “sinner circle”. The “sinner circle” describes the effective impacts in the washing process. These impacts are controlled by the Program selected. The factors controlled by the Program are:
(a) time;
(b) temperature;
(c) chemicals; and
(d) mechanism.
5.5 During the wash Cycle, the duration of washing, tank temperature, dosing of the detergent and wash pump output are controlled by the Program selected. During the rinse Cycle the rinse water volume, rinse temperature and dosing of the rinse aid are controlled by the Program selected. These factors do not alter the basic function of the Cycles to wash and rinse and instead alter the impact of those functions. This does not result in new or separate Cycles being created as a result.
Respondent’s Statement of Issues
The issues are stated by the Respondent to be:
(a) Whether the subject goods, viewed objectively in their condition as imported, are eligible for entry under the TCO; and
(b) For the TCO to apply, the subject goods must meet each of the terms of the TCO and be classified to the correct heading, being heading 8422.19.00 of Schedule 3 of the Customs Tariff Act 1995 (Cth) (“Tariff Act”).
Respondent’s submissions
The Respondent makes numerous submissions which can be summarised as follows:
(a) The TCO does not define the meaning of the word “cycle”; accordingly, it is necessary to ascertain the meaning relying on the context: for this purpose, extrinsic materials may be useful;
(b) A dictionary definition of the word “cycle” in isolation does not provide the context in which the term is used;
(c) When used in the context of dishwashers, the word “cycle” can be used as meaning “programs”;
(d) The Applicant’s pivotal submission is that “it is possible to understand these warewashers to have two cycles and that the TCO should not be read down to exclude the possibility”; and
(e) Extrinsic materials should be used to find the correct meaning of the term “cycle” in the TCO; the Applicant’s construction of the TCO does not accord with logic nor common sense; “in contrast, the Respondent’s construction is the most natural and ordinary meaning which is appropriate in the circumstances which accords with logic and common sense”.
Respondent’s Reply to Applicant’s Alternative Submission
The Respondent refers to the opinions expressed by Mr Hutchinson, noting that Mr Hutchinson is not qualified as an expert in accordance with the Tribunal’s Guidelines. The Respondent makes the following observations:
(a) Having concurred with Mr Goh that the terms “cycle” and program” are used interchangeably in the industry, Mr Hutchinson then refers to “industry understanding” that the terms are different “even if the terminology used in certain promotional material confuses those two terms”;
(b) There is no evidence to support any such understanding;
(c) The reference contained in Mr Hutchinson’s first statement (paragraph 5.2 and 5.3) is relied upon by him to refer to the Applicant’s goods and to the Engineers Manual for the “Pass Through” Machines as annexed to the statement; however, such material shows “a complete cycle” and two sub-cycles, thereby, giving a total of three cycles. Such material supports the Respondent’s submission that the word “cycle” may have different meanings depending on the context;
(d) Mr Hutchinson’s material establishes that there is no fixed use of the words “cycle” and “program” in the industry and that such terminology is used interchangeably.
(e) The term “cycle” in the context of the TCO should be given the ordinary meaning in the context of an entire wash program of the dishwasher; and
(f) The imported goods are not “precisely described” by the wording of the TCO since they have three cycles of programs that can be selected and not one, two or four.
Respondent’s Evidence
Significantly, the Respondent relies upon a witness statement of Jin Goh dated 22 December 2020. Mr Goh is a Design Engineer of Middleby Australia (Middleby), which designs and produces commercial kitchen and food service equipment and commercial dishwashers. Middleby is said to have been engaged in such industry for over 100 years.
Mr Goh states that in his experience, the words “cycle” and “program” in the dishwasher industry in Australia are used interchangeably: sometimes the word “cycle” means a single process, such as a “wash cycle”, “dry cycle”, or “drain cycle”. On other occasions, it is used to mean a “complete set of functions”: that is, it includes all of the processes of “wash cycle” and “dry cycle” and “drain cycle”. When used in this sense the complete set of functions may be described as a “cycle” or a “program”. There is no consistency in the use of the terms “cycle” and “program” in the commercial dishwasher industry.
Applicant’s response
Mr Hutchinson does not dispute Mr Goh’s evidence that “cycle” can mean different things: Mr Goh’s evidence is not inconsistent with the generality of the term “cycle”; and there is no basis to “read down the generality of the term “cycles” in the TCO so as to exclude the possibility that the evidence of both Mr Hutchinson and Mr Goh supports” [emphasis in original submissions].
Applicant’s Alternative Position
The Applicant has provided a second statement of Mr Hutchinson signed on 1 September 2021 (second statement), which specifically addresses the statement of Mr Goh. After confirming his opinion stated in the first statement that the words “cycle” and “program” are used interchangeably by the industry, he states:
… there is a fundamental understanding of the difference between a cycle and a program from a functional perspective.
The second statement relevantly continues:
2.3 In my experience, it is understood in the industry which functions of the Warewashers are referred to when the terms “cycle” and programme” are used, even if those terms are used interchangeably from a marketing perspective.
2.4 As I state in my First Witness Statement, the programmes and cycles available with the Warewashers are tailored to address the needs of the customer using the Warewasher. The terminology used to describe the functions of the Warewashers is targeted at the consumer market.
2.5 I reiterate that it is not an accepted understanding in the industry that programmes and cycles are the same thing functionally despite the language being used interchangeably in promotional material.
2.6 I refer to paragraph 3.7 of my First Witness Statement and reiterate that there are two cycles available with the Warewashers:
(a) Wash (with detergent); and
(b) Rinse (fresh water and hot water with rinse aid).
ANALYSIS OF PRINCIPLES
The applicable delegated legislation, namely the TCO, is made pursuant to Part XVA – Tariff Concession Orders under the provisions of the Customs Act 1901 (Cth). Schedule 3 to the Tariff Act describes the classification of goods which are to be interpreted according to the General Rules for the Interpretation of Schedule 3 to the Customs Tariff Act 1995.
Such rules contain no definition of the terms “cycle” or “program”. However, the High Court of Australia in Collector of Customs v Agfa-Gevaert Limited (1996) 186 CLR 389 (“Agfa-Gevaert”) has provided assistance concerning the interpretation of categories referred to in a tariff concession order. At page 395, the plurality referred to the decision of the Full Federal Court in Collector of Customs v PozzolanicEnterprises Pty Ltd (1993) 43 FCR 280 where the Full Federal Court summarises the principles of interpretation derived from previous authority as follows:
1. The question whether a word or phrase in a statute is to be given its ordinary meaning or some technical or other meaning is a question of law. (22)
2. The ordinary meaning of a word or its non-legal technical meaning is a question of fact. (23)
3. The meaning of a technical legal term is a question of law. (24)
4. The effect or construction of a term whose meaning or interpretation is established is a question of law. (25)
5. The question whether facts fully found fall within the provision of a statutory enactment properly construed is generally a question of law. (26)
However, the High Court (at page 395) in Agfa-Gevaert added the following:
In Pozzolanic, the Full Court qualified the fifth proposition. The Court said that, when a statute uses words according to their ordinary meaning and it is reasonably open to hold that the facts of the case fall within those words, the question as to whether they do or do not is one of fact. (27)
Such general expositions of the law are helpful in many circumstances. But they lose a degree of their utility when, as in the present case, the phrase or term in issue is complex or the inquiry that the primary decision-maker embarked upon is not clear. Thus, the phrase “silver dye bleach reversal process” is not easily pigeon-holed in terms of the general rules summarised in Pozzolanic because Jenkinson J construed the phrase by reference to the trade or technical meaning of “silver dye bleach process” and the ordinary meaning of “reversal”. Significantly, at page 398 in Agfa-Gevaert, the Court said:
When construing revenue statutes that utilise trade or technical terms, therefore, the law generally favours interpretation of the terms as they are understood in the trade to which the statute applies. In Herbert Adams Pty Ltd v Federal Commissioner of Taxation (38), Dixon J said: “A revenue law directed to commerce usually employs the descriptions and adopts the meanings in use among those who exercise the trade concerned.” The courts have also said that it may be less difficult to establish a trade meaning which extends the ordinary meaning of an expression than one which limits the ordinary meaning in a specialised way. (39) However, the “presumption” in favour of trade meaning in revenue statutes does not deny the possibility that words used in a revenue statute directed to commerce are to be understood in their ordinary meaning. (40)
At page 401, the Court said:
No doubt there are cases where a court or tribunal must interpret a composite phrase by reference to the ordinary meaning of the words taken as a whole without recourse to the trade meaning that one or more of its words may have. Much depends on the subject matter and context of the phrase. In the area of statutory interpretation and construction, courts must be wary of propounding rigid rules. Even the use of general rules carries dangers in this area because of the tendency for such rules to be given an inflexible application. (49) Nevertheless, when construing a composite phrase which does not have a trade meaning, it will ordinarily make sense for a court or tribunal to take notice of the trade meaning of a word or words within that expression, provided such an interpretation does not lead to a result which is absurd (50) in the sense that the result may be unworkable or impracticable (51), inconvenient (52), anomalous or illogical (53), futile or pointless (54), or artificial. (55) Consideration of the trade meaning of individual words in such cases is more likely than not to lead to the interpretation that the makers of the instrument had in mind.
Further, contrary to Agfa's submission, using the trade meaning of individual words in a composite phrase having no special meaning as a whole does not involve a failure to construe the phrase “as a whole”. It simply does not follow, as a matter of logic or commonsense, that the division of a composite expression into parts which are interpreted by reference to their trade meaning, ordinary meaning or a combination thereof necessarily means that a court or tribunal has failed to construe an expression by reference to its meaning as a whole.
It is apparent from the above decision, that the use of words, per se, may not provide the intended meaning when interpreting a TCO. Such conclusion is supported by the decision of the High Court in Federal Commissioner of Taxation v Consolidated Media Holdings Ltd (2012) 87 ALJR 98 at [39] where the High Court said, inter alia:
The statutory text must be considered in its context. That context includes legislative history and extrinsic materials. Understanding context has utility if, and insofar as, it assists in fixing the meaning of the statutory text.
Applying these principles, and the unanimous evidence of both Mr Hutchinson and Mr Goh, the meaning of the term “cycle” is used interchangeably with “program”. Accordingly, applying the provisions of section 15AB(1)(a) and (b) of the Acts Interpretation Act1901 (Cth) (“Interpretation Act”), it is permissible to use extrinsic material to assist in determining the meaning where, as provided by (b)(i), the provision in question is ambiguous or obscure.
In On Track Tyre Trust and Chief Officer of Customs [2009] AATA 877, the Tribunal referred to the meaning of the words “tyres, off-road”, and the Tribunal referred to the meaning of such words in the gazettal notice for this TCO application where it dealt with “stated uses”. At [25] the Tribunal found that the stated use as set out in the gazetted application was significant and relevant in the interpretation of the TCO.
Such supporting material, including the original TCO application, is before the Tribunal attached to the first statement of Mr Hutchinson. Such application includes various washing machines as being of the type that would fall within the wording of the proposed TCO and each washing machine referred to is stated to have a number of complete cycles and the time each cycle takes to perform its function. Significantly, the original TCO contains no reference to a separate “complete cycle” with two sub- cycles; nor does it refer to a separate “wash cycle” or “rinse cycle”.
A list of washing machines referred to in the original TCO application is cross-referenced to a “Quick Reference Guide” set out at page 18 of the TCO. At such page there is contained a description in the TCO application of each model of washing machine: the different models have different cycles and certain warewasher machines comply with TCO 1612840 in that they have either two or four cycles.
However, the specifications for the UC series shows that it has three programs, namely, light, normal and heavy. Furthermore, additional programs may be added, namely, intensive program; energy-saving program; low noise program; and short program. Other specifications refer to the fact that there are three standard programs for washing glasses; three standard programs for washing dishes; and three standard programs for washing bistro items. A note to specifications provides as follows:
Innovative special programmes
Short programmes
Intensive programs – for dried on food residues
Silence programmes – for quiet operation
ECO programs – for more quiet and economical operation
Individual, user-configurable special programme
Descaling programme
Basic cleaning programme for ware
Controlled self-cleaning program
In respect of the Classeq Duo series, the specifications appear to be similar. The specifications refer to the word “cycle” in describing the “wash cycle” and “rinse cycle”. However, there are three programs “which adapt to the shape and size of the wash items and the level of soiling”.
TCO 1612840
It has been repeatedly established that, to receive the concession under a TCO, the products described in the TCO must conform exactly to the criteria for which the concession is sought. The Respondent has conveniently set out the established authorities as follows:
38. In Australian Plastic Products Pty Ltd and CEO of Customs [1998] AATA 433 (“Australian Plastic Products”) (at paragraph 38), the Tribunal referred to a number of cases including Akai Pty Ltd and Collector of Customs (AAT 8075, 2 July 1992) and Zoratto Enterprises Pty Ltd and Collector of Customs (AAT 007321, 23 September 1991) which have “clearly enunciated the principle that to be able to take advantage of a TCO, the products must precisely meet the criteria” [of the TCO].(emphasis added)
39. In the matter of Toro Australia Group Sales Pty Ltd and Chief Executive Officer of Customs [2014] AATA 187 (“Toro”), the issue was whether hoses imported with fittings were described by a TCO that referred to ‘hoses”. The Tribunal stated (at paragraphs 33, 48 & 50):
33. 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 ref erence in the TCO to fittings or hose connectors or any such expression:
48. 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.
50. 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.(emphasis added)
40. In the recent decision of Brand Developers Aust Pty Ltd and CEO of Customs [2015] AATA 215, dealing with goods that had additional features over and above those that bring the goods within a TCO, Deputy President Forgie noted at [44]
Given the strict regime under which TCOs are made and given the purpose of the TCO system to ensure that industry is not taxed by the tariff where it is serving no protective f unction, it seems to me that the goods must meet those described in the relevant TCO precisely. (emphasis added)
In Becker Vale Pty Ltd v CEO of Customs [2015] FCA 525 at [62 – 64], Yates J said:
62. Section 269F(3)(a) of the Customs Act 1901 (Cth) provides that an application for a tariff concession order must contain a full description of the goods to which the application relates. In Toro Australia Group Sales Pty Ltd v Chief Executive Officer of Customs [2014] AATA 187, the Tribunal reasoned (at [31]) that “a full description” in this context necessarily means a precise description. This reasoning supports a construction of “comprising” that exhaustively states the essential components making up the concessional goods as an electrical protection and distribution system. Otherwise, the description would not be “a full description”.
63. The TCO does not, therefore, describe an electrical protection and distribution system that functions to transform higher voltage to a lower voltage. It follows, in my view, that the TCO cannot cover the goods. The contrary conclusion would be a curious outcome in the sense that it would provide a tariff concession for goods whose function is not secured by any of the components that are specifically listed in the TCO.
64. … had it been necessary for me to decide whether the goods are covered by the TCO, I would have accepted the respondent’s submission and concluded that they are not covered.
Application of the TCO
The Second Reading Speech to the Customs Legislation (Tariff Concessions and Anti-Dumping) Amendment Bill 1992, found in Senate Hansard 28 May 1992 at pages 2858 and 2859, recognised that the scheme for the operation of TCO is as follows:
..the object of Part XVA of the Act continues to be to protect all Australian-made goods from competition of any significance from imported goods.
With this objective in mind, section 15AA of the Interpretation Act requires a tribunal to approach the interpretation of the TCO to reflect the intention of Parliament. The section provides:
Interpretation best achieving Act’s purpose or object
In interpreting a provision of an Act, the interpretation that would best achieve the purpose or object of the Act (whether or not that purpose or object is expressly stated in the Act) is to be preferred to each other interpretation.
The TCO requires that the warewashers satisfy precisely its specifications which are set out in paragraph 12 above. With respect to the specified number of cycles, the warewashers must have one, two or four cycles. The evidence before the Tribunal establishes that the warewashers have three cycles, or three programs. Accordingly, the warewashers do not comply with the TCO.
CONCLUSION
The material before the Tribunal satisfies it that the warewashers in issue have three “cycles” or “programs”: the programs can be “cycles” because by using the program, up to three cycles exist.
Accordingly, the warewashers do not match the criteria of the TCO, namely that “one”, “two” or “four” cycles are only provided by such machines. It follows that the requirements of the TCO are not met.
DECISION
The Tribunal finds that the correct or preferable decision is that the warewashers do not satisfy the requirements of the TCO and that the decision under review should be affirmed.
I certify that the preceding 49 (forty-nine) paragraphs are a true copy of the reasons for the decision herein of The Hon. Dennis Cowdroy AO QC, Deputy President
..................................[SGD]......................................
Associate
Dated: 29 November 2021
Date of hearing on the papers: Solicitors for the Applicant: Mr A Hudson, Rigby Cooke Lawyers Solicitors for the Respondent: Mr J Millea, Comptroller-General of Customs
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