Woolworths Limited and Chief Executive Officer of Customs
[2013] AATA 730
[2013] AATA 730
Division GENERAL ADMINISTRATIVE DIVISION File Number(s)
2012/5795
Re
Woolworths Limited
APPLICANT
And
Chief Executive Officer of Customs
RESPONDENT
DECISION
Tribunal Deputy President RP Handley
Date 11 October 2013 Place Sydney The decision under review is affirmed.
...........................[SGD].................................
Deputy President RP Handley
CATCHWORDS
CUSTOMS AND EXCISE - tariffs - meaning of TCO 9200879 – separate tariff advice issued for ‘Ripstick’ caster board – whether caster board complies with tariff clarification and word description of TCO 9200879 and TCO 9204091 - whether a caster board is a skateboard or a snakeboard - duty paid under protest - decision affirmed
LEGISLATION
Acts Interpretation Act 1901 ss 15AA, 15AB, 46
Customs Tariff Act 1995
Legislative Instruments Act 2003 s 13
CASES
Chinese Food and Wine Supplies Pty Ltd v Collector of Customs (Vic) (1987) 72 ALR 591
Collector of Customs v Agfa-Gevaert Ltd (1996) 186 CLR 389
STI Tyres and Chief Executive Officer of Customs (2009) 112 ALD 381Times Consultants Pty Ltd v Collector of Customs (Qld) (1987) 16 FCR 449
REASONS FOR DECISION
Deputy President RP Handley
Date: 11 October 2013
Woolworths Limited (the Applicant) has applied for the review of a decision of a delegate of the Chief Executive Officer of Customs (the Respondent) to refuse to apply a tariff concession order (TCO) to goods imported by the Applicant and described as a ‘Ripstick’ Caster Board (referred to as a Ripstick). If the TCO applies, the Ripsticks will be imported free of duty rather than being subject to duty of 5% of their value.
BACKGROUND
Tariff Concession Order 9200879 (the ‘Skateboard TCO’) with a classification “9506 Skateboards” and Tariff Concession Order 9204091 (the ‘Snakeboard TCO’) with a classification “9506 Snakeboards” have been published in the Gazette. On 26 June 2009, the Applicant requested a Tariff Advice from the Respondent for an imported good, described as a ‘Ripstick’ Caster Board. On 15 July 2009, the delegate of the Respondent decided the Ripstick did not satisfy the terms of the Skateboard TCO. Instead, the Respondent issued a separate Tariff Advice (19453600) identifying the item as a ‘caster board’. As a result, the Applicant was liable to pay duty of 5% of the value of the Ripsticks imported.
On 17 July 2012, the Applicant paid, under protest, the duty for the relevant Customs entry and, on 27 July 2012, requested a refund of the duty paid on imports of Ripsticks from 29 October 2008 to 19 June 2012.
On 20 December 2012, the Applicant lodged an application for review of the decision of 15 July 2009 with the Tribunal.
RELEVANT ISSUES AND LAW
If goods comply with both the tariff classification and relevant word description in a TCO, they may be imported into Australia duty free. The goods must precisely meet the criteria of a TCO to take advantage of the duty free status. The issue for the Tribunal is whether Ripsticks come within the terms of the Skateboard TCO, namely whether they are skateboards. The Applicant contends, in the alternative, that if a Ripstick is not a skateboard, then it is ‘snakeboard’ and comes within the terms of the Snakeboard TCO. The Respondent contends that a Ripstick is a caster board and different from either a skateboard or a snakeboard.
The parties agree that Ripsticks are classified under subheading 9506.99.90 in Schedule 3 of the Customs Tariff Act 1995. Subheading 9506 states relevantly:
9506
ARTICLES AND EQUIPMENT FOR GENERAL PHYSICAL EXERCISE, GYMNASTICS, ATHLETICS, OTHER SPORTS (INCLUDING TABLE-TENNIS) OR OUTDOOR GAMES, NOT SPECIFIED OR INCLUDED ELSEWHERE IN THIS CHAPTER; SWIMMING POOLS AND PADDLING POOLS:
…
9506.99.90
Other
5%
TCO 9200879 applies to:
9506 Skateboards
TCO 9204091 applies to:
9506 Snakeboards
EVIDENCE
The Applicant provided the Tribunal with a sample of a Ripstick. In its Statement of Facts and Contentions, the Applicant described a Ripstick as being “a two wheeled skateboard” which can be of different colours, “that self propels due the flexible connector between the front and the back wheels which allows both ends of the board to pivot slightly and in turn propel the rider”. Examination of a Ripstick reveals there are separate front and rear portions of the Ripstick deck connected by a rubber padded torsion bar which pivots slightly so that the front and rear portions of the deck can move independently. The two caster urethane wheels – one attached to each portion of the deck – can rotate though 360 degrees. A person riding a Ripstick can propel the board along by using a twisting motion so that it is unnecessary to ever push off the ground as would be needed to propel a skateboard. Ripsticks are sold by the Applicant in its Big W stores.
The evidence provided by the parties provides descriptions of a ‘skateboard’ and a ‘snakeboard’. A skateboard has a single deck or footplate on which the user stands with, on the underside of the board, a ‘truck’ attached at each end with an axle on which two wheels are attached, one on each side of the truck. Each truck has a pivot point facilitating rotation on a horizontal plane (enabling the user to steer the skateboard with a sideways movement). A snakeboard comprises front and rear footplates with a larger deck/central crossbar underneath to which, at each end, is attached a truck with an axle and two wheels on a pivot point similar to a skateboard. The snakeboard is propelled by the user moving his/her feet inwards and outwards on the board (one on each end) in conjunction with his/her shoulders.
The Applicant provided the Tribunal with a report dated 26 April 2013 from Associate Professor David Eager of the Faculty of Engineering at the University of Technology Sydney (UTS). Professor Eager is a mechanical engineer who represents Australia on the International Standards Committee ISO/TC 83 [International Organisation for Standardisation/Technical Committee] Sports and Recreational Equipment and is a member of various Australian standards committees. He stated there is no Australian or ISO standard for skateboards.
Professor Eager said, in his opinion, it would be reasonable to envisage a caster board being used at a skate park facility alongside other skateboards. While he acknowledged that riding a caster board is a different experience from riding a traditional skateboard, he said that, nevertheless, they are both skateboards. He concluded that a caster board is a form of skateboard. In a supplementary report dated 5 June 2013, Professor Eager said in his original report, reference to caster boards should include reference to snakeboards. In a further supplementary report dated 5 August 2013, Professor Eager commented on reports provided by the Respondent’s witnesses and referred to various definitions and patents in respect of the different boards.
The Respondent provided the Tribunal with an affidavit dated 13 April 2013 from Richard Flude, the National Development Manager of Skate Australia and Skateboarding Australia. Mr Flude said he has been involved in skateboarding either for recreation or as a competitor for the past 15 years. He stated that he is familiar with Ripsticks which are not skateboards and are not recognised as skateboards in the skateboarding community in Australia. He referred to skateboarding magazines, a skateboard shop and international skateboarding competitions none of which feature or recognise Ripsticks as skateboards. Mr Flude said that in his opinion Ripsticks are not a form of skateboard but something new and different.
Mr Flude said he has never heard of a caster board or a Ripstick referred to as a skateboard in the skateboarding community (at [20]):
The movements of the two are different. The way you ride them is different. With the Ripstick you use both feet to swerve. With a skateboard you push off on one foot. The construction is different. The caster board has two boards joined by a strong spring instead of only one board. A skateboard always has four wheels, none of which can swivel like a castor. The wheels are similar in design to wheels used in roller skates, hence ‘skateboard’. The skateboard wheels are mounted on “trucks” which hold the wheels onto the skateboard and which enable the skateboard to be tilted while the wheels maintain contact with the ground.
Mr Flude said as far as he is aware, Ripstick caster boards have never been used in any skateboard competition in Australia.
The Respondent also provided the Tribunal with affidavits dated 15 May 2013 and 23 September 2013 from Luke Brown, a Project Manager with Skateboarding Australia and President of the Canberra Skateboarding Association. Mr Brown stated that Skateboarding Australia is part of Skate Australia and is the national peak body for skateboarders. Mr Brown also gave evidence at the hearing. He said he has been a recreational skateboarder for 28 years and has previously competed in skateboarding competitions.
Mr Brown said he is familiar with Ripsticks and described the difference between a Ripstick and a skateboard in a similar way to Mr Flude, which does not therefore need repeating. He said: “In my view, a RipsStik [sic] is not a skateboard but a different product entirely.” He noted, “The technique used to ride a skateboard and the tricks performed on a skateboard cannot be done safely on a RipStik.” Ripsticks are commonly viewed as toys in the skateboarding community. In his second affidavit, Mr Brown listed specific differences between the two boards as a means of comparison. He referred to the definition of a skateboard by World Cup Skateboarding, the recognised official international body for both recreational and professional skateboarding, which includes a statement of the following characteristics: “A skateboard has a deck, 2 trucks and 4 wheels”.
At the hearing, Mr Brown demonstrated the use of a skateboard and a Ripstick, and he was asked to comment on video material showing the use of a skateboard, a Ripstick and a snakeboard. Whereas a skateboard is stable and supported by four wheels, a Ripstick is unstable, does not stand up on its own and “most users have great difficulty maintaining balance”. Mr Brown also distinguished a snakeboard from a Ripstick. Whereas each end of a snakeboard can move independently on a horizontal plane, the rider uses a different movement from a Ripstick rider – a snake like, duck-footed motion – and, like a skateboard, a snakeboard has trucks and wheels.
SUBMISSIONS
The parties provided the Tribunal with written submissions and made short oral submissions at the hearing. Both parties referred the Tribunal to relevant dictionary definitions which are discussed below.
Mr Law, for the Applicant, contended that a Ripstick is a form of skateboard, referring to Professor Eager’s opinion that “the Casterboard is an evolved, or an engineering enhanced, form of a skateboard”. Mr Law said a Ripstick is not a toy as suggested by the Respondent’s witnesses: it is potentially dangerous, requiring more dexterity and balance than for a traditional skateboard. He drew attention to the underside of a Ripstick which has a warning “not to be used by children under 8”. There is also a similar warning in the owners’ manual. Mr Law drew an analogy between different “genres” of football: a soccer ball, a rugby union ball, a rugby league ball and an Australian Football League (AFL) ball. He said they are all forms of football; in the same way, a Ripstick is a form of skateboard.
Mr Law submitted that the words ‘skateboard’ and ‘snakeboard’ should be read broadly and that either of the TCOs could be applied.
Mr Millea, for the Respondent, contended that a Ripstick is not a skateboard or a snakeboard in that the essential nature of a Ripstick is significantly different and distinguishable by its ‘look’, design features and how it is used. Mr Brown’s evidence refers to these differences. Mr Millea also noted that the Ripstick has a US patent, indicating that it involves a new invention. While he acknowledged that caster boards may be ‘related’ to skateboards, he contended that they are not the same. He referred to a variety of community sources, both local, government supported and international, which he said clearly distinguish, either by illustration or text, between skateboards and other goods such as Ripsticks and rollerblades.
Mr Millea contended that there is no evidence that Professor Eager has any relevant expertise in relation to skateboards and Ripsticks beyond that of an engineering nature. His evidence does not include any detailed analysis of the design and features of the two products and he expresses opinions, for example in relation to trade, which are outside his area of expertise. He also relies on Wikipedia as a source, which the UTS website on academic sources states is not considered a credible and reliable source of information.
DISCUSSION
To determine whether goods come within the terms of a TCO a decision-maker must first ascertain the identity of the goods as at the time and port of entry: “The characteristics of the goods, their get-up, colour, decoration, labelling and packaging are all relevant considerations” (per Lockhart J, with whom Woodward and Ryan JJ agreed, in Chinese Food and Wine Supplies Pty Ltd v Collector of Customs (Vic) (1987) 72 ALR 591, at 599). The determination must be made objectively without reference to the intentions of the manufacturer, the exporter or the importer. In Times Consultants Pty Ltd v Collector of Customs (Qld) (1987) 16 FCR 449, at 462, the majority of the Federal Court, Morling and Wilcox JJ said:
The authorities make it clear that in determining what is the essential character of goods it is the state or condition of the goods at the time of importation that is the determining factor and that it is wrong to classify goods or to determine their essential character by reference to the purpose of the importer or of the purchaser. Regard must be had to the characteristics of the goods themselves, as they would present themselves to an informed observer …
And at 463:
It must always be remembered that the classification of goods for tariff purposes is a practical "wharfside" 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.
TCOs are considered a “species of delegated legislation” to which the general principles of statutory interpretation apply: Collector of Customs v Agfa-Gevaert Ltd (1996) 186 CLR 389, at 398. These principles require that words should be interpreted according to their natural and ordinary meaning in the context in which the words are used. In interpreting statutory provisions, regard must also be had to relevant provisions of the Acts Interpretation Act 1901 (the AIA): pursuant to s13 of the Legislative Instruments Act 2003 and s 46 of the AIA; see for example, STI Tyres and Chief Executive Officer of Customs (2009) 112 ALD 381.
Section 15AA(1) of the AIA provides that in the interpretation of a statutory provision, a construction that would promote the purpose or object of the legislation shall be preferred to one that would not do so. Section 15AB(1) permits reference to extrinsic material:
(a) to confirm that the meaning of the 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.
As stated above, the issue to be determined is whether a Ripstick falls within the terms of either the Skateboard TCO or the Snakeboard TCO, namely whether it should be classified as a skateboard, or a snakeboard. The Applicant contends that the words skateboard and snakeboard should be read widely and that a Ripstick falls within both descriptions.
To ascertain the ordinary meaning of the words skateboard, snakeboard and caster board, the parties referred me to various dictionary definitions. The noun ‘skateboard’ is defined in the Macquarie Dictionary (on-line edition) as:
a short plank on rollerskate wheels, ridden, usually standing up, as a recreation.
It is defined in the Oxford English Dictionary (on-line edition) as:
A narrow platform mounted on roller-skate wheels, on which the rider coasts along, usu. in a standing position (orig. developed from surf-riding, chiefly as a pastime).
The relevant definition of the noun ‘snakeboard’ in the Oxford English Dictionary (on-line edition) is:
A proprietary name for: a form of skateboard consisting of two footplates joined by a bar, allowing for greater speed and manoeuvrability than a standard skateboard.
There is no relevant definition in the Macquarie Dictionary (on-line edition).
The noun ‘caster board’ is defined in the Macquarie Dictionary (on-line edition) as:
a form of skateboard in which the narrow front and back sections are linked by a metal tube encasing a strong spring, each section having a wheel which can rotate independently of the other.
There is no relevant definition of this in the Oxford English Dictionary (on-line edition).
In my view, it is clear from the dictionary definitions and from an inspection of a skateboard, snakeboard or caster board – the Tribunal viewed a skateboard and a Ripstick caster board and was shown video material of all three - that they are similar goods and that snakeboards and caster boards appear to be derivatives of skateboards. This accords with Professor Eager’s evidence which suggests that caster boards are a development of the original concept of a skateboard. There are, however, clearly differences in design and operation. I found the affidavit of Richard Flude and the affidavits and oral evidence of Luke Brown, each of whom clearly have a broad knowledge of and experience of skateboarding in Australia, particularly useful in identifying and drawing attention to the differences between a skateboard and a caster board. In his supplementary affidavit dated 23 September 2013, Mr Brown referred to such differences:
·A skateboard has one board whereas a caster board has two connected by a metal shaft on which each board can swivel independently.
·A skateboard has four wheels, two at the front on an axle attached to a ‘truck’ and two at the back also on an axle attached to a truck, whereas a caster board has one wheel attached to the front board and another attached to the rear board with each attached via a caster and able to swivel through 360 degrees.
·A skateboard can stand on its own independently whereas a caster board cannot and will fall on its side. It is therefore very difficult for a caster board rider to balance on a stationary caster board.
·A skateboard is propelled by the rider using one foot to push off from the ground from time to time. A caster board is self-propelled by the rider alternating using one foot to press down on one board and then using the other foot to press down on the other board; there is no need to push off from the ground.
Mr Brown also drew a distinction between snakeboards and caster boards. Snakeboards have front and rear footplates attached to a lower deck/central crossbar allowing the footplates to swivel on a horizontal plane, have two trucks and four wheels, and can stand independently. The movement required to self-propel a snakeboard is also different from that of a caster board.
Mr Brown’s evidence indicates the skateboarding is an established form of sport and recreation both nationally and internationally and that snakeboards and caster boards are specifically excluded from sporting competitions. He cites the definition of skateboards adopted by World Cup Skateboarding: “A skateboard has a deck, 2 trucks and 4 wheels”, a definition which specifically excludes various other forms of board, amongst them snakeboards. Mr Brown also referred to various community activities and publications specifically related to skateboarding.
I note further evidence provided by the Respondent of retailers who deal in skateboards and of separate US patents for the skateboard and the Ripstick, albeit that the latter is given the general description in the patent of a “skateboard with direction-caster” while in other respects according with the description of a caster board referred to above (for example, having a front board and a rear board with a connecting shaft which can be elastically twisted, each of the front and rear boards having “at least one direction-caster mounted on the underside”).
The fact that there are separate TCOs for skateboards and snakeboards is also relevant and indicates an intention to examine specific differences for the purposes of classifying goods on importation, notwithstanding that they are similar and that a snakeboard appears to be a derivative of a skateboard.
How then would the informed observer assess a Ripstick, having regard to its essential characteristics at the time of importation and the purpose or object of the TCO as a species of delegated legislation? In my view, the weight of evidence clearly establishes that in terms of essential characteristics, while there are similarities between skateboards, snakeboards and Ripsticks, there are significant differences in look, design and operation such that considered objectively, and in terms of the intention underpinning the two TCOs, a Ripstick should be separately classified.
Thus, I am satisfied that an informed observer would conclude that a Ripstick should be classified as a caster board and not as either a skateboard or a snakeboard. It follows that neither TCO 9200879 nor TCO 9204091 are applicable and the correct or preferable decision accords with Tariff Advice 19453600 identifying the Ripstick as a ‘caster board’. Consequently, the Applicant was liable to pay duty of 5% on the value of the Ripsticks imported and the decision under review should be affirmed.
DECISION
The decision under review is affirmed.
I certify that the preceding 38 (thirty -eight) paragraphs are a true copy of the reasons for the decision herein of Deputy President RP Handley. ..........................[SGD]...................................
Associate
Dated 11 October 2013
Date(s) of hearing 26 September 2013 Date final submissions received 26 September 2013 Solicitors for the Applicant J Millea, Australian Government Solicitor Solicitors for the Respondent J Law, Down Under Trade & Legal
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