Zendel Australia Pty Ltd t/as Glad Products of Australia v Commissioner of Taxation

[1993] FCA 1027

10.27 9 3

JUDGMENT No. ........ ........ ., I ........ ....

A	?	)
1

1) NEW No. NG 757 of 1992

)

G RAL DIVISION ENE )

0	0
FEDERAL COURT OF AUSTRALIA

BETWEEN:  -- --

F

AUSTRALIA

First Appellant

-	E
-
PTY LIMITED It/as INTEGRATED
PACKAGTNG\
- --- - - - - - -. - L

Second Appellant

AUSTRAUA AND : - C

PRINCIPAL First Respondent

COMMONWEALTH OF AUSTRALIA

Second Respondent

COURT :	LOCKHART, BEAUMONT, GUMMOW JJ.
DATE :	25 FEBRUARY 1993
PLACE :	SYDNEY

LOCKHART J.

This is an appeal from the judgment of a judge of the Court (Hill J.) concerning the question whether certain products sold by the appellants are either exempt from sales tax or taxable at a particular rate (10%) pursuant to the provisions of the Sales Tax (Exemptions and Classifications) Act 1935 ("the Act") (his Honour's judgment is reported at 92 ATC 4515).

reasons for judgment.

The facts may be briefly stated and are not in dispute. My
recitation of them is taken substantially from his Honour's

The products are Gladwrap 30 metres, and Glad Go-Between 15 metres. They are sold by wholesale by the first appellant. The product Teno Spin Stretch Film is sold by wholesale by the second appellant. The appellants claim that these products are exempt from sales tax because they fall within the provisions of item

120(5) of the First Schedule to the Act. That item relevantly

reads as follows:

" ~ t e m 120 - Clothing, footwear, piece goods and yarns (other than goods covered by any item in the Second or Third Schedule) viz:

(5) Piece goods, being cloth (whether

woven, felted, knitted, netted or crocheted), including plastic and rubber sheeting, table baize and cloth made wholly or partly of glass fibre, rubber, synthetic or plastic material, but not including tracing cloth or floor coverings. "

The first appellant also sells by wholesale the products, Glad

Foil 10 metres and Glad Freezer n' Storage Bags 120 small. The

appellants assert that these items attract sales tax at the rate

of 10 per cent because they fall within item 2 of the Third

Schedule to the Act. That item provides relevantly as follows:

"Parts, fittings and accessories for goods

covered by item 1, namely . . . (i) kitchen

hardware. "

Each of the products in question, with the exception of Ten0 Spin Stretch Film, is an item that is well known. The product, Gladwrap 30 metres, is a plastic food wrap of 30 metres in length

and 33 centimetres in width, put up for sale on a role in a cardboard package with a serrated edge which can be used to cut the plastic after a length of it is pulled off the roll. The product is made from polyethylene by a process of extrusion which produces the plastic wrap in large continuous lengths, which are then cut to size for the purposes of marketing. The product Glad Go-Between 15 metres is likewise a roll of plastic film of 15 metres in length and 33 centimetres in width, which is packaged in a cardboard container. Its primary use is to separate food in freezers or to cover food. Its attraction to the customer is said to be that it separates easily from any product which comes in contact with it. It too is extruded in large continuous lengths which are cut to size for the purposes of marketing.

The product, Teno Spin Stretch Film is sold as a roll of plastic film. A full roll is 500 millimetres wide and contains approximately 1800 metres of plastic stretch film. The product is used bywholesalers, retailers, transporters and other persons or companies to wrap goods or pallets of goods for transport or

made, it is produced by the process of extrusion as a continuous	storage. Like the other products to which reference has been
roll of plastic film which is cut to size for the purpose of marketing as a roll of plastic film.
Glad Foil is a roll of aluminium foil marketed in a cardboard package with a serrated edge for cutting. The product is principally used by consumers in connection with cooking.
Indeed, it is sold for this purpose: the package states that it makes every stage of food preparation in cooking easier and the food served in the result, fresh, moist and full of flavour. The
package claims :

"Glad Foil is a super strength quality aluminium foil which ensures perfectly baked or barbecued meats and vegetables, delicious garlic bread and easy-to-prepare meals-in-a -

parcel. When you use GLAD Foil, you will love the moist, succulent results. "

Glad Freezer n1 Storage Bags are as the product name suggests, plastic bags which may be used for freezing or refrigerating food, or defrosting food in a microwave, so long as a browning unit or a browning dish is not used. It is not in dispute that the principle use to which the product is put by consumers is for storage in refrigerators and freezers. The learned primary Judge held with respect to item to 120(5) that, in order to answer the description of piece goods within the meaning of that word in the item, the goods must be put up for sale by retail by or from the piece, that is, by or from a linear measure.

He held that the fact that goods were put up for sale in

fixed length3 precluded them from being piece-goods within the

meaning of th2 relevant words in the item and that therefore the

products Glaal Wrap 30 metres, Glad Go-Between 50 metres and Teno Spin Stretch Film were not piece-goods within the meaning of those words in item 120(5) of the First Schedule to the Act, and accordingly they did not fall within that item.

His Honour said with respect to the second aspect of the case, namely item 2 of the Third Schedule to the Act, that the meaning of accessories must depend upon the context in which the word appears; that essentially for an item to be an accessory it must contribute to the working of some principle item or its general effect. The learned primary Judge held that it was a misuse of language to call aluminium foil an accessory to an oven, or plastic freezer bags an accessory to a refrigerator; that aluminium foil did not contribute to the stove or its functioning and plastic freezer bags did not contribute to the refrigerator or its functioning; and that aluminium foil and plastic freezer bags were an adjunct to the processes of cooking or freezing rather than an adjunct to the appliances themselves, namely ovens and refrigerators. Accordingly his Honour held that the products Glad Foil 10 metres and Glad Freezer n' Storage Bags 120, were not accessories within the meaning of that word in item 2 of the Third Schedule to the Act, and that accordingly they did not fall within that item.

His Honour declared that the products Glad Wrap 30 metres, Glad Go-Between 15 metres and Ten0 Spin Stretch Film do not fall within item 125 of the First Schedule to the Act, and that the products, Glad Foil 10 metres and Glad Freezer and Storage Bags 120 small do not fall within item 2 of the third schedule to the Act.

Counsel for the appellants argued before us that his Honour erred with respect to his findings as to both item 125 and item 2 of the Third Schedule to the Act. It is submitted that his Honour did not correctly construe the expression "piece-goods" (where appearing in item 125), in particular, that he treated piece-goods as necessarily requiring that they be goods that are suitable for sale by some linear measure, or a measure of some customarily accepted unit length.

It was argued that his Honour misconstrued the meaning of the word "accessory" in item 2 of the Third Schedule to the Act by drawing what was said to be the rigid division between the contribution of an article to the working or general effect of the article and some other use to which it may be put. It was said that when his Honour found that the items in question were an adjunct to the process of cooking or freezing rather than to the appliance (ie. the stove, oven or refrigerator), he erred, because it is sufficient for the purposes of the item number 2 in the Third Schedule, that they may be an adjunct to both.

Turning first to item 120(5) of the First Schedule, in my opinion, none of the three products in question falls within that item. In my view, the essential characteristics of piece goods is that they be goods which are sold by retail by or from a piece, in the sense of by or from a Linear measure. In his reasons for judgment his Honour referred to the meaning attributed to the words "piece-goods" in a publication, Textile

Terms and Definitions, 8th Revised Edition, compiled by the Textile Institute, which defines piece goods as "fabrics sold by or from the piece". The same publication defines "piece" as "a length of fabric of customarily accepted unit length",

A useful definition is to be found in Webstersv New World Dictionary which defines "piece-goods" as being synonymous with yard goods, namely, textiles made in standard width usually sold by the yard. It is to facilitate a sale of this kind, that piece goods are initially produced in defined lengths. Once, however, the piece goods reach the point of retail sale, they may then be sold either by the metre yard or some other linear measurement or the total length. That is to say, they must be goods put up for sale in lengths and sold by or from the piece. A ready example of piece goods is curtain material which is put up for sale as a bolt of material of a standard length and width, but is generally sold by retail by the metre.

By way of contrast, each of the three products with which up for sale as an entirety, and no one of the products is sold	this case is concerned (under the heading of "Item 25") is put
by or from the piece at all. None is offered for sale at the wholesale or retail level at a price per metre or, indeed, any other linear measure. The mere fact that a product is put up for sale as having a particular defined length does not make that product piece-goods. In my view, none of the three products falls within item 125 of the First Schedule to the Act.
I turn then to the remaining goods which are said to fall under item 2 of the Third Schedule to the Act. It was submitted on behalf of the appellants that the products (Glad Foil and Glad Freezer and Storage Bags 120 small) were accessories for goods covered by item 1, namely, stoves or refrigerators, as the case may be, and accordingly, that each product fell within item 2 of the Third Schedule, and is therefore to be taxed at the concessional rate of 10 per cent.

Again, reference was made before us to the dictionary definition of "accessory," and decisions of courts in which the meaning of that word has been discussed. The Macquarie Dictionary, the Second Revision, describes, so far as is presently relevant, an accessory as "a subordinate part of an object, something added or attached for convenience, attractiveness, etcetera, such as a spotlight heater, driving mirror, etcetera, for a vehicle". The Oxford English Dictionary, 2nd Edition, defines an accessory as meaning, so far as relevant as "an accessory thing; something contributing in a subordinate

degree to a general result or effect; an adjunct or	accompaniment".
Plainly, the meaning of the word "accessory" will depend upon the context in which it is used. It was the context which distinguished the different meanings given to the word in two cases to which we were referred: Deputy Commissioner of Taxation
v Polaroid Australia Pty Limited (1971) 46 ALR 32, a decision of
Gibbs J., and Federal Commissioner of Taxation v Kentucky Fried Chicken Pty Limited (1988) 12 NSWLR 643, a decision of the Court of Appeal of New South Wales.
ultimately, the meaning of the word "accessory" must acquire its meaning from the particular context in which it is used. In
my opinion, for an item to be an accessory within the meaning of the Act, it must contribute to the working of some principal item or its general effect or appearance. The aluminium foil, for example, with which this case is concerned, does not, in my view, contribute to the stove or its function, or its effect or appearance.
A stove functions and performs in the same way irrespective of the use of aluminium foil. Foil certainly may improve the effect of cooking on the food, just as freezer bags may modify the effect of freezing on food; but that simply says that the product in question assists in the process of cooking or freezing. They are an adjunct to the process, rather than an
to the appliance - which in my view they are not - they cannot adjunct to the appliance itself, and unless they are an adjunct fall within the relevant provision.
In my view neither Gladfoil 10 metres nor Glad Freezer and Storage Bags 120 small, answer the description of an accessory to an appliance referred to in item 1 of the Third Schedule to the Act. It has not been demonstrated that his Honour made any
error in relation to the findings to which I have referred. I
would dismiss the appeal.
Q&g
The order of the Court is that the appeal be dismissed and that the appellants pay the costs of the respondents of the appeal.

I certify that this and the preceding nine (9) pages are a true copy of the reasons for

-- Dated. 25 February 1993

IN THE FEDERAL COURT OF AUSTRALIA	)
1
NEW SOUTH WALES DISTRICT REGISTRY )	No. NG 757 of 1992

)

GENERAL DIVISION 1

ON APPEAL FROM A JUDGE OF THE

FEDERAL COURT OF AUSTRALIA

BETWEEN :  ZENDEL AUSTRALIA PTY LIMITED t/as GLAD PRODUCTS OF AUSTRALIA

First Appellant

EIGHTH MILIEU NOMINEES PTY LIMITED AND FIRST GREEN PARK PTY LIMITED ft/as INTEGRATED PACKAGING1

Second Appellant

AND:  COMMISSIONER OF TAXATION

First Respondent

COMMONWEALTH OF AUSTRALIA

Second Respondent

COURT :	LOCKHART, BEAUMONT, GUMMOW JJ.
DATE :	25 FEBRUARY 1993
PLACE :	SYDNEY

REASONS FOR JUDGMENT

BEAUMONT J:

I agree that the appeal should be dismissed.

As Lockhart J. has said, the first issue is whether the goods in question are piece-goods. The point, I think, is one of impression. On behalf of the appellants, reference is made to the Macauarie Dictionary definition of "piece-goods" as "goods or fabrics woven in lengths suitable for retail sale by the usual linear measure." It is then said, on behalf of the appellants, that the subject goods fall within the definition of "piece-

goods" in the item in question because, first, they are cut in pieces from a continuous roll; second, they are sold in or by recognised lengths and, thirdly, the lengths in which the goods are sold are customarily accepted.

I have difficulty in accepting this analysis. As the dictionary definitions show, the term "piece-goods" is a technical term. That is to say, it is really a term of art, and it has not been shown, in my opinion, that Hill J. erred in his

approach to this question.

As to the second issue, I also agree with Lockhart J. It should be noted that the term "accessories" in the item in question appears in the context of an item which is stated to be "parts, fittings and accessories". If the subject goods had been designed exclusively for use in conjunction with a refrigerator or an oven or even if, perhaps, the goods in question had actually been used exclusively in conjunction with an oven or a refrigerator, it could be that the conclusion contended for by

there is no evidence and, indeed, no suggestion, that these goods	the appellants may have been open. But, in the present case,
were either designed exclusively for that purpose or, in practice, used exclusively for that purpose. Again, I am of the view that it has not been shown that Hill J. erred in his approach to this question.

I would, for those reasons, dismiss the appeal.

I certify that this and the preceding two (2) pages are a true copy of the reasons for

judgment herein of the Honourable Mr.

Justice

Associate

IN THE FEDERAL COURT OF AUSTRALIA )

1

NEW SOUTH WALES DISTRICT REGISTRY ) No. NG 757 of 1992

)

GENERAL DIVISION 1

QN APPEAL FROM A JUDGE OF THE

FEDERAL COURT OF AUSTRALIA

BETWEEN :  ZENDEL AUSTRALIA PTY LIMITED t/as GLAD PRODUCTS OF EUSTRALIA

First Appellant

EIGHTH MILIEU NOMINEES PTY LIMITED AND FIRST GREEN PARK PTY LIMITED it/as INTEGRATED

PACKAGING L

Second Appellant

AND:  COMMISSIONER OF TAXATION

First Respondent

COMMONWEALTH OF AUSTRALIA

Second Respondent

COURT :	LOCKHART, BEAUMONT, GUMMOW JJ.
DATE :	25 FEBRUARY 1993
PLACE :	SYDNEY

REASONS FOR JUDGMENT

I would dismiss the appeal and I agree with the reasons given by the presiding Judge.

C certify that this page is a

true copy of the reasons for judgment herein of the Honourable

L". Justice Gummow.

Associate L '2

Dated: 25 February 1993

Counsel for the First and

Second Appellants	A H Slater QC
Solicitors for the First and
Second Appellants	Blake Dawson Waldron

Counsel for the First and	:	D M J Bennett QC
Second Respondents	P Roberts
Solicitors for the First and	Australian Government
Second Respondents	Solicitor
Date of Hearing	25 February 1993
Date of Judgment	25 February 1993