Air International Pty Ltd v Chief Executive Officer of Customs
[2002] FCA 355(2002) 35 AAR 205
(2002) 49 ATR 630
(2002) 121 FCR 149
(Judgment by: Tamberlin J)
Between: Air International Pty Ltd (ACN 004 684 628) - Appellant
And: Chief Executive Officer of Customs - Respondent
Judges:
Hill J
O'Loughlin J
Tamberlin J
Subject References:
CUSTOMS LAW
principles of classification for tariffs
essential character test
whether air conditioning parts designed and adapted for use in air conditioning units should properly be classified as replacement parts where some ultimately sold to dealers and resold as spare parts
whether goods of a kind used as replacement parts
essential character
goods of a kind used as
Legislative References:
Customs Tariff Act 1995 (Cth) - s 7(1); Sch 2 Rule 2(a); Sch 3 Rule 6
International Convention on the Harmonized Commodity Description and Coding System 1983 -
Case References:
Re Pirelli Tyres Australia Pty Ltd and Others and Chief Executive Officer of Customs cited - (1999) 58 ALD 517
Hygienic Lily Ltd v Deputy Commissioner of Taxation referred to - (1987) 13 FCR 396
Customs and Excise Commissioners v Mechanical Services (Trailer Engineers) Ltd discussed - [1979] 1 WLR 305
Diethelm Manufacturing Pty Ltd v Commissioner of Taxation referred to - (1993) 44 FCR 450
Clean Investments v Commissioner of Taxation applied - (2001) 105 FCR 248
Applicant A v Minister for Immigration and Ethnic Affairs referred to - (1997) 190 CLR 225
Customs and Excise Commissioners v Mechanical Services (Trailer Engineers) Ltd applied - [1979] 1 WLR 305
Judgment date: 17 April 2002
Sydney (heard in Melbourne)
Judgment by:
Tamberlin J
44 I have had the advantage of reading the judgment of Hill J who has set out the relevant background in this case.
45 The primary issue in this matter is whether the fans, assemblies, condensers and evaporators used in the assembly of automotive air conditioning systems are goods "of a kind used as replacement components in passenger motor vehicles".
46 In answering this question, it is necessary to construe the quoted expression as a whole. The intent or purpose of the manufacturer or importer is not the criterion to be applied. Nor is it necessary that the goods should in fact have been used or be used as replacement components. It is sufficient if they are "of a kind" which can be so used. That is to say, if they come within the genus of "goods used as replacement components".
47 In order to determine whether the goods are within that genus, it is necessary to examine the "nature, quality and adaptation of the goods in the class": see Gummow J in Hygienic Lily Ltd v Deputy Commissioner of Taxation (1987) 13 FCR 396 at 399, where his Honour stated:
"Further, the setting in which the phrase 'goods of a kind' appears suggests it is directed not to the use for which the particular goods in question were designed or manufactured, nor to the purpose to which it is intended those particular goods shall be put, but rather to the nature, quality and adaptation of goods in the class or genus in question. Thus, goods are 'of a kind ordinarily used for household purposes' if they are to be recognised as members of a class or genus which commonly or regularly (albeit not necessarily exclusively or principally) is used for household purposes ..."
48 The characterisation of the words in this case turns on the word "replacement". The components must in their nature, adaptation or quality be able to be characterised as "replacement" components. It is not sufficient to establish that the subject goods can be made to replace themselves in the sense that once installed they can be replaced or exchanged by the goods themselves. To adopt this approach is to render the expression "replacement" otiose since it is difficult to conceive of any component of a motor vehicle which cannot in fact be replaced, although the replacement may be time consuming and expensive.
49 On accepted principles of statutory interpretation therefore, the adjective "replacement" in relation to the goods in question must be given some meaning. The expression is not simply "component" but is "replacement component".
50 In the present case there are specific findings of fact by the Tribunal at [39] that:
"... a certain proportion of the subject goods are actually used to take the place of (i.e. replace) condensers and evaporators that are involved in cooling the temperature in passenger motor vehicles, that are components of passenger motor vehicles and that need to be changed."
51 A further conclusion reached by the Tribunal is that even if some of the goods were not in fact used:
"... the subject goods are of a genus or class that are used to replace condensers and evaporators that are involved in cooling the temperature in passenger motor vehicles and are used as components in passenger motor vehicles."
52 The same finding is made in relation to the fan assemblies.
53 It is helpful to look at actual use, if any, when deciding whether goods are of a kind used as replacement components. Where they are so used, then that points to a conclusion that they are "of a kind" so used. The words "of a kind" add a further level of generality to the expression "used" so that even if (to use the Tribunal's expression) the goods are not so used but are within a range of goods of a type which are used, then they satisfy the required description.
54 It is important to note that the context in which the expression "of a kind used as" does not include any qualifications such as those found in expressions like "actually used as" or "commonly used as" or "partly used as". The expression "used as" has no quantitative limitation in the sense of any particular degree or level of use as one finds in the use of an expression such as "ordinarily" or "commonly". The description can apply where there is no actual use of a good as a replacement component if the goods are of that genus. That is to say they are of the same type of component which is used to replace components of passenger motor vehicles. The genus, in my view, is a relatively broad one and the word "kind" should be so construed.
55 The appeal to this Court from the Tribunal is on questions of law only. The above findings of fact as to actual use of the goods have not been shown to have been unavailable to the decision-maker as matters of fact.
56 I am not satisfied that there has been any error of law or principle on the part of the Tribunal or the primary Judge in this matter. Accordingly, I would dismiss the appeal. There is no reason why the usual rules as to costs should not apply and I would order that the appellant pay the respondent's costs of the appeal.
Counsel for the Appellant: M Dreyfus QC with Dr S C Chruches
Solicitor for the Appellant: Ian Cunliffe Legal Counsel & Strategy
Counsel for the Respondent: C M Maxwell QC
Solicitor for the Respondent: Australian Government Solicitor
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