304 84 CATCHWORDS Sales Tax - Retreader of worn tyres - Whether "manufacture" of "goods" - Sales Tax Assessment Act (No. 1), ss.3, 17, 17A. Adams v. Federal Commissioner of Taxation (1948) 8 A.T.D - con. Federal Commissioner of Taxation v. Jack Zinader Pty. Limited (1949) 78 C.L.R. 336 ~ con. Jax Tyres Pty. Limited v. Commissioner of Taxation for the Commonwealth of Australia No. G212 of 1984 Beaumont, J. 28 September 1984 Sydney. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTPY GENERAL DIVISION were ew No. G212 sf 1984 BETWEEN . JAX TYRES PTY. LIMITED Judge making order: Date order made: Where made: Flaintiff COMMISSIONER OF TAXATICN FOR THE COMMONWEALTH OF AUSTRALIA Defendant ORDER Beaument, J. 28 September 1984. Svdney. THE COURT ORDERS THAT: l. Direct the Plaintiff tc bring in short minutes of orders to give affect to these reasons. t4 Adjourn the proceedings tc a date to be fixed. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY ~~ ee v wr GENERAL DIVISION No. G2l2 of 1984 BETWEEN : JAX TYRES PTY. LIMITED Plaintiff AND: COMMISSIONER OF TAXATION FOR THE COMMONWEALTH OF AUSTRALIA Defendant ORAM: Beaumont, J. QQ DATED: 28 September 1984 REASONS FOR JUDGMENT These proceedings, originally instituted in the High Court of Australia. were remitted to this Court by order made by Deane. J. on 27 June 1984. By its amended statement of claim. the plaintiff, a retreader of tyres, seeks declaratory relief that retreaded tyres are not "qoods" within the meaning of the Sales Tax Assessment Act (No.1) or the Sales Tax Assessment Act (No.3) or the Sales Tax Act (No. 1) or the Sales Tax Act (No.3); that the operations of retreading carried on by the plaintiff are not the "manufacture" of goods by the plaintiff within the 2. meaning of the Sales Tax Assessment Act (No.1) or the Sales Tax Act (No.1) and are not goods "manufactured" in Australia within the meaning of the Sales Tax Assessment Act (No.3) and the Sales Tax Act (No.3); and that the retreadina of a tyre for another party where the plaintiff does not purchase the tyre 1s not deemed to be or to involve a "sale" by the plaintiff to the person for whom a tyre 13 50 retreaded for the purposes of the Sales Tax Assessment Act (No.1). The plaintiff carries on business in premises 1t describes as a "retread factory" 1n a Sydney suburb. In some cases, the plaintiff retreads tyres for customers and charges a fee for 1ts services; no property in the tyres passes to the plaintiff. In other cases. the plaintiff purchases worn tyres, processes them and sells them itself as "retreads". In the case of truck tyres, almost all (90-95 per centum) of the tyres retreaded by the plaintiff fall aunto the former class of case. For passenger car tyres. the plaintiff retreads tyres for customers in about the same numbers as it processes for itself with a view to sale. The processes of retreading employed by the plaintiff are known as "topcapping". "fullcapping", 'remculdinag" and "pre-curing". In the process of top- capping, new tread rubber 1s applied only to the area of the casing which normally comes into contact with the road. For 3. fullcapping, new tread rubber 1s not only applied to that area of the worn tyre casing which comes into contact with the road. but 1s extended to cover the shoulder areas as weil. In remoulding, rubber 1S removed as 15 necessary and new rubber, extending from bead to bead, 1s applied. (The pead area is that part of the tyre made of steel wires, wrapped or reinforced by ply cords and shaped to fit the rim of the wheel.) Pre-curing 1s mentioned below. For each of the aforesaid processes, the plaintiff obtains worn tyres, for both passenger and truck vehicles, from worn tyre (casing) dealers, tyre retailers and private owners, particularly truck operators. Upon its receipt at the plaintiff's factory, a tyre 13 examined externally and internally to ensure that it 1s suitable for retreading in accordance with the standards prescribed by Australian Standard Specification No. A.5.1973-1976 ain respect of "retreaded pneumatic passenger car tyres". If the casing of a tyre remains sound. 1t mav be retreaded more than once. This frequently happens in the case of truck tyres. In the retreading process, the tread surface to be treated 15 uniformly buffed. in accordance with the Australian Standard Specification, to remove all old and excess rubber and to prepare a clean suritace. Truck tyres and. in some cases, passenaer car tyres, are then sprayed with a rubber solution to ensure adhesion of tread rubber to 4. the buffed surface. The rubber is then applied-by one of two methods. In the processes of recapping, topcapping or remoulding, an orbitread machine 15 used tu apply extruded tread rubber to the casing. The rubber is extruded in the form of a continuous hot ribbon which 15 wound, in overlapping layers. around the circumferences of the casing. In the process of pre-curing, which the plaintiff uses only for retreading truck tyres, the tread rubber purchased by the plaintiff is already cured with the desired tread pattern moulded into it. A thick laver of unvulcanised rubber bonding is applied to the back of the pre-cured tread. After the application of the new tread rubber. the tyre is ready for curing. The curing processes vary, but 1t will suffice to say that they involve the application of heat and pressure to the tyre. The rubber which is applied to the tread area of a tyre 1s significantly stronger than that forming or applied to the casing, but, since casing rubber does not come into contact with the road, it does not wear as quickly as the tread area so that. as has been mentioned, 1t 415 possinle to retread a tyre more than once. At the same time. there are limits to the depth of tread which can be applied to a worn casing. During use, a tyre will build up heat which 1s directly related to tread depth: the qreater the tread depth. the greater the build up of heat witha consequent increase in the prospect of failure in the casing. 5. Although retreaded, the original tyre does not lose its identity. The retreading processes are apparently well developed and effective but I accept the evidence of Mr. Hurrell, a director of the plaintiff. that 1t 15 easy, aven for the inexperienced, to distinguish between a new tyre and a retreaded tyre. One manufacturer of truck tyres, Toya Australia Limited. specifically contemplates that a retread will be carried out as part of the framework of its warranty on the gale of a new tyre. The warranty 18 in these terms: "Toyo Australia Limited warrants the TOYO radial truck tyre casing against defects in workmanship or materials for a period of three years (36 months) from the date of manufacture or up to the buffing stage of the second recap, whichever comes first. provided that the recap has been carried out by one of TOYO's own retread factories." At least one of the States has leqislated in this area. By the Motor Traffic Pequlations 1935 (N.S.W.) (Sch.F. para.82(d)), on or after 1 January 1980, no tyre which has been treated by the process known as retreading shall be fitted to any motor car (an omnibus excerpted), unless such tyre complies with Australian Standard Specification No. A.5.1973-1976. This specification sets out Minimum requirements for the retreading ef pneumatic Passenger car tyres, and defines the performance, and dimensional and physical requirements for the retreaded tyres. The specification includes requirements for retread oO materials, limits of damage, processing, marking, and final inspection. The range of tyre referred to is that covered by Australian Standard Specification ASD31. that 1s, new pneumatic passenger car tyres and corresponding older tyres. The specification adopts the dictionary definition of retreading as "a process of reconditioning a worn tyre by topcapping, fullcapping or remoulding". The performance standard prescribed by the specification in the case of a retreaded radial ply car tyre, the most common type, 1s a maximum road speed of 135 kilometres per hour. Further, each retreaded tyre is required by the specification to be marked with the word "retread". In the case of a passenaer tyre, the average weight of rubber applied in the retreading process 15 approximately three kilogrammes. For a truck tyre, the weight 15 in the range of ten to twelve kilogrammes. In the case of truck tyres, a retread 15 approximately $200.00 cheaper than a new tyre. The retail price of a cheap radial tyre for a passenger vehicle 15 in the range of $45.00 to $50.00. The same type of tyre, when retreaded, is sold as a retread in the retail price range of $26.00 to $35.00. There 1s also a market for second-hand or used tyres. Usually, they are tyres which have not been retreaded. The general scheme of the sales tax leqislation 1s to levy sales tax onthe last wholesale sale of goods, usually by the last wholesaier to the retailer. The tax is imposed on goods which are made in, or imported unto, Australia for consumption here. Second-hand goods are not subject to tax (see Deputy Federai Commissioner of Taxation (S.A.) v. Ellis & Clark Limited (1334) 52 C.L.R. 85), By s.3(1) of the Sales Tax Assessment Act (No.1), 1930, "goods" includes commodities. but does not include: "ta) goods which have, either through a process of retailing or otherwise. qone into use or consumption in Australia: or (b) goods which are sold as second-hand goods and are manufactured exclusively or principally from qoods which - (1) have, whether alone or as parts of other goods, gone into use or consumption in Australia: and (il) in the opinion of the Commissioner, ain their condition as parts of the goods so manufactured, retain their character as goods or parts of goods which have qone into use or consumption in Australia." "Manutacture"" 15 defined to include: "(a) production; (b) the combination of parts or ingredients whereby an article or substance 13 formed 8. which is commercially distinct from those parts or ingredients, except such combination e+. 4S, i12n the opinion of the Commissioner, 1t 1s customary or reasonably practicable for users or consumers of those articles or substances to undertake ..." By s.3(4) of the Assessment Act 'No. 1), for the purposes of the Act, a person shall be deemed to have sold qoods 1%. in the performance of any contract (not being a contract for the sale of goods) under which he has received, or 1s entitled to receive, valuable consideration, he supplies qoods the property 1n which (whether as goods or in some other form) passes, under the terms of the contract, to some other person. Thus, where any person, for valuable consideration, repairs the goods of another person and, in the course of carrying cut those repairs, supplies qoods which are used in, wrought into or attached to the goods of that other person, the goods so supplied are deemed to be sold by the repairer to that other person '(see Commonwealth Sales Tax, Australian Government Publishing Service, 1970, at p.216). By s.17(1) of the Assessment Act (No. 1). the saies tax imposed by the Sales Tax Act (No. 1) 1930 shall be levied and paid upon the sale value of qoods manufactured in Australia by a taxpayer and sold by him or treated by him as stock for sale by retail or applied to his own use. By s.17A(1) of the Assessment Act (No. 1), where: 3. (a) goods have been manufactured in Australia by a person for another person ("the customer") under an agreement entered into after 20 September 1978: and (b) the qoods were manufactured in whole or in part out of materials supplied by the customer, the manufacturer of the goods shall, for the purposes of the Act, be deemed to have sold the goods to the customer at the time when the goods were delivered to the customer. or were delivered under an agreement with the customer to some other person, and the customer shall be deemed to be the purchaser of the goods. The plaintiff first submits that none of the processes of retreading tyres involves a "manufacture". Alternatively, it submits that, even i1f there 1s a manufacture, the retreads are not "goods" within the meaning of the statute. In aid of 1ts argument on the construction of the Acts. the plaintiff referred to the parliamentary history of the relevant legislation (cf. Acts Interpretation Act, 1901, 3.1S5AB). In 1ts original form. the Assessment Act (No. 1) simply defined "manufacture" as including production. as "Goods" was simply defined Ancluding commcdities. But. in 10. 1932, the Act was amended as a result of the decision of the High Court in Irving v. Munro & Sons Limited (1931) 46 C.L.R. 279. There, the defendant imported motor-cycles into Australia in cases, each case containing all the parts necessary to complete a motor-cycle. with the exception of tyres and tubes. Upon arrival at the defendant's worxs. the parts were removed from the case and re-assembled. Locally purchased tyres and tubes were fitted. It was held that the defendant was not a "manufacturer" within the meaning of the Assessment Act (No. 1). As aresult or this decision, by Act No. 39 of 1932. the definition of "manufacture" in the Act was omitted and the following definition was substituted:: "'Manufacture' includes production. and also the combination of parts or inaredients whereby an article or substance 1s formed which 1s commercially distinct from those parts or ingredients, except 3uch combination as, inthe opinion of the Commissioner, 15 customary or reasonably practicable for users or consumers of those articles or substances to undertake;". In the second reading speech on the Bill for the amendment, the Minister introducing the Biil, the Prime Minister and Treasurer, Mr. Lyons, said (Hansard. House of Representatives, 16 September 1932, at p.586): ll. "The proposed amendments, which have as their object the removal of defects and anomalies and the clarification of the law, may be briefly stated and explained as rollows: (a) Extension of the definition or *manufacture' - In consequence of a decision of the High Court. some doubt exists as to whether a person who imports or purchases fabricated parts and combines them into a distinct commercial article can be treated as a manufacturer. It 15 essential that the law should be clarified for the purpose of ensuring that the tax should fall, as intended. on the sale value of the completed article, and that the person who both fabricates and combines the parts of any commercial article should not be at a disadvantage in competition with persons who produce a similar article by a combination or purchased or imported parts." The plaintiff submits, I think correctly, that this explanation of the mischief at which the amendment was aimed supports a construction or the amendment which limits its operation to the type of case described by the Prime Minister. That class of case would not pick up a process such as retreading a worn tyre. But. as the Commissioner submits, since the definition of "manufacture" 15 framed as an inclusive one. there remains the question whether this process constitutes the manuracture of agcods in any ordinary sense (see Cohns Industries Pty. Limited v. Deruty Federal Commissioner of Taxation :1979) 79 A.T.cC. 4, 243). 12. The Assessment Act (No. 1) was further amended in 1936 after the decision of the High Court in Ellis & Clark, supra. The definition of "goods" in s$.3(1) was amended to exclude items (a) and (b) set out in the definition provision previously cited. In introducing the amending Bill in the second reading speech, the Treasurer, Mr. Casey, as he then was, said (Hansard, House of Representatives. 19 November 1936, at p.2130): "Clause 5 provides for the exemption of goods manufactured wholly or principally from second-hand materials and sold as second-hand goods. The High Court's decision that sales tax was not payable on second-hand goods did not have any application to qoods manufactured from second-hand materials. In very many cases where goods are so manufactured the second-hand raw materials lose their second-hand character in the process of manufacture, for instance, when scrap jewellery is melted down and used in the manufacture of other articles of jewellery. There is no doubt that such products are taxable. In some cases, however, the second-hand materials retain thelr second-hand character, and the product 1s sold as second-hand goods. The simplest instances of that are found where a bicvle 15 manufactured from second-hand bicyle parts or a motor car 1s produced by attaching a new body to a second-hand chassis. The Taxation Department has been advised that, in the latter cases, sales tax 1s payable on the 3ale of goods so produced. In some or those cases, however, 1t 1s almost impossible te determine whether the article 1s a manutactured article or merely repaired second-hand goods. In any case, the department 1s faced with the claim that the taxation of the article is contrary to the spirit of the High Court''s decision on second-hand goods. The attitude of the Government 1s that, in view of the exemption of second-hand goods, justice 13 satisfied by the taxation of such new material as may be used 1n the production of the article which 1s sold as second-hand qoods. The bill proposes to give effect to that attitude." In Adams v. Federal Commissioner of Taxation (1948) 8 A.T.D. 332, the taxpayer was engaged in restoring the efficiency of ineffective batteries. The batteries were dismantled and each internal compartment was completely rebullt. Part of the internal reconstruction was composed of second-hand materials, but the whole of the plates were new. The batteries were reconstructed substantially of materials supplied by the customers. The Board of Review ((1943) 11 T.B.R.D. 392) decided that the replated batteries were goods "manufactured by the taxpayer" within the meaning of s.17 of the Assessment Act 'No. 1). In argument, the taxpayer's representative referred to the retreading of tyres by way of analogy but the Board said (at p.399); "His reference to the retreading of tyres 13 in point, but it 1s adverse to the taxpayer. Practically the whole of the expense 15 represented by the cost of the materials to be combined with an otherwise practically useless old tyre and the cost of the process by which they are combined, but there 15 no Manufacture because the retreader starts with a tyre and finishes with the same _ tyre (notwithstanding that without the retreaaing 1t might have been useless). This is no doubt the basis of the decision of the Magistrate in Withers v. Wilkie's Tyre Service Co. «Local Court, Sydney, 6th August, 15. The argument was rejected (at p.334): "The exception contained in para. (a) of the definition of qoods in the amendina Act adopts the decision in Ellis & Clark's case, and the inclusion of the further exception in para. (b) enlarges the exempticn or second-hand goods. But the taxpayer does not claim exemption under para. (b). He relies on para. (a). The batteries left by customers for renovation are, at the time they are left, clearly gocds which fall within this exception. If therefore all that the taxpayer did was to perform some work on the batteries which could be fairly described as a repair, as for instance if he recharged them or supplied some minor part, 1t would be unreasonable to hold that the batteries had lost their original identity and exemption as second-hand goods. But the batteries were completely dismantled, and each internal compartment completely rebuilt. Part of this internal reconstruction was composed of second-hand materials, although the whole of the plates were new, but the alterations in the components of the batteries returned to the customers compared with their components when handed in and the work done to effect these alterations was substantial. The batteries were reconstructed substantially of Materials supplied by the customers. but a person 1S a manufacturer within the meaning of the definition uf he manufactures qoods whether or not he owns the materials out of which the goods are manufactured." In any event, Williams, J. held that the case raised only a question of fact. saying .at p.335): "The definition of 'manufacture' in the Act 15 not exhaustive. It merely states what manufacture includes. So far as 1t3 meaning 1s not defined in the Act, the word must be given its ordinary grammatical meaning at the date the Act came anto force. But the definition expressly includes the combinaticn of parts or ingredients whereby an article 1s formed which 1s commercially distinct from those parts or ingredients. This part of tne definition would appear merely to incorporate an ordinary grammatical meaning of the word which 1s to work up materials inte forms suitable for use." The plaintiff argues. aqain I think correctly, that the result in Adams may be distinguished from the present case, insofar as there can be no suggestion here that the goods were completely rebu1lit. In Federal Commissioner of Taxation v. Jack Zinader Proprietary Limited (1949) 78 C.L.R. 336, a furrier company received from customers fur garments which had become too badly worn and damaged to ke repaired, and. after removing the defective parts, by various processes, remodelled, for those customers, what was left into modern styles of coats, fur capes, fur collars, fur coats and stoles having regard to the extent, shape and nature of the available materials. The materials used by the company in remodelling were, except about five per cent of the linings, confined to those avallable from the customer's garment. If new linings were required, the customer supplied them. It was held py Dixon and Williams, JJ., Webb. J. dissenting, that tne articles which resulted from the remodelling were "qoods ' "manufactured" and sold within the meaning of the Assessment Act (No. 1) and were liable to tax under that Act. 17. Dixon, J. after referring to the statement by Darling, J. in McNicol v. Pinch £1906] 2 K.B. 352 at p.36l that "the essence of making or of manufacturing is that what 1s made shall be a different thing from that out of which it 1s made" said that the first. and possibly che decisive question in the case, was whether the qarments which resulted from the process ot remodelling were different things, that is, were different "goods" from the garments that the customer handed over (at p.343). He concluded (at p.344): "On the whole the commissioner's view appears to be the more correct. The work of the furrler 1s to use skins to form qarments. In skins he works with materials often of great value and usually of some permanence. His skill lies in the use he can make of them and the descriptions of garment he produces. Fashion, commercial usage and his customer's tastes combine to distinguish the various descriptions of garment he makes and to compel the recognization of them as separate categories of 'goods.' When he takes skins made up into one description of fur garment and produces another, he cannot be treated as having altered an existing thing without producing a new one. He has made a different article." His Honour also rejected a defence. based on the reasoning in Ellis & Clark, supra, that the remcdelled garments fell outside the scope of the legislation because they were second-hand qoods. 18. Williams. J., affirming his opinion in Adams. supra, that the question at issue was one of fact and degree, also saw no room for the application of the reasoning in Ellis & Clarx and said (at p.350): "The ordinary meaning of the vern manufacture 1s to work up materials into forms suitable for use. Where new materials are supplied there would plainly be a notional manufacture of goods within the meaning of the Act. Where old materials are supplied there would only be such a manufacture if the work done was more than a mere repair or modification of the old materials and was suchas to change the old goods into qoods of a different character. The purpose of the customer in leaving an old fur garment with the defendant 153 not to have that garment repaired or made to fit the wearer but to provide the material required for the making and fashioning of the remodelled garment. It 1S 1lmmaterial whether the customer leaves the old qarment complete as a garment or first unpicks the old garment and leaves the pieces of fur and linings with the defendant. The defendant 1s not concerned to repair or alter the old garment, 1t 1s concerned to fashion a different garment out of the serviceable Pleces of the old garment or, in other words, to work up this material into a new form sultable for use. This 15 manufacture within the ordinary meaning of the word." In my view, the reasoning in Sinader 15 decisive in the present case. When applied, that reasoning leads to the conclusion that no "manufacture" has sccurred here. The question. one of fact and degree, 15 whether a airferent thing has been produced. In my opinion, it has not. Althouaqh the tread on the tyre has been replaced, the application of the retreading processes has not produced 19. anything that 1s different in character from the worn tyre submitted to those processes (cf. Mayor of Guildford v. Brown £19157 1 K.B. 256 at p.259). It may be accepted that, in the public mind, as the Australian Standard Specification aundicates, 4 clear distinction 1S perceived between a new tyre, a retreaded tyre and a used tyre; that there 1s a distinct commercial market for retreaded tyres: and that the plaintiff carries on its retreading operations on a significant scale. Nonetheless, to pick up the dichotomy expressed in Zinader (at p.343), in its essential features, the retreading process applied by the plaintiff should be characterised as in the nature of the repair of a tyre, in the sense of its being made fit for use, rather than its remodelling into something different. To adopt the language of the Australian Standard Specification, what is here invoived is no more than the "reconditioning of a worn tyre" by one of the nominated processes. No sufficient transformation of the kind contemplated in Zinader has occurred, with the result that, for sales tax purposes, no "qoods" have been "manufactured". If it be material, such a result 1s also consistent with the explanations of the legislation in the Ministerial statements previously mentioned. The question 1s necessarily one of degree and thus one of general impression based upon a common usage of 20. erdinary language (see, @.g., M.P. Metals Ptv. Limited v. Federal Commissioner of Taxation (1968) 117 C.L.R. 631 at p-649). It 15 possible, in the present context, to imagine a case, as happened in Zinader, where a retreading process 13 applied toa worn tyre with the result that a different tyre 1S produced. For example, 1f the worn tyre 15 one Originally designed for use on a motor car but, by some retreading process, its tread 1s not only replaced but Siqnificantly widened so as to be adapted for use on, say, a tractor, it may well be that a different thing is produced 50 that "goods" would then be "manufactured". If the old tyre 1s completely dismantled and then reconstructed, a different thing may well be produced. A "manufacture" may be involved 1f the taxpayer produces something, not part or the retreading process, yet brought into existence as a separate and distinct commercial commodity or article (see Case No. R37 (1965) 16 T.B.R.D. 158 at p.161). But thece can be no suggestion that the plaintiff's operations extend to activities of this kind. Nor 1s this a case where differences in utility for some purpose can be demonstrated (see M.P. Metals, supra, at p.638). The Commissioner sought to avoid the conclusion I have reached by submitting that Zinader and the earlier authorities could be distinguished on the around that they dealt only with the physical aspect of the concept of 21. manufacture. The Commissioner invited the Court to hold that, even if there were in this case no manufacture in the physical sense. 1t 1s possible to stretch the notion of manufacture, so as to pick up a reconditioning or evena repair process, where the application of s3uch a process results in the creation of a product which, in terms of its marketability, 1s distinct from either a new tyre or a worn tyre. Although there 183 some support for the argument in the decision of the Board of Review in case B56 (1970) 70 A.T.C. 267, 1t must, I think, be rejected as inconsistent with the reasoning in Adams and in Zinader that the relevant enquiry for present purposes 1s confined to the processes of alleged manufacture rather than a broader search as to the subsequent reception of the product in the market place. In the United States also, the view has been taken that retreading of worn carcasses does not constitute the Manufacture of goods (see Skinner v. United States 8 F.Supp. 999 £19341; Zook v. Perkins 195 P.2d. 962 (19481; State Ex Rel. A.M.F. Incorporated v. Spradling 518 S.W. 2d. 58 C1974]). The Canadian courts seem to have taken a different approach. For instance, in The King v. Boultbee Limited C19383 1 D.T.c. 443, the Exchequer Court of Canada drew a distinction for sales tax purposes between the case where one retreads or repairs a tyre for an individual owner, a casual and unknown customer in some instances, and the case whece one procures used tyres 1n substantial quantities. for 22. the purpose of repairing or improving them for the purpose of selling them to the public at a profit. The conduct in the latter situation was held to constitute a manufacture. Such a test has never been suggested in any of the decisions of the High Court of Australia which are authoritative for present purposes. In any event, it is difficult. 1n principle, to understand how the scale. or, for that matter. any lack of scale, of the taxpayer's activities can bear upon the question whether what 15 produced 1s a different thing. That question must. I think, be resolved primarily by reference to what 1s done toa particular object regardless of how often it is done, even 1f the size of the taxpayer's operations may well be relevant to the different question of the meaning of "manufacturing plant" and "manufactured goods" for the purposes of the Income Tax Assessment Act, 1936 (see Ready Mixed Concrete (W.A.) Pty. Limited v. Federal Commissioner of Taxation (1971) 71 A.T.C. 4107 at p.4109). In short. since the retreading process involves no more than the repair of a product. the original identity of which 18 maintained throughout the process. no manufacture arises. I propose to arant the declaratory relist scught so as to declare that the retreaded tyres are not liabie to tax 23. in the manner contended for by the Commissioner. As argument has been foreshadowed as to the precise terms of any declaration, I will hear submissions on the point. The Commissioner must pay the plaintiff's costs of the proceedings. I make the following orders at this stage: 1. Direct the plaintiff to bring in short minutes of orders to give effect to these reasons. 2. Adjourn the proceedings to a date to be fixed. were mah Eine 22 preceding 2 wee to Ds 3 ycnscns for wi, TOL cP Tl Ls caureble 'oy -~ wan tan aa aA . a Tye c 32 Bere ee I OS bia dee Bi (prez . Arde (© Associate a7 Dated 22 seShemSd- 1964