gupe 5. CAT BB CATCHWORDS CUSTOMS - Tariffs - Categorization of imported goods - Mixture of polyols and other compounds - Polyols specifically referred to in Schedule 3 - Possible application of rule 2 of Schedule 2 -- Application of rule 3 of Schedule 2 - More specific description. Customs Tariff Act 1982 ss.17, 19, Schedules 2, 3. NSW G.528 OF 1986 RHEEM AUSTRALIA LIMITED v COLLECTOR OF CUSTOMS (NSW) Neaves, Wilcox and Burchett JJ Sydney 11 March 1988 IN THE FEDERAL COURT OF AUSTRALIA ) ) NEW SOUTH WALES DISTRICT REGISTRY ) No. NSW G.528 of 1986 ) ) GENERAL DIVISION AN APPEAL FROM THE GENERAL ADMINISTRATIVE DIVISION OF THE ADMINISTRATIVE APPEALS TRIBUNAL BETWEEN: RHEEM AUSTRALIA LIMITED Applicant AND: COLLECTOR OF CUSTOMS (NSW) Respondent CORAM: NEAVES, WILCOX and BURCHETT JJ PLACE: SYDNEY DATE: 11 MARCH 1988 MINUTES OF ORDER THE COURT ORDERS THAT: 1. The appeal be allowed. 2. The decision of the Administrative Appeals Tribunal be set aside and, in lieu thereof, it be ordered that the matter be remitted to the respondent with a direction that duty be reassessed on the basis that the goods in question fall within para.39.01.19 of Schedule 3 of the Customs Tariff Act 1982. = Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. "oa . 14 , 1 « ' : 1'. ' Bey a , a - . ' wee ' -4 got "oo ' wy - a \ 1 . e - ' ' ' rye t - we 4 "oat ' t rey, . ns ! " oy 1 ' : Bs ote , c * ' ha ' 4 r * p . 3 , ", en ' att 4 . cy ' ! " , pint he oy 1 roy ty atte a oe on ar : , \ Cag sy 1 ote . " eet . : wn ste, , -. y 1 . Y q t - « , . ss ' - ' ' . ve . ace IN THE FEDERAL COURT OF AUSTRALIA NEW_SOUTH WALES DISTRICT REGISTRY No. G 528 of 1986 wee Ew GENERAL DIVISION ON APPEAL FROM THE GENERAL ADMINISTRATIVE DIVISION OF THE ADMINISTRATIVE APPEALS TRIBUNAL BETWEEN : RHEEM AUSTRALIA LIMITED Applicant AND: COLLECTOR OF CUSTOMS (N.S.W.) Respondent CORAM: Neaves, Wilcox and Burchett JJ. DATE: 11 March 1988 REASONS FOR JUDGMENT NEAVES J. The question before the Court 1s whether the Administrative Appeals Tribunal ("the Tribunal") erred in law in determining, by majority, that certain goods, marketed commercially as "Instapak B", imported into Australia by Rheem Australia Limited ("the applicant") were properly classified within paragraph 39.01.13 in Chapter 39 of Schedule 3 to the Customs Tariff Act 1982 (Cth) ("the Act"). The Tribunal reached its conclusion by giving effect, in relation to that paragraph, to rule 2(2) of the Rules for the Interpretation of Schedule 3 set out in Schedule 2 to the Act. At the respective dates of importation of the goods in question, item 39.01 in Chapter 39 of Schedule 3 to the Act identified, as the goods to which it applied - "CONDENSATION, POLYCONDENSATION AND POLYADDITION PRODUCTS, WHETHER OR NOT MODIFIED OR POLYMERISED, AND WHETHER OR NOT LINEAR (INCLUDING PHENOPLASTS, AMINOPLASTS, ALKYDS , POLYALLYLESTERS AND OTHER UNSATURATED POLYESTERS, SILICONES)." Sub-item 39.01.1 related, inter alia, to goods falling within that classification in bulk forms. Paragraphs 39.01.13 and 39.01.19 were in the following terms: "39.01.13 - - Goods, as follows: (a) polyols, NSA, being - (i) polyester polyols; or (ii) polyhydroxy ether compounds containing not less than 50% by weight of reacted propylene oxide; (b) addition products of such polyols with isocyanates being prepolymers containing unreacted hydroxyl or isocyanate groups 39.01.19 - - Other" The effect of the letters "NSA" in paragraph 39.01.13 is to be found in sub-s.4(4) of the Act. They have no relevance to the present case. Note 6 in the notes to Chapter 39 provided: "6. In 39.01.1, 'polyols' means polyhydroxy compounds containing two or more hydroxyl groups per molecule." Rule 2(2) of the Rules for the Interpretation of Schedule 3 provided: ""(2) A reference in an item (including a reference in a sub-item, paragraph or sub-paragraph) to a material or substance shall be read as including a reference to a mixture or combination of that material or substance with another material or substance or with other materials or substances." It was agreed by the parties, and accepted by the Tribunal, that the goods imported by the applicant fell within the description in item 39.01 as being a polyaddition product and within sub-item 39.01.11. Before the Tribunal it was contended by the respondent, and denied by the applicant, that the goods fell within paragraph 39.01.13. It was common ground that, if the goods did not fall within that paragraph, they were to be classified as within paragraph 39.01.19. "Instapak B" is one of two ingredients, the other being a liquid isocyanate marketed as "Instapak A", which react together to produce a copolymer consisting of chains of polyurea and polyurethane, the resultant product being a 4. foam of very low density used as a packaging material. "Instapak B" is a mixture, in liquid form, of seven chemical compounds. It is imported in three different grades identified respectively as I.40, I.50 and I.75. The three grades have the same chemical ingredients though in varying proportions. This results in differences in the densities of the foams produced by the interaction of the particular grade of "Instapak B" with the corresponding grade of "Instapak A". Of the seven chemical compounds in the mixture, three are properly described as polyols, that is to say, polyhydroxy compounds containing two or more hydroxyl groups per molecule (see note 6 to Chapter 39). Those compounds are also properly described as polyhydroxy ether compounds containing not less than 50% by weight of reacted propylene oxide (see paragraph 39.01.13(a)(i1)). Of the remaining four compounds, one is a very common substance which, for reasons of confidentiality, is referred to in the joint reasons for decision of the majority of the Tribunal as "the 'X' compound"; another is a monol described in the material before the Tribunal as an emulsifier or, perhaps more accurately, as a coupling agent; the third is referred to as a blowing agent; and the fourth as a catalyst/surfactant/stabiliser. The members of the Tribunal who comprised the majority approached the question of correctly classifying 5. "Instapak B" by considering whether, in the light of the scientific evidence before them, the product was properly described as a polyol within paragraph 39.01.13(a)(ii). They assayed this task by considering whether the polyols in the mixture gave "Instapak B" its essential character. That they did so was the proposition for which the respondent contended. The applicant, on the other hand, denied that proposition and, while conceding the importance of the polyols, asserted that what gave the mixture its essential character was the X compound, that compound being, so it was submitted, of far greater significance than any of the other compounds in the mixture, including the polyols. The majority of the Tribunal rejected the proposition that the chief characteristic of "Instapak B" lay in the percentage of the X compound contained in the mixture and that conclusion was not challenged before the Court. The majority of the Tribunal were also of opinion that, although the polyols were essential ingredients of, and were components in the formation of, polyurethane chains when ""Instapak A" and "Instapak B" reacted, the presence of the polyols did not result in ""Instapak B" being properly described as falling within the words which appear in Paragraph 39.01.13(a)(ii). They went on to find, however, that it was proper to apply rule 2(2) of the Rules for the Interpretation of Schedule 3. Giving effect to that provision, the majority considered it proper to describe "Instapak B" as being polyols of the description set out in 6. paragraph 39.01.13(a)(ii) mixed with other materials or substances. The majority of the Tribunal did not find it necessary to consider the provisions of rule 3 of the Rules for the Interpretation of Schedule 3 as the occasion for the application of that rule, namely that the goods in question fell within two or more items, two or more sub-items of an item, two or more paragraphs of a sub-item or two or more sub-paragraphs of a paragraph, did not arise. The substantial ground of the appeal to this Court by the applicant is whether rule 2(2) of the Rules for the Interpretation of Schedule 3 had any application to paragraph 39.01.13. That is the matter to which the notice of appeal is directed and it is the issue which counsel for the applicant opened when the appeal was called on for hearing. On that issue, I am satisfied that the Tribunal did not fall into error. The reasons for judgment of Wilcox J., which I have had the advantage of reading, set out the submissions advanced on behalf of the applicant in support of the proposition that rule 2(2) did not apply to paragraph 39.01.13 and the reasons why, in his Honour's view, those submissions should not he accepted. I agree with that conclusion and with the reasons his Honour has expressed. It follows that, in my view, the Tribunal was correct in regarding the language of paragraph 39.01.13, read with rule 2(2), as providing a proper description of the goods imported by the applicant. During the course of the hearing it was suggested to counsel for the applicant that, even if "Instapak B" fell within the language of paragraph 39.01.13 read with rule 2(2), it might also be said to fall within the language of paragraph 39.01.19 read with that rule. This suggestion, which was embraced by counsel, though I think it is fair to say with a distinct lack of enthusiasm, was based on the finding of the Tribunal that the ingredient of the mixture to which I have referred as the emulsifier or coupling agent is a polyaddition product and the further circumstance that, if that ingredient of the mixture were imported on its own, it would properly be classified under paragraph 39.01.19. It was then suggested that "Instapak B" may properly be classified under paragraph 39.01.19 read with rule 2(2) as being that emulsifier or coupling agent mixed with other materials or substances. In my opinion, it is not a correct approach to the proper classification for the purposes of the Act of a product which is a mixture to treat the importation of the mixture as the importation of each of its constituent components, to examine the provisions of Schedule 3 to identify an item, sub-item, paragraph or sub-paragraph that would apply to each of those components if that component were the subject of a separate and independent importation and then to apply rule 3 of the Rules for the Interpretation of Schedule 3 to determine which of the items, sub-items, 8. Paragraphs or sub-paragraphs so identified is to apply. There is, in my view, an initial question to be determined, namely whether it is appropriate to describe the goods imported as consisting of a particular component mixed with other materials or substances. It is only if the goods can properly be so described that it is appropriate to have regard to the item, sub-item, paragraph or sub-paragraph in Schedule 3 which applies to that component. It may he accepted that there will be cases in which a particular mixture is properly described as component A mixed with other materials or substances (including component B) and equally properly as component 5B mixed with other materials or substances (including component A). In such a case there are two equally applicable items and the question which provision applies is to be resolved by resort to rule 3 of the interpretative rules. But unless two items, sub-items, Paragraphs or sub-paragraphs are identified as being applicable by reason that each description properly identifies the mixture, rule 3 can have no application. To take an example, if an imported mixture contains as one of its ingredients a colouring agent, it would not, in my view, be appropriate to describe the goods as being the colouring agent mixed with other materials or substances and to classify the mixture under an item, sub-item, Paragraph or sub-paragraph which would be applicable if the colouring agent had itself been the subject of importation. Similarly, in the present case, it would be inappropriate to 9. treat "Instapak B" as being the compound described as the blowing agent mixed with other materials or substances or, alternatively, the compound described as the catalyst/surfactant/stabiliser mixed with other materials or substances. My understanding of the scientific material before the Tribunal is that, while the compound described as the emulsifier or coupling agent, which comprises 15% by weight of the mixture, is functional in that it reacts with "Instapak A" to form polyurethane chains additional to those formed by the reaction with "Instapak A" of the polyols, its primary function 1s to facilitate the reaction with "Instapak A" of the polyols and the "X" compound. It does so - in combination with another of the components which, although described as a blowing agent, also acts as a solvent - by causing the various reactive ingredients, which do not readily mix, to form a solution by dissolving into one another. It is thus a component of the mixture which is subordinate to the polyols and the "X" compound. There is nothing in the material placed before the Tribunal which, to my mind, gives any support to the proposition that "Instapak B" is properly described as the emulsifier or coupling agent mixed with other materials or substances. I do not understand that to have been contended by the applicant before the Tribunal and certainly the Tribunal made no finding to that effect. . : 10. . In my opinion the Tribunal was correct in concluding that no occasion had arisen for the application of rule 3 of the Rules for the Interpretation of Schedule 3 of the Act. I would dismiss the appeal with costs. I certify that this and the preceding 9 pages are a true copy of the Reasons for Judgment herein of the Honourable Mr Justice Neaves. Associate Dated: 11 March 1988 IN THE FEDERAL COURT OF AUSTRALIA ) ) NEW SOUTH WALES DISTRICT REGISTRY ) No. NSW G.528 of 1986 ) ) GENERAL DIVISION AN APPEAL FROM THE GENERAL ADMINISTRATIVE DIVISION OF THE ADMINISTRATIVE APPEALS TRIBUNAL BETWEEN: RHEEM AUSTRALIA LIMITED Applicant AND: COLLECTOR OF CUSTOMS (NSW) Respondent CORAM: NEAVES, WILCOX and BURCHETT JJ PLACE: SYDNEY DATE: 11 MARCH 1988 REASONS FOR JUDGMENT WILCOX J: The issue in this appeal is whether the Administrative Appeals Tribunal erred in law in deciding to affirm a decision of the respondent, the Collector of Customs (New South Wales), as to the proper classification, under the Customs Tariff Act 1982, of certain goods imported from the Netherlands by the applicant, Rheem Australia Limited. The decision of the Tribunal was that of a majority: MrcCJ Bannon OC (Deputy President) and Mr G R Taylor (Member). Mr B J McMahon (Senior Member) dissented. The subject goods are in liquid form. They consist of a mixture of seven substances including three polyols being compounds derived from four ingredients. The goods are sold under the trade description "Instapak B". They come in three different varieties, sold as 1.40, 1.50 and I.75, in each of which the proportions of polyhydroxy ether compounds and other compounds vary. In summary, Instapak B is a mixture of several chemical compounds of which three are polyols. Instapak B reacts with another product, called Instapak A, to produce a complex of polyurethane foams and polyurea foams used as a packaging material. Section 19 of the Customs Tariff Act applies to goods, other than goods the produce of certain specified countries. It provides that duty in respect of such goods shall be ascertained by reference to the rate of duty set out in column 3 in the tariff classification in Schedule 3 of the Act that applies to the goods. Section 17 applies, for the interpretation of Schedule 3, the rules set out in Schedule 2. Chapter 39 of Schedule 3 1s entitled: "Artificial resins and plastic materials, cellulose esters and ethers; articles thereof". It was common ground before the Tribunal that Instapak B fell into this category. Moreover, it was agreed that the goods fell within item 39.01, which includes condensation, polycondensation and polyaddition products, and sub-item 39.01.1, which covers "bulk forms". But there was a contest whether the goods fell within para.39.01.13 or para.39.01.19. The question turned upon the possible application of the interpretation rules set out in Schedule 2. Column 2 of para.39.01.13 describes the goods falling within 1ts ambit as follows: "-- Goods, as follows: (a) polyols, NSA, being - (1) polyester polyols; or (1i) polyhydroxy ether compounds containing not less than 50% by weight of reacted propylene oxide; (b) addition products of such polyols reacted with isocyanates, containing unreacted hydroxyl or isocyanate groups and, normally, further reacted through these hydroxyl or isocyanate groups." The goods covered by para.39.01.19 are stated as "Other", that is all goods falling within sub-item 39.01.1 which are not within the description of an earlier paragraph. At the hearing before the Tribunal, it was agreed between the parties that each of the polyols contained in Instapak B were polyhydroxy ether compounds containing not less than 50% by weight of reacted propylene oxide; that is, they were polyols of the type described in sub-para.(a)(11) of para.39.01.13. Notwithstanding this, it was clear that -- unless by virtue of Schedule 2 -- the goods would not fall within para.39.01.13. The reason was that note 6 to Chapter 39 defines "polyols", for the purpose of sub-item 39.01.1, as meaning "polyhydroxy compounds containing two or more hydroxyl groups per molecule". It was said that this definition limits the term to goods entirely composed of polyhydroxy compounds, whereas Instapak B is a mixture of such compounds and of other substances. The dispute before the Tribunal turned upon the question whether rule 2(2) of Schedule 2 applied. Rule 2 reads: "2. (1) A reference in an item (including a reference in a sub-item, paragraph or sub-paragraph) to goods of a particular kind shall be read as including a reference to-- (a) goods that are imported in an incomplete or in an unfinished state but have the essential character of goods of that kind; and (b) goods that are imported in an unassembled or in a disassembled state but, if assembled, would be goods of that kind or would be goods to which paragraph (a) applies. (2) A reference in an item (including a reference in a sub-item, paragraph or sub-paragraph) to a material or substance shall be read as including a reference to a mixture or combination of that material or substance with another material or substance or with other Materials or substances. (3) A reference in an item (including a reference in a sub-item, paragraph or sub-paragraph) to goods consisting of a specified material or substance shall be read as a reference to goods consisting wholly or partly of that material or substance. (4) For the purpose of ascertaining whether an item, sub-item, paragraph or sub-paragraph applies to goods that consist of more than one material or substance, regard shall be had to the principles set out in rule 3." Rule 3 goes on to provide for cases where, for any reason, goods fall within two or more items, two or more sub-1tems, or two or more paragraphs. Relevantly it provides: "3. (1) Where, for any reason, goods fall within 2 or more items, 2 or more sub-items of an item, 2 or more paragraphs of a sub-item or 2 or more sub~paragraphs of a paragraph, the item, sub-1tem, paragraph or sub-paragraph, as the case may be, that applies to the goods shall, subject to sub-rule (3), be ascertained in accordance with the following principles: (a) (b) (c) If one of the items, sub-items, paragraphs or sub-paragraphs, as the case may be, provides a more specific description of the goods than any other of the items, sub-items, paragraphs or sub-paragraphs, that first-mentioned item, sub-item, paragraph or sub-paragraph, as the case may be, applies to the goods. If-- (i) the 1tem, sub-item, paragraph or sub-paragraph that applies to the goods cannot be ascertained in accordance with paragraph (a); (ii) the goods are-- (A) mixtures; (B) composite goods consisting of different materials or made up of different components; or (C) put up in sets; and (iii) one material or component gives to the goods their essential character, the goods shall be taken to consist of that material or component. If the item, sub-item, paragraph or sub-paragraph that applies to the goods cannot be ascertained in accordance with paragraph (a) or paragraph (b) the item, sub-item, paragraph or sub-paragraph, as the case may be, that applies to the goods 1s that item, sub-item, paragraph or sub-paragraph that occurs last in Schedule 3 among those items, sub-items, paragraphs or sub-paragraphs, which equally merit consideration when determining the item, sub-item, paragraph or sub-paragraph, as the case may be, that applies to the goods." The Collector argued that rule 2(2) applied to this case. The subject goods contained three polyols, each of which -- considered separately -- answered the description contained in para.39.01.13(a)(11). Each of those polyols was in a mixture with other ingredients, consisting partly of other polyols falling within para.39.01.13(a)(ii) and partly of compounds not falling within that paragraph. The extension effected by rule 2(2) therefore applied, the Collector said. The reference in para.39.01.13 to polyols, of a particular description, was extended by rule 2(2) to include a mixture of that polyol, and each of them, with other materials. The majority of the Tribunal, in essence, accepted this argument and held that Instapak B fell within para.39.01.13. In the present appeal the applicant challenges the majority view, arguing that this view errs in law because it misconstrues Schedule 2. An error of construction of the Schedule would, of course, be an error of law; as indeed is the question whether goods, fully described, fall within a particular provision of Schedule 3: see Peacock v_ Zyfert (1983) 48 ALR 549 at pp.506, 564. In argument before us counsel for the applicant adopts the dissenting opinion of Mr McMahon. Mr McMahon thought that, for the respondent to succeed, 1t would be necessary to read the words "shall be read as including a reference to" as being the equivalent of "shall be read as meaning". Mr McMahon commented upon the progression of steps in the interpretation rules and stated that he would not expect to find a deeming provision so early in that progression. Counsel elaborates on this approach by calling attention to a difference between the language used in rule 2 and that of rule 3. Whereas rule 2 speaks of a reference to an item being "read as a reference" to other goods, rule 3 says that particular goods "shall be taken" to consist of other goods. With respect, I do not share the view expressed by Mr McMahon. Whether it be called a deeming provision or not, the clear intention of rule 2(2) is to extend the categories of goods included within particular items, sub-items and paragraphs in Schedule 3. Presumably the rationale of rule 2(2) is that the duty rate for particular goods ought not to be affected by the fact that they happen to be in an admixture or combination with some other material. Of course, the fact that the imported goods constitute a mixture means that those same goods may also fall within some other category in Schedule 3; a possibility which exists in any event because of overlapping descriptions in that Schedule. But this possibility is recognized by rule 2(4), and is addressed by rule 3, of Schedule 2. The whole purpose of rule 3 is to deal with cases where, for whatever reason, particular goods fall into more than one category. Counsel for the applicant submits that rule 2(2) can have no application because Instapak B, considered as a product, does not contain "not less than 50% by weight of reacted propylene oxide". But this submission misunderstands the application of rule 2(2). The sub-rule applies to goods constituting a mixture or combination, one of the ingredients of which complies with a description in a particular item, or sub-item or paragraph. The sub-rule then extends the reference in the Schedule so as to include the mixture or combination. It is not necessary to the application of rule 2(2) that the mixture or combination itself fall within the description, or any description, in Schedule 3. This would be an unlikely event and, were it to happen, rule 2(2) would be unnecessary. There would already be available a relevant category in Schedule 3. The conclusion that, by force of rule 2(2), Instapak B falls within para.39.01.13 does not end the matter. Although paras.39.01.13 and 39.01.19, in their unextended form, are mutually exclusive, there may be cases in which rule 2(2) will have the effect of putting a particular substance into both sub-items. Reading in the words of rule 2(2), para.39.01.19 refers to polyaddition products in bulk form, other than those for which a rate of duty has been specified in the preceding paragraphs of sub-item 39.01, including a mixture or combination of such a product with another material or substance or with other materials or substances. In the case of a mixture of two products, one within para.39.01.13 and one not within any of the preceding paragraphs of sub-item 39.01.1, the goods will fall within both para.39.01.13 and para.39.01.19. In the present case, as the Tribunal found, one of the ingredients in the mixture which is Instapak B 1s a polyaddition product which -- considered alone -- does not fall within the description in para.39.01.13. This product is a compound with only one hydroxyl grouping. It follows that, if the goods the subject of classification consisted only of this substance, the goods would fall within para.39.01.19. As the goods actually falling for classification are a mixture of this substance and other substances, the effect of rule 2(2) is to put those goods, subject to rule 3, into that same paragraph, that is para.39.01.19. The proposition that the subject goods, subject to resort to rule 3 for final classification, fall within both para.39.01.13 and para.39.01.19 may be illustrated by a more homely example used during argument before us. Assume that there was a sub-item in Schedule 3 described merely as "nuts" with a paragraph reading "brazil nuts" and a later paragraph reading "other". In such a case the first paragraph, by force of rule 2(2), would be expanded to cover "a mixture or combination of brazil nuts with another material or substance". The second paragraph, by the same sub-rule, would be expanded to refer to "a mixture of other nuts" -- that is nuts other than brazil nuts -- "with another material or 10. substance". Assume then the importation of an admixture of brazil nuts and peanuts, peanuts not being referred to by name in the Schedule. The goods would fall within the first paragraph, as being an admixture of brazil nuts with the innominate peanuts, and also within the second paragraph, as being an admixture of innominate peanuts -- which are nuts other than brazil nuts -- with another substance, namely brazil nuts. In such a case rule 3 would need to be used to determine the appropriate classification. In the same way, it is necessary to refer to rule 3 to determine the appropriate classification of Instapak B. The majority of the Tribunal referred to rule 3 but they did not find 1t necessary to apply it in reaching their ultimate decision. This was because of the view they took -- a view which seems to reflect the argument before them -- that paras.39.01.13 and 39.01.19 were necessarily mutually exclusive. If the proper application of rule 3 involved any undetermined question of fact, a difficulty would arise in this Court finally resolving the issue between the parties. The case would have to go back to the Tribunal for the making of appropriate findings of fact. However, as I see the matter, this difficulty does not arise. The first principle enunciated by rule 3 is, relevantly, that if one paragraph provides "a more specific description of the goods" than a competing paragraph then that first paragraph applies to the goods. For the reasons spelled out by Burchett J, neither paragraph provides a more specific ll. description of the goods than the other. The second principle in rule 3 applies in a case in which one material or component gives to the goods their essential character. The majority of the Tribunal examined this question. They found "that 1t cannot be properly asserted that the polyols give the mixture its essential character". Although there was no express finding in relation to the other polyaddition product, 1t is implicit in the Tribunal's discussion of essential character that it did not regard this product as determining the essential character of the goods. So the matter must be determined by reference to the rule of last resort, embodied in rule 3(c): the applicable paragraph 1s the one which, out of the competing paragraphs, occurs last in Schedule 3. In this case that is para.39.01.19. The majority of the Tribunal erred in law, both in declining to apply rule 3 of Schedule 2 and, upon the basis of their findings as to fact, in determining the appropriate classification of the subject goods. The decision of the Tribunal ought to be set aside and the matter remitted to the respondent with a direction that duty be reassessed on the basis that the goods in question fall within para.39.01.19. The appellant succeeds in its appeal, but upon a basis that was not argued in the Tribunal and but fleetingly before us. It seems to me quite probable that, but for the erroneous view pressed by the appellant ~- that para.39.01.13 was, aS a matter of construction excluded from consideration -- the analysis set out above would have been made by the 12. Tribunal; in which event the appeal to this Court would not have been necessary. Under the whole of the circumstances the rs appropriate course 1s to make no order as to costs. I certify this and the eleven (11) preceding pages to be a true copy of the Reasons for Judgment of his Honour Justice Wilcox. Associate Cm Date: 11 March 1988. Counsel for the Applicant: Solicitors for the Applicant: Counsel for the Respondent: Solicitors for the Respondent: Date(s) of hearing: Mr C A Sweeney Westgarth Baldick Mr P S Hastings Australian Government Solicitor 3 June 1987 IN THE FEDERAL COURT OF AUSTRALIA ) ) NEW SOUTH WALES DISTRICT REGISTRY ) No. G.528 of 1986 ) ) GENERAL DIVISION ON APPEAL FROM THE GENERAL ADMINISTRATIVE DIVISION OF THE ADMINISTRATIVE APPEALS TRIBUNAL BETWEEN: RHEEM AUSTRALIA LIMITED Applicant COLLECTOR OF CUSTOMS (NSW) Respondent CORAM: Neaves, Wilcox & Burchett JJ. PLACE: Sydney DATE: 11 March 1988 REASONS FOR JUDGMENT BURCHETT J. This appeal concerns the construction and application of provisions of the customs tariff in the light of the rules for its interpretation given effect by s.17 of the Customs Tariff Act 1982 ("the Act"). The applicant is the importer of drums of a mixture known as Instapak B produced, in some instances, in the Netherlands and, in other instances, in the United States of America. Customs duty having been assessed on the footing that Instapak B fell within tariff provision 39.01.13(a)(ii), and not within 39.01.19 as claimed by the applicant, the applicant sought a review by the Administrative Appeals Tribunal, which, by 2. majority, affirmed the departmental decision. The applicant now appeals to the Court, but, in doing so, is of course limited to questions of law. It is convenient, first, to set out the relevant tariff provisions as contained in Schedule 3 to the Act. They are: "Column 1 Column 2 Column 3 Column 4 Reference General Special no. Goods rate rate 39.01 * CONDENSATION, POLYCONDENSATION AND POLYADDITION PRODUCTS, WHETHER OR NOT MODIFIED OR POLYMERISED, AND WHETHER OR NOT LINEAR (INCLUDING PHENOPLASTS, AMINOPLASTS, ALKYDS, POLYALLYL ESTERS AND OTHER UNSATURATED POLYESTERS, SILICONES): 39.01.1- Bulk forms; waste and scrap: 39.01.13--Goods, as follows: 203% DC: Free (a) polyols, NSA, being - (i) polyester polyols; or (11) polyhydroxy ether compounds containing not less than 50% by weight of reacted propylene oxide; (b) addition products of such polyols with isocyanates being prepolymers containing unreacted hydroxyl or isocyanate groups 39.01.19--Other 23% DC:Free CAN: Free" In reading these provisions, it is necessary to bear in mind that the letters "NSA", as appears from s.4(4) of the Act, indicate that the goods described shall be taken not to include 3. any goods referred to in a preceding paragraph of the sub-item. Neither party in this case suggests that, in fact, there is any material reference in any preceding paragraph. noted, and this is relevant to the present case, Chapter 39 provides: "6. In 39.01.1, 'polyols' means polyhydroxy compounds containing two or more hydroxyl groups per molecule." Section 17 of the Act enacts certain interpretation which: "have effect for the purpose of ascertaining - (a) within which item or items any goods fall and, if the goods fall within 2 or more items, which one of those items applies to the goods; (c)' if the sub-item that applies to the goods is divided into paragraphs - within which of those paragraphs the goods fall and, if the goods fall within 2 or more of those paragraphs, which one of those paragraphs applies to the goods " Rule 1(2) provides: "For the purpose of ascertaining whether goods fall within an item, sub-item, paragraph or sub-paragraph or whether an item, sub-item, paragraph or sub-paragraph applies to goods, regard shall, subject to sub-rules (3), (4) and (5), be had to the terms of items (including sub-items, paragraphs and sub-paragraphs) and of notes to Divisions and Chapters and, except where those terms otherwise require, to rules 2, 3 and 4." rules It should also be that note 6 to of 4. The reference in that sub-rule to sub-rules (3), (4) and (5) is a reference to provisions that, for the purpose of ascertaining whether the goods fall within an item, regard shall not be had to the terms of any sub-item; similarly that with reference to a sub-item regard shall not be had to the terms of any paragraph; and again that with reference to any paragraph regard shall not be had to the terms of any sub-paragraph. In other words, the reader is commanded to stop at the level of specificity at which the problem is encountered, and not seek enlightenment from the more detailed subdivisions which follow. These rules do not work in reverse. It is clear from the terms of rule 1(2), and is indeed implicit in the limited ban imposed by sub-rules (3), (4) and (5), that regard is to be had to the terms of other provisions at the same level of specificity or at an earlier and more general level. Another matter which emerges from a consideration of rule 1(2) is that regard 1s to be had "except where those terms {1.e. the terms of the items, sub-items, paragraphs' and sub-paragraphs to which regard may be had) otherwise require, to rules 2, 3 and 4." There is thus an express indication that rules 2, 3 and 4 will not necessarily apply. When they do apply, they do so "for the purpose of ascertaining whether goods fall within" an item etc. "or whether (an item etc.) applies to goods". They do not apply for any other purpose. That, of course, is in accordance with the limited effect given to the rules by s.17 of the Act. 5. The portions of rules 2, 3 and 4 which are relevant to the present appeal are sub-rules (2), (3) and (4) of rule 2 and sub-rule (1) of rule 3. It is agreed by the parties that sub-rule (3) of rule 3 is not applicable. The relevant provisions to which I have referred are as follows: "2(2) A reference in an item (including a reference in a_ sub-item, paragraph or sub-paragraph) to a material or substance shall be read as including a reference to a mixture or combination of that material or substance with another material or substance or with other materials or substances. 2(3) A reference in an item (including a reference in a sub-item, paragraph or sub-paragraph) to goods consisting of a specified material or substance shall be read as a reference to goods consisting wholly or partly of that material or substance. 2(4) For the purpose of ascertaining whether an item, sub-1tem, paragraph or sub-paragraph applies to goods that consist of more than one material or substance, regard shall be had to the principles set out in rule 3. 3.(1) Where, for any reason, goods fall within 2 or more items, 2 or more sub-items of an item, 2 or more paragraphs of a sub-item or 2 or more sub-paragraphs of a paragraph, the item, sub-item, paragraph or sub-paragraph, as the case may be, that applies to the goods shall, subject to sub-rule (3), be ascertained in accordance with the following principles: (a) If one of the items, sub-1tems, paragraphs or sub-paragraphs, as the case may be, provides a more specific description of the goods than any other of the items, sub-items, paragraphs or sub-paragraphs, that first-mentioned item, sub-item, paragraph or sub-paragraph, as the case may be, applies to the goods. (b) If - (1) the item, sub-item, paragraph or sub-paragraph that applies to the goods cannot be ascertained in accordance with paragraph (a); (ii) the goods are - (A) mixtures; (B) composite goods consisting of different materials or made up of different components; or (C) put up in sets; and (111) one material or component gives to the goods their essential character, the goods shall be taken to consist of that material or component. (c) If the item, sub-item, paragraph or sub-paragraph that applies to the goods cannot be ascertained in accordance with paragraph (a) or paragraph (b) the item, sub-item, paragraph or sub-paragraph, as the case may be, that applies to the goods is that item, sub-item, paragraph or sub-paragraph that occurs last in Schedule 3 among those items, sub-items, paragraphs or sub-paragraphs, which equally merit consideration when determining the item, sub-item, paragraph or sub-paragraph, as the case may be, that applies to the goods." Instapak B consists of a mixture of eight substances, all of which are compounds. The parties were agreed that the mixture was to be classified as a polyaddition product in bulk form, and that it fell either (as the respondent contended, and the majority of the Administrative Appeals Tribunal found) within paragraph 39.01.13 or (as the applicant contends) within paragraph 39.01.19. The basis on which it was said by the respondent to fall within paragraph 39.01.13 was that the mixture contained four polyols, as defined in note 6 of the chapter notes, which had not previously been specified and were polyhydroxy ether compounds containing not less than 50% by 7. weight of reacted propylene oxide. It was then said that rule 2(2) of the interpretative rules applied to require the paragraph to be read as including a reference to a mixture of the polyols with other materials or substances. Despite the terms of rule 2(4), the respondent contended that it was unnecessary to look further, and that no part of rule 3 was applicable. This contention was based on the proposition that, once rule 2(2) enabled the mixture to be regarded (contrary to the fact) as a polyol within paragraph 39.01.13, however small the proportion of polyol in it might be, the mixture could not fall within paragraph 39.01.19, since it could not be regarded as a polyaddition product in bulk form, other than the previously specified polyaddition products, just because it had to be regarded as a polyol specified in paragraph 39.01.13. (Cf. Markell v. Wollaston (1906) 4 C.L.R. 141.) According to the respondent's argument, although rule 2(4) is expressed to apply generally to "goods that consist of more than one material or substance", there is a great gulf fixed between cases involving mixtures containing substances referred to, in different provisions at the same level of the tariff, by the use of any form of words except the word "other", and those cases where one of the substances is referred to by the use of the word "other". In cases of the second type, however clearly an application of rule 3 would demonstrate that the mixed goods should be characterized by reference to the other ingredient, the description which does not employ the word "other" must prevail. As was pointed out in argument, this would mean that if the tariff contained an item "Nuts", with sub-items mentioning 8. various kinds of nuts by name, including brazil nuts but not including macadamia nuts, ending with a sub-item "other", a consignment of mixed nuts containing 10% of brazil nuts and 90% of macadamia nuts would have to be regarded, for tariff purposes, as a consignment of brazil nuts. This is a conseguence which I cannot believe the legislature intended. It is, however, a consequence which may have been accepted by the majority of the Administrative Appeals Tribunal, though, inconsistently with the argument, it did examine the question, raised by a combination of rule 2(4) and rule 3(1)(b), whether the polyols in the mixture gave to the goods "their essential character". It seems to me that it is not possible to decide the present appeal without confronting this issue. For it was accepted at the hearing of the appeal, having regard to an express finding of the Administrative Appeals Tribunal, that the mixture auncluded a polyaddition product which it was not suggested fell within any of the paragraphs other than 39.01.19. Though it was a polyol in the language of chemists, it contained only one hydroxyl group per molecule, thus failing to meet the definition imposed by note 6 of the chapter notes for a polyol within paragraph 39.01.13. It follows that, unless rule 2(4) is inapplicable as the respondent's argument requires, it is necessary to resort to rule 3 to select between the two paragraphs in chapter 39 each of which embraces an ingredient or ingredients of the mixture, and therefore under rule 2(2) includes a reference to it - that is, unless the word "other" is necessarily excluded from application just because rule 2(2) makes paragraph 39.01.13 applicable. In my opinion, the respondent's argument involves a fundamentally erroneous approach to the reading of Schedule 3 to the Act in which chapter 39 appears. Words such as "other", in the ordinary use of language, only obtain their meaning from the context in which they are used. They faithfully mirror that context. Draftsmen inevitably use such a word in that context and with the meaning it conveys. But when, for a particular purpose, an artificial meaning is introduced into the context by such a provision as rule 2(2), 1t would be very dangerous to allow that artificial meaning, introduced for that purpose, to distort the reflected meaning of the word "other" for all purposes. An artificial meaning should be confined to the purpose it was intended to serve. Particularly is this so with provisions of inclusion. A recent example is provided by the decision of the House of Lords in Coltman v. Bibby Tankers Ltd. {1987] 3 W.L.R. 1181, where even a general inclusive definition, not (as in the present case) an inclusion limited to a particular situation, was not allowed to distort the proper meaning of the substantive provision. The question is as to the meaning of the word "other" in paragraph 39.01.19 ~- other than what? No ordinary reader would fail to read the word as describing goods falling within the sub-item other than those described in the preceding paragraphs. That is how the word "other" appearing in sub-item 96.01.9 was read by the Administrative Appeals Tribunal in OES Holdings Pty Limited v. Collector of Customs (Mr. Hall, Senior Member, Mr. Sinclair, Member, Mrs. Hallowes, Member, unreported, 11 October 10. 1982), and how the word "other" was read in a comparable European tariff provision in Past & Co. KG v. Hauptzollamt Freiburg (1974) 1 C.M.L.R. 400. In Canada, the tariff provision in question in Sealed Air of Canada Ltd. v. The Deputy Minister of National Revenue for Customs and Excise (which, interestingly, concerned a product there referred to as "Instapak 40B") was worded not simply "other" but "all other goods", which might be thought to point rather more clearly to the goods previously listed, though in my opinion the meaning 1s the same. The respondent's argument requires that the word "other" be read as meaning, not simply "other than those goods previously described", but also "other than any mixed goods which might be deemed by virtue of interpretative rule 2(2) to be embraced by any of the foregoing provisions". I think this is to misuse the deeming rule. Rule 1(2) makes 1t clear that the succeeding rules are to be utilized "for the purpose of ascertaining whether goods fall within" an item etc., which is quite a different purpose from using the rules to construe the meaning of an item. Section 17 of the Act does not give the rules any general effect beyond that asserted by Rule 1(2); indeed, it limits their effect in the same way as does that rule. The rules are not rules of construction, but are rules extending or governing' the application of the tariff provisions in particular situations. If rule 2(2) should be treated as a rule of construction or a definition provision, authority would still be against substituting the definition for the expression defined so as to affect the syntax of the part of the tariff following the substituted words: No. 20 Cannon Street Ltd. v. Singer & ll. Friedlander Ltd. [1974] Ch. 229 at 239-240, a decision of Megarry d. Furthermore, the first requirement of rule 1(2) is to have regard to the terms of the items, sub-items, paragraphs and sub-paragraphs themselves; and "except where those terms otherwise require" to the succeeding rules. The terms of a series of paragraphs describing goods falling within a general heading, followed by a paragraph using the single word "other", seem to me to require the word to be understood in the sense I have already stated, and not as would be required by a reading into paragraph 39.01.13 of the words of rule 2(2). There is no suggestion in rule 2(2) and (4) of an exception in the case of a provision of the tariff which uses the word "other". No reasonable basis has been urged upon which Parliament might be supposed to have wished to create such an exception. On the contrary, its creation would have introduced into a comprehensive system, aimed at establishing rational tariff classifications for mixtures, an exception that would operate arbitrarily to exclude a classification which, in a particular case, might clearly accord with reality. It does not seem to me that the logic of a deeming provision, inserted for a particular purpose, requires the construction contended for. On the contrary, there is high authority that such a statutory fiction should be given only the effect that 1ts purpose demands: Hill v. The East and West India Dock Company [1884] 9 A.C. 448 at 456, 458; Muller v. Dalgety & Co. Limited [1909] 9 C.L.R. 693 at 696; and see Fleet Motor & General Insurance Co. (Aust) Pty Ltd v. Tickle [1984] 1 N.S.W.L.R. 210. But even if the logic of the provision did support the respondent, I would apply the dictum of 12. Dixon C.J. 1n Commissioner for Railways (NSW) v. Agalianos (1955) 92 C.L.R. 390 at 397: "(T)he context, the general purpose and policy of a provision and its consistency and fairness are surer guides to its meaning than the logic with which it is constructed." What the respondent's argument really requires is that the consistent and fair policy of attributing the most appropriate classification to goods should be distorted by taking a statutory fiction created to solve a particular problem only, and arbitrarily applying it in an entirely new way. That sort of transposition is normally only found in musical comedy, where, for instance, one is delighted by Gilbert's dexterity in making the fiction that the emperor's word was law the justification for a lie that hid real disobedience to the imperial command: "Your Majesty says, 'Kill a gentleman' ... . Consequently, that gentleman is as good as dead - practically, he is dead - and if he 1s dead, why not say so?" (The Mikado, Act II). The original decision the Administrative Appeals Tribunal was reviewing differentiated between the polyols, and the polyaddition product which did not fall within the definition of a polyol for the purpose of the tariff, on the ground that "the essential character" of the product was given to it by the polyol component. This, of course, is a test to which, in the application of rule 3, resort may only be had, as is made clear by the opening words of paragraph (b) of that rule, if the appropriate item, sub-item, paragraph or sub=paragraph "cannot be 13. ascertained in accordance with paragraph (a)". Accordingly, 1t is implicit in the decision that paragraph (a) did not enable ascertainment of the appropriate paragraph to apply to this case. The Administrative Appeals Tribunal appears to have been of the same view, and indeed it seems no argument was advanced to the contrary. The majority reasons of the Administrative Appeals Tribunal, which reject the conclusion "that the polyols give the mixture its essential characteristic", and state that "other compounds are of similar importance in characterizing the mixture", describe Instapak B as appearing "to be substantially a mixture of compounds of polyols with other compounds." They proceed: "It appears reasonable to conclude that the polyols are of importance, but the mixture as such gives no pre-eminence to them either as an entity or as an entity having potentiality for a use for some purpose." The reasons conclude: "Turning from Rule 2 to Rule 3, the matters discussed previously (that is, in the discussion resulting in the findings I have quoted) lead to the conclusion that this rule has no application." On the hearing in this Court, the respondent raised an argument, though faintly, that rule 3(1)(a) applied, that 1s, that the description referring to polyols provided "a more specific description of the goods" than the description of other polyaddition products. If I am right in thinking that the Tribunal must have dismissed this view before it could have considered rule 3(1)(b), there can be no basis for any contention that it erred in law in doing so. On the contrary, it seems to me that there was no legal foundation for any other finding. 14. Both the polyols, and the polyaddition product which was not a polyol within the definition, form substantial ingredients of the mixture, in which both fulfilled substantial functions. But there were also a number of other compounds as well, of which at least one fulfilled a major, and perhaps the major, function. There was no evidence upon which a finding could have been made that one of these substances provided a specific description of the goods in any sense. The expression "provide a more specific description of the goods" implies that at least one description can be said to be in some sense a specific description of them, which can then be seen to be more specific than the description afforded by the other or others. In Re Impco Pty Ltd and Collector of Customs Victoria (1980) 2 A.L.D. 843, the Administrative Appeals Tribunal considered the position of a brush, comb and mirror set. At 847 the Tribunal said: "There is no question of para (a) of rule 3 solving the problem. Each item etc. in question specifically describes each component to which it applies. It does not describe the other two components at all, so that no question of more or less specificity arises. In truth para (a) is really quite inapposite, for the same reason as that to which we refer later in relation to para (c). In essence, it 1s that it would appear that para (a) was intended to deal with a Situation in which there is a question as to which of two or more items etc. should be found to apply to a singular unit of goods, and not with the present situation." Subject to the fact that 1t is implicit in rule 2(4) that rule 3(1)(a) may in some cases have application to goods that consist of more than one material or substance, I agree with these comments. 15. I have also sought assistance from the decision of the European Court of Justice in Baupla GmbH v. Oberfinanzdirektion Koln (1975) §5.C.R. 989. There the product consisted of a compressed wood fibre board impregnated with asphalt with an asphalt layer on the front. The question was whether the product should be classified under a tariff heading referring to building boards or one referring to articles of asphalt, and the case concerned the application of a rule of interpretation of the Common Customs Tariff similar to rule 3(1) of the rules under the Act. The European Court of Justice referred to the explanatory notes to the Brussels Nomenclature, adopted by the Common Customs Tariff, in which it is stated: "Tf two or more headings each refer to one only of the materials or substances contained in mixed or composite goods, those headings are to be regarded as equally specific in relation to those goods, even if one of them gives a more complete or precise description than the others. In such cases, the classification of the goods shall be determined by Rule 3(b) or 3(c)." The opinion of the Advocate-General includes the statement: "As the Commission has rightly stressed, Rule 3(a) necessitates a comparison; but a comparison of the precision of concepts presupposes comparability. This can be said to be the case if two concepts stand in the relationship of a wider and a narrower concept. The components characterizing the narrower concept must include all the characteristics which define the wider concept and further specific characteristics in addition. There is thus comparability of descriptions of goods only 1f they contain common characteristics which are to be ascertained on the basis of criteria according to which the relevant 16. headings define the goods comprised and if a description contains further subsidiary characteristics which then justify speaking of a more specific description. The Commission rightly stressed that a judgment as to the more specific nature of the descriptions of goods which relate to their components is possible only 1£ the descriptions relate to goods of the same basic material. There is no comparability and no possibility of applying Rule 3(a) 1£ in the case of goods consisting of more than one material or substance each of the descriptions relates to a different component and the aforesaid conditions are not satisfied." The decision of the Court was: "When a mixture is, prima facie, classifiable under two or more headings of the Common Customs Tariff, each of which relates to one of the materials composing the mixture, none of the headings can be regarded as more specific than the others on the sole ground that it gives a more precise or more complete description of the product referred to. In classifying such a product Rule 3(b) or 3(c) of the General Rules must therefore be applied." I do not find it necessary to rely on the explanatory note referred to by the European Court of Justice, or on that Court's use of the note; but I find the Advocate-General's reasoning helpful. So far as the note is concerned, whether such a note 1s a permissible aid to the construction of the statute has been said by Mason J. to be "open to question": D & R. Henderson (Mfg) Pty Ltd v. Collector of Customs for the State of New South Wales (1974) 48 A.L.J.R. 132 at 135; and see, on appeal, D. & R. Henderson (Mfg) Pty Ltd v. Forbes (Collector of Customs, New South Wales) (1975) 49 A.L.J.R. 335 at 336. It may be that, in a case where it is necessary to decide the question, some assistance may be gained in resolving it from s.15AB of the 17. Acts Interpretation Act 1901, which was inserted into that Act in 1984. In the present case, I do not regard the evidence as affording any basis for the comparison which the application of rule 3(1)(a) would have required, and the Tribunal's correct appreciation of this fact is, I think, the reason why it proceeded, without discussion of rule 3{1)(a), to consider rule 3(1)(b). It decided, contrary to the conclusion which had led to the decision under review, that it could not, by the application of rule 3(1)(b), arrive at the opinion that the polyols gave the mixture 1ts essential character. Implicit in the reasoning of the majority is the view that no other component of the mixture could be said to give it its essential character either. The Tribunal's finding in this regard is a finding of fact: Times Consultants Pty Ltd v. Collector of Customs (Queensland) (Fox, Morling and Wilcox JJ., unreported, 11 September 1987). In that case, Fox J. commented of goods which consisted of a magazine and a cassette recording: "For my part I find it hard to understand how the concept of 'essential character' could be applied at all in relation to the goods in question ... . The goods were just too diverse in 'character' for any 'essential character' to be apparent, except possibly for a wide generic term which finds no place in the Schedule." In their joint judgment, Morling and Wilcox JJ. said: "In the case of goods made up in sets, it may be that there is no single' essential character; in which case Rule 3(1)(b) will be inapplicable and reference will need to be made to the arbitrary rule contained in Rule 3(1)(c)." a 18. Those comments underline the appropriateness of the finding made in the present matter. The majority of the Tribunal considered that rule 2(2) and (3) applied. They rejected, rightly in my opinion, an argument, which was also advanced before us, that the reference to compounds in paragraph 39.01.13 excluded the application of a rule referring to mixtures. JI can see no substance in that argument since there is no practical or theoretical difficulty in regarding the paragraph as apt to include mixtures of compounds. The Tribunal also rejected, again rightly in my opinion, a contention that the mixture could not be described, in the language of paragraph 39.01.13(a)(ii), as "containing not less than 50% by weight of reacted propylene oxide". The simple answer to this contention is that the quoted words form an adjectival phrase describing the relevant polyols. They are the substances which must answer the description - not the mixture which only attracts the paragraph because its other ingredients are mixed with them. Having rejected these arguments, and determined that rule 2 was applicable, the Tribunal (as 1t was required to do by the terms of sub-rule (4) of rule 2) turned to rule 3. However, when it did so, it contented itself with referring to its previous discussion of the problem whether any component could be said to give the mixture its essential character, and concluded "this rule has no application". At that point, it seems to me an error of law intruded. Paragraphs (a) and (b) of rule 3(1) having been rejected, the whole rule could not simply be ae 19. discarded. Rule 2(4) still required regard to "be had to the principles set out in rule 3". There could be no doubt that rule 2(4) applied, once the Tribunal found the goods to consist of more than one material or substance. Neither rule 3(1)(a) nor rule 3(1){b) providing an answer, rule 3(1)(c) required a decision applying to the goods that paragraph which occurred last in Schedule 3 among those paragraphs which equally merited consideration. The fact seems to be that the Tribunal acted sub silentio upon the view which the respondent urged before us, that the application of rule 2(2) to paragraph 39.01.13 automatically removed the goods from the reach of an alternative paragraph applying only to goods "other" than those already described. It was not suggested that, 1£ the respondent's contention as to the modification of the meaning of the word "other" by rule 2 was rejected, the two paragraphs in question did not equally merit consideration within the meaning of rule 3(1)(c). The goods are a mixture, partly composed of polyols and partly composed of another polyaddition product. Each paragraph is capable, by virtue of the extension effected by rule 2(2), of including within itself a reference to the whole mixture. In those circumstances, rule 3(1)(c) is quite literally and directly applicable, so that the paragraph occurring last in Schedule 3, that is to say paragraph 39.01.19, is the paragraph that applies to the goods. The significance of the Tribunal's finding that the mixture included nonyl phenol ethoxylate, a polyaddition product which was not a polyol within the definition, did not emerge in 20. the applicant's argument until after some comments from the bench. It was then relied upon, and was sought to be answered on behalf of the respondents in the manner which appears from these reasons. There was no suggestion on behalf of the respondent that the point was not available to the applicant. It fell within the broad terms of the questions of law and grounds set out in the notice of appeal. The respondent's counsel did not argue that the conduct of the applicant's case before the Administrative Appeals Tribunal had been such as to prevent the applicant from relying on this matter. An application before the Tribunal does not proceed with the formality and technicality of a court action in which the issues are defined with precision (see s.33(1)(b) of the Administrative Appeals Tribunal Act 1975). For the purpose of reviewing a decision, the Tribunal may exercise all the powers and discretions that are conferred on the person who made the decision (see s.43). As Jenkinson J. said in McDonald v. Director-General of Social Security (1984) 1 F.C.R. 354 at 368, a Tribunal's function is "to determine for itself, upon the material before it" the question raised by the review it is undertaking. See also the comments of Woodward J. at 356-7 and Northrop J. at 365-6. Even where curial proceedings were concerned, and in a case where the respondent to an appeal argued that a point as to the existence of a lien, upon which the appeal was decided, "was not raised in the courts below and that accordingly it is not open to the appellant to rely upon it in this Court", its existence being a question of fact to be determined in the light of the circumstances, the High Court in ' 21. National Australia Bank Ltd v. KDS Construction Services Pty Ltd (in liq) (1987) 76 A.L.R. 27 at 34 in the joint judgment of the Court held: "Although the appellant's claim to a lien was not litigated as such in the courts below, there is nothing in the evidence or in the relationship of the parties that points to the possible existence of an agreement or of circumstances which would negate the existence of a lien. ... There is simply no basis for conceiving that there could be any agreement, express or implied, between the parties or any circumstances negating the existence of a lien. The evidence, which was generally directed to the circumstances in which the cheques came to be deposited and cleared and to the appellant's defence that it took in good faith for valuable consideration in the ordinary course of business, traversed the discussions and transactions between the parties which might have been expected to throw up the basis, 1f one existed at all, for holding that there was no lien in fact. Accordingly, the Court should not decline to give effect to the appellant's submission that 1t had a lien. But in the circumstances it is proper to deny the appellant its costs of the appeal." In my view, mutatis mutandis, all of this is applicable 1n the present case. Indeed, it is applicable a fortiori, since in the present case it was not suggested by counsel for the respondent that the point was not now open, nor that any further evidence was required to elucidate the facts, nor that in truth (if his legal argument concerning the meaning of the word "other" in the light of rule 2 were rejected) the mixture did not contain another polyaddition product not referred to in any of the preceding paragraphs. In those circumstances, it would be unjust to deny the applicant a correct decision which the Tribunal, standing in the shoes of the administrator, was bound to make. 22. The National Australia Bank Ltd case shows that, even in respect of litigation conducted in courts upon a strictly adversarial basis, it may be possible to correct a failure to raise a legal issue, where this can be done without injustice to the other side. In my view the appeal should succeed. Since all the necessary facts have been found and 1t is a question of law within which particular part of the Tariff the goods fall (Peacock v. Zyfert (1983) 48 A.L.R. 549), an order should be made under s.44(4) of the Administrative Appeals Tribunal Act setting aside the decision and remitting the matter to the respondent with a direction that duty be reassessed on the basis that the goods in guestion fall within paragraph 39.01.19. There should be no order as to the costs of this appeal. I certify that this and the preceding twenty-one (21) pages are a true copy of the Reasons for Judgment herein of his Honour Mr. Justice Burchett. Aor Wolo Associate Dated: 11 March 1988. Counsel for the Applicant: Mr C.A. Sweeney Solicitors for the Applicant: Westgarth Baldick Counsel for the Respondent: Mr P.S. Hastings Solicitors for the Respondent: Australian Government Solicitor Date of hearing: 3 June 1987