Chief Executive Officer of Customs v I.P.L. Datron Pty Ltd & Anor1 [1998] FCA 1055

FEDERAL COURT OF AUSTRALIA CUSTOMS TARIFF – classification of goods identified as ribbons in cartridges for computer printers – goods prima facie classifiable under two headings – heading 9612 more specific description than heading 8473.

Customs Tariff Act 1987, Sch 2, r 3(a); Sch 3, headings 8473 and 9612.

Cody v Datacraft (Australia) Pty Ltd (1989) 10 AAR 346 applied. Chief Executive Officer of Customs v I.p.l. datron pty ltd and lexmark international (aust) pty ltd NG 602 of 1997 Whitlam J

28 August 1998 Sydney

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY NG 602 of 1997

ON APPEAL FROM THE GENERAL ADMINISTRATIVE DIVISION

OF THE ADMINISTRATIVE APPEALS tribunal

BETWEEN: chief executive officer of customs

Applicant

AND: i.p.l. datron pty ltd and

lexmark international (aust) pty ltd

Respondents

JUDGE: WHITLAM J

DATE OF ORDER: 28 august 1998

WHERE MADE: SYDNEY

THE COURT ORDERS THAT: 1. The appeal is allowed. 2. The decision of the Administrative Appeals Tribunal in proceedings numbered N97/381 and N97/382 is set aside. 3. The decisions under review in those proceedings are affirmed. 4. The respondents pay the applicant's costs of the appeal. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY NG 602 of 1997

ON APPEAL FROM THE GENERAL ADMINISTRATIVE DIVISION

of the ADMINISTRATIVE APPEALS TRIBUNAL

BETWEEN: chief executive officer of customs

Applicant

AND: i.p.l. datron pty ltd and

lexmark international (aust) pty ltd

Respondents

JUDGE: WHITLAM J

DATE: 28 August 1998

PLACE: SYDNEY

REASONS FOR JUDGMENT The short point in this case is whether the Administrative Appeals Tribunal ("the Tribunal") correctly applied Rule 3(a) of the Interpretation Rules set out in Schedule 2 to the Customs Tariff Act 1987 ("the Act"). Schedule 2 relevantly provides: "Classification of goods in Schedule 3 shall be governed by the following principles: 1. The titles of Sections, Chapters and sub-Chapters are provided for ease of reference only; for legal purposes, classification shall be determined according to the terms of the headings and any relative Section or Chapter Notes and, provided such headings or Notes do not otherwise require, according to the following provisions: 2. . . . 3. When . . . goods are, prima facie, classifiable under two or more headings, classification shall be effected as follows: (a) The heading which provides the most specific description shall be preferred to headings providing a more general description. . . ." Two applications were heard together by the Tribunal. They concerned similar goods, and the only issue for determination was under which heading in Schedule 3 to the Act the goods were to be classified. The Tribunal identified the goods this way: "7. It was not disputed between the parties that the goods, the subject of the application to the Tribunal were described as printer ribbons, put up in cartridges for use with computer printers. The ribbons themselves are mainly of nylon or polyester textile fabric, inked, and are mounted in plastic cartridges which serve much the same purpose as the old fashioned spools on which conventional typewriter ribbons are mounted. The structure of the cartridge allows the printer ribbon to be installed in the printer without handling the surface of the ribbon. Ribbons of this kind are designed to be installed in specific printers or a specific range of printers. The goods in matter N97/381 are designed for Oki Printers imported from Japan, whereas those referrable [sic] to matters N97/382 are designed for IBM Printers . . ." Customs had classified the goods under heading 9612. Before the Tribunal the respondents had contended that the goods should be classified under heading 8473. Those headings are in the following terms: "8473 PARTS AND ACCESSORIES (OTHER THAN COVERS, CARRYING CASES AND THE LIKE) SUITABLE FOR USE SOLELY OR PRINCIPALLY WITH MACHINES OF 8469 TO 8472:" "9612 TYPEWRITER OR SIMILAR RIBBONS, INKED OR OTHERWISE PREPARED FOR GIVING IMPRESSIONS, WHETHER OR NOT ON SPOOLS OR IN CARTRIDGES; INK-PADS, WHETHER OR NOT INKED, WITH OR WITHOUT BOXES:" At the Tribunal hearing it was agreed between the parties that computer printers were covered by the expression "MACHINES OF 8469 TO 8472" used in heading 8473. The Tribunal rejected the respondents' contention that the ribbons were "parts" within the meaning of heading 8473, but held that they were "accessories" within that heading. The Tribunal said, in paragraph 13 of its reasons that it was accordingly required "to find which of the headings, 8473 or 9612, is the more specific description of the goods." The Tribunal referred to two passages from the judgment of Burchett J in Cody v Datacraft (Australia) Pty Ltd (1989) 10 AAR 346 at 353 and 354 "as to the specificity of a description". The Tribunal then concluded: "21. Applying those principles to the subject goods, and having regard to . . . [the fact] that the ribbons are designed to be installed in specific printers or a specific range of printers, I am of the opinion that the more specific description is that of accessories suitable for use solely or principally with machines of 8471, that is to say, automatic data processing machines and units thereof, as opposed to the more generalised description of typewriter or similar ribbons. 22. The decisions under review will therefore be set aside and this matter remitted to the [decision-maker] with the direction that the subject goods are to be classified to Tariff Subheading 8473.30.00." Counsel for the applicant accepts that the Tribunal did not misdirect itself in referring to the passage in Cody where Burchett J said (at 353): "The question how specific a description is can only be answered by considering the extent to which the description reduces the area within which the thing described is to be identified. That depends very much on the range of things from which it is to be distinguished." Counsel submits, however, that Rule 3(a) required the Tribunal to consider the range of things covered by heading 8473 and the range of things covered by heading 9612, and then to compare the identified goods with the range covered by each heading in order to determine which heading provided "the more specific description" of the goods. In particular, he draws attention to the expression "MACHINES OF 8469 TO 8472". That means, he says, one must consider accessories for all the machines covered by headings 8469, 8470, 8471 and 8472. Heading 8469 deals with typewriters, whereas Note 5 to Chapter 84 extends heading 8471 to all kinds of automatic data processing machines. It is not necessary to set out the terms of these headings in order to accept that the range of parts and accessories will be vast. On the other hand, counsel for the applicant submits, the range of things covered by heading 9612 is comparatively small and focused. Its description of the goods is very specific. He submits that heading 9612 provides the more specific description because it reduces to the greatest extent the area within which the goods described are to be identified. Counsel for the respondents says that, contrary to the submissions on behalf of the applicant, the Tribunal was not required by Rule 3(a) merely to prefer whichever of the two headings under consideration provided the "most specific description" as opposed to the "more general description". Of course, it is true that classification does not depend on which heading covers the greater number or diversity of goods. I do not understand counsel for the applicant to argue otherwise. One must never lose sight of the description of the goods identified. But the classification exercise will necessarily require attention to the very terms of the headings and where, as in the present case, the goods are prima facie classifiable under two headings, the governing principle is laid down in Rule 3(a). Counsel for the respondents does not accept that heading 9612 provides a more specific description of the subject goods or that its language is more specific. Such a position is, in my opinion, quite untenable when regard is had to the plain language of the headings. It could not be suggested that, in the case of typewriter ribbons, "typewriter . . . ribbons" is not a more specific description than "accessories for use . . . with [typewriters]". So in the present case "similar ribbons . . . prepared for giving impressions" is a more specific description of the subject goods than "accessories for use . . . with [automatic data processing machines]". In Cody Burchett J referred (at 353) to the use of an article as one way of narrowing the area of choice. The description in heading 9612 is plainly apt in the present case to give a much more specific indication of the function of the goods in question. The Tribunal erred in holding heading 8473 to be the "more generalised description". The facts have been fully found by the Tribunal. The correct classification is thus a question of law: Collector of Customs v Johnson & Johnson Medical Pty Ltd (Burchett, Tamberlin and Lehane JJ, 15 August 1997, unreported) at p 6. In my opinion, the Tribunal made an error of law in deciding that the subject goods should be classified under heading 8473. The decision of the Tribunal will be set aside and the decisions under review by it affirmed: Australian Trade Commission v Richard Shrapnel Consulting Services Pty Ltd (1988) 85 ALR 287 at 290. The respondents must pay the costs of the appeal.