Holden Limited v Chief Executive Officer of Customs [2003] FCA 1060

FEDERAL COURT OF AUSTRALIA

Holden Limited v Chief Executive Officer of Customs [2003] FCA 1060 Administrative Appeals Tribunal Act 1975 (Cth) s 44(1) Customs Tariff Act 1995 (Cth) s 18(2), Sch 4 items 41A, 41B

HOLDEN LIMITED v CHIEF EXECUTIVE OFFICER OF CUSTOMS V 704 of 2002 GRAY J 23 SEPTEMBER 2003 MELBOURNE

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY V 704 of 2002

ON APPEAL FROM THE ADMINISTRATIVE APPEALS TRIBUNAL

BETWEEN: HOLDEN LIMITED

APPLICANT

AND: CHIEF EXECUTIVE OFFICER OF CUSTOMS

RESPONDENT

JUDGE: GRAY J

DATE OF ORDER: 23 SEPTEMBER 2003

WHERE MADE: MELBOURNE

THE COURT ORDERS THAT:

1. The appeal be allowed. 2. The decision of the Administrative Appeals Tribunal made on 6 September 2002 be set aside. 3. The matter be remitted to the Administrative Appeals Tribunal for further consideration according to law. 4. There be no order as to the 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

VICTORIA DISTRICT REGISTRY V 704 of 2002

ON APPEAL FROM THE ADMINISTRATIVE APPEALS TRIBUNAL

BETWEEN: HOLDEN LIMITED

APPLICANT

AND: CHIEF EXECUTIVE OFFICER OF CUSTOMS

RESPONDENT

JUDGE: GRAY J

DATE: 23 SEPTEMBER 2003

PLACE: MELBOURNE

REASONS FOR JUDGMENT 1 Before the Court is an appeal from a decision of the Administrative Appeals Tribunal ('the Tribunal'). By s 44(1) of the Administrative Appeals Tribunal Act 1975 (Cth), such an appeal is limited to a question of law. The appeal in question is brought from a decision of the Tribunal, constituted by a deputy president, made on 6 September 2002. The Tribunal affirmed four decisions of the respondent, dated 14 March 2002, in respect of claims for the drawback of import duty in respect of goods, pursuant to reg 129 of the Customs Regulations 1926 (Cth) ('the Customs Regulations'). In substance, subreg (2) of that regulation provides that drawback of import duty may be paid on the exportation of imported goods to which the regulation applies. 2 In its reasons for decision, the Tribunal posed the question before it in the following terms: 'The issue in this case is whether, upon their export, Holden is entitled to drawback of customs duty in respect of goods when it has used export credits to offset duty payable upon these goods being imported.' 3 The matter was conducted before the Tribunal upon the basis of an agreed statement of facts, to which were attached certain documents, in some cases merely as samples or illustrations of what was said in the agreed statement of facts. The proceeding by agreed statement of facts was no doubt of great benefit to the Tribunal, because the arrangements that led to the export credits used by the applicant in respect of customs duty on imported goods were complex and had a considerable history. Their substance is explained in simpler terms in the agreed statement of facts, which in many ways found its way into the reasons for decision of the Tribunal. 4 In its reasons for decision, the Tribunal made reference to s 18(2) and to items 41A and 41B in Sch 4 to the Customs Tariff Act 1995 (Cth) ('the Tariff Act'). Each of the items begins with the words, 'Goods, as prescribed by by-law,' and contains in the right-hand column, which is the prescription of the calculation of duty, the words 'An amount equal to the amount of duty assessed in accordance with Part 2 of this Act, less any amount of export credits issued to the owner of the goods'. In the course of its reasons for decision the Tribunal said: 'To determine what is payable in the context of this case regard must be had to Part 2 of the Tariff Act and the combined effect of s. 18, Schedule 4 and items 41A and 41B. The combined effect of those provisions is that the "duty payable" is "An amount equal to the amount of duty assessed in accordance with Part II of this [Tariff] Act, less any amount of export credits issued to the owner of the goods". This means that the duty payable is $x, being the monetary amount of duty assessed under Part 2 less $y, being the monetary value of the export credits. The resulting figure, being $(x-y), is the duty payable. It is the duty that is owed, to be paid or due by Holden. The duty payable is not $(x+y). Therefore, although export credits are used to determine the duty payable, the amount of the duty payable does not include a monetary amount representing the value of Holden's export credits. It follows that the duty paid by Holden does not include the monetary amount of those export credits.' 5 The Tribunal went on to hold that the import duty paid by Holden on the goods that it had imported and used in the manufacture of specified goods did not comprise export credits accrued by it under the administrative arrangements that gave rise to those credits. The Tribunal therefore found that Holden was not entitled to drawback of import duty paid in respect of those imported goods upon the exportation of the specified goods. 6 In its notice of appeal filed in this Court the applicant specified the question of law raised in the appeal as follows: 'Whether, on the exportation of specified goods, drawback of import duty is payable in respect of imported goods used in the manufacture of the specified goods in circumstances where export credits were used to offset the customs duty applicable at the time of importation.' 7 The grounds of appeal were as follows: '(a) The Tribunal erred in law in finding that the applicant did not use export credits to pay customs duty. (b) The Tribunal erred in law in taking irrelevant considerations into account, namely: (i) items 41A and 41B of Schedule 4 of the Customs Tariff Act 1995; (ii) section 168(2) of the Customs Act 1901.' 8 In the course of argument about the matter this morning, counsel for the applicant put squarely the submission that the Tribunal had made an error in having regard to the terms of items 41A and 41B. He did so on the basis that, as he put it, it was his client's case before the Tribunal that none of the relevant goods imported was prescribed by by-law and that therefore items 41A and 41B were completely irrelevant. Counsel for the applicant contended that the Tribunal had only been taken to items 41A and 41B, by counsel who appeared for the respondent in the Tribunal, for the purpose of indicating to the Tribunal a method of calculating duty payable. Those items had been used, in effect, by way of analogy, to support an argument that this same approach should be taken in relation to the particular case. 9 At that point counsel for the respondent made it clear to me that his client's case was that some, if not all, of the goods imported fell within items 41A and 41B and that accordingly the true question of law was the question of the effect of those items perhaps in conjunction with s 18 of the Tariff Act. 10 It appeared from this exchange, therefore, that the parties were really conducting different arguments on the appeal. The applicant was endeavouring to argue that the question depended entirely on reg 129 of the Customs Regulations and on the meaning of the word 'paid' in that regulation. The question of law from the applicant's point of view was whether the application of export credits to the satisfaction of the amount that otherwise would have been payable in respect of duty on imported goods amounted to payment for the purposes of that regulation. The question of law as seen by the respondent was whether the calculation of the amount of duty payable for the purposes of s 18 of the Tariff Act involved disregarding any amount or deducting any amount that had been the subject of export credits, so that the resulting amount was the amount that was payable and the amount to which reg 129 would apply. 11 Not only was there a difference as to the question of law raised by the appeal, but it became apparent that the difference arose because of an issue of fact. Counsel for the respondent contended, by reference to the reasons for decision of the original decision-maker, that there was a factual difference between the parties as to whether duty had been paid on the goods, that information had been requested of the applicant and at that stage not supplied, and that if the information had been supplied, it might have indicated whether in fact the goods had all been imported duty free. 12 Counsel for the applicant referred to passages in the transcript of the proceeding in the Tribunal, in which counsel who then appeared for the applicant put the submission that items 41A and 41B were irrelevant. He took the Tribunal to documents attached to the agreed statement of facts which, it must be remembered, were only by way of sample or illustration, to illustrate that irrelevance. 13 It does appear, from the transcript of the proceeding before the Tribunal, that there was a dispute between counsel at the Tribunal level about this factual issue. It also appears, by examination of the reasons for decision of the Tribunal, that the Tribunal did not make any form of a determination about that factual issue. Instead, the learned deputy president seems to have made an assumption that items 41A and 41B should be applied. 14 Whether because the learned deputy president failed to appreciate that there was a factual question, or whether, as counsel for the respondent contends, because the parties acted on a common assumption that the factual question did not need to be considered, the Tribunal failed to make a determination about that factual issue. Unfortunately, it now emerges that the determination of the factual issue is crucial to establishing precisely what is the question of law before the Court. Because the Court is dealing only with an appeal on a question of law, it is not open to the Court to make any finding of fact. The Court does not ordinarily receive evidence on such an appeal, and it would be wrong to attempt to short-cut the matter by trying to conduct a trial of it myself. 15 It seems, therefore, and the parties are now at one in relation to this, that the only proper course is that the appeal be allowed, and the matter be remitted to the Tribunal for determination of the necessary factual issue. In my view, the question of law that does arise is whether the Tribunal approached its task correctly. Regrettably, and as I say, for reasons that do not appear clearly, the Tribunal does not seem to have appreciated the necessity to determine the issue of fact before it could decide what question of law arose, and determine that question of law. It must therefore be concluded that the Tribunal failed to perform the task given to it. In saying this, I do not necessarily attach blame to the Tribunal for the situation. I simply do not know how blame should be allocated, because I am not in a position to make findings of fact about that question. 16 The Tribunal's failure to perform the required task, in my view, amounts to an error of law. As a consequence, the Court is empowered to allow the appeal and to remit the matter to the Tribunal to determine according to law. I propose to make orders along those lines. 17 There was then some argument about the question of costs, the result of which was that counsel for both parties have conceded that the appropriate order is to allow costs to lie where they fall. In my view, that is the appropriate order, because it is not possible for me to determine where blame is to be allocated, if it is to be allocated, for the failure of the Tribunal to address the crucial factual issue. 18 The orders of the Court, therefore, will be: 1. The appeal be allowed. 2. The decision of the Administrative Appeals Tribunal made on 6 September 2002 be set aside. 3. The matter be remitted to the Administrative Appeals Tribunal for further consideration according to law. 4. There be no order as to the costs of the appeal.