Comptroller-General of Customs v Vestas - Australian Wind Technology Pty Ltd

JUDGES: JESSUP, LOGAN AND PERRAM JJ DATE: 16 DECEMBER 2015 PLACE: MELBOURNE

Introduction 1 This appeal concerns the proper construction of ss 269B to 269E of the Customs Act 1901 (Cth) ('the Customs Act'). The respondent ('Vestas') is an importer of gearboxes for wind turbines with a capacity of at least 3MW. The use to which such gearboxes are put is to convert the high torque power of a large scale wind turbine rotor into the kind of low torque power used by generators. 2 By s 15(a) of the Customs Tariff Act 1995 (Cth), duties of customs are imposed on goods imported into Australia after 1 July 1996. Through a web of provisions, which it is not necessary to relate, the tariff on such gearboxes if, as here, imported from Europe is set at a rate of 5%. By s 159(1) of the Customs Act that 5% tariff is calculated upon the 'customs value' of the gearboxes. 3 Provision exists under the Customs Act for relief from the imposition of these tariffs. A person may apply to the Comptroller-General of Customs ('the Comptroller') for a tariff concession order (a 'TCO') in respect of generically described goods: ss 269F and 269SJ(1)(aa). Putting the matter at a very high level of generality and in a manner which favours ease of comprehension over exactitude, the Comptroller may make a TCO if satisfied that there is no relevant local industry to protect by means of the tariff. 4 In this case the Comptroller (formerly, and at the time of the hearing in the Administrative Appeals Tribunal ('the Tribunal'), the Chief Executive Officer of Customs) refused to grant Vestas a TCO. If a TCO had been granted it would have entitled Vestas to relief from the 5% tariff from the date of its original application. That date was 14 August 2012. 5 Following a process of internal review (which affirmed that initial decision as correct) the matter eventually came before the Tribunal, which, on 21 May 2015, set aside the earlier refusal to grant the TCO and substituted instead a decision that the requirements for the issue of a TCO had been met and remitted the matter to the Comptroller to make the necessary TCO: Vestas - Australian Wind Technology Pty Limited v Chief Executive Officer of Customs [2015] AATA 348. 6 It is from that decision that the Comptroller now appeals to this Court under s 44 of the Administrative Appeals Tribunal Act 1975 (Cth).

The Question 7 The question before this Court raises a short, but complex, issue of statutory construction. It involves, at its core, the proper construction of s 269E(2) of the Customs Act. That question does not occur in isolation but also throws up questions concerning the proper construction of ss 269B, 269C and 269D, together with the more general question of how these four provisions are to operate together. 8 It goes without saying that any consideration of those issues turns heavily on their precise wording. However, in order to understand those provisions it is necessary to begin the inquiry at an anterior point.

The Scope of Tariff Protection 9 Vestas' desire is that it should be allowed to import certain gearboxes into Australia without having to pay the 5% tariff presently imposed upon equipment of that type. The existence of that tariff, which is imposed by Australian law, is a measure designed to protect local manufacturing industries from competition abroad. On the other hand, tariffs of that kind can serve no useful purpose if there is no local industry requiring protection. In such a case, a tariff will operate as a pointless impost on local consumers, although it will still serve as a revenue raising measure. 10 The tariff was first imposed under the Customs Act on 4 October 1901. Even at that early time, it was recognised in fixing the rates under that tariff that concessional treatment was unnecessary where there was no local industry. As the Rt Hon Charles Kingston, the Minister for Customs and Trade, said during the debate on the tariff when originally imposed, '[w]hen it cannot be produced locally it is admitted at a low rate, if not free…': see Australia, House of Representatives, Debates (1901) Vol HR5, p 5707. As originally formulated, the concession was achieved through direct manipulation of the tariff rates. 11 The scope of the concession and the mechanics of its imposition have been, as might naturally be expected in a contestable area such as trade policy, the subject of periodic revision. Significant alteration to the scheme was made in each of the years 1926, 1948 and 1957. The current form of provisions governing the concession largely has its origin in a new system which commenced on 1 July 1983. That system was known as the Commercial Tariff Concession System or 'CTCS'. It was embodied in a new Pt XVA, which was inserted into the Customs Act from 1 July 1983. It replaced 'the previous by-law concession system which incorporated a concept of suitable equivalence' and which had been 'found difficult to apply': Corinthian Industries (Syd) Pty Ltd v Comptroller-General of Customs (1989) 86 ALR 387 at 389 per Davies J. 12 The CTCS underwent further revision in 1992 and 1996, but some of its original architectural features are of significance for the construction questions before this Court. As originally enacted, Pt XVA provided for tariff concessions, by means of what the legislation originally called a 'Commercial Tariff Concession Order' ('CTCO'), if certain criteria were met. The effect of the criteria was that a CTCO was to be made unless: goods serving similar functions to the goods for which concessional entry was sought were made in Australia; or goods serving similar functions to the goods for which concessional entry was sought were capable of being made in Australia by any person in the normal course of business. 13 This was achieved by the former s 269C which relevantly provided: '(1) Subject to this Part, where the Minister, after considering an application under section 269G for the making of an order under this section in respect of particular goods, is satisfied that - (a) goods serving similar functions to the particular goods are not produced in Australia; and (b) goods serving similar functions to the particular goods are not capable of being produced in Australia by any person in the normal course of business, the Minister shall make a written order, to be known as a Commercial Tariff Concession Order, declaring that the particular goods are goods to which a prescribed item specified in the order applies.' (emphasis added) Also relevant was s 269B(7), which provided: 'For the purposes of this Part, a person shall be taken to be capable of producing goods in the normal course of business if, in the normal course of business, he is prepared to accept orders for the supply of such goods that have been, are being, or are to be, produced by him.' 14 What is important to note is that the concession would be withheld in two distinct situations, namely, where there was actual local production of goods and where, although there was no actual production of the goods, there was a local capacity to produce the goods. We will call the latter aspect of the concession its 'capacity limb'. The net of protection thus cast over local industry extended not just to those producers who did produce the goods in respect of which a CTCO was sought but also to those who could produce them. 15 As will be seen later in these reasons, the case the Comptroller advanced in the Tribunal (and before this Court) was that a concession from the levying of the 5% tariff should not be granted to Vestas in respect of its gearboxes because whilst, speaking loosely for now, gearboxes of the kind imported by Vestas were not made in Australia, there was nevertheless a local capacity to make them. The Comptroller identified a local producer of gearboxes, Hofmann Engineering Pty Ltd ('Hofmann'), as having the requisite local capacity to produce, again speaking loosely for now, equivalent goods. 16 The question which this Court is now called upon to resolve is whether the present structure of Pt XVA continues the existence of the original capacity limb of the concession or whether the various amendments which have been made to Pt XVA since 1 July 1983 have had the effect of requiring not only the demonstration of local capacity for manufacture to satisfy the capacity limb but also at least one example of actual prior production. 17 Just how the capacity limb has operated since 1 July 1983 has been the subject of some controversy. It is necessary to rehearse that controversy in detail because it forms the essential context to understanding what the current provisions were intended to achieve. As the High Court has observed in Federal Commissioner of Taxation v Consolidated Media Holdings Ltd (2012) 250 CLR 503 at 519 [39]: '"This Court has stated on many occasions that the task of statutory construction must begin with a consideration of the [statutory] text". So must the task of statutory construction end. The statutory text must be considered in its context. That context includes legislative history and extrinsic materials. Understanding context has utility if, and in so far as, it assists in fixing the meaning of the statutory text. Legislative history and extrinsic materials cannot displace the meaning of the statutory text. Nor is their examination an end in itself.' (footnotes omitted) 18 Following the introduction of Pt XVA on 1 July 1983, difficulties began to emerge in relation to the application of the capacity limb. The wording of s 269C(1)(b) (supra) referred to goods which were 'capable of being produced in Australia by any person in the normal course of business' (emphasis added). The difficulties in question began to emerge along a fault line which runs through the heart of this appeal. It concerns how goods of a kind which are ordinarily produced on a one-off basis to satisfy an individual order are to be approached in the context of the concept of 'the normal course of business'. One such category of goods is that consisting of heavy engineering equipment which is usually, although not invariably, ordered on a one-off basis and which may be relatively unique. The gearbox in this case may be an example of such an item (we say 'may' because, as we later explain, that factual issue has not yet been determined in this case). 19 The difficulties with the application of the normal course of business test to one-off goods became clear at least by 1984, when the events leading to this Court's decisions in the Amcor litigation occurred. Those decisions were Amcor Ltd v Comptroller-General of Customs (1988) 79 ALR 221 (FC) ('Amcor No 1') and Amcor Ltd v Comptroller-General of Customs (1991) 33 FCR 200 (FC) ('Amcor No 2'). The machine involved in the Amcor litigation and the flavour of the questions it generated were usefully explained in Amcor No 2 in these terms (at 201): 'In 1984 the appellant Amcor Ltd (Amcor) - then known as Australian Paper Manufacturers Ltd - wished to acquire a large and complex machine for making coated papers. It called for tenders from the six leading manufacturers of paper-making machines in the world, those being companies based in the United States, Finland, West Germany, Sweden and the United Kingdom. In early 1985 Amcor selected the tender of a German company, J M Voith GmbH, and placed an order with its Brazilian subsidiary, Voith SA of Sao Paulo. This litigation is concerned not with that machine but rather with a notional machine which might have been made in Australia.' 20 The litigation concerned the operation of the then ss 269C(1) and 269B(7) which are set out above. The last sentence, with its reference to a notional machine, illustrates that, at least originally, posing the question of whether a local producer had the capacity to produce a specified good necessarily devolved into an examination of a hypothetical act of manufacture. 21 The problem thrown up by the Amcor litigation was how goods which were one-off production goods and subject to an individual order were to interact with the normal course of business test. The argument, in essence, was that one-off production of goods could not, as a matter of definition, be manufactured in the normal course of a business. 22 In Amcor No 1, the Full Court considered s 269B(7). It concluded that, whilst the nominated Australian producer in that case, Johns Perry, might have been able to produce the machine, it was an undertaking for it which 'might fairly be described as special, exceptional or extraordinary'. Thus, whilst Johns Perry might have been willing to accept an order for the machine this was not necessarily in the normal course of its business. 23 In Amcor No 2, the question was whether the production of one-off goods could ever be something done in the normal course of a business. The answer to this question was 'yes' (at 208-209): 'We do not see why, as a matter of law, the manufacture of goods on a one-off basis cannot be something done in the normal course of business. A person may have a business, a substantial part of which involves production of one-off goods, in the sense that he regularly manufactures goods which he has never manufactured before to the specifications of a particular customer. If that is the way he does business, then the meeting of such orders would be something done in the normal course of his business. We do not think one can read into s 269B(7) some limitation that the goods must have been previously manufactured. The very fact that s 269C(1)(b), in contradistinction to par (a), is dealing with goods which are not in fact produced in Australia suggests strongly that the fact that goods identical to imported goods have not previously been manufactured in Australia will not of itself enable an applicant to make out a case for a TCO. If the goods in question are totally different from the range and character of goods previously manufactured by the person referred to in par (b), that may be a relevant consideration. But some manufacturers may produce to order, on a one-off basis, goods of widely differing kinds. It is impossible to lay down as a matter of law a test as to what will constitute the appropriate genus. It is a question of fact turning on an examination of the nature of the business of the person in question.' (emphasis added) 24 The emphasised portion shows that the original form of Pt XVA did not require, for the satisfaction of the capacity limb of the concession, that the goods in question should have been previously manufactured. Of course, it is Vestas' contention in this appeal that there is now such a requirement in the modern form of the provisions. In reaching the conclusion that the original form of Pt XVA did not require actual production of goods for the satisfaction of its capacity limb, the Court did no more than give effect to the what the Industries Assistance Commission had recommended in its 1982 report into the tariff system (Industries Assistance Commission, The Commercial By-Law System, Report No. 305 (Australian Government Publishing Service, Canberra, 1982) at p 130) and which led to Pt XVA: 'The Commission is of the view that produced or manufactured in Australia should also be considered to include situations where the local industry has the capability to produce the goods under normal Australian business conditions. Thus, if a product is normally manufactured to order in Australia, a local producer would not be expected to produce a prototype to demonstrate his capability to produce, even if the comparable product overseas is manufactured for stock. For goods which are regarded in Australia as 'stock' items, mere capacity to produce would not be regarded as sufficient.' (emphasis added) 25 On 8 March 1990, the then Treasurer, the Hon Paul Keating, referred to the Industry Commission ('the Commission') a number of issues for report. These included 'the effect of the current Commercial Tariff Concession System on the development of efficient, internationally competitive Australian industries, and for the economy generally'. The Commission was requested to make recommendations on any matters relevant to its inquiry. The Commission delivered its report on 8 March 1991, entitled 'The Commercial Tariff Concession and By-law Systems'. 26 The Commission considered the capacity limb requirement in Section 5.2 of the report. Amongst the materials which it considered was a draft amending bill prepared by the Government in 1989. In that draft the Government had considered deleting the legislative expression of 'capable of being produced in the normal course of business' altogether and replacing it instead with interpretative guidelines which were to be issued by the Minister. The proposed guidelines were as follows: '(a) This phrase is to be interpreted in the light of ordinary Australian manufacturing practice. It includes situations where manufacture to order of the category of product within the industry is the norm in Australia. If a product is normally manufactured to order in Australia, a local producer would not be expected to produce a prototype to demonstrate his capability to produce, even if the comparable produce overseas is manufactured for stock. (b) For goods which are regarded in Australia as 'stock' items, mere capacity to produce would not be regarded as sufficient to refuse a CTCO. (c) There should be reasonable expectation that a local firm could produce the good with regard to factors such as past production performance and technical capabilities before this becomes a basis for rejecting a concession. (d) Preparedness to accept orders will also be considered an indication of capability to produce goods in the normal course of business. (e) Inability of local supply to meet demand fully, i.e., shortfall and fallshort situations, shall not constitute a basis for a CTCO.' (emphasis added) 27 It will be seen from the emphasised words in proposed guideline (a) that the proposal explicitly did not include, in respect of made-to-order goods, any requirement for prior actual production to satisfy the requirements of the capacity limb of the concession. 28 The Commission's responsive comment on proposed guidelines (a) and (b) was as follows: 'The first two guidelines understate the role of the 'made to order' nature of the goods relevant to the capability criterion. This criterion applies only to such situations, and this could be stated in one guideline. [The point in guideline (a) about prototypes is obvious when seen in this light.] ' (emphasis added) 29 Thus it appears that both the Commission and the Government shared the view that prior production of made-to-order goods should not be necessary for satisfaction of the capacity limb. The difference between them lay, it seems, in other areas. The chief of these differences was that the Commission did not think that the use of Ministerial guidelines was appropriate from a legislative perspective. Its ultimate recommendation in this regard was as follows: 'Recommendation The Commission agrees with participants that 'capability to produce in the normal course of business' is not adequately defined in the legislation. It recommends that the existing definition should be replaced in the legislation by a series of (non-exhaustive) considerations to which Customs should have regard. The basis for these should be: • the capability test applies only to those goods which have to be made to order in Australia; • preparedness to accept orders at a time of the CTCO application should not be sufficient to refuse a concession; • there should be a reasonable expectation that a local firm could produce the good and supply it within a reasonable period of time, having regard to factors including its past production performance and technical capabilities; and • inability of local supply to meet demand fully should not constitute a basis for granting a CTCO.' (emphasis in original) 30 The Commission did not make any explicit recommendation that it should be stated in the legislation that prior production would not be necessary in order to satisfy the capacity limb. However, in light of its report, this was plainly because the Government was itself not suggesting any such proposal and because the Commission thought it was 'obvious' that there was no such requirement. That understanding was consistent with this Court's conclusion in the Amcor litigation that there was no such requirement. 31 Upon receipt of the Commission's report, the Government then introduced the Customs Legislation (Tariff Concessions and Anti-Dumping) Amendment Bill 1992 (Cth). Upon the bill's second reading, the responsible Minister, the Hon David Beddall, said (at Australia, House of Representatives, Debates (1992) Vol HR183, p 2665): 'The amendments proposed in this Bill reflect the Government's decision to accept most of the Industry Commission's recommendations for changes to the commercial tariff concession system. They will make concessional entry more readily available without affecting the assistance given to industry and improve the openness, clarity and consistency of the tariff concession system.' 32 Of course, the Commission had not recommended any change to the situation then obtaining that prior production was not necessary for satisfaction of the capacity limb in the case of made-to-order goods. Nor, as we have said, had that been any element of the Government's position. The Minister then continued to say (at p 2665-2666) (in a passage whose significance lies in what is not said): 'In particular, clause 10 of the Bill introduces a new tariff concession system by repealing the old part XVA of the Customs Act and substituting a new part XVA. The four principal elements of the new system are as follows: • The first introduces new definitions for the current core criteria for the granting of a tariff concession order to replace the old 'goods serving similar functions' test, which incorporated the economic concept of 'cross-elasticity of demand', which has proven difficult to interpret and administer, • The second introduces strict time limits both on the processing of applications or revocations by the bureaucracy, and on the submission of information by affected parties. This will streamline the consideration of applications for tariff concession orders or revocations of such orders, and help make the process more transparent, • The third introduces limited and definitive grounds for the revocation of tariff concession orders, to improve accountability and address concerns amongst users of tariff concessions about possible arbitrary revocations, • The fourth introduces a right to merits review of all decisions made in the new part XVA, first through an internal review mechanism, and then via the Administrative Appeals Tribunal.' 33 The insertion of a prior production requirement into the capacity test would have reversed the Full Court's holding in Amcor, departed from the Government's own previously announced position on the issue and set aside the Commission's explicit assumption that the non-existence of such a requirement was 'obvious'. It would have been a substantial change to the way in which the tariff concession system worked. That it does not appear in the Minister's remarks is, at least in this case, telling evidence that it was not intended by the Commission, the Government or, for that matter, anyone. Indeed, the first trace of such a suggested operation for the concession in relation to the capacity limb was in Vestas' argument in this case before the Tribunal. 34 The bill became the Customs Legislation (Tariff Concessions and Anti-Dumping) Amendment Act 1992 (Cth). As foreshadowed in the Minister's remarks, it replaced the old Pt XVA with a new Pt XVA. Subject to the definition of 'substitutable goods' and 'made-to-order capital equipment' being subsequently altered in 1996, the provisions passed in 1992 remain, insofar as they are relevant to this appeal, the same. 35 Before examining the central provisions it is, however, necessary to say something of these definitions. The 1983 provisions had included in the former s 269C(1) a test for identifying the goods in question using the words 'goods serving similar functions'. That expression had generated its own problems. Although those problems do not directly arise in this appeal, it is useful to know that in the 1992 legislation the former definition was replaced with a new expression, 'substitutable goods', which was initially defined in this way by s 269B(1): 'substitutable goods', in respect of goods the subject of a TCO application or of a TCO, means goods produced in Australia that are put to a use that corresponds with a use (including a design use) to which the goods the subject of the application or of the TCO can be put'. 36 At the same time, the scope of the concession was reduced in relation to the capacity limb so that only 'made-to-order capital equipment' would attract it. This expression was initially defined in a new s 269E(3) in this way: 'made-to-order capital equipment' means capital equipment that is made in Australia to meet a specific order rather than being the subject of regular or intermittent production.' 37 Both of these definitions were further refined in 1996 on the passage of the Customs Amendment Act 1996 (Cth). The expression ', or are capable of being put,' was added to the definition of 'substitutable goods' after 'are put', and it was made clear that in determining whether goods were substitutable ones, no analysis of whether the goods competed in a market was necessary. The latter clarification was effected by the insertion of a new s 269B(3). At the same time, the definition of 'made-to-order capital equipment' was replaced, with the new definition adding a further requirement that the goods should not be produced in such quantities as to indicate that they were production line goods. 38 We observe these matters to show that nothing which happened in 1996 was intended to impact on the basic operation of the provisions in relation to whether there was a capacity limb. 39 Including the 1996 amendments, the relevant provisions then read (and still read): '269B Interpretation (1) In this Part, unless the contrary intention appears: … substitutable goods, in respect of goods the subject of a TCO application or of a TCO, means goods produced in Australia that are put, or are capable of being put, to a use that corresponds with a use (including a design use) to which the goods the subject of the application or of the TCO can be put. … 269C Interpretation - core criteria For the purposes of this Part, a TCO application is taken to meet the core criteria if, on the day on which the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business. 269D Interpretation - goods produced in Australia (1) For the purposes of this Part, goods, other than unmanufactured raw products, are taken to be produced in Australia if: (a) the goods are wholly or partly manufactured in Australia; and (b) not less than ¼ of the factory or works costs of the goods is represented by the sum of: (i) the value of Australian labour; and (ii) the value of Australian materials; and (iii) the factory overhead expenses incurred in Australia in respect of the goods. (2) For the purposes of this Part, goods are to be taken to have been partly manufactured in Australia if at least one substantial process in the manufacture of the goods was carried out in Australia. (3) Without limiting the meaning of the expression substantial process in the manufacture of the goods, any of the following operations or any combination of those operations does not constitute such a process: (a) operations to preserve goods during transportation or storage; (b) operations to improve the packing or labelling or marketable quality of goods; (c) operations to prepare goods for shipment; (d) simple assembly operations; (e) operations to mix goods where the resulting product does not have different properties from those of the goods that have been mixed. (4) For the purposes of this section, the Comptroller-General of Customs may, by instrument in writing published in the Gazette: (a) direct that the factory or works cost of goods is to be determined in a specified manner; and (b) direct that the value of Australian labour, the value of Australian materials or the factory overhead expenses incurred in Australia in respect of goods is to be determined in a specified manner; and those directions have effect accordingly. (5) The provisions of sections 48 (other than paragraphs (1)(a) and (b) and subsection (2)), 48A, 48B, 49A and 50 of the Acts Interpretation Act 1901 apply in relation to directions given under subsection (4) as if: (a) references in those provisions to regulations were references to directions; and (b) references in those provisions to the repeal of a regulation were references to the revocation of a direction. 269E Interpretation - the ordinary course of business (1) For the purposes of this Part, other than section 269Q, goods (other than made-to-order capital equipment) that are substitutable goods in relation to goods the subject of a TCO application are taken to be produced in Australia in the ordinary course of business if: (a) they have been produced in Australia in the 2 years before the application was lodged; or (b) they have been produced, and are held in stock, in Australia; or (c) they are produced in Australia on an intermittent basis and have been so produced in the 5 years before the application was lodged; and a producer in Australia is prepared to accept an order to supply them. (2) For the purposes of this Part, goods that: (a) are substitutable goods in relation to goods the subject of a TCO application; and (b) are made-to-order capital equipment; are taken to be produced in Australia in the ordinary course of business if: (c) a producer in Australia: (i) has made goods requiring the same labour skills, technology and design expertise as the substitutable goods in the 2 years before the application was lodged; and (ii) could produce the substitutable goods with existing facilities; and (d) the producer is prepared to accept an order to supply the substitutable goods. (3) In this section: made-to-order capital equipment means a particular item of capital equipment: (a) that is made in Australia on a one-off basis to meet a specific order rather than being the subject of regular or intermittent production; and (b) that is not produced in quantities indicative of a production run.' 40 These then are the provisions with which the present case is concerned. It will be noted that 'CTCO' became 'TCO'.

Vestas' Argument 41 Vestas' argument before the Tribunal and in this Court was that the capacity limb in s 269E(2) could not be satisfied because the local manufacturer who was put forward as being capable of producing goods which were substitutable for Vestas' gearbox, Hofmann, had never produced such gearboxes. It will be apparent from what has been said above that the legislative context of s 269E(2) shows clearly that this was not how the provision was ever intended to operate. 42 Vestas' argument was as follows: (a) The central provision was s 269C. It was this provision that provided for the deeming that the 'core criteria' were satisfied. A TCO could only be made under s 269P if the 'core criteria' were satisfied. The language used in s 269C was that 'no substitutable goods were produced in Australia in the ordinary course of business' on the day the application for the TCO was lodged. This was inherently temporal and indicated that on that day goods had to have already been produced. (b) The actual production requirement could also be seen in the reference to 'substitutable goods' in s 269C itself. That term was defined in s 269B to mean 'goods produced in Australia'. This was expressed to be in the past and this was so whether 'produced' was read as a verb or a past participle used adjectivally. (c) Further, the expression 'goods produced in Australia' was itself defined in s 269D in terms which were directed to past activities. Under s 269D(1)(a) they had to be 'wholly or partly manufactured in Australia'. Further, the calculus in s 269D(1)(b), which was directed at determining whether at least one quarter of the factory or works cost were represented by Australian components, made no sense in relation to goods which had not yet been produced. (d) Similarly, s 269E(1), which was concerned with goods produced in the ordinary course of business, looked to issues of past production. (e) Section 269E(2), the central provision in the appeal, which appears to be directed to the future by the words 'could produce' in para (c)(ii), was, in fact, directed to the past because the definition of 'made-to-order capital equipment' in s 269E(3) connoted past production. 43 Mr Davies QC, who with Mr Slonim of counsel, appeared for Vestas put this argument as one anchored in the text of the provisions. It was, as he put it, what the provisions said. 44 We would reject the argument for a number of reasons. First, for the reasons which follow, even without recourse to the legislative history Vestas' argument results in s 269E(2) being deprived of any substantive operation. Secondly, this anomaly can be removed only by reading ss 269E(1) and (2) as the provisions which have a temporal operation. Like its predecessors, s 269E has two limbs: the past, in relation to production line (or similar) goods (s 269E(1)); and the future, in relation to the capacity limb. This requires ss 269B and 269D to be read as lacking temporal elements but this is unsurprising when their actual function is brought to account. Thirdly, while this result flows without recourse to the legislative history, that context confirms the correctness of it. 45 As to the first point: if Vestas be correct, the result will be that under s 269E(2) the conditions in paras (a) and (b) cannot be met unless substitutable goods have been manufactured in Australia before the date of the TCO application. In relation to para (a), this follows from Vestas' argument that there cannot be 'substitutable goods' under s 269B(1) unless there are goods produced in Australia within s 269D. In relation to para (b), it follows from his contention that there cannot be 'made-to-order capital equipment' under s 269E(3) because, in the words of para 17 of Vestas' written submissions, it 'requires analysis of an actual production of goods'. 46 Assuming in Vestas' favour that this is, indeed, how s 269E(2)(a) and (b) are to be read, it will mean that the question of whether a producer 'could produce the substitutable goods' in s 269E(2)(c)(ii) only arises when it has already produced goods before the date of the TCO application. 47 On its face, this leaves s 269E in a curious state. Section 269E(1) is unambiguously tied to the past. It applies to goods which are not made-to-order, that is to say, production line goods, but only if they have been made in the past. Section 269E(2) then appears, on Vestas' argument, to apply to the question of whether goods could be manufactured in Australia but only if they have already been manufactured. 48 This then raises the question of what it is, if anything, that s 269E(2)(b) does. 49 Vestas' response to this was not without subtlety. It was this: s 269E(1)(a) to (c) were not engaged by a manufacturer who had made the goods before the time limits mentioned in those provisions. Thus, to take an example, a producer who had made substitutable goods ten years before the TCO application could not avail itself under any of the provisions of s 269E(1). Section 269E(2) was then to be seen as directed to this sort of producer. Provided the producer could show that the substitutable good was an item of made-to-order capital equipment to which s 269E(3) applied; that, under s 269E(2)(c)(i), it had made goods requiring similar skills etc within the last two years; that it could, in fact, produce the substitutable goods under s 269E(2)(c)(ii); and that it was prepared to accept such an order under s 269E(2)(d), it would be entitled to succeed under s 269E(2) and hence the core criteria in s 269C would not be satisfied. 50 Dr Donaghue QC who, with Ms Maud of counsel appeared for the Comptroller, submitted, correctly in our view, that this submission had an insurmountable problem. As a matter of definitional structure, there are no goods which fall within the scope of both provisions. Section 269E(2) only applies to made-to-order capital equipment within s 269E(3) and s 269E(1) applies to everything which is not equipment of that kind. Vestas' proposed producer of goods which, but for the fact the goods were last produced 10 years ago, would fall within s 269E(1) cannot ever be brought within s 269E(2). Put another way, if an item of equipment falls within the former provision it will be because it is not an item of made-to-order capital equipment and this will necessarily disqualify it from the operation of s 269E(2) which can only apply to equipment of that kind. 51 Once Vestas' argument is put to one side there does not appear to be any operation for s 269E(2) at all. The goods to which it applies are 'made-to-order capital equipment' which is defined to mean goods of a particular characteristic made on 'a one-off basis'. By definition, goods made on a one-off basis are likely to encompass a large range of goods which have never been produced before. In every such case s 269E(2) will do no work. Its operation will, therefore, be limited to those cases where one-off goods are involved which have been made more than once. Whilst this is most likely not an entirely empty class, it does seem to us to result in an operation for the provision which is, to say the least, largely empty and certainly idiosyncratic. Even without recourse to the legislative history, we can discern no rational reason relating to the protection of local industries which s 269E(2), so construed, might be seen to serve. Recourse to the legislative context shows, as discussed above, that no such operation was ever intended. 52 Vestas' argument, therefore, results in a largely redundant operation for s 269E(2) and is contrary to what the legislative context clearly suggests was the aim of the provisions. Authority counsels against a construction of a statute which leaves a provision with a redundant operation, for a court construing a statutory a provision 'must strive to give meaning to every word of the provision': Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 382 [71]. 53 Granted Vestas' argument has those problems, the question then arises as to whether there is another, more preferable, construction which avoids those difficulties.

The Correct Construction of s 269E(2) 54 The legislative context shows unequivocally that since 1983 a distinction has existed between the actual production and capacity limbs of the concession. There is nothing in the legislative history to suggest that Parliament intended to move away from that dichotomy. Indeed, to the contrary, the only indicia in the contextual materials are that this was not intended. Nor, for the reasons we have already given, is there any support in those materials for the notion that a requirement of actual prior production was to be inserted into the capacity limb in 1992; again the materials do not show that this was intended and, indeed, they show that it was not. 55 This suggests that s 269E should be seen simply as the most recent instantiation of an industry protection mechanism having two limbs - actual past manufacture of production line goods and the capacity for future production of goods - which has existed, varied at the level of detail, no doubt, but fundamentally unchallenged in this structural aspect, for some 32 years. 56 So viewed, s 269E(2) provides the straightforward answer to the question that s 269C plainly asks: when are goods produced in Australia in the ordinary course of business? It is a reading of s 269E which has, inter alia, the virtues not only of historical legislative continuity but of simplicity. That said, it also has consequences for the way ss 269B to 269D must be read. It means, in particular, that the definition of 'substitutable goods' in s 269B(1) cannot be read as having a temporal aspect. 57 Far from being a difficulty, however, the role that expression fulfils in the scheme of Pt XVA shows that it can hardly have been intended to operate otherwise. In 1992 (with further adjustment in 1996) the expression replaced an earlier expression in the original form of Pt XVA. As mentioned above, this was the idea of 'goods serving similar functions' under the old s 269C(1). That provision did not have a temporal element. Indeed, it involved notions of cross-elasticity of demand. Section 269B(4) had provided as follows: 'Without limiting sub-section (3), for the purposes of this Part, goods shall be taken to serve similar functions to other goods unless the Comptroller is satisfied that, if both goods were readily available for sale throughout Australia, there would be no significant part of Australia in which there would be significant cross-elasticity of demand between the goods.' 58 It will be apparent that this not only lacks a temporal element but is altogether hypothetical in nature. The Commission recommended in its 1991 report that the legislation should be amended to remove the requirement of cross-elasticity of demand from this definition (at p 89). It did not suggest that a temporal element should be inserted. The Government went further and replaced the 'serving similar functions' test with the 'substitutable goods' test (thereby accepting, in part, the recommendation to do away with cross-elasticity of demand as a requirement). But there is nothing to suggest that anyone thought that this involved the addition of an unprecedented temporal element. 59 So viewed, it is clear that the new concept of 'substitutable goods' was never intended to be directed at matters temporal but was only a provision to identify the class of goods under examination. A reading of the definition in s 269B(1) which gives it a temporal operation therefore makes s 269E(2) largely functionless. 60 A related, but similar, criticism is to be made of Vestas' approach to s 269D. It is quite plain from the scheme that Pt XVA is presently, and has always been, focussed on protection of local industry. Necessarily this has required the identification of local goods. The formula adopted has been to require at least 25% of the factory or works costs to be represented by Australian integers. That question does not have a temporal element to it. In effect, s 269D poses, in a statutory form, the question of whether a specified item - whether in the future or the past or a hypothetical inquiry - is Australian made. It is that concept which is then picked up on in the definition of 'substitutable goods' in s 269B(1). The net requirement of the provisions is that the goods examined under either limb of s 269E must be substitutable with the goods the subject of the TCO application and they must be, within s 269D, Australian made. There is no room for any temporal operation in those provisions. The temporal work is done in s 269E. 61 It remains to observe the effect of Vestas' argument that s 269C itself has a temporal element. We agree that this is so. It requires the questions posed by s 269E to be asked as if they were being answered on the day the TCO application was made. To that extent, Vestas is correct. That proposition is however, a long way short of demonstrating that the goods must have been previously produced. 62 For those reasons, we would reject Vestas' construction of ss 269B to 269D.

The Tribunal's Reasoning 63 The Tribunal was persuaded that Vestas' construction was correct. For the reasons we have just given, it was in error to adopt that construction. Out of deference to the Tribunal, which gave this question anxious and detailed consideration, it is useful to identify how it reasoned and why this reasoning was erroneous. 64 The Tribunal reasoned this way: (a) s 269E(1) and (2) are the same except one excludes made-to-order capital equipment, and goods requiring repair, and the other does not; (b) there is no reason, in light of (a), to think that the issue of whether there had been prior production of the goods differed between the two provisions; (c) accordingly, since it was plain that s 269E(1) did require prior production, it must follow that prior production was also required for subs (2); (d) this conclusion was strengthened because the word 'are' (in the reference in both subsections to 'goods that are substitutable goods') hinted, by use of the present tense, at goods which already existed; (e) the Comptroller's argument required the provision to be rewritten and words added; and (f) Pt XVA reveals a policy of only affording protection where goods have been previously produced. 65 For the reasons we have already given, propositions (a) and (b) do not grasp the actual operation of s 269E's two limbs as reflecting an unwavering legislative commitment to maintain a past production limb and a capacity limb to the concession. The logic of proposition (c) would follow if (a) and (b) were correct, but they are not. Proposition (d) is incorrect because it fails to take into account the non-temporal nature of the definitions of 'substitutable goods' and 'goods produced in Australia'. 66 As to proposition (e), the Tribunal reasoned this way at [30]: 'Putting aside the problems that we have already referred to in giving different interpretations to ss 269E(1) and (2), we are of the view that the CEO's interpretation of s 269E(2) requires us to reorder the words Parliament has used. His reading requires us to read it as providing that, if the conditions in ss 269E(2)(c) and (d) are met, goods will be taken to be substitutable goods that are made-to-order capital equipment that have been produced in Australia in the ordinary course of business. We cannot, however, reorder words at our whim. To reorder them to meet the CEO's interpretation would mean that the words "taken to be" would precede the identification of the goods as substitutable goods and made-to-order capital equipment when, in fact, they preceded the words "produced in Australia in the ordinary course of business ...". The provision would then read: "For the purposes of this Part, goods ... [are taken to be]: (a) … substitutable goods in relation to goods the subject of a TCO application; and (b) … made-to-order capital equipment; … produced in Australia in the ordinary course of business if: (c) a producer in Australia: (i) has made goods requiring the same labour skills, technology and design expertise as the substitutable goods in the 2 years before the application was lodged; and (ii) could produce substitutable goods with existing facilities; and (d) the producer is prepared to accept an order to supply the substitutable goods."' 67 We do not agree that any such rewording is necessary. The Tribunal's contrary view is driven by its erroneous assumption that the concept of 'substitutable goods' has a temporal element. When that assumption is cleared away the need for the addition of words to the provision recedes. 68 Finally, as to proposition (f), the problem with the Tribunal's reasons appears at [52], where it said: 'Notions of capacity, or lack of capacity, to produce goods were removed from s 269C in 1992. …' 69 For the reasons we have already given, this is incorrect. The 1992 amendments were assuredly not intended to do this and they did not do so. The capacity test explicitly appears in s 269E(2). Consequently, the Tribunal's conclusions at [43] that the policy of Pt XVA 'is not intended to protect capability and willingness when substitutable goods have never been produced' proceeds from an erroneous assumption about what happened in 1992.

The Argument that the Comptroller conceded the point 70 Next, Vestas submitted that a concession made by the Comptroller during the hearing before the Tribunal meant that the appeal should be dismissed. To understand the concession it is necessary to focus upon the way the case was conducted before the Tribunal. 71 The Comptroller's case in the Tribunal was always framed under s 269E(2). At [18] of the Tribunal's reasons the Comptroller's case was recorded thus: 'The submissions made by Mr Northcote on behalf of the CEO are summarised at the conclusion of his Statement of Facts and Contentions: "87.1 The goods produced by Hofmann Engineering and the TCO goods are 'made-to-order capital equipment' within the meaning of Section 269E(3); 87.2 The goods produced by Hofmann Engineering in the 2 years before the TCO application was lodged were all 'produced in Australia' as they had at least 25% Australian content, and at least one substantial process of manufacture was undertaken in Australia, as required by Section 269D; 87.3 The goods produced by Hofmann Engineering were all produced in Australia in 'the ordinary course of business', as the requirements in Section 269E(2) were met; 87.4 That Hofmann Engineering was at 14 August 2012 prepared to accept an order for a good substitutable for the TCO goods and continues to be prepared to accept an order for the TCO goods; 87.5 In these circumstances, the criteria for granting a TCO under s. 269P ... [have] not been met; 87.6 ..."' 72 The reference to 'made-to-order capital equipment' and s 269E(3) in para 87.1 inevitably meant that only s 269E(2) was in play, since s 269E(1) has no application to made-to-order capital equipment. This was made clear at para 87.3 which explicitly invoked s 269E(2). 73 Some confusion then appears to have crept into para 87.2. The goods which needed to have the suggested qualities were not the goods which had in fact been produced in the last two years, as the wording of s 269E(2)(c)(i) shows. Rather, it was the hypothetical goods which could be produced under s 269E(2)(c)(ii). 74 There was no need for the Comptroller to prove, therefore, that the gearboxes which had been produced by Hofmann in the last two years were 'substitutable goods'. For completeness, the actual gearboxes made by Hofmann in the last two years were: (1) a 548kW wind turbine gear box (Windflow); (2) a 7.4MW gear box; (3) a 2.5MW gear box; and (4) a 1MW underwater tidal turbine. 75 The Tribunal recorded the Comptroller's concession at [20]: 'Later, the CEO conceded that gear boxes such as these and any others manufactured by Hofmann Engineering either currently or in the past are not substitutable goods in the context of the TCO application. His argument is that this is of no consequence for s 269E(2) is a deeming provision and does not require there to be, or to have been, actual production of substitutable goods in Australia. …' 76 In this Court, Vestas submitted that the Comptroller had conceded that 'on the day on which the TCO Application was lodged no substitutable goods were produced in Australia', so that under s 269C his case had to fail. 77 That was not the concession which is recorded at [20]. That concession was that the goods which had been produced were not substitutable. This was conceded, presumably, because it was entirely irrelevant to the Comptroller's argument that s 269E(2) applied. Once that point is reached, the argument reduces to an assertion that s 269E(2) only operates in relation to substitutable goods which have already been produced. That is the argument we have rejected above. It follows that Vestas' argument based on the alleged concession fails too.

The Factual Argument 78 Vestas then submitted by notice of contention that there was no evidence before the Tribunal that the substitutable goods referred to in s 269E(2)(a) were 'made-to-order capital equipment' within the meaning of s 269E(3). Hence, even if the Comptroller was correct about the operation of the provision, the case failed because s 269E(2)(b) was not satisfied. 79 The Tribunal made no finding about whether either of s 269E(2)(a) or (b) had been satisfied because of its erroneous view that s 269E(2) could not operate unless there had been prior production. Even though the Tribunal did not find any facts about the matter, this Court nevertheless has the power on an appeal under s 44 of the Administrative Appeals Tribunal Act 1975 (Cth) to make findings of fact in its discretion. The power is conferred by s 44(7) to (9) which provide: '44 Appeals to Federal Court of Australia from decisions of the Tribunal … Federal Court may make findings of fact (7) If a party to a proceeding before the Tribunal appeals to the Federal Court of Australia under subsection (1), the Court may make findings of fact if: (a) the findings of fact are not inconsistent with findings of fact made by the Tribunal (other than findings made by the Tribunal as the result of an error of law); and (b) it appears to the Court that it is convenient for the Court to make the findings of fact, having regard to: (i) the extent (if any) to which it is necessary for facts to be found; and (ii) the means by which those facts might be established; and (iii) the expeditious and efficient resolution of the whole of the matter to which the proceeding before the Tribunal relates; and (iv) the relative expense to the parties of the Court, rather than the Tribunal, making the findings of fact; and (v) the relative delay to the parties of the Court, rather than the Tribunal, making the findings of fact; and (vi) whether any of the parties considers that it is appropriate for the Court, rather than the Tribunal, to make the findings of fact; and (vii) such other matters (if any) as the Court considers relevant. (8) For the purposes of making findings of fact under subsection (7), the Federal Court of Australia may: (a) have regard to the evidence given in the proceeding before the Tribunal; and (b) receive further evidence. (9) Subsection (7) does not limit the Federal Court of Australia's power under subsection (5) to make an order remitting the case to be heard and decided again by the Tribunal.' 80 The Comptroller did not seek the making by this Court of a finding that the substitutable goods were made-to-order goods under s 269E(3). It was only Vestas that sought the negative finding that they were not. 81 We do not think that this is an appropriate case in which to exercise the power in s 44(7). The question which arises under s 269E(3) only arises under the capacity limb in s 269E(2). The factual inquiries it throws up, and which the Tribunal did not resolve, are: (1) Could the Australian producer have produced on the application day a good using its existing facilities which would have been substitutable for the goods the subject of the TCO application within the meaning of the definition of 'substitutable goods' in s 269B(1)? (2) If yes, would the good be an item of capital equipment within the meaning of s 269B(1) and would it have been Australian made under s 269D? (3) If yes to both questions in (2), would the good have been made on a one-off basis as a result of a specific order, rather than being the subject of regular or intermittent production (s 269E(3)(a))? (4) If yes, would the good be produced in quantities which were not indicative of a production run (s 269E(3)(b))? (5) If yes (at which point both s 269E(2)(a) and (b) would be satisfied), has the producer made goods within the last two years requiring the same labour skill etc as the substitutable goods which it could have made (s 269E(2)(c))? (6) If yes, is the producer prepared to accept an order to supply the hypothetical good (s 269E(2)(d)? 82 Only if all of these questions are answered 'yes' can it be found that s 269E(2) is engaged. A negative answer to any of them will justify the conclusion that the provision is not enlivened. 83 Vestas took the Court to evidence before the Tribunal which was capable of suggesting that Hofmann could have produced a gearbox which was substitutable with the TCO goods using a production line. There was also evidence, however, that Hofmann could have produced it as a result of a one-off order. Neither of those facts, however, engages with the correct questions. Those are the question in propositions (3) and (4) (which merely paraphrase s 269E(3)(a) and (b)). The question is not what Hofmann could have done; it is what it would have done. That question, no doubt, will often enough be affected by the capacity of a producer: it is common sense, after all, that a producer would not have done something which it could not do. But the obverse is not true. That Hofmann could have produced substitutable gearboxes by production line or on a one-off basis (which appears to be what the evidence suggests) tells one nothing about which of those it would have done. 84 Once hypothetical capacity to manufacture a good is established, s 269E(3) then requires a contemplation of whether the Australian producer would have manufactured the goods as one-off goods or as production line goods. This is most likely able to be answered only by knowing whether the demand for the good, if it had been made, would have resulted in a decision by the producer to enter production line manufacture or not. 85 The material before this Court does not provide an adequate basis for determining any of these matters. It is inappropriate, therefore, for this Court to exercise the power under s 44(7) of the Administrative Appeals Tribunal Act 1975 (Cth).

Conclusion 86 The question of law posed for the Court's consideration was: '1. Whether the Tribunal erred in its construction of s 269E(2) of the Customs Act 1901 (Cth) by: 1.1 misconstruing the expression "substitutable goods" as defined in s 269B(1): 1.1.1 by interpreting the expression "goods produced in Australia" in that definition as being confined to goods that have at some time in the past been actually produced in Australia and as being incapable of encompassing goods to be produced in the future; and 1.1.2 by failing to interpret those expressions and s 269D as being capable of encompassing goods to be manufactured in Australia in the future; 1.2 misconstruing "goods that … are substitutable goods in relation to goods the subject of a TCO application; and … are made-to-order capital equipment"; in s 269E(2)(a) and (b) by: 1.2.1 interpreting those expressions as being confined to goods that presently exist and/or have at some time in the past been actually produced in Australia; [and] 1.2.2 failing to interpret those expressions as being capable of encompassing goods to be produced in the future.' 87 That question should be answered 'yes' as to each paragraph. The appeal should be allowed, the decision of the Tribunal dated 21 May 2015 set aside and the matter remitted to the Tribunal for further consideration in light of this Court's reasons. How the Tribunal proceeds from here is a matter for it. Vestas must pay the Comptroller's costs of the appeal to this Court. I certify that the preceding eighty-seven (87) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Jessup, Logan and Perram.