The Tribunal's decision
26 The Tribunal identified the first two principal issues and then set out in considerable detail the evidence relating to each issue. The first issue, referred to as the "delegation of authority matter," related to whether Mr Walker had authority to demand payment from the applicant. The second issue, referred to as the "tariff classification matter," related to whether the goods ought properly to have been classified by reference to sub‑heading 2710.00.20 as the respondent contended, or 2710.00.90 as the applicant contended, or some other classification under sub‑heading 2710 (in particular, 2710.00.30).
27 The delegation of authority matter arose in the following circumstances. Mr Walker signed the two letters of demand which claimed the short paid duty, and which were made pursuant to s 165 of the Customs Act. From April 1991 until March 1998 Mr Walker held the position of Chief Inspector in the CIB, being position No 31551. During this period he exercised a number of powers, including the power to make demands for duty under s 165 of the Customs Act. These powers had been the subject of instruments of delegation.
28 An alternative basis for Mr Walker's authority to sign the 19 May 1997 notice was that Mr Walker was acting as head of the CIB during the period 19 to 23 May 1997 (inclusive). The head of the CIB, Mr Robert Johnson, was going on leave during the week commencing 19 May 1997. Prior to going on leave Mr Johnson asked Mr Walker orally to act in his position whilst he was away on leave. Mr Walker agreed to do so. Mr Johnson then orally sought and obtained the formal approval of the Regional Director of Customs, Ms Virginia Stretton, to Mr Walker so acting as the power to appoint Mr Walker to act in Mr Johnson's place was vested in Ms Stretton. Mr Walker's acting appointment was not reduced to, or evidenced in, writing, although such an acting appointment was required to be in writing.
29 The Tribunal first addressed the question of whether the demands needed to have been made pursuant to s 165 of the Customs Act. The Tribunal then addressed the question whether Mr Walker had authority, properly delegated under s 14 of the Customs Administration Act 1985 (Cth), to issue demands pursuant to s 165 of the Customs Act in either his capacity as relieving head of the CIB, or as Chief Inspector of the CIB.
30 The Tribunal considered that the decision of the High Court in Malika Holdings Pty Ltd v Stretton (2001) 204 CLR 290 applied and that consequently a demand under s 165 of the Customs Act was not necessary. The Tribunal considered Malika Holdings to be applicable to the applicant, because its director Mr Tribuzio, had intentionally misinformed, and committed a fraud upon, the respondent.
31 The Tribunal's finding of fraud was based on Mr Tribuzio's whiting‑out of the name of the product on the Jayta specification and the Jayta pro forma invoice and his re‑naming of the product "X370". Mr Tribuzio's evidence was not consistent on this issue. He said that he had renamed the product "X370" and had whited‑out the heading on the Jayta specification and the description on the pro forma invoice for internal brand classification purposes. He also said that this had been done to ensure that all the banking documents were in order so there would be no difficulty regarding payment by the bank under a letter of credit which was in place. The Tribunal did not accept his explanation and did not regard Mr Tribuzio as a credible witness. The Tribunal found that although Mr Tribuzio denied having knowledge of, or expertise in, the relevant industry, this was belied by his post‑graduate qualifications and experience in the area. Mr Tribuzio was alleged to have relied on the advice of his solicitors, but such reliance was not borne out by the facts. Finally, Mr Tribuzio's evidence regarding the whiting‑out of documents was unsatisfactory as the Tribunal considered it was unlikely that the bank requirements would necessitate the action Mr Tribuzio took and the Tribunal considered that such an explanation was not consistent with the evidence of Mr Brothers.
32 The Tribunal concluded that Mr Tribuzio's motivation in the whiting‑out process was to deceive the respondent as to the true nature of the goods and thereby avoid duty by having the goods classified under sub‑heading 2710.00.90 rather than under sub‑heading 2710.00.20. The Tribunal found that the applicant had misinformed and deliberately committed a fraud upon the respondent and so Malika Holdings applied. The effect of Malika Holdings in these circumstances was, according to the Tribunal, that a demand complying with s 165 of the Customs Act was not necessary.
33 The Tribunal concluded that the de facto officer principle did not operate in favour of the respondent and the respondent has not pursued this issue on the appeal.
34 The Tribunal considered that Mr Walker clearly fell within the definition of Collector under s 8(1)(a)(iii) of the Customs Act (par [7] above). The Tribunal noted that ss 167 and 273GA(2) refer to a "Collector", and said that, in light of the definition in s 8(1)(a)(iii), Mr Walker was clearly a Collector as contemplated in those sections. Having concluded that Malika Holdings applied so as to dispense with the need for a demand that complied with s 165 of the Customs Act, and having concluded that Mr Walker was a Collector for the purposes of ss 167 and 273GA(2), the Tribunal found that the demands made on 19 May 1997 and 19 August 1997 were valid.
35 The Tribunal reasoned:
"(c) Section 165 of the Customs Act has the effect that where the Respondent is not misinformed or there is no fraud or negligent misdescription, the Respondent cannot make a demand for duty after the expiry of 12 months. That prohibition (and it is to be remembered that the system involves self‑assessment) is removed when Malika Holdings (supra) applies, as, in our view, it does in this instance.
(d) This Tribunal derives its jurisdiction from section 273GA(2) of the Customs Act, which in its terms relates back to section 167 of the Customs Act. This Tribunal must consider the 'decision to make that demand and of any other decision forming part of the process …'. The first question then is as to whether the demand must comply with section 165 of the Customs Act. Section 167 of the Customs Act does not refer to section 165 of the Customs Act, even though it follows relatively closely after it. It is arguable that where Malika Holdings (supra) does not apply, the demand must nevertheless be one which complies with section 165. In this case, though, Malika Holdings (supra) does apply, and so that a demand under section 165 of the Customs Act is not necessary. This being so, the demand made in May 1997, even if it was not compliant with section 165 of the Customs Act sufficies; so for that matter would the later demand by Mr Walker be sufficient. It is relevant as we have said that Mr Walker was on any basis a Collector as defined. This being so, this Tribunal does have jurisdiction to consider the relevant classification and the demand made in respect thereof."
36 The Tribunal nevertheless went on to consider the applicant's submissions regarding Mr Walker's ability to make a demand under s 165 of the Customs Act having regard to the position he held in his own right.
37 On both occasions on which the demands were served, Mr Walker held the position of Chief Inspector of the CIB, being position No 31551. There was no Instrument of Delegation of Authority that on its face conferred on position No 31551 a power to make a demand under s 165 of the Customs Act. Instead, the Instrument delegating power to position No 31551 referred to s 165 of the Excise Act 1901 (Cth) ("the Excise Act").
38 The instrument of delegation under which Mr Walker was acting had been signed by the acting Comptroller‑General of Customs, Mr Kelly on 6 December 1989. However, that instrument delegated power to a number of positions including Mr Walker's position No 31551, as being, inter alia, pursuant to s 165 of the Excise Act. This was said to be a mistake in the preparation of the instrument which should have referred to the delegated power as being pursuant to s 165 of the Customs Act. Mr Kelly said that he did not intend, when signing the instrument of delegation, to delegate the power under s 165 of the Excise Act which related to the power to make by‑laws. Rather he intended to delegate powers under the same section, that is s 165, of the Customs Act. He said the mistake was a clerical error.
39 Mr John Drury, who acted in the position of Comptroller‑General of Customs during part of 1993, and who signed the Instrument of Delegation of Authority on 30 September 1993, said hedid not intend to delegate power under s 165 of the Excise Actto position 31551 at the time he executed the Instrument of Delegation. Rather, it was his intention to delegate his authority to that position in respect of s 165 of the Customs Act. He said that the reference to s 165 of the Excise Act was the result of a clerical error in the preparation of Sch 1 of the Instrument of Delegation. Mr Drury said that s 165 of the Excise Act related to the power to make by‑laws and this power was only intended to be delegated to officers in senior management positions and was never intended to be delegated to less senior personnel such as those in position 31551.
40 The Tribunal concluded that, when one had regard to the Instrument of Delegation as a whole, it became clear that the reference to s 165 of the Excise Act in relation to a number of positions, including position 31551, was an error of a clerical nature. The Tribunal thought that it was open to it to interpret the Instrument of Delegation in the manner in which it was plainly intended rather than what was stated on the face of the Instrument. The Tribunal therefore read the Instrument of Delegation as referring to s 165 of the Customs Act rather than s 165 of the Excise Act.
41 The Tribunal found that Mr Walker had authority to make both the first and second demands in his capacity as Chief Inspector of the CIB, as delegated by instrument and pursuant to s 165 of the Customs Act.
42 The Tribunal thought that it was not strictly necessary for it to consider whether Mr Walker was duly authorised to act as the head of the CIB as it had already found that the demands were validly made in his capacity as Chief Inspector of the CIB, nevertheless it addressed this point.
43 Prior to 19 May 1997, Mr Johnson purported orally to authorise Mr Walker to act in his position in the week commencing 19 May 1997. Regulation 116A(2) of the Public Service Regulations 1935 (Cth) provided:
"The Secretary of a Department may give a direction in writing to an officer to perform temporarily the whole, or a specified part, of the duties of an office in that Department."
44 Mr Walker purported to act in position 30508, as acting head of the CIB, in the week commencing 19 May 1997. Mr Walker signed the first demand as "Delegate of the CEO" on 16 May 1997, before he was acting in position 30508. The demand was served on 19 May 1997, in accordance with Mr Walker's instructions, once Mr Walker had commenced to act in position 30508.
45 The Tribunal concluded that a demand is made when it is delivered so that the first demand was made on 19 May 1997. The Tribunal then addressed the second issue whether Mr Walker was properly authorised to act in position 30508.
46 Mr Johnson, who was head of the CIB from 1994 to 1999 and was Mr Walker's direct supervisor in May 1997, said that prior to appointing Mr Walker to relieve him in position 30508 he had received oral approval of the appointment from the Regional Director of Customs, Ms Virginia Stretton. He said that the usual practice was for oral approval to be sought well before the appointment and for the paperwork to be completed at a later date. He assumed that the appropriate written approval had been given. Mr Walker did not receive written approval of his appointment.
47 Mr Kelly said that, at least while he was with Customs, reg 116A(2) of the Public Service Regulations 1935 required that directions appointing an officer to assume another officer's position on an acting basis had to be made in writing and took effect on the day the written direction was given.
48 The Tribunal concluded that the reference to a written direction in reg 116A(2) of the Public Service Regulations 1935 was permissive rather than mandatory so that the lack of written authorisation prior to 19 May 1997 did not result in Mr Walker's appointment to position 30508 being invalid.
49 The Tribunal therefore found that Mr Walker also had the power to make a demand for duty short levied in his role as relieving head of the CIB.
50 It was agreed by the parties that the goods imported by the applicant fell within heading 2710 of Sch 3 of the Tariff Act but there was a disagreement as to which specific sub‑heading properly described the goods. The Tribunal addressed the question whether the goods ought to have been classified as "automotive diesel oil, "industrial diesel fuel" or "marine diesel fuel" so as to come under sub‑heading 2710.00.20, as was submitted by the respondent, or as "Other" so as to come under sub‑heading 2710.00.90, as was submitted by the applicant. The Tribunal also had to consider the applicant's submission that, if the respondent's method of interpretation of the categories was correct, the goods ought properly to have been classified as fuel oil, heating oil, lighting kerosene or power kerosene so as to come under sub‑heading 2710.00.30. In determining the appropriate classification, the Tribunal considered whether the use of the goods or the intention of the importer as to the use to which the goods would be put were relevant or determinative factors. The Tribunal concluded that the intention of the importer was, in the light of the authorities, "altogether irrelevant".
51 Both parties called a number of expert witnesses as to whether the product was an automotive diesel oil, industrial diesel fuel or a marine diesel fuel so as to fall within sub‑heading 2710.00.20, or whether it was more appropriately classified as some other class of goods. Australian Standard AS3570 for automotive diesel fuel, as well as the International Standard, ISO 8217:1987, and the British Standard, BSMA 100:1998 for marine diesel fuel, were used as the comparative standards by the expert witnesses.
52 The Tribunal interpreted the three categories in 2710.00.20 - automotive diesel oil, industrial diesel fuel and marine diesel fuel - as being disjunctive, despite the absence of "or", so that the product only needed to fall within one category in order to be classed under sub‑heading 2710.00.20. In any event, the Tribunal found that the product fell into all three categories. In particular, the Tribunal found that the product constituted an automotive diesel oil whether or not the Australian Standard was strictly complied with. The Tribunal therefore concluded that the goods fell within sub‑heading 2710.00.20.
53 The Tribunal considered that the only categories relevant to the applicant's product in sub‑heading 2710.00.30 were heating oil and fuel oil. Based on the expert evidence of Mr Gunn and Mr Shuptrine, the Tribunal concluded that the goods were not of a type that fell within sub‑heading 2710.00.30.
54 The Tribunal rejected the applicant's contention that sub‑heading 2710.00.90 was a specific classification. The Tribunal interpreted sub‑headings 2710.00.1 to 2710.00.59 inclusive as specific classifications and sub‑heading 2710.00.90 as a residual "bucket" category so that, if the product was found to fall within one of the specific classifications, it would be unnecessary to consider the classification "Other" in sub‑heading 2710.00.90. As the Tribunal found that the goods fell within the specific classification of 2710.00.20, it thought it unnecessary to consider whether the goods could come within 2710.00.90.
55 The Tribunal acknowledged that "suitability for use" may be relevant in classifying goods and referred to a number of cases in which the use to which the goods may be put, as indicated by their physical and chemical properties (and as distinct from the use to which the importer of the goods intended to put the goods) was a relevant consideration. Whilst the Tribunal considered that evidence of use was relevant to a limited extent in relation to suitability, it noted that sub‑heading 2710.00.20 was not a use‑based category and that in this instance scientific analysis of the goods was required. As noted above, it took the view that the scientific analysis of the goods indicated that the goods were in fact automotive diesel oil, industrial diesel fuel and marine diesel fuel.
56 The Tribunal indicated that the classification issue was resolved in part by its conclusions as to the factual circumstances surrounding the whiting‑out process and in part by the weight of the scientific evidence as to the nature of the product. The scientific evidence supported classification under sub‑heading 2710.00.20, and was not undermined by considerations of suitability for use or intention as to use, particularly given that the Tribunal had found that the intention of the applicant was to conceal the true nature of the goods and that the evidence given as to intention by Mr Tribuzio was not credible.
57 The Tribunal therefore concluded that the goods were properly classified under sub‑heading 2710.00.20.