Customs Act 1901 - ss 269B, 269C, 269E, 269K, 269l

Administrative Decisions (Judicial Review) Act 1977 - ss 13, 16

Davies Craig Pty Limited v Comptroller-General of Customs (1986) 68 ALR 105

Amcor Limited v Comptroller General of Customs (1988) 79 ALR 221

Corinthian Industries (Syd) Pty Limited v Comptroller-General of Customs [1989] FCA 100; (1989) 86 ALR 387

The decision of the second respondent be set aside;

The decision be remitted to the first and/or second respondent for reconsideration in accordance with these reasons;

The respondents pay the applicant's costs of these proceedings.

NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

This case concerns clear polyethylene terepthalate resin ("PET" resin) which is a substance used in the manufacture of plastic containers. PET resin is not produced in Australia, and was first introduced into this country in 1979. It has primarily been used in the manufacture of large soft drink bottles.

2. The applicant imports "PET" resin ("the goods"). On 29 September 1987 it lodged an application seeking from the first respondent a Commercial Tariff Concession Order ("CTCO") in respect of the goods. The CTCO if granted would have reduced the rate of customs duty payable on the goods from 10% to 2%.

3. The application was refused on 22 August 1988 by Mr L. Nock, a delegate of the first respondent. The applicant subsequently sought internal review of that decision pursuant to s 269K(2) of the Customs Act 1901 ("the Act"). The review was undertaken by Mr. Edward Tregillgas, the second respondent, also a delegate of the first respondent, who, on or about 5 July 1989, affirmed Mr. Nock's decision not to grant a CTCO in respect of the goods. On 18 August 1989, he published reasons for his decision pursuant to a request under s.13 of the Administrative Decisions (Judicial Review) Act 1977 ("the ADJR Act").

4. The applicant appeals to this court seeking review, under s 16 of the ADJR Act, of the decision of Mr. Tregillgas. The grounds of the application are as follows:-

(1) The decision involved errors of law in that

the first respondent and/or the second respondent

misconstrued sub-section 269B(4) of the Customs

Act, 1901.

(2) The first respondent and/or the second

respondent failed to take relevant considerations

into account in making the decision.

(3) The first respondent and/or the second

respondent took irrelevant considerations into

account in making the decision.

(4) A breach of the rules of natural justice

occurred in connection with the making of the

decision.

(5) There was no evidence or other material to

justify the making of the decision.

(6) The decision was unreasonable.

5. The respondents concede that there was a relevant breach of the rules of natural justice in circumstances to which I will later make reference. This concession assumes significance in the context of the orders that the parties seek.

(1) An order that the decision be set aside.

(2) An order that the first respondent grant a

Tariff Concession Order according to the applicant's

application for such an Order with effect from 29 September

(3) Alternatively, an order that the decision under

review be remitted to the first and/or the second respondent

for reconsideration with the direction that:-

(a) the use of PET resin in the manufacture of

500 millilitre Pine-o-Cleen containers; and

(b) investigation by Goodman Fielder Industries

Limited of the possible use of PET resin for the manufacture

of containers for the premium brands under the trade name

Meadow-Lea

- could not constitute significant cross-elasticity

of demand between PET resin and PVC resin;

Additionally, as a result of the development of argument in this case, the applicant also sought orders that the respondents publish a notice under s.269L of the Customs Act, and that there be liberty to apply.

7. The respondents seek, pursuant to their concession that a particular breach of natural justice has occurred, to have the matter remitted to the first respondent for consideration in accordance with law. They argue that it would be inappropriate in the circumstances for the court to make mandatory orders as there are questions of discretion and judgment under the Act which are best left to the unconfined consideration of the respondents. In particular, they rely upon the fact that the second respondent, in the circumstances of his decision, did not consider sections 269E and 269L of the Act. It is correctly conceded by the applicant that section 269L must be complied with by the respondent before the applicant's application can be granted. Accordingly, it is not possible for this Court to make order 2 as sought. I shall refer to considerations arising in respect of s 269E later in these reasons.

8. It is convenient to set out, so far as relevant, the sections of the Act which are involved on this case:-

(3) For the purposes of this Part, identical goods shall be

taken to serve similar functions.

(4) 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.

...

(7) For the purpose of this Part, a person shall 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.

...

s 269C (1) Subject to this Part, where the Comptroller,

after considering an application under section 269G for the

making of an order under this section in respect of 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 Comptroller shall make a written order, declaring that

the particular goods are goods to which a prescribed item

specified in the order applies.

...

(1C) An order provided for by sub-section (1), (1A) or (1B)

is to be known as a Commercial Tariff Concession Order.

...

s 269E (1) The Comptroller may, in his discretion refuse to

make a concession order under sub-section 269C(1) in respect

of particular goods if, in his opinion, the making of the

order:-

(a) would be likely to have a substantially

adverse effect on the market for any goods produced in

Australia; or

(b) would not be in the national interest.

...

s 269K (1) Where the Comptroller decides not to make a

concession order for which an application, other than an

application deemed to have been made under sub-section

269J(1) or (2), has been made (whether or not a notice

referred to in section 269L in relation to the application

has been published), he shall, in a prescribed manner, give

the applicant notice, in writing of the decision.

(2) The giving of a notice under sub-section (1) in respect

of a concession order does not prevent the Comptroller

giving further consideration to the application or

applications for that concession order or reversing the

decision by reason of which notice was given.

s 269L The Comptroller shall not make a concession order

(not being an order dealt with in a report by the Industries

Assistance Commission or the Temporary Assistance Authority

or an order under sub-section 269P(10) unless he has:-

(a) published in the Gazette a notice:-

(i) stating that an application for the

order has been made;

(ii) specifying the particular goods to which

the application relates; and

(iii) inviting any persons who consider that

there are reasons why the order should not be made to

submit, in a manner specified in the notice, particulars, in

writing, of these reasons to the Comptroller within 28 days

after the date of the publication of the notice; and

(b) considered any relevant particulars

submitted in response to the invitation referred to in

sub-paragraph (a)(iii).

9. The provisions mainly involved in the determination of this review are ss 269C(1)(a) and (b) and s 269B(3) and (4). Before considering these sections, it is necessary to make some reference to the facts of the matter, which mainly appear from documents placed before the Court as annexures to affidavits read in the proceedings.

10. As already indicated the applicant sought a CTCO in respect of the importation of PET resin on 29 September 1987. It appears that prior to 1985 a formal approach had been made to the Department of Industry, Technology and Commerce on behalf of polyvinyl chloride (PVC) manufacturers and a group of blow moulders of bottles made of that substance, seeking assistance against imports of PET resin. A departmental investigation took place which "included discussions with representatives of the PET and PVC industries, production site visits, examination of questionnaires received from the complainants and analysis of overseas PVC/PET interaction". The Department found some evidence of substitution of PET products for PVC products, but advised the complainants that it had concluded "that the extent and potential for short term growth of these sales is minimal". It said it would monitor future developments. The result was that PET resin remained subject to import duty, at that point of time, at the existing rate of 2%. However, a decision was later taken at government level (the details of which are of no consequence) which resulted in an increase of the rate of duty on PET resin to 10% from 1 January 1988. Importers of PET resin who wished to bring it into Australia at the previous 2% rate became obliged to make application for a CTCO to effect this purpose.

11. The applicant made such an application through its customs agent, Ronald C. Fisher, on 24 September 1987 and, in accordance with relevant regulations, forwarded a market statement together with correspondence it had exchanged with Australian manufacturers on the topic of the application. The application noted the fact that ICI Australia Limited ("ICI") and B.F. Goodrich Chemical Limited ("Goodrich") had both objected "on the grounds that a concession would have a substantially adverse effect on their market for PVC resins in the container area". The application further noted that PET resin was not produced in Australia and was not capable of being so produced in the foreseeable future as the local demand was around 13,000 tonnes per annum whilst it was not economically viable to build a production plant in Australia unless there was a demand of the order of 50,000 tonnes per annum.

12. The application was based on the contention that, within the meaning of the Act, no goods serving similar functions to PET resin were being produced in Australia or were being capable of being so produced by any person in the normal course of business. This claim was contested by ICI and Goodrich, both producers of PVC resin, on the basis that that substance was produced by them and relevantly served similar functions to PET resin. Accordingly it was asserted that the CTCO should not be granted and the tariff rate of 10% should be maintained. It was indicated that there would be no objection on their part to the applicant being granted a "policy by-law" which would enable it to bring in PET resin for the specified purpose of making carbonated soft drink bottles of a certain large size. It may be noted that this method of importation if adopted would be confined to the applicant alone and for the specified purpose, whereas the issue of a CTCO would operate in favour of all persons or organisations seeking to import PET resin.

13. The letter accompanying the application referred to the fact that from 1 January 1988 PET resin which could currently be imported at a duty of 2% would then become dutiable at 10% in the absence of a concession. The application was, as already indicated, accompanied by a market statement and copies of correspondence which had, up to that point of time, been exchanged with Australian PVC manufacturers. Mr Fisher referred to this correspondence and the issues arising from it in the following terms which, clearly, make reference to the requirements of ss 269B and C:

"The question, then, is whether goods serving

similar functions are being produced in Australia

and both ICI and B.F. Goodrich claim that PVC

resin is such a good. Of course the comparison

between PET and PVC resins must revolve around

what is practical and realistic in the market

place and the degree of competition which exists.

The method used to determine the degree of

competition is the cross elasticity of demand

concept and, in this case, an accurate measure can

be made as PET resin is currently imported at 2

per cent and the application for a concession

seeks a continuance of that rate. In other words

the current market realities would be the market

realities were a Tariff Concession Order to be

promulgated.

As the department would know the issue was one

looked at by the Industrial Assistance Commission

in its recent review of assistance for the

Chemicals and Plastics Industries. The Commission

noted in its report that `Participants agreed that

PVC is not substitutable for PET in the production

of bottles for carbonated soft drinks'. The

Commission also commented that it was not clear as

to what degree of substitution could or would

exist between PVC and PET resins in cases other

than carbonated soft drink container manufacture

were the tariff advantages in PET to be removed.

However, the Commission did conclude that the

tariff induced substitution is relatively small

and therefore recommended no change in the 2 per

cent duty rate applicable to imports of PET resins.

That conclusion would seem to be consistent with

the views of the Department of Industry and

Commerce in 1984 when it rejected an approach by

producers of polyvinyl chloride and blow moulders

of PVC bottles for short term assistance against

imports of PET resin. The in depth examination of

the issues by the Department concluded that the

claims of the local manufacturers were unfounded

and that no grounds existed for a reference on

short term assistance.

Despite the above the government, in implementing

assistance measures for the Australian chemicals

and plastics industries, chose to impose 10 per

cent duty impost on PET resins imported after 1st

January 1988 and rely, in the first instance, on

the TCO system for relief from those duties.

I will in the course of the next few weeks be

collecting data from interested parties and I will

then put together the relevant economic analysis

to demonstrate to the department that goods

serving similar function are not being produced in

Australia as measured by the concept of demand

cross elasticities."

14. The Market Statement prepared by the applicant referred to the fact that "PET Containers have been manufactured in Australia since 1979 by ACI Plastic Packaging Division (`PPD') and Smorgon Plastic (`SP')". It indicated that there were no other manufacturers and that the major customers were "Coca-Cola Bottlers and Cadbury Schweppes Australia who purchase approximately 80% of all PET containers produced by PPD and SP". It referred to the fact that PET was fully imported and that "production of PET resin in Australia cannot be cost justified". It was further indicated that PET resin was used predominantly for the manufacture of soft drink bottles, the only exception being that 200 MT out of 13,000 MT imported were used by SP in the manufacture of Pine-o-Cleen disinfectant bottles. It complained that the Minister, by increasing the duty rate to 10%, had "equated PET resin with general purpose plastic resins".

15. The statement continued by asserting that the Minister's action may have been based on the premise that PET and PVC resins were equivalent in terms of price and physical properties. It noted that there had been some attempted use of PET resin in the manufacture of Cottees cordial bottles in place of PVC resin but that this had occurred in the past and had not been persisted in, even though there was a price advantage in the use of PET resin. It went on to state that, despite the price advantage of PET rein as compared with PVC resin, there had not been a significant increase in PET container production for the following reasons:-

"1. PET containers are not suitable for hot fill

fruit juices. (Container distorts). This is a major market

for PVC containers.

2. PET container manufacture is more costly than

the extrusion blow used for PVC containers.

3. PET container moulds costs approximately

$350,000 per set as compared with $50,000 per set for PVC

containers. The consequence of this is that PET container

costs cannot be amortised quickly enough on short production

runs.

4. PET container manufacturing equipment is about 5

times more expensive than an extrusion blow moulding

machine."

"The total local demand for PVC is around 140,000 MT per

annum. The major applications for PVC resin include pipe

manufacture, extrusion, wire and cable coating and blow

moulding. The blow moulding market for PVC has been

impacted by PET resin to the extent of 200 tons only. The

industry has no knowledge of any future impact by PET resin

and consider this to be unlikely.

The foregoing indicates that PET resin does not compete in

any significant way with general purpose resin such

as...PVC."

16. In a follow-up letter of 9 October 1987 to the Comptroller-General, Mr Fisher made other points in favour of the granting of the CTCO. He claimed that since the introduction of PET resin into the Australian container market in 1979 it had been used basically in one market, the carbonated soft drink market, and then only in part of that market, namely for the manufacture of containers with a capacity of 1.25L or more. It was used for the "large economy size" carbonated soft drink containers. It had in effect "created its own market niche". He strongly disputed the assertions made by ICI and Goodrich that PET was a threat to their "traditional PVC markets". He pointed out that PET containers had not intruded into those markets even though PET resin had been dutiable at a 2% rate, that being the rate sought to be reintroduced via the CTCO mechanism. He said that history had indicated that there had been a negligible substitution effect of PET for PVC in those markets.

17. It was also pointed out again that containers manufactured from PET resin were not suitable in other possible markets such as the large fruit juice market as the "hot fill" method of introduction of the juice into containers caused a container made from PET resin to distort whereas this problem did not exist in a container made from PVC resin. This was a substantial area of the container market in which no competition could exist between the two resins as PET resin was simply unsuitable for such manufacturing purposes. There was in fact cross inelasticity of demand in this case despite the fact that imported PET resin was considerably cheaper than Australian manufactured PVC resin.

18. It was further asserted that an examination of the properties of the two resins provided relevant explanations. The following argument was stated:-

"There are peculiar properties of each. PVC

containers can be manufactured in a simple one

process extrusion blow moulding operation. PET

containers, on the other hand, must undergo a two

process manufacturing route. The PET pre-form

must first be injection moulded before the second

process of extrusion blow moulding can be

undertaken. PET container moulds at $500,000 per

set are ten times more expensive than moulds for

PVC containers and the cost of equipment on which

to manufacture PET containers is five times the

cost of equipment required to manufacture PVC

containers. There is quite simply little chance

of substitution."

19. This letter was responded to by Mr Nock, who, as already indicated, was the delegate who made the first decision adverse to the applicant. In a letter of 20 October 1987, he indicated that the applicant's letter went "most of the way towards answering the objections of Goodrich and ICI". However, he expressed a limited understanding of the industry and a desire not to decide on the situation without first allowing local manufacturers an opportunity to comment. Thereafter, a lengthy correspondence ensued with Mr Nock on behalf of both the applicant and ICI, in which allegations and replies were made on each side, until Mr Nock finally, by letter of 22 August 1988 to the applicant, rejected the application on the basis that he was "not satisfied that goods serving similar functions are not produced and are not capable of being produced in Australia in the normal course of business".

20. It is not necessary to set out in detail the contents of this lengthy correspondence. The whole of it has been placed before me. One cannot forebear from commenting that it appears to have constituted a most protracted and cumbersome procedure for arriving at a decision of considerable commercial consequence. The issues raised by the legislative provisions set out above are obviously productive of difficulties in decision. These difficulties must be compounded when material is placed before the decision maker in a disjointed and protracted manner through correspondence and interview. Clearly, Mr Nock was concerned as to whether he was obtaining a clear and accurate picture of the way in which the two resins related in the market place. One gains the clear impression that the process of decision would have been much aided by a form of administrative hearing in which the interested parties could have each put forward properly prepared cases on a final basis for the decision of the delegate. It is difficult to avoid the conclusion that an error of law into which Mr Nock fell, being an admitted misconstruction of ss 269B and C, could probably have been avoided if he had had the benefit of some properly presented oral argument with each side present before him. This would have focused attention on relevant issues arising from a proper interpretation of the sections. As it was, Mr Nock received a large amount of not easily assimilable written material which appears to have been supplemented by oral representations made by one side in the absence of the other. In these circumstances, I shall merely set out hereunder what appear to have been the main contentions of the parties as they emerged from the material produced by this procedure.

21. In a letter of 18 November 1987, ICI claimed that there was a relevant cross elasticity of demand between PET and PVC "in view of the numerous market applications in other than carbonated drink bottles where PET resin is being used around the world". The following assertions were made, supported by copies of material from magazines and trade journals. It was said that "in Japan major bottle uses for PET include detergents and shampoos, edible oil, soy sauce and sake, beer and other alcohol. In U.S.A. close to 100 million lb of PET is being used in a wide range of non-carbonated bottles for both food and non-food uses. The usage of PET in these applications has almost doubled in the past couple of years". It was argued that it must be expected that these international trends would appear in Australia and that PET would come to be used for the manufacture of bottles other than carbonated drink bottles despite current difficulties in the production of such containers. It was argued that the high cost of setting up equipment for the production of PET containers would, in the long run, favour the use of PET for such production, in that once a large capital expenditure had been made for the introduction of PET, a manufacturer would be reluctant to revert to the use of PVC.

22. Mr Fisher responded on behalf of the applicant in a letter to Mr Nock dated 16 December 1987. In relation to ICI's expression of concern based upon international uses of PET resin he asserted that "in Australia, history has shown that there has not been one successful substitution of PET resin for PVC resin in any market segment despite the supposed tariff advantages for PET of minimum rates". He also sought, correctly, to bring the debate back to the issues posed by the legislation by asserting that "the test of substitution is the cross elasticity concept in the market and that is the central tenet of the Tariff Concession System if identical product (sic) is not manufactured in Australia. Cross-elasticities are measured by the movement in demand for a unit change in price".

23. He continued by expanding his point that the granting of the application would result in no more than the maintenance of the status quo, which involved, in Australia, no threat to the manufacturers of PVC resin. He submitted as follows:-

"In this case we have to project forward into 1988

when a 10 per cent tariff on PET resin becomes

operative. On ICI's, and I presume Goodrich's,

hypothesis a reduction in the tariff rate of eight

percentage points for PET Resin will lead to a

significant increase in the demand for PET Resin

and a commensurate decline in the demand for PVC

resin, in other words there is significant cross

elasticity.

We know that to be not true of the past or the

present and that is really what we are dealing

with, the here and now. If circumstances change

in the future then the facility to revoke the

Tariff Concession Orders exists."

24. These paragraphs raise a point also argued before me on behalf of the applicant, namely that the relevant legislative provisions do not contemplate a wide ranging inquiry into the future but, instead, direct attention at the more immediate situation and the effects upon it of the granting of the CTCO applied for. I shall deal with this question later in these reasons.

25. Mr Fisher proceeded to deal with ICI's contentions as to there being a significant threat of market substitution of PET for PVC in Australia based upon PET resin's allegedly wider market applications overseas. He pointed out that PET was, because of its particular physical qualities, developed for the carbonated beverage bottle market. It had, overseas, "intruded into some niche markets" at the expense of PVC "only where there has been regulatory or legislative difficulties with PVC monomers" which were productive of health concerns related to the leaching of these monomers into the beverages in the containers. This regulatory problem for PVC did not exist in Australia. The use of PET based containers overseas as a substitute was in itself fortuitous as PET was, apparently, the only available substitute at the time. Mr Fisher expressed the view that overseas developments were resulting in the substitution of other plastic materials for both PET and PVC in the manufacture of these containers.

"In summary, the Australian experience is that PET

is not a substitute for PVC. Where substitution

has occurred overseas it was through the

availability of PET to replace PVC largely where

regulatory or legislative requirements demanded it

and economic considerations were not an immediate

factor. To redress that situation, modified

polyesters have been or are currently being

serviced by PVC. PET, then, a unique product

development (sic) specifically for the carbonated

beverage bottle market will remain with that

market and even the minor experience will not be

translated into the Australian market."

27. On the basis of this reasoning he asserted that there was, in Australia, no relevant cross elasticity of demand between PET and PVC.

28. ICI responded by letter of 23 February 1988 claiming, in effect, that the impact of overseas regulatory provisions in expanding the usage of PET resins for container manufacturing had been overstated by the applicant and reasserting the interchangeability of the two resins for the manufacture of containers for cooking oil, still mineral water, fruit juices and wine. It was asserted that previous comments "regarding the future possible use in Australia of PET resin in non-carbonated drink and other containers" held true "in the light of the experience gained in the European, U.S.A and other major overseas markets". The view was expressed that the granting of the CTCO would hasten the use of PET resin in markets currently enjoyed by PVC.

29. The expression of these opposing views, couched in such general terms, led to the holding of meetings with Mr Nock in Canberra at which the applicant and subsequently ICI put their points of view orally. These took place in March 1988. On 15 March 1988 Mr Nock, in a letter sent to all interested parties, set out the position as he then saw it. He expressed the view that he did not believe that a concession could be granted. This view appears to have been founded, at least in part, upon a misconception of the effect of the relevant legislative provisions, in that he considered that the fact that both resins were capable of being used in the production of beverage containers was indicative of the fact that they had "similar functions" within the meaning of those provisions.

30. The applicant took issue with this opinion. It asserted that a proper interpretation of the legislation did not produce this result. It does not appear that any further factual submissions were made although previous ones were expanded. A submission was also made as to the applicability of s 269E. As this section does not appear to have been the basis of the rejection of the application, nor indeed of any consideration on behalf of the respondents, I do not propose to consider it in these reasons, other than to say that on the factual material advanced to date there would appear to be no basis upon which relevant "national interest" factors could arise for consideration.

31. In the course of representations made to Mr Nock reference was made to the decision of Davies J as to the interpretation of ss 269B(3) and (4) when read with s 269C(1). His Honour's construction of substantial portions of these sections was given in Davies Craig Pty Limited v Comptroller- General of Customs 1986 68 ALR 105 at 114 as follows:-

"In my opinion, s 269B(4) is explicit and clear.

It provides that goods shall be taken to serve

similar functions unless the Comptroller is

satisfied that if the 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.

That provision and s 269B(3), with respect to

identical goods, are provisions which were

intended by Parliament entirely to govern the

question of similar function. Identical goods are

deemed to have a similar function. If goods are

not identical, the question is to be determined by

reference to cross-elasticity of demand.

In other words, I am of the view that Parliament

intended by the definitions in s 269B(3) and (4)

to cover the field. Mechanical or physical

function is covered by s 269B(3), which requires

identity. If there is not identity in this sense,

the issue is to be decided by reference to the

requirement of `significant cross-elasticity of

demand between goods', which is a market or

economic test and not a mechanical or physical

test, though the mechanical or physical function

of the goods would be a relevant matter to be

considered."

32. His Honour also dealt with the concept of "cross-elasticity

of demand" as follows:-

"It was submitted by Mr M Dowling QC, senior

counsel for the applicant, and not disputed by Mr

E.D. Lloyd QC, senior counsel for the respondent,

that I should adopt the following description of

'cross-elasticity of demand' which appears at p

47A of the booklet entitled `Tariff Concession

System':

`When two goods are substitutes and the price

of one good is held constant, a variation in

the price of the second good would have a

significant effect on the market demand for

the first.

'In economic terms the relative change in

demand for one good resulting from a 1

percentage change in the price of another is

known as the cross-elasticity of demand.

'In the case of substitutes, a decrease in

the price of on good has the effect of

decreasing the demand for the other good.

'In practical terms this is determined by

examining the interaction between the goods

in the market place and essentially comes

down to the question of whether the goods

compete with each other.'

I am content to adopt that definition which sets

out my understanding of the term."

33. This also accords with my understanding of what is essentially a concept from the field of economics. I also adopt it.

34. His Honour's exposition of these aspects of the sections was approved by a Full Court in Amcor Limited v Comptroller-General of Customs (1988) 79 ALR 221.

35. The provisions were again considered by Davies J in Corinthian Industries (Syd) Pty Limited v Comptroller-General of Customs [1989] FCA 100; (1989) 86 ALR 387, in circumstances where his Honour, apparently, perceived from submissions made in the case that there was some misconception as to what he had said in Davies Craig. In this context his Honour said (at p 390-392) as follows:-

"Before turning to particular aspects of the

legislation and to the facts of the case, it is

convenient for me to make some general

observations regarding the interpretation of these

provisions. I do so particularly as some of my

comments in Davies Craig Pty Ltd v Comptroller-General

of Customs (1986) 68 ALR 105 appear to

have been misunderstood.

Sections 269B and 269C of the Act are not

ambiguous. They should be applied having regard

to the words used, not according to some

background philosophy. The Minister's second

reading speech is entirely confirmatory of that

point. A concession order may be made only when

the Comptroller or his delegate is satisfied that

goods serving similar functions to the particular

goods are not produced in Australia and are not

capable of being produced in Australia by any

person in the normal course of business.

A determination of similar function is governed

entirely by the provision of s 269B(3) and (4).

Notwithstanding the Davies Craig judgment, it was

again argued for the respondents in the present

case that a determination as to function requires

the decision-maker to look to ordinary commercial

concepts of function. Perhaps that was not

precisely how the argument was put but that was

the effect of it. Such an approach is not

correct. One does not look at ordinary commercial

concepts of function, or to past concepts of

suitable equivalence. Part XVA specifies its own

tests.

Section 269B(3) provides that `identical goods

shall be taken to serve similar functions'. That

says and means that, if goods are identical, they

are deemed to serve similar function. It appears

from some of the material before the court and

from submissions put by counsel that the

Comptroller and his delegate interpret this

provision as meaning that, if goods are identical

in their manufacture or makeup or if goods are

identical in function, they are to be deemed to

serve similar functions. But s 269B(3) refers to

`identical goods'. Identity of an element such as

function is not sufficient. The provision does

not apply unless the goods are identical.

It is not useful for the purposes of this case to

attempt to expound on the circumstances required

to make goods identical. It is sufficient for the

present purposes that the word `identical' is an

ordinary word of the English language, as is the

word `goods'. The provision will apply when goods

satisfy the ordinary concept of identical goods

and will not apply if the goods are not identical

in this sense.

If goods are not identical, then s 269B(4)

applies. That sub-section provides that 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. The prescribed test does not involve a

determination as to function. No doubt function,

as that term is understood in ordinary parlance,

is a relevant factor in a determination of

cross-elasticity of demand between goods. If goods

serve entirely different functions, there is

presumably no cross-elasticity of demand between

them. Nevertheless, the test prescribed is not a

test of function but a test of cross-elasticity

of demand.

Mr C.J. Stevens, of counsel, who appeared for the

respondents, submitted that, so read, the

provision of s 269B(3) would be otiose, for there

would necessarily be cross-elasticity of demand

between identical goods. However, the tests are

clear and, as I read them, Parliament has in mind

that if goods are identical then they are to be

taken to serve similar functions and it is

unnecessary to consider whether or not there is

any significant cross-elasticity of demand between

them. If they are not identical, then it is

necessary to examine the question of cross-elasticity

of demand.

In my reasons in Davies Craig, supra, at 114, I

said: "

"By the sentence `mechanical or physical function

is governed by s 269B(3), which requires identity'

I did not intend to convey that the word

`identical' in s 269B(3) would be satisfied by any

identity other than identity of goods."

36. Insofar as this passage represents an enlargement and further exposition of his Honour's previous remarks in Davies Craig, I respectfully agree with them and adopt them as a correct interpretation of the portion of the legislation to which they apply. As already indicated, it is clear that Mr Nock in his deliberations in the instant case did not correctly apply these tests but found "identity" between PET and PVC resins based upon the fact that they were both used in the manufacture of containers. This was fallacious and necessarily vitiated his decision. The fallacy was not repeated in the decision of Mr Tregillgas, the second respondent, who correctly accepted that he needed to approach the matter on the basis of cross-elasticity of demand between PET and PVC resin, the goods not being identical goods. Mr Tregillgas's decision is called in question by the applicant on other grounds to which I shall make reference hereunder. However, in reaching his decision, Mr Tregillgas had regard to all the factual material which had been placed before Mr Nock together with some additional material which had been placed before him after Mr Nock had reached his decision. It is necessary, therefore, that I make a brief reference to some additional material which was introduced into Mr Nock's deliberations before he made his final determination.

37. It appears that, in the course of information gathering, Mr Nock had been told that two organisations were contemplating marketing their products in containers made from PET resin in substitution for containers currently made from PVC resin. The organisations in question were Cottee's Foods and Meadow Lea Foods, a division of Goodman Fielder Industries Limited. The information related to 750ml cordial bottles in the case of Cottee's and bottles for edible vegetable oils in the case of Meadow Lea. On 12 August 1988 the applicant wrote to Mr Nock in relation to these matters, forwarding copy letters received from relevant officers of those two organisations. In the case of Cottee's Foods the letter indicated that for some time in the past they had used PET resin containers for that size of cordial bottle but had reverted to the use of PVC resin containers because "(1) PET did not satisfy our top load requirements and (2) design faults occurred with the `square round' bottle from a manufacturing/moulding process". It was also indicated in the letter that PVC containers cost substantially less per unit than similar PET containers. The question of a reversion to PET containers had arisen in circumstances where there had been progressive price rises for PVC material. This provoked a threat from Cottee's Foods to ICI that it would revert to PET containers. The letter indicated that this threat was in the nature of a bluff as even after PVC price rises were taken into account, the use of PVC was still significantly cheaper than PET and "to switch back to PET would cost some $1,500,000 in equipment and tools scrapped and some $1,000,000 in new plant". The letter asserted that "it would be totally uneconomic in the foreseeable future to attempt to switch to PET even assuming that the technical problems which bedevilled our last attempt could be solved, which as yet does not appear to be the case".

38. The letter from Meadow Lea Foods stated that that organisation was currently using PVC bottles for all its edible vegetable oil bottle requirements. It had been investigating the feasibility of switching some of its premium brands into PET containers but that the current cost differential between PET and PVC was more than it was prepared to pay.

39. A file note of Mr Nock indicates some scepticism towards these letters based upon an apparent suspicion that some pressure had been brought to bear upon the writers by the applicant. The note also refers to other investigations made by Mr Nock. He referred to information that Pine-o-Cleen used PET for its 500ml pack with a production of about 8 million per annum. He also made the observation that "other PVC products such a toiletries bottles where volumes could be as high as 25 million bottles/annum are also threatened by PET. Apart from the obvious raw material price advantage enjoyed by PET there are some presentation benefits. Pet bottles have a better clarity and gloss than PVC. The absence of the vinyl chloride monomer carcinogen threat provides an additional marketing premium to help justify price premiums for PET". He also expressed some concern that ACI, in its application, had not made known the use of PET in the Pine-o-Cleen 500ml bottles. He felt that this might be indicative that the case submitted lacked completeness. As was pointed out in argument, such a disclosure had in fact been made much earlier in correspondence on the basis that the use was a very minor one.

40. It is clear that shortly after bringing this file note into existence, Mr Nock made his decision refusing the application, notification of which he made to the applicant on 22 August 1988. On 2 September 1988 the applicant sought departmental review of this decision pointing out, correctly, that the test in Davies Craig had not been properly applied. It was also submitted that the applications of PET resin in Australia for purposes other than the production of carbonated soft drink containers could not be "significant" within the meaning of the legislation.

41. A further detailed submission, prepared by Mr Sharkey, then acting as the applicant's customs agent, was submitted on 23 January 1989 for the purpose of the departmental review. The submission made the point, which is clearly correct, that PET and PVC resins which are, obviously, the "goods" to be considered in terms of the legislation are not "identical". Accordingly the matter fell for determination in terms of their substitutability in a competitive market where the potential purchasers were manufacturers of commercial containers. The points were made again that PET could not be used in any blow moulding of containers with handles, that it could not be used in containers where a hot-filling process was to be employed; that it was uneconomic in production processes involving fewer than 10 million containers per annum, there being very little business on this scale in Australia as opposed to Europe, U.S.A., or Japan; and that PET was unsuitable, unlike PVC, for use in the production of opaque containers. Also PET containers could not match the top load capacity of PVC containers. All these factors were of importance in considerations of cross-elasticity of demand between the two resins. In general the previous arguments were all reiterated and expanded. Use was also made of schedules to illustrate the relatively minor use of PET resin as against PVC resin in areas where either resin could be used to produce an equivalent container. It must be said that the source of the information in the schedules is not clear in all circumstances, but that the overall effect is the production of what would seem to be a fairly powerful case for the absence of any significant cross-elasticity of demand between the two substances.

42. It appears that there was a further conference between representatives of the applicant and representatives of the first respondent, including Mr Tregillgas, the second respondent. It is clear from correspondence between the applicant and the first respondent referring to this conference that the points were made by the applicant that PET and PVC could not be regarded as "identical" and that there was no significant cross-elasticity of demand between them in that they were sold into separate markets which had no material overlap, that in the "eleven years of history" it had been "plainly demonstrated that the price of each resin had no bearing upon the quantity demanded of the other" and that "neither the imposition of duty nor resin price changes have led to any substitution of one resin for the other".

43. ICI made a further submission to be used in the review procedure, by letter of 7 April 1989. This letter put forward the following information:-

"In early February 1989, our Plastics Group was

approached by ACI plastics packaging of Moorabbin,

Victoria, seeking assistance to prevent the loss

of their PVC edible oil bottle business to Meadow

Lea, who had been offered a competitive bottle by

Containers Limited manufactured from PET resin.

In this instance, the bottle was produced by an

affiliate of Containers in New Zealand.

The Meadow Lea edible oil business is currently

shared with Rheem and represents a total market of

about 4 million units per annum. This in turn

represents 260 tonnes per annum of PVC resin worth

about $6.5 million.

It was reported by our Plastics Group that the PET

and PVC bottles looked identical with respect to

clarity but lateral ribs had been added to the PET

bottles to improve top load strength. There had

been no complaints on the quality of the existing

PVC bottle, so it appeared that the change to PET

was being driven by Containers' desire to be in

the PET market.

ACI Plastics Packaging, in tendering for this

business, apparently closely examined the

possibility of supplying an alternative bottle in

PET resin. this was subsequently rejected by them

on commercial grounds and the new offer was based

on PVC resin. A decision by Meadow Lea is

expected shortly.

It would thus appear that within the BTR Nylex

organisation, an anomalous situation now exists.

On the one hand, ACI Petalite is seeking

concessional entry for PET resin on the grounds of

no competition from alternative plastic materials,

whilst on the other hand, ACI Plastics Packaging

are being threatened with PET Resin intruding into

their existing PVC bottle business.

It is ICI Australia's view therefore, that this

type of activity in the market clearly

demonstrates the degree of substitution that does

exist between the PET resin and PVC in certain

applications. Accordingly there has been no change

in the circumstances which would cause ICI

Australia to alter its present opposition to a

general tariff concession order being granted."

44. The "Plastics Group" is, obviously, the relevant division of ICI which produces PVC resin. "ACI Plastics Packaging" is a company associated with but quite distinct from the applicant, both being "within the BTR Nylex organisation". The applicant is referred to as ACI Petalite in this letter, a name which frequently appears on the letterhead of communications which I have referred to.

45. There was also made available by ICI to the decision-maker a copy of a file note of a Mr Wayne Solomon, an account manager of ICI, of a phone discussion between him and Mr Colin Kilgour of ACI Plastics Packaging of 8 June 1989. This note reads as follows:-

1. Kilgour advised that Meadowlea have still

not yet made a decision whether to remain with PVC

bottles long term or change over to PET.

2. In response to pressure from PET

competition and the need to hold on to Meadowlea's

business, ACI dropped their price for PVC bottles

effective 1st May, 1989. This represents an

annual saving of $90,000 per annum to Meadowlea.

This is a bottom line price for ACI, and could not

be reduced further unless there was an investment

in new equipment, however this could not be

justified on the expected return on the

investment.

3. The current price to Meadowlea is not an

open agreement, and there is an ultimatum for them

to make a decision within a fixed period of time,

thereafter prices will be reviewed.

4. In addition to the PET offer from

Containers, ACI as a Group have now been asked to

submit a price on the supply of PET bottles. To

date this submission has not been made.

5. Kilgour will keep me informed of further

developments as they occur."

46. It is clear that this information was important and opened up a further possible field of inquiry. At the very least it indicated that it might be within the field of local technological expertise to produce PET containers of sufficient strength to command a greater part of the container market than had previously been possible. This information was taken into account by Mr Tregillgas. It is referred to specifically in his letter of 5 July 1989 rejecting the applicant's application, after review. The receipt of this material by Mr Tregillgas was not made known to the applicant and no opportunity was given to it of considering and answering the matters raised in it. It is conceded that this involved a relevant breach of the rules of natural justice.

47. As indicated earlier in these reasons, it was accepted by the respondents at some time before the commencement of this hearing that the decision of Mr Tregillgas should be set aside because of this breach and that the matter should be referred back to the decision-maker and an opportunity thereby provided to the applicant of dealing with these matters. It was submitted, however, that no further steps should be taken by the Court in relation to this application. This course was vigorously opposed by the applicant, on the basis that there were other significant errors involved in the decision and the applicant was entitled to have the Court adjudicate on these also, so that when the matter was approached afresh, those errors would not be repeated.

48. Specifically, the applicant claimed that, having regard to material which had been the subject of consideration, the essential parts of which I have set out, it was entitled to the directions to which I have already referred namely that (a) the use of PET resin in the manufacture of 500ml Pine-o-Cleen containers and (b) investigation by Goodman Fielder Industries Limited of a possible use of PET resin for the manufacture of containers for premium brands under the trade name Meadow Lea could not constitute significant cross-elasticity of demand between PET resin and PVC resin.

49. The determination of these questions requires some further consideration of the second respondent's decision and of the relevant legislative provisions.

50. In his letter of 5 July 1989 the second respondent stated, correctly, that the matter did not fall for determination under s 269B(3), the two resins not being identical. Accordingly the matter was to be decided having regard to the provisions of s 269B(4). His decision, and the grounds for it, appear to be stated in the following paragraphs:-

"Neither ICI nor BF Goodrich is opposed to

concessional admission of PET provided that it is

restricted to the manufacture of containers for

carbonated beverages. Both companies acknowledge

that PVC is unsuitable for that type of container

but both are concerned that unrestricted duty free

admission of PET could lead to other local

manufacturers switching from PVC to PET for the

production of containers other than those for

carbonated beverages.

On the information before me, I am satisfied that

PET and PVC can be substituted for each other in

the manufacture of a range of containers,

including containers for disinfectants and edible

oils. While it may be claimed that technical

features influenced the choice of PET over PVC, it

has not been shown that price was not also an

influencing factor.

On the contrary, information provided by ICI

following a phone discussion between Wayne Solomon

of ICI and Colin Kilgour of ACI Plastics Packaging

on 2 June 1989, indicates that a local

manufacturer of edible oils is still considering a

decision on whether to remain with PVC containers

in the long term or whether to switch to PET. The

manufacturer concerned has indicated that its

preparedness to switch will be based on PET

becoming more price competitive.

...

Having considered the information submitted by and

on behalf of your client as well as the

information supplied by ICI Australia and BF

Goodrich Australia Ltd, I am not satisfied that

grounds have been established in terms of Part XVA

of the Customs Act to grant the requested Tariff

Concession Order."

51. The second respondent was requested pursuant to s 13 of the ADJR Act to provide a statement of reasons for his decision. He did so on 18 August 1989. After setting out the relevant legislative provisions, he indicated that in considering whether the goods were eligible for the concessional admission he had had regard to evidence consisting of the material which had been before Mr Nock and which has been placed before this court and also the material, to which reference has already been made, that was provided after Mr Nock's decision.

52. After indicating that he was satisfied that PET resin and PVC resin were not identical and that he should therefore consider the criteria in s 269B(4), he gave his reasons for his decision as follows:-

"41. ss 269B(4) requires that goods will be taken to serve

similar functions unless I am satisfied, that if PET resin

and PVC resin 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.

42. Evidence was submitted by ICI and Goodrich that PVC

resin is produced in Australia in the normal course of

business.

43. There was also substantial evidence that both PET

resin and PVC resin compete in the market for containers and

that the relative prices of the resins directly affected the

demand for each type of resin. For example, an Australian

manufacturer (Meadow Lea) was still in the process of making

a decision whether or not to switch from PVC resin to PET

resin for the manufacture of containers for edible oil. The

relative price of the two resins was stated to be a

significant factor in the decision by that manufacturer

`.....whether to remain with PVC bottles long term or to

change over to PET'. Another example is the use of PVC and

PET resins in the production of containers for disinfectant.

44. On all the information before me I considered that

PET resin and PVC resin were competitive in the market for

containers and that a small change in the price of one would

affect the demand for the other. Therefore there was no

legal basis for me to make an order under ss 269C(1) of the

Customs Act in respect of PET resin.

45. Accordingly, for the reasons outlined above, on 5

July 1989 I advised ACI of my decision to refuse the

application."

53. Before considering whether I should give any further orders or directions in this matter other than that it should be returned to the decision-maker with the direction that the opportunity be given to the applicant to deal with the material which had not been referred to it, I consider it necessary to essay the construction of aspects of ss 269B(4) which do not appear yet to have been the subject of interpretation by the Court. This provision, even with the assistance already rendered by judicial decision, remains difficult to interpret and apply.

54. In the first place the Comptroller is required to be satisfied as to the existence of a negative. Although questions of onus of proof are not to be regarded as having the significance in areas of administrative decision that they have in curial decision, nevertheless, it is of some assistance in the focusing of thought to regard the section as broadly requiring the applicant for a CTCO to satisfy the Comptroller on the balance of probabilities of the negative requirements of the section. If this is not achieved, then, by force of the section, the goods in respect of which the CTCO is sought shall be taken to serve similar functions to the relevant "other goods" (or, perhaps, vice versa) with the result that the applicant cannot satisfy the requirements of s 269C(1).

55. Secondly, the Comptroller is required to be satisfied of what is put as a purely hypothetical situation, namely that the "goods" and the "other goods" be both readily available for sale throughout Australia. There is no requirement that this state of fact be established. Quite the reverse: if the factual situation were that one or both of the goods were not so readily available, it would make no difference in the application of the section. The Comptroller (through his delegate) is required to envisage, when applying the section, the posited situation of ready availability.

56. Thirdly, what meaning is to be given to the words "readily available for sale throughout Australia"? In the first place, the phrase "readily available for sale" must be read in the context of the later requirement to consider "cross-elasticity of demand". In these circumstances I am satisfied that "ready availability" does not import any consideration as to price. It contemplates no more than that the relevant goods be in a position to be purchased, irrespective of whether they are for sale at a generally acceptable or at a prohibitive price. This part of the section is satisfied if the "goods" and the "other goods" be present at relevant points of sale in sufficient quantity or amount to answer consumer demand based upon need alone. There must be no scarcity of the "goods" or "other goods".

57. In the second place, the phrase "throughout Australia" may be productive of difficulty. It is to be noted that the legislature has used the word "throughout" rather than the word "in". In doing so it has introduced the concept of nationwide availability of the relevant goods at the point of time when the test of cross-elasticity of demand is to be applied. The way in which this criterion can be, or can be envisaged to be satisfied will no doubt vary in accordance with the nature of the goods and the potential consumer. For instance, some consumer goods of domestic utility might not be so available unless offered for sale in most corner stores throughout urban and rural Australia. In the case of goods which are (as in the present case) materials required for large scale manufacture of products to be purchased by the end user, different considerations, no doubt, apply. Here the purchasers are necessarily far more specialised and less numerous. The section would doubtless be answered by the contemplation of a situation in which all such manufacturers, wherever they might be in Australia, could have their needs satisfied by purchasing the relevant goods from a central point or central points of sale in Australia. Even so, considerations not related to the basic price of the competing goods may, perhaps, come into the assessment of ready availability. Significantly large freight or handling costs might arguably influence availability where the putative intending purchaser was geographically remote from an envisaged point of sale. I mention these matters as illustrative of difficulties which may be involved in the application of the section, not as necessarily arising in the present case.

58. Turning to the present case, I am satisfied that the delegate, ultimately the second respondent, was required in considering the applicant's application to postulate a situation where any manufacturer wishing to manufacture containers from either PET or PVC resin would be able to obtain, without difficulty from sources in Australia, sufficient amounts of either resin for his purposes. Although the material in Mr Tregillgas's letter to Mr Sharkey of 5 July 1989 and in the reasons furnished pursuant to s 13 of the ADJR Act does not indicate precisely that Mr Tregillgas turned his mind to these considerations, I would not be prepared to hold, having regard to the hypothetical nature of the question, that he did not.

59. Indeed, the main questions agitated in argument before me related to the subsequent provisions of the section, the wording of which produces difficulty in construction.

60. In the first place, it must be noted that there is again a hypothetical quality attached to the considerations enjoined by this part of the section. The decision-maker having, by an effort of imagination, conjured up a situation, which may be contrary to current fact, of ready availability of each of the competing goods on a nationwide basis, is then required to determine another hypothetical question whether, in such envisaged circumstances, there would be cross-elasticity of demand between the goods, i.e. would the goods be substitutable the one for the other in circumstances where the only factor determining choice would be price. If satisfied that such would be the case, the next inquiry, again hypothetical, is to be whether there would be "no significant part of Australia" in which the cross-elasticity of demand so ascertained would occur to an extent which could be described as "significant".

61. In other words, putting the matter as succinctly as I find possible, the decision-maker was in this case, confronted with the question whether, on the assumption of "ready availability" of both PET and PVC resin throughout Australia there was demonstrated that there would be an absence of significant price-based market substitution of the one for the other in any significant part of Australia.

62. It has been put on behalf of the applicant that, in the answering of this question, the decision-maker should not have regard to future possibilities; he should tie his considerations to the present demonstrable facts of the marketplace. In my view, the hypothetical nature of the inquiry indicates that this cannot be so. Although, obviously, the current situation obtaining between the two goods in the marketplace and also the history of their market interaction must be of very considerable importance, the very nature of the inquiry requires that the mind of the decision-maker rove over the possibilities and probabilities of the result of granting the CTCO sought. This must, in my view, inevitably involve consideration of potential future effects. The application of the section clearly does not permit of wild conjecture or flights of fancy but requires a genuine and reasoned attempt to foresee the situation throughout Australia on the assumptions postulated. The decision-maker is not obliged to regard the market situation as static. He is not obliged to assume that the suppliers and purchasers will remain the same. He can take account of observable market trends, even though they may be merely inchoate. The fact that the comptroller is empowered by s 269P of the Act to revoke CTCOs where the circumstances originally justifying the making of the order cease to exist does not mean, in my opinion, that the decision-maker cannot take account of such matters. Accordingly, to the extent that it was submitted on behalf of the applicants, that Mr Tregillgas had, in reaching his decision, taken such considerations into account and thereby erred in law, I find no relevant error in the decision.

63. The applicant's main claim as to the commission of error of law by Mr Tregillgas was based upon the use of the word "significant" in the section. It was put that the material before him, including the material which the applicant had been denied the opportunity of answering, was such as to necessarily require, in law, his finding that "there would be no significant part of Australia in which there would be significant cross-elasticity of demand between the goods". It, therefore, sought the further directions already referred to. In the way in which the argument developed, it can be said that the following further submissions were involved namely (a) Mr Tregillgas misdirected himself as to the meaning of "significant" where used in the section and/or (b) Mr Tregillgas did not, in making his decision, consider the issues raised by the word "significant" where used in the section.

64. The word "significant" has acquired a number of shades of meaning in common parlance. For instance, it is not infrequently used as a substitute for "substantial". It is, however, clearly important that it be as given precise a meaning as possible in this legislative provision, as its use imports a major guiding consideration into the determination by the Comptroller of whether goods serve "similar functions". I turn, therefore, to the dictionaries for guidance and find that the Oxford English Dictionary (2nd Ed.) defines the word (where relevant) as "full of meaning or import; important, notable; and having or conveying a meaning", and that the Macquarie Dictionary defines it as "important; of consequence; expressing a meaning; indicative".

65. I derive assistance also from considering that the word is the opposite of "insignificant" which word is defined in the Macquarie Dictionary as meaning "unimportant, trifling or petty" and as "too small to be important". Looked at from this point of view "significant" may be regarded as meaning "not unimportant or trivial" or as "sufficiently large to be important".

66. One could no doubt multiply meanings by recourse to other dictionaries. One thing is very clear, namely that there is necessarily a fair degree of value-judgment involved in attributing significance to something. Significance must also depend upon context. The very use of the term must frequently involve the subsidiary question "significant for what?". Where the word is used in connection with the holding of an inquiry or the making of a decision then, in my view, it conveys the notions of importance, meaningfulness and relevance to the inquiry or decision.

67. Turning to the sub-section, one finds the first use of the word in the phrase "significant part of Australia". Even with the assistance of dictionary definitions, it is difficult to achieve satisfaction as to the meaning attributed to this phrase by the legislature. It is juxtaposed to the expression "throughout Australia" which would appear to give it a geographical-spatial meaning such that a "significant part of Australia" would be a portion of Australia of sufficient geographical area to warrant the description of "important", "meaningful" or "of consequence". This is obviously too restricted a meaning. Although the Nullarbor Plains and the Simpson Desert are no doubt significant parts of Australia in terms of size, it would hardly be contemplated by the legislature that there should be an investigation as to the cross-elasticity of demand within their confines of substances such as PET and PVC resin.

68. If one eliminates the merely geographical-spatial approach, one is left with other considerations such as economic importance, social importance and the like. It is conceivable that in relation to some goods a major city might not constitute a "significant part of Australia", whereas in relation to other goods a relatively small geographic area given over to intensive manufacturing might do so. I do not consider, in the context of this case, that it is profitable to further continue these considerations. In my view, two things emerge quite clearly from them. Firstly, in the context of each case there must be careful consideration of the issues necessarily raised by this phrase in the legislation and secondly, that in the present case there is simply no indication that the matter has been given any consideration at all by the second respondent.

69. It is also necessary that the decision-maker consider the question of whether any cross-elasticity of demand between PET and PVC resin would be such that it could be characterised as "significant". In my view the same general range of considerations to which I have adverted above must apply in the determination of this question. In this area of the case, a great deal of material and argument was put forward by the applicants for the consideration of the decision-maker. Great effort was expended on indicating that such area of substitutability as existed between PET resin and PVC resin in the manufacture of containers was currently very small in comparison with the area where no substitutability could exist.

70. I have already set out above the passages in which Mr Tregillgas dealt with the question of cross-elasticity of demand between PET resin and PVC resin. Those passages do not, in terms, deal with the issue of whether such cross-elasticity of demand would be or even was "significant", although it is clear that the applicants made extensive submissions on this topic. In my view, this question was not considered by the second respondent. He has found the existence of cross-elasticity but does not appear to have come to any conclusion as to its significance or otherwise. There are obviously difficult factual questions involved when considering the relative demand in the marketplace for PET and PVC resin and whether aspects of that demand demonstrate cross-elasticity. Where choice of PET against PVC is dictated by physical properties, competition in a broad sense may exist but one does not find cross-elasticity of demand, unless price is the sole determinant of choice. When this area is identified, the question of its "significance" arises in the context of the considerations analysed above. I can see no indication of the second respondent's having considered the applicant's submissions on this topic.

71. Mr Tregillgas's final decision was contained in the following words: "on all the information before me I consider that PET resin and PVC resin were competitive in the market for containers and that a small change in the price of one would affect the demand for the other. Therefore there was no legal basis for me to make an order under s 269C(1) of the Customs Act in respect of PET resin". This formulation appears to ignore the extensive submissions made by the applicants that the degree of cross-elasticity of demand and the area in which it occurred were both so small in comparison to the actual and potential markets for the two resins in their other applications as to render the established cross-elasticity insignificant.

72. Indeed, as I have indicated, I am asked by the applicants to hold that, as a matter of law, on the evidence placed before the decision-maker, they have established relevant "insignificance", on the basis that no other finding is legally possible. I have hesitated over this as I feel that there is much to be said for the making of the directions sought, there being little or nothing which I can discern in all this material which could accord "significance" to the degree of cross-elasticity established. However, I have ultimately come to the conclusion that I should not take this course. There remains a possibility that the material to which Mr Tregillgas attributed importance and to which the applicant is entitled to respond may add something to this issue. But I am satisfied, as I have said, that the general question of significance, and the particular matters raised in this regard by the applicants, have not received consideration by the decision-maker. On this basis, as well, the matter must be returned for further consideration.

73. As indicated earlier, the Court was asked to give a direction that the first respondent publish a notice in the Gazette pursuant to s 269L of the Act. This section is set out above. Clearly enough the section only comes into operation in circumstances where the Comptroller has otherwise determined to make a concession order. In this case the Comptroller, for reasons requiring review, had determined not to make a concession order. The requirement to publish the notice had therefore not arisen. Nor has it arisen at this point of time as the matter is to be remitted to the respondent for further consideration. Accordingly, I can see no basis upon which I can make the direction sought. There would appear to be no reason why a notice should not be published whilst the respondent is otherwise considering the application as it may be productive of matters proper to be considered under ss 269C(1) and ss 269B(3) and (4), in circumstances where it might otherwise be contemplated that the material relevant to the questions raised by those sections was complete. However, the Act itself lays down no time for the giving of the notice and there may always be legitimate reasons for delay. Such reasons apart, it would clearly appear to be in the public interest that applications of this kind be dealt with as expeditiously as is reasonably possible.

74. I was asked to make a special cost order in the matter should I conclude that the only basis on which the matter should be remitted was the failure of natural justice referred to. An offer to consent to the setting aside of the decision on this ground had been made at a relevantly early stage of the litigation. As I have decided that the decision should be set aside on the further grounds referred to above, I consider that costs should follow the event in the usual way.

1. that the decision of the second respondent be

set aside;

2. that the decision be remitted to the first

and/or second respondent for reconsideration in accordance

with these reasons;

3. that the respondents pay the applicant's costs

of these proceedings.