Federal Court of Australia|1995-09-04|Before: Solicitors J, Beazley JJ

Sharp Corporation of Australia Pty Ltd v Collector of Customs [1995] FCA 1521 (4 September 1995)

SHARP CORPORATION OF AUSTRALIA PTY LTD v. COLLECTOR OF CUSTOMS

Customs and Excise - Tariff classification of laser printer "toner replacement kit" - "composite goods in a set put up for retail sale" - "toner" found to be separate component - whether finding was reasonably open - whether goods classifiable under r.3(c) of the Rules for ther Interpretation of the Tariff - meaning of "equally merit considerations" discussed - whether or not one material or component gave to the items their "essential character" - meaning of "essential character" discussed - whether error of law in approach of Tribunal - meaning of "question of law" discussed.

Jurisdiction - appeal from AAT to Federal Court on question of law - distinction between question of law and fact discussed - meaning of English words used in their ordinary parlance ordinarily a question of fact - decision of Tribunal on a question of fact not reviewable on merits - s.44(1) Administrative Appeals Tribunal Act 1975 (Cth)

Administrative Appeal Tribunal Act 1975 (Cth) - s.44(1)

Customs Tariff Act 1987 (Cth) - r.3 schedule 3

Sales Tax (Exemptions and Classifications) Act 1935 (Cth)

Australian Gaslight Co v The Valuer General (1940) 40 SR (NSW) 127

Blackwood Hodge (Australia) Pty Ltd v Collector of Customs (NSW) (1980) 47

Bushell v Repatriation Commission [1992] HCA 47; (1992) 175 CLR 408

Cody (Collector of Customs) v Datacraft (Australia) Pty Ltd (1989) 19 ALD

Collector of Customs v Pozzolanic Enterprises Pty Ltd (1993) 43 FCR 280

Collector of Customs (Qld) v Times Consultants Pty Ltd (1986) 13 FCR 190

Commissioner of Taxation v Roberts [1992] FCA 363; (1992) 37 FCR 246

Deputy Commissioner of Taxation v Polaroid Australia Pty Ltd (1971) 46 ALJR

Federal Commission of Taxation v McCabe [1990] FCA 389; (1990) 26 FCR 431

Hope v Bathurst City Council [1980] HCA 16; (1980) 144 CLR 1

Jedko Game Co Pty Ltd v Collector of Customs (NSW) FCA unreported but noted

Peacock v Zyfert [1983] FCA 190; (1983) 48 ALR 549

Thomson Australian Holdings Pty Ltd v Federal Commissioner of Taxation

Times Consultants Pty Ltd v Collector of Customs (Qld) (1987) 16 FCR 449

Watersheid Australia Pty Ltd v Collector of Customs (1988) 7 AAR 555

2. The orders of the trial judge be set aside and in lieu

thereof it be ordered that the application to the

Court be dismissed with costs.

3. The respondent pay the appellant's costs of the

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

DAVIES AND BEAZLEY JJ This is an appeal from a judgment of a judge of the Court. Under s.44(1) of the Administrative Appeals Tribunal Act 1975 (Cth), the learned trial Judge set aside a decision of the Administrative Appeals Tribunal ("the Tribunal") and affirmed the primary decision of the Collector of Customs, which had been the subject of the application for review which was before the Tribunal.

2. The issue before the Tribunal was whether goods identified as "Sharp Brand" Toner Kit Model No JX957C for laser beam printers were to be classified under sub-heading 3707.90 of the Third Schedule to the Customs Tariff Act 1987 (Cth) or under sub-heading 8473.30 thereof.

3707 CHEMICAL PREPARATIONS FOR PHOTOGRAPHIC

USES (OTHER THAN VARNISHES, GLUES,

ADHESIVES AND SIMILAR PREPARATIONS);

UNMIXED PRODUCTS FOR PHOTOGRAPHIC USES,

PUT UP IN MEASURED PORTIONS OR PUT UP FOR

RETAIL SALE IN A FORM READY FOR USE:

3707.10.00 - Sensitised emulsion

3707.90.00 - Other

8471 AUTOMATIC DATA PROCESSING MACHINES

AND UNITS THEREOF; MAGNETIC OR

OPTICAL READERS, MACHINES FOR

TRANSCRIBING DATA ONTO DATA MEDIA IN

CODED FORM AND MACHINES FOR

PROCESSING SUCH DATA, NOT ELSEWHERE

SPECIFIED OR INCLUDED:

8471.92 --Input or output units, whether or

not presented with the rest of a

system and whether or not containing

storage units in the same housing.

8473 PARTS AND ACCESSORIES (OTHER THAN

COVERS, CARRYING CASES AND THE LIKE)

SUITABLE FOR USE SOLELY OR

PRINCIPALLY WITH MACHINES OF 8469 TO

8472:"

8473.30 - Parts and accessories of the

machines of 8471

4. The Tribunal described the relevant facts as follows:-

"6. The goods in question consist of a polystyrene

container in which are packed in designated spaces the

following:

(i) a toner cartridge being a moulded plastic receptacle

containing 'toner',

(ii) a toner collecting container which

also has incorporated as part of the

moulding of that vessel, a fuse, and

(iii) a roller cleaner

together with a set of instructions. The container is

surrounded by a cardboard envelope bearing, amongst other

words and symbols, the words 'Toner Kit'.

7. The toner is eventually transferred by the operation

of the laser printer onto paper and is, to use a broad

analogy, the 'ink' which is printed onto the paper. The

Applicant's witness, Mr Nuij, was unable to state the

chemical composition of the toner, except to say it

contained part carbon, part resin and other chemicals.

...

9. The laser printer itself utilises electro static

forces to deposit toner in the form of characters onto paper

and the paper and toner are then fused together and the

printed page is produced from the machine.

...

12. The toner cartridge which is made from moulded plastic

fulfils two functions. One is as a container for the toner

until it is emptied into the developer cartridge which is a

reservoir for the toner. The other use is to act as a seal

between the developer cartridge and the rest of the machine.

If this seal were not in place, then some of the toner

(which is flammable) would escape from the developer

cartridge and enter the working parts of the machine with

consequent disruption to the machine's functioning.

13. The toner collecting container is a moulded plastic

bottle which incorporates a fuse. It collects excess toner

removed by the roller cleaner from the OPC drum in the laser

printer. The work of the machine and the quality of its

printing would be affected were excess toner simply to be

allowed to accumulate in the machine.

...

15. The roller cleaner when installed scrapes excess toner

from the upper heat roller contained in the printer and thus

ensures that there is no dirt or smudge marks on the printed

copy made by the machine. The life of the roller cleaner is

not related to the other goods in the toner kit but it is

included in order that it might be replaced at the same time

as the other items. The machine will operate without the

roller cleaner but, over time, the effectiveness of the

machine to perform its primary task will be impaired."

5. As the Tribunal pointed out, the toner cartridge served two functions. In the first place, it contained the toner, and, when it was inserted into a printer and a seal was withdrawn, the toner left the cartridge and was emptied into a developer cartridge in the machine, which was the reservoir for the toner. The other function of the toner cartridge was that, when inserted in place in the printer but emptied of the toner, it served to act as a seal between the developer cartridge then containing the toner and the rest of the machine.

6. As we read the reasons for decision given by the Tribunal, the Tribunal considered that there were four elements of the Toner Kit. The Tribunal regarded the toner as being independent of the toner cartridge and as being a consumable. The Tribunal said:-

"10. It is clear, on the authority of Deputy Commissioner

of Taxation v Polaroid Australia Pty Ltd 46 ALJR 32, that

the toner itself is a consumable. Once the amount of toner

in the machine has been used up, then the machine will not

perform its function of printing in the same way as once the

ink in a pen has been used, the pen will not write.

11. Having regard to its composition and its status as a

consumable, the toner is prima facie classifiable under

Tariff Item 3707.90."

The Tribunal held that the remaining items of the Toner Kit were parts of the printers.

7. The findings of the Tribunal that there were four components to the Toner Kit, that the toner collecting container, the roller cleaner and the cartridge were parts of the laser printer and that the toner was a consumable were findings of fact which were open to the Tribunal.

8. The finding that three of the items were "parts" of the laser printer accorded with the exposition of the term "parts" in Deputy Commissioner of Taxation v Polaroid Australia Pty Ltd (1971) 46 ALJR 32 and in Watersheid Australia Pty Ltd v Collector of Customs (1988) 7 AAR 555.

9. The view of the Tribunal that the toner was to be regarded as a separate element, a consumable, rather than as a component of a "part", the cartridge, was a finding of fact to which a decision-maker could reasonably come. Although the consumable was contained in a "part" when sold, nevertheless on installation it was to be removed therefrom. In this circumstance, it was open to the Tribunal to regard the toner as a separate component, a consumable. Mr S. Gageler, counsel for the Collector of Customs, submitted that, "What it (the Tribunal) did was to take one of the items and break it down and make it two which is not a matter of fact." However, as the toner was to be removed from the cartridge on installation, and was to be used as a consumable, the finding of fact of the Tribunal that the toner was a separate component was one which was reasonably open.

10. On these findings of fact, the Tribunal necessarily found that, if the components were classified separately, the toner would be classified under sub-heading 3707.90 and the parts would be classified under sub-heading 8473.30.

11. The Tribunal then turned its attention to rule 3 of the General Rules for the Interpretation of the Tariff. That rule provides:-

"3. When by application of Rule 2(b) or for any other

reason, goods are, prima facie, classifiable under two or

more headings, classification shall be effected as follows:

(a) The heading which provides the most specific

description shall be preferred to headings providing a

more general description. However, when two or more

headings each refer to part only of the materials or

substances contained in mixed or composite goods or to

part only of the items in a set put up for retail

sail, those headings are to be regarded as equally

specific in relation to those goods, even if one of

them gives a more complete or precise description of

the goods.

(b) Mixtures, composite goods consisting of different

materials or made up of different components, and

goods put in sets for retail sale, which cannot be

classified by reference to 3(a), shall be classified

as if they consisted of the material or component

which gives them their essential character, insofar as

this criterion is applicable.

(c) When goods cannot be classified by reference to 3(a)

or 3(b), they shall be classified under the heading

which occurs last in numerical order among those which

equally merit consideration."

12. As the goods in the Toner Kit were composite goods in a set put up for retail sale, and as each of the headings referred to part only of the items in the set, rule 3(a) required both the sub-headings to be regarded as equally specific in relation to the goods.

13. The Tribunal then turned to rule 3(b) and to the question whether the goods should be classified as if they consisted of a material or component which gave them their essential character. As the words "insofar as this criterion is applicable" show, the mere fact that goods are put up in a set for retail sale does not mean that they have an essential character given to them by one material or component. The essential character, if there be one, may be given to the goods by reason of the diversity or mixture of the materials or components. In Collector of Customs (Qld) v Times Consultants Pty Ltd (1986) 13 FCR 190, it was said at 195:-

"But where two goods have a different composition and nature

and are put together in a set because they complement each

other and because each adds a significant quality that the

other does not have, one cannot ordinarily say that one

article only gives to the set its essential character."

14. The Tribunal explained that the purpose served by putting the components of the Kit together in a set was to ensure that the toner collecting container and the roller cleaner were regularly replaced, so that there would be no buildup of waste or used toner in the printer. The Tribunal said:-

"8. It was explained by Mr Nuij, who is an engineer

employed by the Applicant, that the primary reason for

including the toner collecting container and roller cleaner

in the kit, together with the toner cartridge, was to ensure

that the former items were regularly replaced. The toner

itself has a finite life being good, according to Mr Nuij,

for some 3,000 copies at 4% black image (ie at 1,600

characters per page)."

15. The Tribunal concluded that no particular material or component gave to the whole Kit an essential character for the reason that the uses of the components were disparate. The toner was a consumable whilst the other components were parts of the printer, each serving a function different from the other. The Tribunal in effect held that the toner was a consumable whilst the toner collecting container and the roller cleaner were parts which, for the efficient functioning of the printer, should be replaced whenever the toner was renewed. The Tribunal said:-

"26. The term 'essential character' has been discussed in a

number of matters before this Tribunal and the Federal Court

- see for example re Toyworld and Collector of Customs (Vic)

7 ALD 67, Times Consultants Pty Ltd v Collector of Customs

(Qld) 76 ALR 313, Peacock v Zyfert [1983] FCA 190; 48 ALR 549, and re

Bicycle Corporation Pty Ltd and Collector of Customs 20 ALD

655. A consideration of those cases persuades the Tribunal

that to ascertain the 'essential character' of any good or

goods is a practical test to be applied objectively to the

particular goods in question.

27. Applying that test to the goods contained in the toner

kit, it cannot be said that any particular component gives

to the whole any essential character. The uses of the

components are quite disparate. The toner is akin to ink

and is consumed by the machine, the other items are parts of

the machine. The fact that they are replacement parts ought

not to prevent them from being identified as parts if that

is their role. Cf meaning 10. of the Macquarie Dictionary

meaning of the word 'part' referred to above."

16. The Tribunal therefore applied rule 3(c), and classified the goods in the set under sub-heading 8473.30, which was the last in numerical order among the relevant classifications.

17. The jurisdiction conferred by s.44(1) of the Administrative Appeals Tribunal Act 1975 (Cth) upon the Federal Court is to determine a question of law. The decision of the Tribunal on issues of fact are not reviewable on their merits by this Court.

18. The principles to be applied were recently stated by Neaves, French and Cooper JJ in Collector of Customs v Pozzolanic Enterprises Pty Ltd (1993) 43 FCR 280. At 287, their Honours set out five general propositions, of which it is sufficient to set out propositions 2 and 5:-

"2. The ordinary meaning of a word or its non-legal

technical meaning is a question of fact: Jedko Game

Co Pty Ltd v Collector of Customs (NSW) (supra); New

South Wales Associated Blue-Metal Quarries Ltd v

Commissioner of Taxation (Cth) [1956] HCA 80; (1956) 94 CLR 509 at

512; Life Insurance Co of Australia Ltd v Phillips

[1925] HCA 18; (1925) 36 CLR 60 at 78; Neal v Department of Transport

[1980] FCA 45; (1980) 3 ALD 97 at 107-108.

...

5. The question whether facts fully found fall

within the provision of a statutory enactment

properly construed is generally a question of

law: Hope v Bathurst City Council (1980) 144

CLR 1 at 7 per Mason J with whom Gibbs, Stephen,

Murphy and Aickin JJ agreed; Australian National

Railways Commission v Collector of Customs (SA)

at 379 (Sheppard and Burchett JJ).

"The fifth proposition as stated by the High Court in Hope v

Bathurst City Council (supra) was elaborated by reference to

the remarks of Fullagar J in Hayes v Commissioner of

Taxation (Cth) (1956) 96 CLR at 51:

'Where the factum probandum involves a term used in a

statute, the question whether the accepted facta

probantia establish that factum probandum will

generally - so far as I can see, always - be a

question of law.'

This principle is qualified when a statute uses words

according to their ordinary meaning and the question is

whether the facts as found fall within those words. Where

it is reasonably open to hold that they do, then the

question whether they do or not is one of fact: Hope v

Bathurst City Council at 8. Mason J there cited the

observation of Kitto J in New South Wales Associated Blue-Metal

Quarries Ltd v Commissioner of Taxation (Cth) (supra)

at 512:

'The next question must be whether the material before

the Court reasonably admits of different conclusions

as to whether the ... operations fall within the

ordinary meaning of the words as so determined; and

that is a question of law ... If different conclusions

are reasonably possible, it is necessary to decide

which is the correct conclusion; and that is a

question of fact ...'

See also Australian Gas Light Co v Valuer-General (supra) at

137 (Jordan CJ); Lombardo v Commissioner of Taxation (Cth)

(supra) at 210 (Bowen CJ), 215 (Franki J); TNT Skypak

International (Aust) Pty Ltd v Commissioner of Taxation

(Cth) [1988] FCA 119; (1988) 82 ALR 175 at 182 (Gummow J); Commissioner of

Taxation v Bivona Pty Ltd (1990) 21 FCR 562 at 564;

Commissioner of Taxation v Cooper [1991] FCA 164; (1991) 29 FCR 177 at

194-195 (Hill J)."

19. Thus, it is primarily a question of fact, not of law, as to what is the meaning of an ordinary English word or phrase as used in a statute in its ordinary sense and so also is the question whether, there being a different conclusions reasonably open, a particular set of facts comes within the description of such a word or phrase. This principle was enunciated in detail and explained by Jordan CJ in Australian Gaslight Co v The Valuer General (1940) 40 SR (NSW) 127 at 137-8 and by Mason J in Hope v Bathurst City Council [1980] HCA 16; (1980) 144 CLR 1 at 7-8. The principle was followed by Beaumont and Burchett JJ in Jedko Game Co Pty Ltd v Collector of Customs (NSW) (Federal Court of Australia, 10 March 1987, unreported but noted (1987) 12 ALD 491).

20. Even so, in any particular decision, although the decision may be a factual one, all the usual grounds of review will apply for they are regarded as being illustrative of questions of law. Thus a decision-maker may have failed to provide procedural fairness or may have failed to take into account a relevant fact, or may have had regard to an irrelevant matter or the decision may have been so unreasonable that no reasonable decision-maker could have come to it. Examples where Courts have enquired under these principles into the facts found by administrative decision-makers are Federal Commission of Taxation v McCabe [1990] FCA 389; (1990) 26 FCR 431; Bushell v Repatriation Commission [1992] HCA 47; (1992) 175 CLR 408.

21. If the decision-maker adopts a wrong approach to the task, the decision may be set aside and the matter remitted for reconsideration. See Times Consultants Pty Ltd v Collector of Customs (Qld) (1987) 16 FCR 449 and Waterscheid Australia Pty Ltd v Collector of Customs. This may occur if the decision maker has not applied the well understood ordinary meaning of a term but has given to it a meaning or qualification of his or her own or if, in the application of terms such as "income", "capital" and "incurred" which appear in the Income Tax Assessment Act 1936 (Cth) and the term with which we are now concerned, "essential character", all of which have been the subject of exposition in reasons of courts, the decision maker adopts a meaning contrary to that which has been established by legal decisions.

22. In Commissioner of Taxation v Roberts [1992] FCA 363; (1992) 37 FCR 246, the issue fell within the fifth proposition enunciated in Pozzolanic. In Peacock v Zyfert [1983] FCA 190; (1983) 48 ALR 549, the words of the Tariff which were in question took on a meaning from the context in which they appeared and therefore the construction of the Tariff was in issue. In cases of the latter type, which may involve mixed questions of fact and law, it is necessary to identify whether the administrative decision-maker is alleged to have made an error of law or an error of fact.

23. In Pozzolanic, Neaves, French and Cooper JJ pointed out the consequences of the application of these principles. Their Honours said at 286-7:-

"The appealable error of law must arise on the facts found

by the Tribunal or must vitiate the findings made or must

have led the Tribunal to omit to make a finding it was

legally required to make. A wrong finding of fact is not

sufficient to demonstrate error of law: Waterford v

Commonwealth [1987] HCA 25; (1987) 163 CLR 54 at 77-78. Where the decision

of the Tribunal involves matters of fact and degree, then

provided it applies correct principles of law, no appeal

will lie: Commissioner of Taxation v Brixius (1987) 16 FCR

359 at 365.

The limits within which the jurisdiction is conferred

require that it be exercised with restraint. Only in

exceptional circumstances should the decision of the

Tribunal not be the final decision: Blackwood Hodge

(Australia) Pty Ltd v Collector of Customs (NSW) (1980) 47

FLR 131 at 145 (Fisher J); Commissioner of Taxation (Cth) v

Cainero (1988) 88 ATC 4,427 (Foster J). As the Full Court

said in Repatriation Commission v Thompson (1988) 9 AAR 199

at 204:

'... the nature of the task of this Court is clear.

It is to leave to the tribunal of fact decisions as to

the facts and to interfere only when the identified

error is one of law.'

This translates to a practical as well as principled

restraint. The Court will not be concerned with looseness

in the language of the Tribunal nor with unhappy phrasing of

the Tribunal's thoughts: Lennell v Repatriation Commission

(1982) 4 ALN N 54 (Northrop and Sheppard JJ); Freeman v

Defence Force Retirement and Death Benefits Authority (1985)

5 AAR 156 at 164 (Sheppard J); Repatriation Commission v

Bushell [1991] FCA 185; (1991) 13 AAR 176 at 183 (Morling and Neaves JJ).

The reasons for the decision under review are not to be

construed minutely and finely with an eye keenly attuned to

the perception of error: Politis v Commissioner of Taxation

(Cth) (1988) 16 ALD 707 at 708 (Lockhart J)."

24. Their Honours' reference to Blackwood Hodge (Australia) Pty Ltd v Collector of Customs (NSW) [1980] FCA 96; 1980 47 FLR 131 is of particular significance, for that decision (Fisher and Sheppard JJ, Smithers J dissenting) established that, in the context of the Tariff, when words of the English language are used in their meaning in ordinary parlance, the meaning of those words and the question whether the facts fall within them are ordinarily questions of fact for the administrative decision-maker.

25. It is fundamentally a question of fact whether goods in a set have an essential character and what that essential character is. In Times Consultants Pty Limited v Collector of Customs (Qld) at 462, Morling and Wilcox JJ said: "In our opinion, it was a question of fact whether one material component gave to the goods their essential character." Fox J, in his dissenting judgment, similarly said at 456:-

"In the present case, the words "essential" and "character"

are par excellence words which have an ordinary meaning, and

the combined phrase "essential character" cannot be regarded

otherwise. It is not a term of art. The concept of

"essential character", as his Honour's reasons disclose, is

not precise, or clean cut. Although perhaps not always easy

to apply to goods, the words have an ordinary meaning, which

is not limited by the Act or the Schedule."

"Character ... 9. The aggregate of the distinctive features

of any thing; essential peculiarity; nature, style; sort,

kind, description ....'

'Essential ... 2. of or pertaining to essence, specific

being, or intrinsic nature ... '

'Essential character: in scientific classification, the

marks which distinguish a species, genus, etc. from the

others included with it in the next superior division.'"

26. The trial Judge considered that the words "essential character" in rule 3(b) were to be given a meaning from the context in which they appeared. His Honour said:-

"The whole work of differentiation is to be borne by the

criterion of 'their essential character', the only

alternative being the arbitrary classification provided by

para. (c). It is not to be imagined that the intention was

to make the lottery of para. (c) the test for other than

extreme cases, where the chosen criterion could not yield an

answer. A principled application of differential tariffs,

in this context, requires that the test of 'essential

character' be understood in a sense in which it will

generally provide an effective means of discriminating

between possible classifications. Too frequent resort to

para. (c) would turn the operation of what is meant to be a

practical test into a haphazard matter of chance. To this

broad consideration, if the context is examined more

minutely, may be added an implication which arises from the

terms of para. (c). That paragraph treats a case where

para. (b) is not applicable as a case where more than one

possible classification of the goods in a set can be

described as 'equally merit(ing) consideration'. This

implies a contemplation that anything other than equality

between components, in the impact they make upon the mind of

the classifier, will allow para. (b) to provide the

criterion. If two different components may be described as

'disparate', but do not have completely equal weight as

determinants of the essential character of the set, para.

(b) can and should be utilized."

27. With respect, we cannot accept this approach. The words "essential character" are a well known expression which has long been used when the task is to classify or characterise goods. In Thomson Australian Holdings Pty Ltd v Federal Commissioner of Taxation (1988) 20 FCR 85 (affirmed on appeal (1989) 25 FCR 481), where the issue was whether certain publications were "catalogues or price-lists", terms used in item 51(1)(c) of the First Schedule to the Sales Tax (Exemptions and Classifications) Act 1935 (Cth), the Court said, at 86:-

"I agree with (Counsel's) view that the task of the Court is

to determine the essential character of the goods, what

essentially the goods are, not some characteristic that the

goods might have. Essential character derives from the

basic nature of the goods, from what they are, though

composition, function and other factors necessarily play a

part."

See also the observations of Burchett J on appeal at (1989) 25 FCR 481 at 486.

28. The expression "essential character" directs the attention of the decision-maker to the essence of the goods, to what they really are, and away from issues such as subjective purpose or how a particular person intends to use the goods in certain circumstances. In the context of rule 3(b), the term "essential character" carries its ordinary meaning and, in our opinion, ought not to be given any other meaning with a view to avoiding the application of rule 3(c). The words "which equally merit consideration" do not suggest that some different interpretation should be given. Rule 3(a) provides that, if two or more headings each apply to part only of the items in a set put up for retail sale, those headings are to be regarded as equally specific in relation to the goods. In this event, each such heading would equally merit consideration.

29. In Cody (Collector of Customs) v Datacraft (Australia) Pty Ltd (1989) 19 ALD 145 at 147, Northrop and Keely JJ referred to rule 3(c) as a "precept of despair". However, the rules mean what they say. Rule 3(a) requires that, if two or more headings each apply to part only of the items in a set put up for retail sale, those headings are to be regarded as equally specific in relation to the goods. Rule 3(b) deals with the circumstance where one material or component gives to the goods as a whole their essential character. If this rule does not apply, rule 3(c) applies. There is no ambiguity in those rules. They should be given the effect which Parliament intends. We do not read the remarks of Northrop and Keely JJ as suggesting the contrary.

30. Reference was made by Mr Gageler to the Brussels' Notes to the Harmonised System, but we have not found those notes to be of assistance with the present issue.

31. In our opinion, there was no error in the Tribunal's approach to the issues before it. Its decision was one which was open to a reasonable decision-maker.

32. We would allow the appeal. We would set aside the orders below and would substitute therefor an order that the application to the Court be dismissed with costs. We would order that the respondent, the Collector of Customs, pay the costs of the appeal.

HILL J I have had the opportunity of reading in draft form the joint judgment of Davies and Beazley JJ and agree with the orders proposed by their Honours and with the conclusions which they have reached. I wish only to add some brief comments on the issue whether the appeal from the Administrative Appeals Tribunal raised a question of law.

2. The Tribunal was of the view that no particular component of the toner replacement kit gave to the whole an essential character, with the result that Rule 3(c) of the general rules for the interpretation of the tariff required the kit to be classified under sub-heading 8473.30, being the last in numerical order among the relevant headings which equally merited consideration. The judgment appealed from took a different view of Rule 3(b) and in particular its relation to Rule 3(c).

3. It was submitted that the finding by the Tribunal that Rule 3(b) had no application was a finding of fact and raised no question of law. It followed, it was said, that his Honour erred in concluding that there was a material component which gave to the goods their essential character, such that Rule 3(c) had no application.

4. At the heart of the submission lies the well established rule that the ascertainment of the ordinary meaning of a word is but a question of fact: Australian Gas Light Co v The Valuer General (1940) 40 SR(NSW) 127 at 137-8 per Jordan CJ; Hope v Bathurst City Council [1980] HCA 16; (1980) 144 CLR 1 at 7-8 per Mason J. So it is said that the meaning of the phrase "essential character", that phrase being made up of ordinary English words, is likewise a question of fact.

5. The next step in the argument is to say that the question whether a particular set of facts comes within the description of such a word or phrase is likewise one of fact, a proposition for which Australian Gas Light Co is also authority. A finding by the Tribunal that a particular material component gave to particular goods their essential character would be a finding of fact: Times Consultants Pty Ltd v Collector of Customs (Qld) (1987) 16 FCR 449.

6. However, even where the Tribunal has made a finding of essential character, a limited right of appeal to this Court may arise. That finding may not be open on the evidence. If so, the Tribunal has erred in law in reaching it. Likewise, in arriving at its finding, it is possible in a particular case that the Tribunal might err in law, for example, by failing to afford to a party procedural fairness, or the Tribunal might have misdirected itself in law, for example, because it adopted an incorrect view as to the relationship between Rule 3(b) and Rule 3(c).

7. The rule that a question of fact is involved in determining whether facts fall within the meaning of a word once that meaning is ascertained, may cause confusion. The confusion comes about because there are actually two related rules, the distinction between which is not always readily apparent. The first of these rules is generally expressed as being that where the facts have been fully found or there is no dispute as to the facts and the question is whether those facts necessarily fall within the description of a word or phrase in a statute, that will be a question of law. This is the sixth proposition enunciated by Jordon CJ in the Australian Gas Light Co case. The rationale for this principle is clear enough. If only one meaning is open but a tribunal arrives at a different meaning, underlying the tribunal's conclusion must be an error of principle, that is to say, an error of law.

8. The second related principle is that where the facts found are capable of falling within or without the description used in the statute, the decision which side of the line they fall on will be a decision of fact and not law. Such a decision will generally involve weight being given to one or other element of the facts and so involve matters of degree.

9. When in Collector of Customs v Pozzolanic Enterprises Pty Ltd (1993) 43 FCR 280 Neaves, French and Cooper JJ enunciate their fifth proposition in terms that the question whether facts fully found fall within the provisions of a statutory enactment properly construed is "generally" a question of law, the reason for the qualification lies in the fact that the fifth proposition is in truth the two separate and related propositions to which I have already referred.

10. Turning to the facts of the present case where the primary facts were not in dispute, the question whether it was open for the Tribunal to find that no one material or component gave the goods their essential character was clearly a question of law. It was a question which on his Honour's view of the construction of Rules 3(b) and (c) and their relationship to each other, had been decided erroneously by the Tribunal. If, as I think to be the case, it was open to the Tribunal to find that no one material or component gave to the toner kit an essential character, then its finding that Rule 3(b) was inapplicable involved no more than a finding of fact which could not be reviewed by this Court.

Administrative Appeal Tribunal Act 1975(Cth)

Sales Tax (Exemptions and Classifications) Act 1935(Cth)

Appeals Tribunal Act 1975

Tax Assessment Act 1936

Sharp Corporation of Australia Pty Ltd v Collector of Customs [1995] FCA 1521

At a glance

Court

Decision date

Before

Source

Judgment (74 paragraphs)

Sharp Corporation of Australia Pty Ltd v Collector of Customs [1995] FCA 1521 (4 September 1995)

Parties

Legislation Cited (5)

Cases Cited (19)