Voxson Sales Pty Ltd v Collector of Customs [1993] FCA 609; (1993) 19 Aar 129 (10 December 1993)

FEDERAL COURT OF AUSTRALIA

VOXSON SALES PTY LTD v. COLLECTOR OF CUSTOMS
No. QG70 of 1992
FED No. 984/93
Number of pages - 18
Customs And Excise - Statutes
[1993] FCA 609; (1993) 19 AAR 129

COURT

IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY
GENERAL DIVISION
SPENDER J

CATCHWORDS

Customs And Excise - Customs tariffs - Tariff Concession Orders - approach to construction of tariff concession orders - whether before goods can be covered by a tariff concession order they must first be goods coming within the tariff classification to which the tariff concession order is keyed - whether tariff concession orders should be interpreted element by element or rather as a whole and in light of tariff classification to which it is keyed - meaning of "telephone handset" - meaning of "base unit".

Statutes - whether ordinary rules of construction apply to tariff concession orders - taxing statute to be construed beneficially - words to be given their ordinary meaning unless they have acquired a secondary meaning through trade usage.

Administrative Appeals Tribunal Act 1975 s. 4(4)

Customs Act 1901 ss. 269B(1) and 269C(1)

Customs Tariff Act 1987 Schedules 2 and 3

Tariff Concession Order 8906970

Chandler and Co. v. The Collector of Customs [1907] HCA 81; (1907) 4 CLR 1719

Chinese Food and Wine Supplies Pty Ltd v. Collector of Customs (Vic) 72 ALR 591

Defiance Enterprises Pty Ltd v. The Collector of Customs for the State of Queensland (1992) 2 QdR 81

Re Gissing and the Collector of Customs 14 ALR 555

Markwell v. Wollaston [1906] HCA 91; (1906) 4 CLR 141

Whitton (Collector of Customs for Victoria) v. Falkiner [1915] HCA 38; (1915) 20 CLR 118

HEARING

BRISBANE, 4 March 1993
10:12:1993

Counsel for the Applicant: Mr L. Gross

Solicitors for the Applicant: Churven and Co.

Counsel for the Respondent: Mr C. Hampson QC
with Mr J.A. Logan

Solicitors for the Respondent: Australian Government Solicitor

ORDER

THE COURT ORDERS THAT:

(i) the decision of the Tribunal be set aside and the matter be
remitted to the Tribunal to be heard according to law;
(ii) the respondent pay the applicant's costs of this proceeding.

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

DECISION

ON APPEAL from the General Administrative Division of the Administrative Appeals Tribunal SPENDER J This is an appeal brought under s. 44 of the Administrative Appeals Tribunal Act 1975 against a decision of the General Administrative Division of the Administrative Appeals Tribunal ("the Tribunal") given on 27 April 1992.

2. The case concerns the interpretation of Commercial Tariff Concession Order No. 8906970 ('the TCO') made under Part XVA of the Customs Act 1901 ('the Customs Act'). The question is whether a good imported by the applicant is within that TCO.

3. The applicant is the importer of a telephonic device described in the applicant's advertising material as the Voxson Cellvox 2002 hand held portable ('the Cellvox'). The Cellvox is a single hand held unit. The specifications for the Cellvox indicate that it has a frequency range in the transmit mode from 824.04 to 848.97 MHZ and in the receive mode from 869.04 to 893.97 MHZ. The RF power output is 0.6 watt, which is 50 Ohms and the battery voltage is 7.5 volts. The dimensions of the unit are 200 x 57 x 43.5 millimetres and it weighs 650 grams. Both parties accept that the Cellvox is a "cellular mobile telephone".

4. Schedule 3 of the Customs Tariff Act 1987 ('the Tariff Act') establishes the rate of tariff applicable to each particular classification of imported goods listed in that schedule. To determine the duty prima facie payable on an imported good, the product must be identified and the identified product must be classified to one of the headings contained in Schedule 3 of the Tariff Act ('Schedule 3'). The identified product can have only one classification pursuant to Schedule 3 of the Tariff Act at any particular time. This follows from the structure of Schedule 3 and from the general rules for the interpretation of the harmonised system.

5. Schedule 2 of the Tariff Act deals with the General Rules for the Interpretation of the Harmonized System and the first four rules are of relevance to the conclusion I have just stated. In particular, Rule 2(a) provides:

"Any reference in a heading to an article shall be taken
to include a reference to that article incomplete or
unfinished, provided that, as presented, the incomplete
or unfinished article has the essential character of the
complete or finished article. It shall also be taken to
include a reference to that article complete or finished
(or falling to be classified as complete or finished by
virtue of this Rule), presented unassembled or disassembled."

6. And by Rule 3 a mechanism is created by which goods which prima facie are classifiable under two or more headings can have a single classification determined. It is accepted by the parties that cellular mobile telephones are properly classified under Heading 8525.20 of Schedule 3.

7. Heading 8525 is in the following terms:

"TRANSMISSION APPARATUS FOR RADIO-TELEPHONY, RADIO-TELEGRAPHY,
RADIO-BROADCASTING OR TELEVISION, WHETHER OR NOT INCORPORATING
RECEPTION APPARATUS OR SOUND RECORDING OR REPRODUCING
APPARATUS; TELEVISION CAMERAS: "

8. Heading 8525.10.00 is "Transmission apparatus" and the heading within which it is agreed the Cellvox comes is 8525.20.00: "Transmission apparatus incorporating reception apparatus".

9. There was a suggestion from the Bar Table by Mr Hampson QC, senior counsel for the Collector, that CT2 (a "second generation cordless telephone" referred to in Exhibit 1 of the exhibits that were before the Tribunal) might satisfy the TCO. If CT2 did not have a receiving capacity (as was suggested and as was to be found in Exhibit 1 of the exhibits before the Tribunal), it would, in my opinion, not fall within heading 8525.20.00.

10. Schedule 4 of the Tariff Act ('Schedule 4') provides for concessional rates of duty for goods entered for home consumption coming within the ambit of the items listed in that schedule. Item 50 provides for a concessional rate of tariff for "Goods that a Commercial Tariff Concession Order declares are goods to which this item applies".

11. Part XVA of the Customs Act provides a mechanism regulating TCOs. That Part has been substantially amended since the TCO was made. At the time that the TCO was made, the operative section was s. 269C(1), which provided that the Comptroller of Customs (the 'Comptroller') shall, provided certain requirements were met, make a written order declaring that particular goods are goods to which prescribed items of Schedule 4 specified in the order apply. The common practice of the Comptroller is to declare that goods covered by a TCO are goods to which item 50 applies.

12. Under its Schedule 3 classification, the Cellvox is subject to duty in the range 17-19%. The applicant claims, however, that the Cellvox comes within the ambit of the TCO. The effect of the Cellvox coming within the ambit of the TCO is that the Cellvox would become a good covered by Item 50 of Schedule 4. Consequently, tariff duty on the Cellvox would be due at a lower rate. (Initially this rate was 2%: it has now been reduced to nil.)

13. The TCO which is the subject of these proceedings is Exhibit 1 before me. Because of the difficulties that I see in the method of approach by the Tribunal to the question of construction, it is appropriate that I set it out in full.

COMMERCIAL TARIFF CONCESSION ORDER
14. In pursuance of Section 269 C1 (sic) of the Customs Act 1901, I Patrick J. Maher, a delegate of the Comptroller, hereby declare that the particular goods specified in Column 1 of THE TABLE hereto are goods to which the item in Part III of Schedule 4 to the Customs Tariff Act 1987 specified in Column 2 of THE TABLE applies. The Order shall have effect from the 25th day of August 1989, and is effective until the end of the day before the date if any, specified in Column 2 of THE TABLE and, unless the context otherwise requires:

(a) Goods specified in Column 1 of THE TABLE are only particular
goods for the purpose of the item in Column 2 if they are
classified under the subheading in Column 1.
(b) The description of particular goods in Column 1 of THE TABLE
is to be interpreted in accordance with the principles set
out in the General Rules for the Interpretation of the
Harmonised System set out in Schedule 2 to the Customs Tariff
Act 1987.
(c) Any word or phrase used to describe particular goods in
Column 1 of THE TABLE has the same meaning as it would have
if it were usede (sic) in Column 2 of Schedule 3 to the
Customs Act 1987 that applies to those goods, and
(d) Notwithstanding paragraphs (a), (b) or (c) above, unless the
contrary intention appears, shall not include such particular
goods incorporated in sets, or sets incorporating those
particular goods.
THE TABLE
Column 1 Column 2
Description of Particular goods including Prescribed Item No.
the applicable subheading of the Customs Date
Tariff
8525.20 TELEPHONE HANDSETS, cordless with 50
dialling facility, battery (DC)
operated, approved for use with
telecom lines, designed to operate
in conjunction with mains (AC)
powered radio frequency base units
Op. 25.8.89
TC 8906970

15. In the Government Gazette No. TC91/10 of Wednesday, 20 March 1991, at page 4 the following appears:

" COMMERCIAL TARIFF CONCESSION ORDERS MADE
In pursuance of section 269M of the Customs Act 1901, notice
is hereby given that the Commercial Tariff Concession Orders
as set out in THE TABLE hereunder have been made under
section 269C or 269P of the Customs Act 1901."

and then at page 12 of the Gazette is set out the TCO. The operative date is referred to in the Gazette as 25 August 1989.

16. The Comptroller rejected the applicant's contention that the TCO applied to the Cellvox and levied duty on the Cellvox at the rate prescribed for goods classified under 8525.20 of Schedule 3.

17. The applicant sought review of the decision of the Comptroller by the Tribunal. The Tribunal held in favour of the Comptroller. This is an appeal from that decision.

18. The Tribunal took the view that the Cellvox was not within the TCO because the Cellvox was not a "telephone handset" and the Cellvox was not designed to operate in conjunction with mains (AC) powered radio frequency "base units". The Tribunal came to these conclusions on the basis of findings in relation to the meaning of the expressions "telephone handset" and "base units".

19. Four grounds of appeal from that decision were filed:

"(a) The Tribunal erred in law in failing to hold that
only goods that fall to classification 8520.20 (sic
the reference should be 8525.20) could be eligible
for concessional entry under Commercial Tariff
Concession Order No. 8906970.
(b) The Tribunal took into account irrelevant
considerations in its interpretation of the ambit of
Tariff Concession Order No. 8906970 by considering
evidence of goods that fell to other
classifications.
(c) The Tribunal erred in law in failing to properly
construe the words 'telephone handsets, cordless
with dialling facility' in Tariff Concession Order
No. 8906970.
(d) The Tribunal erred in law in failing to properly
construe the words 'mains (AC) powered radio
frequency base units' in Tariff Concession Order No.
8906970."

20. However, the central thrust of the applicant's submission is that the Tribunal's construction of the terms "telephone handset" and "base unit" were in error because of an error in the Tribunal's approach to construction of TCOs.

21. It will be necessary to analyse the process of reasoning of the Tribunal in some detail, but in the view I take of the matter, the Tribunal seriously misconceived the proper approach to the construction of the TCO and the interrelationship of a particular TCO to the Schedule 3 classification to which it is "keyed". It did this, in a large part, because of the distractions introduced by reference to distinctions between cellular mobile telephones and cordless telephones; to classification of goods other than under heading 8525.20; and to TCOs whose only relevance was to classification of goods other than goods classified under heading 8525.20.

22. Evidence was given before the Tribunal by four experts, two on behalf of the applicant and two on behalf of the Collector. Mr Peter Van Velzen, an electrical engineer, who amongst other qualifications has a Bachelor of Engineering (Electronics) from R.M.I.T., in a report before the Tribunal concerning the Cellvox unit, said:

"The modules, when combined with other equipment, form
telephone hand-sets for use with the Cellular Mobile
Telephone Network.
The completed hand-sets have facilities to dial telephone
numbers via a keypad.
...
The modules and the completed handsets are of a cordless
nature. They do not require hard wire connection to the base
unit for operation. Communication with the base unit is
performed by radio transmission and reception. The base unit
for the mobile cellular telephone system is provided by
Telecom and located at cell sites. The base unit controls
the communication with mobile cellular telephones within the
cell...The base unit is connected by hard wire (cord) to the
public switched telephone network for connection to other
telephones.
(T)he handsets are DC powered.
The handsets must be approved for telecom lines if they are
to be sold within Australia. The Telecom line designation is
"Mobilenet" as would be stated in the Compliance Statement
Certificate granting approval for connection of the handsets
to the network.
The Telecom base stations (units) communicate with the
handsets by radio signals.
The Telecom base stations are mains (AC) powered."

23. It was his view that the handsets technically comply with TCO 8906970.

24. Professor Herbert Harrison, a Professor of Microelectronics at Griffith University also gave evidence on behalf of the applicant. With regard to the Cellvox, Professor Harrison said that he believed that they were telephone handsets which are cordless, and which have a dialling facility. They are DC operated by battery and are also designed to operate in conjunction with mains (AC) powered radio frequency base units. Like Mr Van Velzen, Professor Harrison saw no distinction between base stations and base units.

25. On behalf of the Collector, Mr Gary Rose gave evidence. Mr Rose is the Regional Manager, Mobile Networks for Telecom and has held that position since 1988 and he has been a telecommunications engineer with Telecom since 1978. In his evidence Mr Rose said that mobile cellular telephones must receive two separate approvals, one from Austel and the other from the Department of Transport and Communications. These approvals have been granted in respect of the Cellvox unit. Mr Rose was concerned at some length with the difference between what is described as a cordless telephone network and a cellular telephone network:

"The feature that distinguishes a mobile telephone network
such as the cellular network from any of the cordless
telephone networks as defined by Austel is the ability of an
in-progress call to be handed over from one base station to
another..."

And later:

"That factor of hand-over is the key to distinguishing between
a cellular network and a cordless telephone..."

26. A cordless telephone, according to Mr Rose's description, is essentially a cordless extension of an ordinary telephone, permitting a person by means of radio to communicate from a handset to the wired telephone outlet in a home or office, which in turn is connected in the ordinary way to the basic public switched telephone network ('PSTN'). He said that an important difference between the cordless telephone and a cellular network is the level of switching. Within a PSTN there is a hierarchy of telephone exchanges; the local exchange is at the bottom of the hierarchy and is the exchange to which telephones such as domestic telephones are normally connected. As a cordless telephone is just another extension of that access to the PSTN, it comes in at the basic level of the switching hierarchy. A cellular network comes into the PSTN at a much higher level of the hierarchy and involves data connections directly between the exchanges with one computer talking to another rather than line signalling devices.

27. When asked about other differences between cellular telephones and cordless telephones, Mr Rose said:

"...the term cordless telephone implies a complete generation
of telephones along the lines that I'm describing here as
distinct from a telephone without a cord. A cellular
telephone, of which there are three generic types: a mobile
unit, a transportable unit and a hand-held unit, are complete
identities in themselves in that the hand-held telephone
contains all of the switching equipment as well as the voice
equipment in the one instrument, as here, for communication
with the base station, whereas a cordless telephone consists
of a handset with electronics in it for communication with a
base station unit as described in the other device."

28. In Mr Rose's opinion, a mobile hand-held telephone could not be described as a telephone handset. It would be described he said as a complete telephone, as it is totally self contained and capable of doing all the signalling to originate and receive calls. A handset on the other hand is part of a telephone which usually contains a microphone and a loudspeaker and some electronics to communicate. The signalling is found in the remainder of the telephone.

29. Also on behalf of the Controller was called Mr Neil Boucher, who is a consulting engineer. His evidence is particularly important because it is apparent that the Tribunal relied in large measure on what he said. Importantly, because it manifests the fundamental error which in my opinion infects the Tribunal's reasoning, Mr Boucher considered that the TCO referred to a cordless telephone which is not a cellular telephone.

30. He noted that a cordless telephone needs no licence as it is very low powered. This is to be contrasted with the licences in respect of a cellular mobile telephone. He also said that the cordless telephone must be no greater than 5 KHZ and is intended only to operate in a local environment such as in a house or office and only at a range of approximately 120 metres. A cellular mobile telephone is much higher powered at 12 KHZ and is intended to operate at much greater distances. This gives it a range of up to 20 kilometres to a single base station. He also indicated that the frequency for a cellular mobile telephone is fixed and is worldwide, so enabling it to be used in any country. However, the frequencies allocated for cordless telephones vary from country to country and the frequency is much lower.

31. Mr Boucher considered that a mobile cellular hand-held telephone could not be described as a telephone handset. He said that the word "hand-set" really refers to the microphone and earpiece of a conventional telephone that is held in the hand. A mobile cellular telephone has that but is a lot more as it is a fully self-contained telephone interface unit.

32. It is accepted by the parties that cordless telephones (at least so far as the first generation of them is concerned) are properly to be classified under heading 8517.10, which provides:

"8517 ELECTRICAL APPARATUS FOR LINE TELEPHONY OR LINE
TELEGRAPHY, INCLUDING SUCH APPARATUS FOR CARRIER-CURRENT LINE
SYSTEMS: 8517.10.00 - Telephone sets "

33. There is at least one TCO "keyed" to that classification, namely, TCO 8437846, which provided, at the time the subject goods were imported:

"8517.10 Telephones, cordless, (so called) approved for
connection to Telecom lines, consisting of BOTH of the
following:
(a) radio frequency transceiver handsets with dialling
facility, battery (DC) powered;
(b) radio frequency transceiver base units, mains (AC)
powered."

34. The effect of this keying is that, an imported good, a cordless telephone, which is properly classified under heading 8517.10, will be eligible for concessional duty if, and only if, it falls within the description of TCO 8437846.

35. Cellular mobile telephones are properly classified under heading 8525.20, being transmission apparatus incorporating reception apparatus within the heading "Transmission Apparatus for Radio-Telephony". It follows that they will be eligible for concessional duty if, and only if, the good falls within description of the TCO.

36. The fundamental requirement is that, before goods can fit within a particular TCO they must be within the tariff classification to which that TCO is keyed. This is plain from the terms of the TCO earlier set out and from Customs Regulation 181(1)(d) which is in the following terms:

"For the purposes of paragraph 269G(2)(a) of the Act, the
following particulars are prescribed in respect of an
application for a concession order in respect of particular
goods:
...
(d) a description that adequately identifies the goods
including the tariff classification that applies to those
goods;
(my emphasis)

37. In my respectful view, the Tribunal misunderstood this fundamental requirement.

38. The Government Gazette which publishes the TCOs specifically sets out the tariff reference number in Schedule 3 that is applicable to the goods the subject of each TCO.

39. At the time of the importation of the Cellvox, the legislation was based on the making of a TCO in respect of "particular goods". Section 269B(1) of the Customs Act defined this to include "goods included in a particular class or kind of goods".

40. It is agreed between the parties that the goods are battery (DC) operated. The Tribunal found that the goods are approved for use with Telecom lines and the Tribunal has found that the goods have a dialling facility. The dispute is whether the goods are telephone handsets within the ambit of the TCO and whether they are designed to operate in conjunction with mains (AC) powered radio frequency base units.

41. The approach to the construction of the TCO by the Tribunal appears from its reasons in paragraphs 34, 35, 36 and 37:

"34. There was no dispute between the parties that cordless
telephones are classified 85.17.10. We do not make any finding in
that regard as it is not necessary for us to do so. We note it,
however, for it formed the basis of Mr Gross' submission that the
tariff concessions applicable to cordless telephones must be related
to that classification only. Therefore, for example, we take Mr
Gross to mean that goods which come within a tariff concession order
relating to clarification 85.17.10, such as TC 8437846 may not fall
within a tariff concession order relating to a classification
85.25.20. The goods intended to fall within each must be different
so that a cordless telephone may not be intended to be covered by
tariff concession orders relating to each of the classifications
85.17.10 and 85.25.20...
35. Mr Gross did not cite any authority to support his argument. We
know of no rule of statutory interpretation which suggests to us
that we should adopt Mr Gross' submission. There is no suggestion
in Schedule 2 to the Act that tariff concession orders are to be
read so that they must be mutually exclusive. Such a suggestion
would serve to be contrary to their nature as concessions and would
seem to ignore the first step in any consideration of the
applicability of a tariff concession order i.e. that of
classification which, in turn, requires a determination of the
essential character of the goods at the time of their importation.
It would not seem to be inconsistent with the purposes of the Act
if, having been classified under a particular classification, goods
match the more particular description in a tariff concession order
applicable to quite a different classification as well as a tariff
concession order applicable to its own classification. Of course,
only the tariff concession order applicable to its classification
may be claimed.
36. That means that we will consider only whether the Cellvox 2002
comes within the tariff Concession Order, TC 8906970 and will
consider each of its components in turn. We will not do (that) on
the basis that TC 8937146 relates to cordless telephones and so TC
8906970 must relate to something other than cordless telephones.
The first is whether the Cellvox 2002 is a "telephone handset".
Professor Harrison said that it was whereas Mr Rose said that it
could not as it was a complete telephone. A handset, said Mr Rose,
contains only a microphone and a loudspeaker and some electronics to
communicate. There was nothing in the evidence to suggest to us
that the term "telephone handset" has acquired a trade meaning. We
have had regard to the ordinary meaning of "handset" in the
Macquarie Dictionary as "a part of a telephone covering both the
receiver and the transmitter, one at each end of a handle"
37. In the absence of any specific trade meaning, we give the word
"handset' its ordinary meaning as combining both the receiver and
the transmitter in the one instrument. This would accord also with
the meaning given to it in TC 8437818 which specifies "Handsets,
telephone exchange equipment testing", TC 9004207 which specifies
"Telephone, handset, clock radio" and TC 8437846 which we have set
out at paragraph 34 above. Each uses the word "handset" in the
ordinary meaning and separates the handset from the rest of the
equipment needed to have a functioning telephone."

42. In paragraph 42 of its reasons, the Tribunal said:

"42.
...
It is apparent from an examination of the classification 8517.10.00
and TC 8437846 as well as TC 8906970 that the words "telephone",
"telephone set" and "telephone handsets" are all used quite
specifically. It follows that if one description is used, it cannot
be interpreted as meaning another. It follows that a telephone
handset cannot be a telephone and that the Cellvox 2002, as a
telephone, does not come within TC 8906970."

And in paragraph 43, the Tribunal said:

"43.
...
We are satisfied on all the evidence that the Cellvox 2002 is
cordless with a dialling facility. In our view, however, the
Cellvox 2002 is not a telephone handset as required by TC 8906970
but a complete telephone. This is sufficient to conclude the
matter but we do, for the sake of completeness, make our findings
of fact and state our conclusions in relation to the remaining
aspects of that tariff concession order."

43. In identifying goods for customs purposes one looks at the goods themselves and the condition in which they are imported: Chinese Food and Wine Supplies Pty Ltd v. Collector of Customs (Vic) 72 ALR 591. The subject good, the Cellvox, is properly identified as a cellular mobile telephone: see Re Gissing and the Collector of Customs 14 ALR 555. On the question then "does the cellular mobile telephone fall within the terms of the TCO as properly construed", the principles of construction have long been settled. One applies the ordinary rules of construction, and if notwithstanding this a doubt still remains as to the meaning of the words to be interpreted, one resolves that doubt in favour of the taxpayer. In determining the meaning of the words, one gives them their ordinary meaning unless it is proved that they have acquired some generalised secondary meaning through trade usage in commerce. If so, that meaning is to be preferred: Chandler and Co. v. The Collector of Customs [1907] HCA 81; (1907) 4 CLR 1719 at 1734 per O'Connor J; Whitton (Collector of Customs for Victoria) v. Falkiner [1915] HCA 38; (1915) 20 CLR 118; per Isaacs J at 127 and per Higgins J at 132; Markwell v. Wollaston [1906] HCA 91; (1906) 4 CLR 141, 147 and 150; see also Defiance Enterprises Pty Ltd v. The Collector of Customs for the State of Queensland (1992) 2 QdR 81.

44. The Tribunal, in the reasoning I have set out, has interpreted the TCO in such a way that it cannot apply to goods within the particular classification to which the TCO is keyed. In order to interpret the phrase "telephone handsets" the Tribunal has ignored the fact that that phrase stands qualified by the other attributes that the TCO says that a telephone handset must have to fit within it. In other words, in my opinion, one cannot give telephone handsets a definition, which of itself excludes the possibility that it can have any of the attributes that the TCO goes on to specify. To do that is to construe the TCO in a way that deprives it of any meaning. Consistent with the ordinary principles of statutory interpretation, that is a course of last resort.

45. It was submitted by Mr Hampson QC that the Tribunal got it right in the last sentence of its reasons in paragraph 35 earlier referred to, namely:

"...only the tariff concession order applicable to its
classification may be claimed."

46. Read in context, however, that is not so. The statement immediately preceding that sentence, namely:

"It would not seem to be inconsistent with the purposes of the
Act if, having been classified under a particular
classification, goods match the more particular description
in a tariff concession order applicable to quite a different
classification as well as a tariff concession order
applicable to its own classification."

is wrong. Further, the statement:

"We will not do (that) on the basis that TC 8937146 relates to
cordless telephones and so TC 8906970 must relate to
something other than cordless telephones."

reveals error. Quite simply, TCO 8906970 must relate to something other than cordless phones, because cordless phones are to be found within a heading which is a heading other than the heading to which that TCO is keyed.

47. Next, it is a wrong approach to consider each element in turn, without having regard to the description of goods in a TCO as a whole. That is what the Tribunal has done in this case and, as a consequence, has ensured that there is no good that can fit within the TCO.

48. The errors into which, in my opinion, the Tribunal has fallen might be explained by a reference to part of the evidence of Mr Boucher. He was asked in his oral evidence before the Tribunal:

"...could you describe what you would regard as a "telephone
handset, cordless with dialling facility, battery DC
operated, approved for use with Telecom lines, designed to
operate in conjunction with mains AC powered radio frequency
base units?"

49. Mr Boucher replied:

"Okay. Well, this is not a cellular phone. This is a cordless
telephone..."

and he was asked:

"Would you describe a mobile cellular hand-held telephone as a
telephone handset? "

and he replied:

"No, because the word handset really goes back to the
conventional telephone, and it really refers to the
microphone and ear piece and the - the piece you hold in your
hand for conventional telephone. They're - the word isn't
really properly applied to a cellular telephone because it's
a lot, lot more than just a simple microphone and ear piece."

50. The evidence as to "telephone handset" from Mr Van Velzen and Professor Harrison was that the goods came within that description. The evidence from Mr Boucher, in particular, as to the meaning of that phrase was by reference to his knowledge of "cordless telephones" as against "cellular mobile telephones" and that evidence sought to define "telephone handsets, cordless with dialling facility" as referring to "cordless telephones". To adopt that course, it seems to me, is to define the TCO out of possible operation.

51. The meaning of "telephone handset" which found favour with the Tribunal, which was essentially "that part of an ordinary telephone that one holds in the hand" does not satisfy the description "transmission apparatus for radio telephony being transmission apparatus incorporating reception apparatus", which is the classification to which the TCO is keyed. Goods covered by the TCO must fall within the heading to which the TCO is keyed.

52. Further, if that is the correct meaning to give to "telephone handset" in the TCO, those telephone handsets are not "DC operated, with dialling facility and cordless", and consequently no good could fit the description in the TCO, because those goods which fall within the meaning of "telephone handset" as the Tribunal indicated those words meant, do not have the other elements including "DC operated, with dialling facility and cordless" which the TCO requires.

53. In short, the Tribunal has given telephone handsets a definition which excludes the possibility that the goods can have any of the attributes that the TCO goes on to specify.

54. In the view I take of the matter, the Tribunal looked at concepts described in the evidence applicable to cordless telephones to try and interpret a tariff concession that has nothing to do with cordless telephones. It is not irrelevant in this context to note that Mr Rose said in a report before the Tribunal:

"To a lay person the wording of TC 8906970 'Telephone
Handsets, cordless with dialling facility, battery (DC)
operated, approved for use with Telecom lines, designed to
operate in conjunction with mains AC powered radio frequency
base units' could easily be misunderstood to cover a wide
range of mobile communication devices.
A handheld cellular telephone is generally accepted by the
public to be:
(i) a telephone handset
(ii) cordless
(iii) have a dialling facility
(iv) be DC powered "

55. Notwithstanding this general acceptance by the public, Mr Rose attempted to suggest that that general acceptance by the public was misplaced and that that phrase did not, as the public supposed, cover a handheld cellular telephone.

56. In my opinion, the same approach adopted by the Tribunal in relation to the question of telephone handsets, taints its approach in relation to the question of base units. The Tribunal said, in paragraph 45 and 46 of its reasons:

"That brings us to the final aspect - and that is whether
Cellvox 2002 is 'designed to operate in conjunction with
mains (AC) powered radio frequency base units. There is no
disagreement in the evidence that a mobile cellular telephone
operates by sending, via the air, radio signals to a tower
which is connected with what we will call, for the present, a
'base'. That base switches the cell via conventional wire
lines to a switching centre and the call is then connected to
the Public Switched Telephone Network. Mr Van Velzen said
that the 'box' could be called a base unit and a base
station, and that the two terms were interchangeable.
Professor Harrison also saw no distinction between the two.
In contrast, Mr Rose consistently referred to it as a base
station. Voxson's brochure refers to the base as a 'base
station'. Mr Boucher said that the base is never called a
base unit but always a base station. Mr Rose also referred
to the base in a cordless telephone as a base station as well
as a base unit.
In view of Mr Boucher's credentials specifically related to
this field, we have concluded that the weight of evidence
favours our finding that the two terms 'base unit' and 'base
station' are not inter-changeable. Taking all of the
evidence into account we find that the 'base' to which a
cellular mobile telephone transmits its radio signal is known
as a base station and we do not find that it is transmitted
to a base unit."

57. Mr Hampson QC submitted:

"The Tribunal seems...to have found that a base unit had a
particular trade meaning and accepted Mr Boucher's evidence
in this regard..."

58. I find it difficult to accept that this is what in fact the Tribunal did do. If there was a particular trade meaning, it was not put to the other expert witnesses and the tenor of their evidence would suggest strongly that there is no such special or particular trade meaning to be given to the phrase 'base station'. It is curious that if a special meaning deriving from trade usage was what the Tribunal thought the phrase meant, it did not expressly say so. It seems to me that essentially the Tribunal accepted Mr Boucher's approach, namely that the TCO was concerned with cordless telephones. That, in my opinion, is a fundamental error.

59. In my opinion, the evidence does not suggest that the term 'base station' is used in any technical sense. The Tribunal certainly did not say it was adopting a technical rather than the ordinary meaning of that phrase.

60. The task of construction of the TCO miscarried for the reasons that I have indicated. However, in this case, the court should not make any order the effect of which is to say that the Cellvox is within the TCO. It is fallacious to say that because the Cellvox is within 8525.20 and the TCO is keyed to that heading, the Cellvox is within the TCO. The items covered by a TCO generally constitute a subset of the items with which the keyed heading deals, although the possibility exists that the set of the goods within the description of the TCO might consist of precisely the same goods as the set of the goods within the keyed heading. It is a matter for determination whether, as a matter of fact on the proper construction of the TCO, the Cellvox falls within it. The approach to the construction of the TCO by the Tribunal was erroneous in my opinion, but the matter is one which is required to be remitted to the Tribunal.

61. Under s. 44(4), the Court has power to make such order as it thinks appropriate by reason of its decision. I think that in all the circumstances and for the reasons which I have given, the orders that I should make are as follows:

I set aside the decision of the Tribunal. I remit the case to the Tribunal to be heard according to law. The question of whether the same Tribunal or a different Tribunal should be constituted to deal with the matter is a matter for the Tribunal, as is the question of whether the matter can be dealt with on the same evidence or whether further evidence might be permitted.

As to costs, the applicant should have its costs of the application before me.