Holden Limited v Chief Executive Officer of Customs [2005] FCAFC 27 (3 March 2005)

Last Updated: 4 March 2005

FEDERAL COURT OF AUSTRALIA

Holden Limited v Chief Executive Officer of Customs [2005] FCAFC 27

CORRIGENDUM

HOLDEN LIMITED v CHIEF EXECUTIVE OFFICER OF CUSTOMS
VID 992 of 2004

NICHOLSON, WEINBERG and SELWAY JJ
3 MARCH 2005 (CORRIGENDUM 3 MARCH 2005)
MELBOURNE

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VID 992 OF 2004

ON APPEAL FROM THE ADMINISTRATIVE APPEALS TRIBUNAL CONSTITUTED BY THE PRESIDENT

BETWEEN:	HOLDEN LIMITED APPELLANT
AND:	CHIEF EXECUTIVE OFFICER OF CUSTOMS RESPONDENT
JUDGES:	NICHOLSON, WEINBERG and SELWAY JJ
DATE OF ORDER:	3 MARCH 2005
WHERE MADE:	MELBOURNE

CORRIGENDUM

On page 19 Counsel for the Respondent should read ‘T Pagone QC and W Harris’ not ‘T Pagone QC and H Harris’.



I certify that the preceding one (1) paragraph
is a true copy of the Corrigendum to the
Reasons for Judgment of the Honourable Justices
Nicholson, Weinberg and Selway.






Associate:

Dated: 3 March 2005

FEDERAL COURT OF AUSTRALIA

Holden Limited v Chief Executive Officer of Customs [2005] FCAFC 27

CUSTOMS – drawback of duty on imported goods and components used in manufacture of motor vehicles upon export – export credits utilised to meet import duty payable –whether duty paid with export credits eligible for drawback

ACIS Administration Act 1999 (Cth)
ACIS (Unearned Credit Liability) Act 1999 (Cth)
Customs Act 1901 (Cth) ss 4, 168, 168(1), 168(2), 266, 273, 273GA(1)(jb)
Customs Tariff Amendment Act 1982 (Cth) (Act No 30 of 1982)
Customs Tariff Amendment Act (No 1) 2001 (Cth) (Act No 26 of 2001)
Customs Tariff Act 1995 (Cth) Sch 4 item 17(c)(ii), Sch 4 item 41A, Sch 4 item 41E, ss 10(2), 15, 16, 18(1), 18(2)

Customs Regulations 1926 regs 129, 131, 136

ACI Operations Pty Ltd v Chief Executive Officer of Customs (1998) 53 ALD 86 cited
Alcoa of Australia Ltd v Button (1984) 2 FCR 13 cited
Attorney-General (NSW) v Collector of Customs (NSW) [1908] HCA 28; (1908) 5 CLR 818 cited
Australian Capital Territory v Pinter [2002] FCAFC 186; (2002) 121 FCR 509 cited
Bull v Attorney-General (NSW) [1913] HCA 60; (1913) 17 CLR 370 cited
Chief Executive Officer of Customs v Tony Longo Pty Ltd [2001] NSWCA 147; (2001) 52 NSWLR 458 applied
Commissioner of Stamp Duties (NSW) v Perpetual Trustees Co Ltd [1929] HCA 27; (1929) 43 CLR 247 cited
Deputy Federal Commissioner of Taxes v Elder’s Trustee and Executor Co Ltd [1936] HCA 64; (1936) 57 CLR 610 cited
Entech Printed Circuits Pty Ltd and Chief Executive Officer of Customs, Re [1999] AATA 232; (1999) 55 ALD 244 cited
Federal Commissioner of Taxation v Angus [1961] HCA 18; (1961) 105 CLR 489 cited
Gerah Imports Pty Ltd v Minister for Industry, Technology and Commerce (1987) 17 FCR 1 considered
Minister for Immigration, Local Government & Ethnic Affairs v Gray [1994] FCA 1052; (1994) 50 FCR 189 cited
Misiura v Minister for Immigration & Multicultural Affairs [2001] FCA 133 cited
Minister for Industry and Commerce v East West Trading Co Pty Ltd (1986) 10 FCR 264 cited
Parks Holdings Pty Ltd v Chief Executive Officer of Customs [2004] FCAFC 317; (2004) 57 ATR 580 followed
Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355 cited
Spargo’s Case (1873) LR 8 Ch App 407 cited
Whim Creek Consolidated NL v Federal Commissioner of Taxation (1977) 17 ALR 421 cited


HOLDEN LIMITED v CHIEF EXECUTIVE OFFICER OF CUSTOMS
VID 992 of 2004

NICHOLSON, WEINBERG and SELWAY JJ
3 MARCH 2005
MELBOURNE

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VID 992 OF 2004

ON APPEAL FROM THE ADMINISTRATIVE APPEALS TRIBUNAL CONSTITUTED BY THE PRESIDENT

BETWEEN:	HOLDEN LIMITED APPELLANT
AND:	CHIEF EXECUTIVE OFFICER OF CUSTOMS RESPONDENT
JUDGES:	NICHOLSON, WEINBERG and SELWAY JJ
DATE OF ORDER:	3 MARCH 2005
WHERE MADE:	MELBOURNE

THE COURT ORDERS THAT:

1.	The appeal be dismissed
2.	Costs be reserved.

THE COURT DIRECTS THAT:

1.	Within 7 days the appellant file and serve any written submissions on the form of the costs order on the appeal.
2.	Within a further 7 days the respondent file and serve any written submissions in response.
3.	Within a further 5 days the appellant file and serve any reply.

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

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VID 992 OF 2004

ON APPEAL FROM THE ADMINISTRATIVE APPEALS TRIBUNAL CONSTITUTED BY THE PRESIDENT

BETWEEN:	HOLDEN LIMITED APPELLANT
AND:	CHIEF EXECUTIVE OFFICER OF CUSTOMS RESPONDENT

JUDGES:	NICHOLSON, WEINBERG and SELWAY JJ
DATE:	3 MARCH 2005
PLACE:	MELBOURNE

REASONS FOR JUDGMENT

THE COURT:

1 The issue on this appeal is whether the Administrative Appeals Tribunal (‘the Tribunal’) was in error of law in holding the appellant ineligible for drawback of Export Facilitation Scheme (‘EFS’) credits utilised by it to partially meet liability for import duty on certain goods being vehicles and components for vehicles.

2 The Tribunal’s decision was made on 23 July 2004. As the consequence of the resolution of issues concerning how the import duty had been paid, the Tribunal set aside the decision under review (which denied any entitlement to drawback). It remitted the matter to the Chief Executive Officer of Customs for reconsideration and for the taking of steps to carry into effect or to perfect the entitlement of the appellant to ‘drawback’ under s 168 of the Customs Act 1901 (Cth) (‘the Customs Act’) with respect to certain items. However it excluded from the reconsideration the claims so far as they related to the utilisation of EFS credits. The appeal contests the correctness of this exclusion

3 The decision under review before the Tribunal related to four claims for ‘drawback’ described as follows:

Claim No.	Total Claim	Duty acquitted using cash or ACIS Credits	Duty acquitted using export credits (‘EFS’)	Date of Claim
2103869	$1 755 289.35	$86 116.25	$1 669 173.10	8.11.2001
2104221	$1 532 375.03	$1 136 567.16	$395 807.87	6.12.2001
2200436	$946 487.98	$538 775.98	$407 712.00	13.12.2001
2104285	$208 231.83	$115 699.95	$92 531.88	08.02.2002

4 The decision under review rejected the four claims in full. However, by the time the application for review had come before the Tribunal the non-EFS portion of the claims had been accepted. Consequently, the only issue before the Tribunal was whether duty acquitted with EFS credits was subject to drawback.

5 The respondent submitted on this appeal that the decision reached by the Tribunal was correct. The respondent does not challenge the facts found by the Tribunal. He accepts that the essential criterion of application of the drawback provisions is that drawback will only be available on the exportation of goods where the exporter establishes that import duty had been ‘paid’ on those goods.

6 It is common ground that the jurisdiction of the Tribunal to review the decision which came before it arose pursuant to s 273GA(1)(jb) of the Customs Act.

DRAWBACK

7 Drawback is provided for in s 168(1) of the Customs Act which reads as follows:

‘(1) The regulations may make provision for and in relation to allowing drawbacks of duty paid on goods imported into Australia.’

8 The word ‘drawback’ is defined in a limited manner by s 4 of the Customs Act which provides only that it includes bounty or allowance. However, it has for centuries been understood in the context of customs as describing ‘repayments of duties or taxes previously charged on commodities, but from which they are relieved on exportation, that they might be disposed of in the foreign market on the same terms, as if they had not been taxed at all’: Attorney-General (NSW) v Collector of Customs (NSW) [1908] HCA 28; (1908) 5 CLR 818 at 846 per Isaacs J; Alcoa of Australia Ltd v Button (1984) 2 FCR 13 at 13-14, 17-18 per Woodward J.

9 The Customs Regulations 1926 make provision for drawback in reg 129 and reg 131. Regulation 129 provided at the relevant time, being the calendar year in which the EFS credits were utilised, namely 2001:

‘(1) This regulation applies to any imported goods on which import duty has been paid except:

(a) imported goods that have been used in the manufacture of goods, or have been subjected to a process or to treatment, in the Commonwealth; or
(b) secondhand goods.

(2) Subject to these Regulations, drawback of import duty may be paid on the exportation of imported goods to which this regulation applies. ...’

10 Similarly, reg 131 of the Customs Regulations provided, relevantly:

‘(1) In this regulation:

specified goods means:

(a)	manufactured goods in the manufacture of which imported goods have been used; or
(b)	imported goods that have been subjected to a process or to treatment in Australia.

imported goods, in relation to specified goods, means imported goods:

(a)	on which import duty has been paid; and
(b)	that have not been used in the Commonwealth otherwise than:
(i)	in the manufacture of the specified goods or in being subjected to a process or to treatment for the purpose of producing the specified goods, as the case may be; or
(ii)	for the purpose of being inspected or exhibited.

(2) On the exportation of specified goods, drawback of import duty may, subject to these Regulations, be paid in respect of:

(a)	the imported goods used in the manufacture of the specified goods; or
(b)	the imported goods that were subjected to a process or to treatment for the purpose of producing the specified goods;

as the case may be, and also in respect of any imported goods lost or wasted in the manufacture of the specified goods. ...’

11 Other regulations make further provision in relation to aspects of drawback. In particular, certain conditions are set by reg 134 and it is common ground that these have been met in respect of the claims from which the issue concerning eligibility of the EFS component for drawback arises. Reference is also required to reg 136B which provides:

‘Where:

(a)	except for the operation of this regulation, drawback of import duty may be paid on the exportation of goods; and
(b)	any rebate of that import duty has been made;

the amount of drawback that may be paid is to be reduced by an amount equal to the amount of the rebate made.’

12 Section 273 of the Customs Act provides for the respondent to determine by instrument in writing that an item of a Customs Tariff that is expressed to apply to goods, or to a class or kind of goods, as prescribed by by-laws shall apply, or shall be deemed to have applied, to particular goods specified in the determination. It applied with respect to certain of the applicant’s motor vehicles, including components, of the type specified in Customs By-law No 0040027 which was in force between 1 January and 31 December 2001. It is not in dispute that the determination was made as required in respect of the issues now arising under the claims for drawback. The relevant determinations were evidenced by gazettal notices.

EFS AND ITS SUCCESSOR ACIS

13 The Tribunal described the EFS in its reasons. The scheme was established in March 1982. From 1994 it was administered pursuant to a document issued by the Australian Customs Service and called ‘Administrative Arrangements to the Year 2000 for the Automotive Industry’. The EFS is one of two arrangements dealt with in the Administrative Arrangements. The other is the ‘PMV [Passenger Motor Vehicle] Producers’ 15 per cent entitlement to duty-free importation’ (‘the duty-free allowance’). That is dealt with in Pt B of the Administrative Arrangements. Part C deals with the EFS. It is common ground that no issue arises concerning the duty-free allowance on this appeal.

14 The EFS came to an end on 31 December 2000 when it was replaced by a new scheme, the Automotive Competitiveness and Investment Scheme (‘ACIS’) introduced by the ACIS Administration Act 1999 (Cth) and the ACIS (Unearned Credit Liability) Act 1999 (Cth). Transitional arrangements provided for in the former Act permitted the use of EFS credits in the 2001 year. In the second reading speech to these Acts as Bills it was said that the changes would make the scheme easier to manage, more robust and more reflective of industry practice with the least administrative burden. The issue arising before the Tribunal concerning the eligibility of the EFS credits for drawback is not one which can now arise in relation to ACIS credits because that possibility is precluded by the introduction into the Customs Act of s 168(2) reading:

‘(2) For the purposes of this section and of any regulations made for the purposes of this section, the amount of duty paid on goods that are imported into Australia under item 41E of Schedule 4 to the Tariff is to be taken to be the sum of:

(a)	the amount of money (if any) paid as customs duty on the importation of those goods; and
(b)	to the extent that duty credit issued under the ACIS Administration Act 1999 has been offset against customs duty that would otherwise have been payable in respect of those goods – the amount of customs duty offset by the use of the credit.’

Likewise item 41E of Sch 4 was introduced into the Customs Tariff Act 1995 (Cth) (‘the Tariff Act’), reading:

‘41E

‘Goods, as prescribed by by-law, being goods classified under a subheading of heading 8702, 8703 or 8704, including components therefor, imported by a person who owns duty credit under the Automotive Competitiveness and Investment Scheme set out in the ACIS Administration Act 1999 that can be applied in respect of the importation of those goods and who applies that credit to that importation.

An Amount equal to the amount of duty assessed in accordance with Part 2 of this Act, less any duty credit owned by the owner of the goods that can be and is applied to the goods NZ/PG/CA/DC/DCS/LDC/SG/US/TH: An amount equal to the amount of duty assessed in accordance with Part 2 of this Act, less any duty credit owned by the owner of the goods that can be and is applied to the goods.’

15 In its reasons the Tribunal referred as follows to features of Pt C of the Administrative Arrangements describing the operation of the EFS:

‘9. The provisions of Part C relating to the EFS do not appear to place emphasis on the scheme to reduce or avoid duty. However, not all the material in the document is one way.

10. When dealing with eligibility to earn export credits the document states that exporters will "receive the full benefit of any export credits earned" (C:1.1.1). Under the heading "Earning Expert Credits" (C:1) the document provides that credits are earned upon the export of eligible exports (C:1.3.1) being the level of Australian automotive value added content which is the "FOB selling price of the goods less the duty-free into store cost of any imported components" (C:1.3.4). EFS credits are calculated in money.

11. An important section of the document is the section headed "Claiming Export Credits" (C:2). This includes a number of references to "duty rebate" as follows:

"For duty offset purposes, Determinations will be issued by PMV Administration, ACS specifying an $A value of duty rebate (derived from the value of export credits earned)." (C:2.1.1)

"When submitting claims for export credits the following information should be supplied to PMV Administration, ACS:

(f) details of the beneficiary of the credits (to minimise transfers of Determinations of duty rebate amounts);" (C:2.1.2)

"For exports which are eligible to earn export credits under this scheme and also eligible for bounty assistance, if a bounty is claimed on those exports the value of any duty rebate derived from export credits earned will be reduced by the amount payable under the bounty scheme." (C:2.1.3)

"Once claimed export credits can be transferred between participants or sold by one participant to another. There are no limits on the transferability or sale of export credits between participants in any year. Once a Determination for duty rebate has been issued, any transfer of that instrument will be at the prevailing duty rebate level." (C:2.1.4)

It is noted that export credits can be converted into cash by sale.

The Tribunal referred to additional aspects of the contents of the Administrative Arrangements:

12. Reference to the scheme leading to a "duty rebate" also appears under the heading "Using Export Credits" (C:3). The relevant paragraphs are as follows:

"C:3.1 Use of Export Credits to Obtain Duty Rebate

C:3.1.1 Export credits may be used to obtain a rebate on the duty payable on the importation of Eligible Imports as defined in Part C3.2. The duty rebate derived from export credits can also be used by PMV producers to offset the duty payable on Eligible Imports in excess of their 15 per cent duty-free entitlement in any calendar year (see Part B:1.1.4)."

"C:3.1.3 Duty rebate will be calculated from the value of export credits as follows:

one dollar of credits will earn a duty reduction/rebate equal to one dollar multiplied by the appropriate tariff rate (expressed as a decimal) for the year of use ...

Where claims are made for credits on shipments exported towards the end of a calendar year and it is the following year before the actual Determination is issued, the ACS will give a retrospective validity date to the instrument. This will enable the claimant to gain the maximum benefit from the credits earned by obtaining refunds of duty paid during the period covered by the instrument."

"C:3.1.5 There are no limitations on the level of duty rebated that can be used during any calendar year by any participant."

13. It is agreed that EFS credits can also be used to obtain refunds of duty already paid or redeemed by paying cash when they have already been used.

14. It is to be noted that the reference to "duty reduction/rebate" in para C:3.1.3 leaves open the inference that the effect of the scheme is to reduce duty. Such an approach is also supported by the definition of "Export Facilitation Scheme" in the document which is: "[a] scheme whereby eligible organisations can earn export credits to permit duty-free entry of eligible goods". A definition of "Item 41A" contains a similar reference.’

16 In its reasons the Tribunal recorded that it was not clear precisely upon what legislative basis the EFS was established. In the course of oral argument the Court was informed that such legislative recognition as it had received had been in the Tariff Act, to which it is necessary to turn.

CUSTOMS TARIFF ACT

17 Section 15 of the Tariff Act imposes customs duty on goods imported into Australia. Section 16 sets out the usual method of calculation of duty. The section relevantly provides for duty to be calculated by reference to the ‘general rate set out in the third column of the tariff classification under which the goods are classified’. Section 18 provides for concessional rates of duty in respect of certain goods referred to in an item in Sch 4 of the Act. Item 41A of Sch 4 is such an item and applies with respect to the goods the subject of these proceedings. The Tribunal said that by the time item 41A was enacted as part of the Tariff Act, the EFS scheme had legislative recognition because it was referred to in that item.

18 Item 41A in Sch 4 of the Tariff Act is as follows:

‘41A

Goods, as prescribed by by-law, entered for home consumption on or before 31 December 2001, being goods classified under 8702, 8703 or 8704 of Schedule 3, including components therefore, imported by the owner of a determination issued under the Export Facilitation Scheme for certain motor vehicles and components

An amount equal to the amount of duty assessed in accordance with Part 2 of this Act, less any amount of export credits issued to the owner of the goods. NZ/PNG/FI/DC/DCS: An amount equal to the amount of duty assessed in accordance with Part 2 of this Act, less any amount of export credits issued to the owner of the goods’

19 During the course of argument of the appeal, counsel for the appellant referred to item 24 introduced by the Customs Tariff Amendment Act 1982 (Cth) (Act No. 30 of 1982) as having first given the EFS regulatory authority. That item referred to vehicle components without specific reference to the EFS.

20 Credits under the EFS are referred to in only one other item, namely item 17. As a consequence of the Customs Tariff Amendment Act (No 1) 2001 (Cth) (Act No. 26 of 2001), from 14 August 2000 the item provided free entry in the following terms:

‘17 Goods:

(a)	...
(b)	...
(c)	which, when first imported into Australia, were entered for home consumption under item 41A of Part III of Schedule 4 to this Act with export credits used in calculating the rate of duty, that have been exported from Australia and that are returned in an unaltered condition, being goods that have not been subjected to treatment, repair, renovation, alteration or any other process, and not being goods in respect of which:

(i) any duties of the Commonwealth were payable at or prior to the date of exportation but which have not been paid; or
(ii) drawback or refund of any duties of the Commonwealth was paid and an amount equal to such drawback or refund has not been paid to the Commonwealth; or
(iii) reinstatement of export credits was made and an amount equal to the value of the export credits has not been paid to the Commonwealth; or
(iv) reinstatement of export credits was made and has not been reversed; or ...’

A predecessor provision introduced from 4 July 2000 was in similar terms although it referred to the utilisation of the export credits ‘in calculating the amount of duty’ rather than by reference to the rate. (The appellant says in relation to item 17(c)(ii) that it contemplates that drawback can be paid where goods have been entered with export credits).

21 It is also relevant to mention that s 10(2) of the Tariff Act provides:

‘(2) Unless the contrary intention appears, any words, or words and figures, set out in a rate column, that enable the duty to be worked out in respect of goods, are a rate of duty.’

TRIBUNAL’S REASONS

22 The Tribunal considered that two issues were raised by the application before it. The first was whether the utilisation of the EFS credits either satisfied an obligation to pay duty or operated to reduce the amount of duty payable. If they did so, the second was whether such utilisation constituted a ‘payment’ so as to attract a drawback or whether a ‘payment’ could only be made in cash.

23 The Tribunal was of the view that s 18(2) of the Tariff Act read in conjunction with item 41A in Sch 4 answered the question of what duty is payable as ‘an amount equal to the amount of duty assessed in accordance with Pt 2 of this Act, less any amount of export credits issued to the owner of the goods’. Consequently, it considered that the duty payable did not include the EFS credit amount because the amount was described by reference to the result of the subtraction. Although ascribing fairness and consistency to the arguments presented on behalf of the appellant, the Tribunal did not regard them as sufficient to displace the clear words used in item 41A of Sch 4 of the Tariff Act. It said this was a case when legislative statements were so clear that matters of purpose and policy and the like could not lead to a different result.

24 The Tribunal therefore concluded that the EFS credits did not satisfy an obligation to pay duty but rather operated to reduce the amount of duty payable.

25 Turning then to the question as to whether the appellant was entitled to claim drawback with respect to the use of EFS credits, the Tribunal looked to the words of s 168 and the question whether the use of the EFS credits could be described as resulting in ‘duty paid on goods imported into Australia’. That in turn led it to examine the issues of whether the conclusions previously reached required it to determine that the use of the EFS credits had not resulted in ‘duty being paid’ and, second, whether duty can only be ‘paid’ by the use of cash. In relation to the former question, it considered that because the duty payable under item 41A is the result of the subtraction provided for in the item, there is no duty paid by application of EFS credits and there can be no drawback with respect to them. In those circumstances the second question was considered not to arise.

CONTENTIONS ON APPEAL

26 On this appeal the appellant generally renewed the arguments made before the Tribunal. The appellant submitted that the critical question before the Tribunal arose under s 168(1) of the Customs Act and reg 129 and reg 131. That question was whether, by application of the EFS credits, import duty had been "paid" on the imported goods. It was submitted that this required the Tribunal to accord the central importance to that statutory provision and those regulations. It was said that the Tribunal, in turning first to item 41A of Sch 4 of the Tariff Act and s 18 of the Customs Act, had taken a wrong approach.

27 The submissions for the appellant therefore commenced by placing reliance on Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355 at [69]- [70] per McHugh, Gummow, Kirby and Hayne JJ. There it was stated:

‘[69] The primary object of statutory construction is to construe the relevant provision so that it is consistent with the language and purpose of all the provisions of the statute (See Taylor v Public Service Board (NSW) [1976] HCA 36; (1976) 137 CLR 208 at 213, per Barwick CJ). The meaning of the provision must be determined "by reference to the language of the instrument viewed as a whole" (Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation [1981] HCA 26; (1981) 147 CLR 297 at 320, per Mason and Wilson JJ. See also South West Water Authority v Rumble’s [1985] AC 609 at 617, per Lord Scarman, "in the context of the legislation read as a whole"). In Commissioner for Railways (NSW) v Agalianos [1955] HCA 27; (1955) 92 CLR 390 at 397, Dixon CJ pointed out that "the context, the general purpose and policy of a provision and its consistency and fairness are surer guides to its meaning than the logic with which it is constructed". Thus, the process of construction must always begin by examining the context of the provision that is being construed (Toronto Suburban Railway Co v Toronto Corporation [1915] AC 590 at 597; Minister for Lands (NSW) v Jeremias [1917] HCA 41; (1917) 23 CLR 322 at 332; K & S Lake City Freighters Pty Ltd v Gordon & Gotch Ltd [1985] HCA 48; (1985) 157 CLR 309 at 312, per Gibbs CJ; at 315, per Mason J; at 321, per Deane J).
[70] A legislative instrument must be construed on the prima facie basis that its provisions are intended to give effect to harmonious goals (Ross v The Queen [1979] HCA 29; (1979) 141 CLR 432 at 440, per Gibbs J). Where conflict appears to arise from the language of particular provisions, the conflict must be alleviated, so far as possible, by adjusting the meaning of the competing provisions to achieve that result which will best give effect to the purpose and language of those provisions while maintaining the unity of all the statutory provisions (See Australian Alliance Assurance Co Ltd v Attorney-General (Q) [1916] St R Qd 135 at 161, per Cooper CJ; Minister for Resources v Dover Fisheries Pty Ltd (1993) 43 FCR 565 at 574, per Gummow J). Reconciling conflicting provisions will often require the court ‘to determine which is the leading provision and which the subordinate provision, and which must give way to the other" (Institute of Patent Agents v Lockwood [1894] AC 347 at 360, per Lord Herschell LC). Only by determining the hierarchy of the provisions will it be possible in many cases to give each provision the meaning which best gives effect to its purpose and language while maintaining the unity of the statutory scheme.’

It was submitted that, approached in this way, the provisions of the Tariff Act in s 18 and item 41A of Sch 4 should be read and interpreted as subordinate provisions in the context of the Customs Act. That Act, it was submitted, not only expressed the legislative intention of imposing import duty on goods imported into Australia but also expressed the legislative intention of allowing drawbacks of such duty in s 168(1). In addition, the appellant submitted that the legislation under consideration here should be approached on the basis that it is beneficial, so that it should be interpreted to ‘give fullest relief which the fair meaning of its language will allow’: Bull v Attorney-General (NSW) [1913] HCA 60; (1913) 17 CLR 370 at 384.

28 It was further contended that the Tribunal’s conclusion that import duty was not paid on the goods was difficult to support when, in order to obtain lawful possession of the goods from Customs, the appellant had yielded up and tendered to Customs, and Customs had accepted, valuable consideration in the form of EFS credits. It was submitted that those credits were precisely equal in dollar value to the dollar amount of import duty due on the goods. Each such transaction had reduced the assets of the appellant and correspondingly reduced the liabilities to the Commonwealth. They had discharged the then existing liability of the importers for import duty. Therefore, it was submitted, they were surely ‘payment’ and necessarily payment of import duty: Commissioner of Stamp Duties (NSW) v Perpetual Trustee Company Limited [1929] HCA 27; (1929) 43 CLR 247 at 263 citing Spargo’s Case (1873) LR 8 Ch App 407 at 414; Federal Commissioner of Taxation v Angus [1961] HCA 18; (1961) 105 CLR 489 at 503-504. It is not in dispute that the liability for such duty had attached upon the arrival of the goods in Australia: Chief Executive Officer of Customs v Tony Longo Pty Ltd [2001] NSWCA 147; (2001) 52 NSWLR 458, accepted by the Full Court of this Court in Parks Holdings Pty Ltd v Chief Executive Officer of Customs [2004] FCAFC 317; (2004) 57 ATR 580 at [49].

29 Further it was contended that payment of import duty is not always effected by cash and may be made in other ways. The Tribunal itself had referred to cases in which a set-off had been held to satisfy various statutory requirements for payment, namely: Commissioner of Stamp Duties (NSW) v Perpetual Trustees Co Ltd [1929] HCA 27; (1929) 43 CLR 247 at 263; Angus at 503 and Whim Creek Consolidated NL v Federal Commissioner of Taxation (1977) 17 ALR 421 at 425.

30 Aside from these general overriding considerations going to interpretation of the provisions of the Tariff Act, the appellant pointed to textual considerations arising from the relevant Tariff Act provisions why they should not be interpreted literally. First, in relation to s 18(2) of the Tariff Act, the appellant submitted that item 41A of Sch 4 of the Tariff Act refers to ‘the amount of duty in accordance with Part 2’ which does not take account of EFS credits. It argued that if the respondent was right, the amount of duty could never be known until after payment had been made because the amount of export credits tendered under the item could be changed up until the time of payment. Additionally it said the amount of duty could subsequently change if EFS credits were later used in return for a cash refund or redeemed in return for a cash payment or dealt with by being sold. (It was accepted on the appeal that the commercial motivation for such dealing apparently lay in considerations of liability for GST.) It was further submitted that when s 18(2) is read with item 41A of Sch 4 it is to be seen that the item does not really give rise to a concessional rate but instead to an ordinary rate with a different method of payment. It was accepted by the appellant that this may involve reading s 18 differently in relation to the item because it is not in reality a concessional rate but something different.

31 Second, the appellant contended that the wording of item 41A of Sch 4 is to be seen as expressive of a contrary intention for the purposes of the application of s 10(2) of the Tariff Act. This was said to be because a rate of duty cannot be defined by reference to the form or forms of payment which an importer chooses to adopt. Therefore, the item is not be to be understood as having provided for a ‘rate’ of duty.

32 Third, the item refers to the EFS credits as having been ‘issued to the owner of the goods’ and this was said to make little sense in the context of the EFS.

33 Fourth, the appellant submitted that given that the item makes reference to the EFS, it does not produce consistency, fairness or harmony if interpreted as it has been by the Tribunal. This is because on that interpretation, where EFS credits are utilised to meet liability for import duty, drawback is not available and the party applying the credits cannot be put into the position on export of the imported goods or components ‘as if they had not been taxed at all’: Attorney-General (NSW) at 846. The unfairness was said to arise because at the time of entry it was open under the EFS for the importer to choose to apply EFS credits and that choice should not place an importer in a less favourable position than if that importer had chosen to pay cash or apply ACIS credits. The Tribunal’s interpretation, it was said, should therefore be seen as contrary to the policy of the EFS and of the drawback provisions in the legislation.

34 Fifth, it was also submitted that viewed in the context of Sch 4 of the Tariff Act, item 41A is not a standard item because there is a contrast between the specific provisions of the item and the provisions of ‘free’ or a rate of duty on other items. It was said it should be interpreted as a special case.

35 The essence of the appellant’s case was therefore that item 41A of Sch 4 of the Tariff Act provides for a concessional duty requiring to be read differently in the application of s 18 and as having the consequence that application of EFS credits does not preclude drawback in relation to those credits.

REASONING

36 It is desirable first to address the legal foundation of the EFS. Unlike the ACIS, it was never enacted into law. The sole reference to it in statutory or regulatory sources is that which occurs in item 41A and the not dissimilar item 17. Each contains what can only be described as cryptic references to the EFS or EFS credits. When item 41A refers to importation by the owner of a determination ‘issued’ under the EFS, it cannot be read either literally (because the authority for the determination is s 273, not the EFS) or as an adoption of the provisions of the EFS. If the latter were the case, the statutory adoption would be effective only in relation to the terms of the Administrative Arrangements as they stood at the date of the coming into effect of item 41A but it is not contended that those Arrangements are frozen in that way.

37 This is not said to be a case in which the Minister has formulated a scheme for calling, and dealing with, tenders for the right to enter for home consumption during a period, or each of a number of periods, a determined quantity of particular goods, or particular goods of a determined value, at concessional rates of duty in accordance with s 266 of the Customs Act. Such a scheme arose for consideration in Gerah Imports Pty Ltd v Minister for Industry, Technology and Commerce (1987) 17 FCR 1. Davies J, after referring to and setting out authorities on the issue of whether departure from the terms of the non-statutory scheme may invalidate a decision, concluded that, despite the formulation pursuant to s 266, the scheme was a statement of guidelines not a prescription of legal entitlements. It was a statement of policy designed to assist the exercise of discretion under s 273 but did not have legislative character nor was it delegated legislation, a regulation or a by-law (at 10). Davies J’s reasoning followed the analogous reasoning of the Full Court (Fox, Morling and Beaumont JJ) in Minister for Industry and Commerce v East West Trading Co Pty Ltd (1986) 10 FCR 264. This latter decision was relied upon by Burchett J in ACI Operations Pty Ltd v Chief Executive Officer of Customs (1998) 53 ALD 86 to conclude that a delegate was entitled under s 273 in the exercise of his or her broad discretion and in the application of departmental policy to decline to determine that the concessional rate provided for in item 43 of Sch 4 should apply to the goods of the applicant in that proceeding.

38 In our view it is clear from these authorities that the legislative references to the EFS do not constitute a statutory adoption of all of the terms of the EFS. Rather, what the references do is give specific statutory effect to an aspect of the EFS. We cannot therefore accept the appellant’s contention that by the combined operation of s 273 and item 41A of Sch 4 of the Tariff Act read in respective contexts the terms of the Administrative Arrangements are given the status of statutory property rights: cf Australian Capital Territory v Pinter [2002] FCAFC 186; (2002) 121 FCR 509 at 527 per Black CJ. Consistently with East West and with Gerah, the EFS can only be understood as being a statement of guidelines stating relevant governmental policy. (That, of course, is not to say that a failure of a decision-maker to have regard to non-statutory rules does not mean such rules cannot have an effect in law because such non-regard (or misconstruction) may open itself to argument on judicial review that there has been failure to take into account a relevant consideration: Gerah at 15; Minister for Immigration, Local Government & Ethnic Affairs v Gray [1994] FCA 1052; (1994) 50 FCR 189 cited in Misiura v Minister for Immigration & Multicultural Affairs [2001] FCA 133 per Madgwick J. Such are not considerations raised in this present appeal.) In order to determine what effect (if any) those guidelines have in relation to the legal obligation to pay duty and/or to pay a drawback, reference needs to be made to the Act and regulations, rather than the EFS.

39 It follows from the status of the EFS as guidelines that the use of language in it cannot be determinative of whether or not the application of EFS credits constitutes the payment of import duty so as to entitle the appellant to drawback. It is to the statutory and regulatory language that the Tribunal was required to have primary regard to resolve the issue of construction. We note that the Tribunal was of the view that the legislative statements in issue are so clear that the matters of purpose and policy and the like contended for by the appellant could not lead to a different result.

40 The appellant urges that in approaching the legislative and regulatory provisions we have well in mind that the Tribunal was required to address the legislation as ‘beneficial’ legislation. The respondent does not argue that the provisions in question should not be approached on that basis. That has the consequence that the Tribunal was required and this Court is required to look to the fair meaning of the language used and give it the fullest relief which that will allow: Bull at 384; Re Entech Printed Circuits Pty Ltd and Chief Executive Officer of Customs [1999] AATA 232; (1999) 55 ALD 244 at 254. However, adopting that approach does not in our view make apparent any error in the reasoning of the Tribunal.

41 In approaching those provisions it is also necessary to have in mind the principles applicable to the interpretation of the legislation and regulations in issue. These were recently stated by a Full Court constituted by Black CJ, Sackville and Sundberg JJ in Parks Holdings Pty Ltd at [41]-[48]. There the Court was concerned with the interpretation of s 167, a provision concerned with disputes as to duty. Although the Full Court accepted that the question of construction must be resolved by reference to the words used by Parliament, nonetheless it considered that in a case of legislation of the longevity of the Customs Act, it is desirable for intermediate appellate courts to proceed by reference to what the High Court has said as a guide to meaning: Longo at 464 [25].

42 Turning to those provisions, the definition of ‘drawback’ in s 4 supports a view that drawback may be paid in the form of or by way of bounty or allowance, such as by way of ACIS credits. This does not assist on the question of entitlement to drawback on export credits, only as to the method of payment once entitlement exists. It is apparent that s 168(1) does no more than pass attention to the regulations authorised by its terms. Section 168(2) demonstrates that Parliament considered there was a need for legislation to ensure that ACIS credits are treated as part of the amount of import duty paid. Yet Parliament did not provide any transitional provisions to ensure this with respect to EFS credits. Regulations 129 and 131, read in the context of other regulations relating to drawback, do not in themselves bring any light to the issue of whether drawback can apply to the utilisation of EFS credits. Like s 168(1), they rely on the concept of drawback being applicable to import duty which has been paid and therefore on the concept of payment. Hence those provisions in turn direct attention to the source from which payment derives, namely item 41A of Sch 4 of the Tariff Act. Even if the statutory and regulatory provisions are addressed with the priority urged by the appellant, the focus of attention inevitably comes down to the terms of this item, upon which the Tribunal’s consideration was concentrated.

43 When attention is directed to the third column of item 41A and the language examined, it is impossible not to agree with the Tribunal that (at [21]):

‘...The amount is described by reference to the result of a subtraction. The result of the subtraction is the amount left after the amount of ESF (sic) credits has been deducted from the basic duty. Literally read, there cannot be any doubt that the duty payable when EFS credits are employed, is the amount remaining after the EFS credits are used to reduce the amount of duty rather than the amount before the subtraction. ...’

Reference to item 17(c)(ii) does not lead to a different conclusion. That sub-par is capable of application to goods on which part of the import duty has been met by application of export credits and the balance paid by cash. The reference there to export credits is used to describe the goods in issue and not to delimit the concept of drawback. Even if it is accepted that the sub-par is able to be applied in its terms to an instance where the importer has met the entire liability for import duty by application of export credits, it cannot lead to a different interpretation to what the plain reading of item 41A yields. Item 41A does not have about it the necessary ambiguity of item 17(c)(ii) to have influence if it was introduced after item 41A: Deputy Federal Commissioner of Taxes v Elder’s Trustee and Executor Co Ltd [1936] HCA 64; (1936) 57 CLR 610 at 625-626. In the context of the new ACIS legislation, item 17(c)(ii) would of course be able to be understood as referring to drawback on ACIS credits.

44 The only question therefore remaining is whether the legislative intent and the other considerations raised by the appellant require item 41A to be interpreted in accordance with the alleged purpose and policy, rather than its terms.

45 We do not consider that there is any clear legislative intent in relation to drawback such as would override the express provisions of the item. Drawback is provided only in terms which the item permits. It follows from the provisions which we have traced through that the intent of their application is made apparent in terms of the item. This is not a case where it can be said that the provision of the benefit is to occur independently of the precise terms which it is provided for in the item. It is impossible to form the view that the legislation requires any ‘payment’ of drawback to be allowed irrespective of the application of the precise terms of item 41A.

46 The status of the EFS as guidelines does not permit that to be a determining influence on the rewriting of item 41A. In any event, if it did have the status of law or if consistency with it was required, it would not assist the appellant’s case. That is because the Administrative Arrangements giving effect to the EFS refer to credits as being employed to ‘offset’ or effect a ‘reduction’ of import duty or to obtain a ‘rebate’ of it.

47 The fact that under the EFS as administered an importer is able to change the amount of EFS credits or that such credits may be bought and sold is simply irrelevant to the question whether their utilisation constitutes the payment of import duty for the purpose of the Act. Assuming that the practice is lawful (which was not disputed), if there is a change in the amount of the credits, that simply means that the amount of duty paid will also change with correlative consequences for any later claim of drawback.

48 We cannot accept the submission that item 41A does not create a ‘rate’ of duty. The words set out in the third column of the item clearly enable the relevant duty to be worked out in respect of the goods to which the item applies and is therefore a ‘rate’ of duty.

49 In relation to the argument that there is an inconsistency with legislative intent when the appellant elects to utilise EFS credits because it cannot claim drawback with respect to the credits, it is the case that reg 136B, by preventing an importer from claiming drawback of import duty to the extent that any ‘rebate’ has been allowed on that duty, manifests an intention contrary to the appellant’s view.

50 In relation to the introduction of item 41E providing for drawback to be applicable to duty offset using ASIC credits, the appellant contends that this subsequent provision should be taken as casting light on the proper understanding of item 41A. The respondent contends that it is significant that no equivalent provision was introduced concerning the utilisation of EFS credits. The principle of interpretation in the light of retrospective enactment is only applicable, however, where the interpretation of a statute is ‘obscure or ambiguous, or readily capable of more than one interpretation’: Elder’s at 625. We have found that not to be the case.

51 We do not consider that the appellant’s argument that item 41A is not ‘standard’ contains any substance. It is apparent from inspection of Sch 4 that there is variety in the modes of the expression of the items even if many are shown simply as ‘free’.

52 Consequently we accept the respondent’s submission that the question whether the use of EFS credits amounts to ‘payment’ of import duty for the purposes of s 168 of the Customs Act and the regulations made under it cannot be determined in a manner divorced from the legislative and administrative context in which they arise. Nor does that context open itself to re-interpretation to accord with what the appellant contends are other purposes and intents than those expressly provided. Having done as the appellant contended and commenced with a consideration of the legislation rather than item 41A, we are nevertheless driven to the terms of that item and to the conclusion that the Tribunal was not in error in the conclusion which it reached.

53 For these reasons we conclude that the appeal must be dismissed.

I certify that the preceding Fifty-three (53) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Nicholson, Weinberg and Selway.

Associate:

Dated: 3 March 2005

Counsel for the Appellant:	A Cavanough QC and J Slonim
Solicitor for the Appellant:	Mahonys
Counsel for the Respondent:	T Pagone QC and H Harris
Solicitor for the Respondent:	Australian Government Solicitor
Date of Hearing:	14 February 2005
Date of Judgment:	3 March 2005