Dow Agroscience Australia Ltd and Chief Executive Officer of Customs and Nufarm Australia Ltd (Party Joined) [2010] AATA 859 (3 November 2010)

Last Updated: 3 November 2010

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2010] AATA 859

ADMINISTRATIVE APPEALS TRIBUNAL )

) No 2008/3845

GENERAL ADMINISTRATIVE DIVISION		)
	Re		Dow Agroscience Australia Ltd

Applicant

And

Chief Executive Officer of Customs

Respondent

And

Nufarm Australia Ltd

Party Joined

DECISION

Tribunal

M D Allen, Senior Member Dr K Levy, RFD, Senior Member Dr T Schafer, Member

Date 3 November 2010

Place Sydney

Decision

The decision under review is SET ASIDE and REMITTED to the Respondent with the direction that the Tariff Concession Order sought by the Applicant be granted.

..............................................
M D Allen, Presiding Member

CATCHWORDS

CUSTOMS – Tariff Concession Order. Substitutable goods. Produced in Australia. Goods produced in the ordinary course of business.

LEGISLATION

Administrative Appeals Tribunal Act 1975

Customs Act 1901, Ss 269B, 269C, 269D, 269E, 269P(3)

CASES

Kenso Marketing (M) SDN BHD and CEO Customs and Anor [2008] AATA 42

Kenso Marketing (M) SDN BHD and CEO Customs and Anor [2010] AATA 445

Riverwood Cartons Pty Ltd v CEO Customs and Anor [1997] FCA 817; (1997) 77 FCR 493

Seguin Moreau v Anor (1977) 77 FCR 410

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

Amcor Limited v Comptroller General of Customs [1991] FCA 622; (1991) 33 FCR 200

REASONS FOR DECISION

3 November 2010

M D Allen, Senior Member Dr K Levy, RFD, Senior Member Dr T Schafer, Member

1. On 12 October 2007 the Applicant lodged with the Respondent an application for a Tariff Concession Order (“TCO”) for goods described as:

“PRECURSORS, HERBICIDES, having BOTH of the following:

(a) Not less than 96% Trifluralin; and
(b) Nitrosamine NOT greater than 0.4 parts per million”

2. The Party Joined (Nufarm) lodged an objection to the making of the TCO on 13 December 2007. The objection notice gave the following grounds for the objection:

“Nufarm manufactures trifluralin technical as well as a range of formulated trifluralin products in Australia. The manufacture of trifluralin technical is the first stage in the manufacture of formulated trifluralin products undertaken by Nufarm in Australia. Nufarm’s trifluralin technical is directly substitutable for the product specified in the TCO application. Furthermore, Nufarm’s formulated products are put to the same end use as the goods the subject of the TCO application.”

3. In particular, the objection submission referred to Nufarm’s formulated herbicide TriflurX as being substitutable.
4. A delegate of the Respondent decided on 14 March 2008 that the TCO should not be granted as Nufarm produced substitutable goods in Australia. On 10 July 2008, a reconsideration decision affirmed the decision not to grant a TCO.
5. Although the Party Joined, in its initial objection, referred only to Trifluralin Technical and the product formulated from that precursor, namely TriflurX, its amended statement of facts and contentions filed with the Tribunal on 13 August 2010 raised for the first time the contention that 2,4-dichlorophenoxyacetic acid ("2,4-D acid"), a precursor manufactured by Nufarm which is used in the manufacture of post-emergent herbicides, is a substitutable good.
6. Section 269P(3) Customs Act 1901 provides, inter alia, that the Respondent must make a TCO if satisfied that the application meets the core criteria.
7. The core criteria are defined in section 269C Customs Act, namely:

“For the purposes of this Part, a TCO application is taken to meet the core criteria if, on the day on which the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business.”

8. Substitutable goods are defined in subsection 269B Customs Act as:

"substitutable goods" , in respect of goods the subject of a TCO application or of a TCO, means goods produced in Australia that are put, or are capable of being put, to a use that corresponds with a use (including a design use) to which the goods the subject of the application or of the TCO can be put.”

9. Section 269D defines the circumstances in which goods are taken to be "produced in Australia". It states:

“(1)  For the purposes of this Part, goods, other than unmanufactured raw products, are taken to be produced in Australia if:

(a)  the goods are wholly or partly manufactured in Australia; and

(b)  not less than ¼ of the factory or works costs of the goods is represented by the sum of:

(i)  the value of Australian labour; and

(ii)  the value of Australian materials; and

(iii)  the factory overhead expenses incurred in Australia in respect of the goods.

(2)  For the purposes of this Part, goods are to be taken to have been partly manufactured in Australia if at least one substantial process in the manufacture of the goods was carried out in Australia.

(3)  Without limiting the meaning of the expression substantial process in the manufacture of the goods , any of the following operations or any combination of those operations does not constitute such a process:

(a)  operations to preserve goods during transportation or storage;

(b)  operations to improve the packing or labelling or marketable quality of goods;

(c)  operations to prepare goods for shipment;

(d)  simple assembly operations;

(e)  operations to mix goods where the resulting product does not have different properties from those of the goods that have been mixed.

(4)  For the purposes of this section, the CEO may, by instrument in writing published in the Gazette :

(a)  direct that the factory or works cost of goods is to be determined in a specified manner; and

(b)  direct that the value of Australian labour, the value of Australian materials or the factory overhead expenses incurred in Australia in respect of goods is to be determined in a specified manner;

and those directions have effect accordingly.

(5)  The provisions of sections 48 (other than paragraphs (1)(a) and (b) and subsection (2)), 48A, 48B, 49A and 50 of the Acts Interpretation Act 1901 apply in relation to directions given under subsection (4) as if:

(a)  references in those provisions to regulations were references to directions; and

(b)  references in those provisions to the repeal of a regulation were references to the revocation of a direction.”

Section 269E defines the circumstances in which goods are taken to be produced in Australia "in the ordinary course of business". It states:

“(1)  For the purposes of this Part, other than section 269Q, goods (other than made-to-order capital equipment) that are substitutable goods in relation to goods the subject of a TCO application are taken to be produced in Australia in the ordinary course of business if:

(a)  they have been produced in Australia in the 2 years before the application was lodged; or

(b)  they have been produced, and are held in stock, in Australia; or

(c)  they are produced in Australia on an intermittent basis and have been so produced in the 5 years before the application was lodged;

and a producer in Australia is prepared to accept an order to supply them.”

10. The issues in this matter devolved into three questions, namely:
    1. Were the Party Joined’s Trifluralin Technical, TriflurX, 2,4-D acid and 2,4-D herbicide substitutable goods?
    2. If so, was not less than 25% of the factory or work costs of the said good represented by the aggregate value of Australian labour, Australian materials and factory overhead expenses incurred in Australia in respect of the goods?
    3. Were the goods produced in the ordinary course of business?

SUBSTITUTABLE GOODS

11. Trifluralin Technical is a chemically synthesised substance which has the International Union of Pure and Applied Chemistry name of α,α,α-trifluoro-2,6-dinitro-N,N-dipropyl-p-toluidine. It is the active ingredient in the manufacture of a range of agricultural herbicides.
12. Trifluralin Technical and 2,4-D acid are both herbicide precursors, that is, in Australia they are not used directly to kills weeds but, rather, are formulated so as to advance their uptake. The reason for formulating the compounds was explained in the evidence of Mr Colin Sharpe. Briefly, it may be said that Trifluralin Technical is blended with emulsifiers and solvents to produce a concentrated liquid formulation called TriflurX, which can be mixed with water and sprayed over the soil. Similarly, 2,4-D acid is formulated into a number of different herbicides, such as Estercide Xtra 680. The main difference between formulations of the two herbicide precursors is that formulations containing Trifluralin Technical are pre-emergent herbicides, which prevent the emergence of weeds by killing weeds when they germinate, whereas formulations containing 2,4-D acid are primarily post-emergent herbicides, which kill growing weeds by absorption of the herbicide through the foliage.
13. Evidence was adduced that Trifluralin Technical could possibly be applied directly to the soil if it was ground to a consistency similar to talcum powder. There was also evidence that in the USA Trifluralin Technical is mixed with clay pellets for direction application to the soil.
14. The fact is that currently in Australia the Australian Pesticides and Veterinary Medicines Authority (“APVMA”) has not approved Trifluralin Technical for use by direction application to the soil.
15. Whether such a use would be permitted, if applied for, is to our minds irrelevant. As at the date of the application and as at the date of the hearing in this matter, Trifluralin Technical was not permitted in Australia to be applied directly to the soil.
16. As we understand the evidence of Mr Wells for the Party Joined, and Mr Sharpe for the Applicant, 2,4-D acid has no use except as a precursor for formulated herbicides, trading under names such as Esterade Xtra 680.
17. Where the particular herbicides differ is in their operation. To adapt what was said by Deputy President McPherson in Kenso Marketing (M) SDN BHD and CEO Customs and Anor [2008] AATA 42 at paragraph 13, the Trifluralin Technical and 2,4-D acid are the killers; formulation simply provides access to the target of the crime.
18. The important difference is that formulations containing Trifluralin Technical are pre-emergent herbicides, which are applied to the soil before sowing of the crop and act upon the roots of the weeds, whereas 2,4-D herbicides are post-emergent, acting upon the roots of the weeds by being absorbed through the leaves.
19. There was some evidence of an overlap in the case of sugarcane but we do not see this one off application of a post-emergent herbicide as affecting the issues.
20. Both the Party Joined and the Respondent argued that 2,4-D acid was substitutable for Trifluralin Technical.
21. In Riverwood Cartons Pty Ltd v CEO Customs and Anor [1997] FCA 817; (1997) 77 FCR 493 at 497 Goldberg J said of the term substitutable goods:

‘“Substitutable goods’ are goods produced that are put to a use that corresponds with a use to which the relevant imported goods can be put. There is no requirement that the substitutable goods have only one use. The definition will be satisfied even if the substitutable goods (in this case, corrugated fibre board) have a number of uses, only one of which corresponds with a use to which the imported goods can be put.”

22. The Tribunal was taken to various cases in which the concept of substitutable goods was discussed. Each of those cases turn upon the specific facts of the case and, in no small measure, the answer depends upon the way in which the question as to what is comparable in respect of the goods is phrased.
23. Both the Party Joined and the Respondent submitted the 2,4-D acid was substitutable for Trifluralin Technical. Their argument was that substitutability had to be decided with respect to herbicides generally.
24. We disagree with that approach. Formulations of Trifluralin Technical act as pre-emergent herbicides and are, therefore, applied to the soil before planting. In contrast, 2,4-D acid formulations act as post-emergent herbicides and their particular times of application and means of killing weeds are quite different. To simply refer to pre-emergent and post-emergent herbicides generally as herbicides makes the same kind of error that the Tribunal rejected in Seguin Moreau v Anor (1977) 77 FCR 410.
25. Seguin Moreau supra concerned barrels for the maturation of wine. A ground of appeal was that the Tribunal had not considered itself bound by an agreement between the parties that the relevant substitutable goods embraced all locally made barrels of French oak and American oak. The Tribunal had said in its decision:

“The evidence indicates that French oak barrels are not interchangeable with American oak barrels for particular wine making styles. As such, the market for substitutable goods which may be significantly adversely affected by the grant of the TCO is the market for French oak barrels.”

26. At page 413, Drummond J said:

“The comments the Tribunal here made about French oak barrels having a more specific use than as containers for wine and also not being interchangeable with American oak barrels, can only sensibly be read as going to the issue of identifying just what are the Australian produced goods that are put to a use that corresponds with a use to which the imported French oak barrels can be put, that is, to the issue of what are the ‘substitutable goods’ for the purposes of the case before it.”

Continuing at page 414:

“In my opinion, the Tribunal was correct in construing section 269C(b) as requiring it to have regard to the impact of the grant of a TCO on the whole of the market for all the goods identifiable in the material before the decision-maker as ‘substitutable goods’. It was also right to identify those goods as limited to locally made French oak barrels, once it concluded that French oak barrels were not interchangeable in use with American oak barrels, a factual conclusion the correctness of which is not attacked.”

27. We are satisfied that because of their different properties, Trifluralin based herbicides are not substitutable for 2,4-D formulated herbicides and vice versa.

GOODS PRODUCED IN AUSTRALIA

Evidence

28. The applicant’s witnesses who principally dealt with this aspect were Mr James Donlevy and Mr Graeme Lavelle, an external consultant engaged by the Applicant.
29. Mr Donlevy has a background in agricultural science, although he now occupies a managerial and planning role in Dow Agroscience. His position is responsible for forecasting products and sales. He told the Tribunal that prices are set by two main suppliers for Trifluralin Technical. These suppliers are located in Italy and China and prices are usually available in July or August each year. Market intelligence enables purchasers to negotiate the best price and then place orders for delivery later in each year.
30. The main witnesses who had provided evidence about the cost of products were from the Party Joined, Nufarm. In respect of the cost and accounting evidence in relation to these products, Mr O’Donnell, the Australian Operations Manager, told the Tribunal that cost analyses undertaken by Nufarm were in some respects ad hoc. The determination of the percentage of cost to be allocated to overheads, and which is additional to the cost for all materials, is not undertaken through the accounting department but through the manufacturing and operational divisions. He stated that because the managers are the ones who have knowledge of their daily tasks, they were the ones who determine the cost allocations, at least in terms of the percentage of overheads which are applied to various products. This was also justified on the basis that experienced staff would be able to allocate these costs quite accurately merely by experience. He gave evidence that detailed line items would be available to calculate such costs more accurately but stated that it would be a large job to undertake this exercise and the cost could be significant.
31. Mr O’Donnell told the Tribunal that his statement was prepared only with the benefit of budgeted figures.
32. Mr O’Donnell’s evidence was that Bills of Materials were “reviewed quarterly” and that total manufacturing costs were reviewed annually. These costings are influenced by the method of allocating overheads, which was described by Mr O’Donnell as being that most commonly undertaken by specifically identifying and applying labour costs, and using a “volume split”.
33. Evidence was also received from Mr Craig Duggan, professional accountant who is employed by Nufarm as a Business Analyst. While he is formally qualified as an accountant, he is employed as a Managerial Accountant but does not work in the Accounting division of the Company. No officer of the Accounting division, nor the Accountant for the Company, was made available to give evidence.
34. Mr Duggan stated that Nufarm reviews its actual costs on a monthly basis. In that context, the costs of raw materials are available to management. Mr Duggan also agreed when questioned by Mr Slonim, counsel for the Applicant, that based on the figures in the document “CAD 1”, the percentage of costs of the Australian content in producing the relevant product was less than 25%.
35. Mr Duggan was also questioned about the cost allocation of by-products and, in particular, whether the cost of a product which had already been included in one process could then justifiably be included as a by-product in another product when the raw materials of that by-product had already been fully accounted for. Mr Duggan conceded that if Mr O’Donnell’s calculations were incorrect, then the management accounting results produced by him would also be incorrect.

Mr Graeme Lavelle

36. Mr Lavelle gave evidence as an independent witness for the Applicant. Mr Lavelle is a Chartered Accountant with more than 30 years' experience, 25 of those spent as a partner in various chartered accounting firms. He is also a Fellow of the Institute of Chartered Accountants in Australia.
37. His evidence provided an independent analysis of the statements of Mr Michael O’Donnell, Mr Craig Duggan and Mr Eugene Shanahan in relation to the accounting and financial aspects of Nufarm's activities. He relied upon a document entitled “Estimation of actual cost of manufacturing, by product”, and the costs therein had been constructed as part of a ‘cost review analysis’ (CRA). A CRA typically is an exercise to “build up” costs in three broad categories:

(1) A Bill of Materials.

(2) Direct costs.

(3) Indirect or fixed production costs.

38. A Bill of Materials is the build up of the cost of various raw materials used in the production process. It is a “build up” of actual costs of each material component, taking account of quantities and prices for each product. That can provide a standard cost of the previous year’s operations and is used to develop a budget for the current and/or following financial year. This means that the components' costs are expected to be adjusted based on anticipated volumes/quantities and prices for the relevant year. The adjusted figures include other factors such as movement in “exchange rates, market price changes, product changes...”.
39. Mr Lavelle told the Tribunal that in the ordinary course, a weighted average would be estimated for each of the materials used and included in the budget. He said this is usually the basis for computing a “standard” cost per product (or aspect of manufacturing) or for monitoring of actual costs by considering variances from “standard” costs. A Bill of Materials is normally reviewed at the time of budget preparation and at other times as a result of changes in costs or other relevant factors which would affect standard or actual costs.
40. Mr Lavelle’s evidence was also that direct costs are additional to material costs and are mainly labour costs. Indirect or fixed production costs include fixed overheads (for example rent, depreciation) and are apportioned across the cost of all of the products.
41. Mr Lavelle took account of AASB 101, an accounting standard issued by the Australian Accounting Standards Board which is adopted by professional accountants so that there is uniform treatment in dealing with various costs recorded, such as converting costs of raw materials used in the production process, and allocating direct and indirect costs. He provided his assessment of the company’s approach to utilising their systems to produce costs, in terms of compliance with professional accounting standards and whether they could be relied upon with an acceptable degree of accuracy by members of the public or others.
42. In his analysis of material costs, Mr Lavelle noted that:
    • Mr Duggan’s statement showed costs “akin to a ‘bill of materials’... on or about the relevant date.” The relevant date was 9 October 2007.
    • the costs had been taken “from a single sample tax invoice that relates to the particular ingredient that was purchased.”
    • he would have expected a company such as Nufarm to have “a relatively up to date bill of materials”.
    • he regarded the methodology contained in Mr Duggan’s statement as “unusual”, as it was retrospectively prepared and relied on a single invoice.
    • Mr Duggan used costs from an invoice for the Western Australian plant, not the costs at the manufacturing location, and therefore differences in shipping costs etc may have inflated his estimates.
43. Mr Lavelle concluded that Mr Duggan’s method may not be reliable because the accuracy of the single sample price may not be the same as the real cost included in the Bill of Materials. His conclusion was also that the average cost based on a more comprehensive sample of invoices “over time” would be likely to be different to the result shown in Mr Duggan’s method.
44. Mr Lavelle noted that the usual practice would be to select invoices from the financial records, utilise the total cost and total volume of each raw material and then calculate the average cost or weighted average cost. Fluctuations in exchange rates, shipping costs etc would affect such a calculation. He also noted that not only was the representativeness of invoices open to question, but that some invoices were of transactions between related parties and may not represent a true, independent assessment of cost of materials (see pages 6 to 9 of Mr Lavelle’s statement).
45. Mr Lavelle was unable to verify the accuracy of figures used for labour and overhead costs but was similarly circumspect of these costs as he was of the material costs.
46. Mr Lavelle also noted that Nufarm was not producing 250 kg containers of Trifluralin Technical during the relevant period (see page12 of Statement of 25.6.10).

Submissions

47. Mr Slonim for the Applicant argued that the Tribunal should accept Mr Lavelle’s evidence. He reminded the Tribunal that information was not provided to Mr Lavelle by the Respondent, even when certain information was sought under a subpoena. Mr Slonim questioned the credibility of Nufarm, the Party Joined.
48. Mr O’Donnell stated that if he was doing the exercise himself, he would have done it differently. Mr Slonim referred to this and pointed out that Nufarm had historical costs and, being a public company, they must have systems and resources to know what the costs really are. He submitted that the non-production of evidence must be because either:
    • (1) the company did not know what their costings were; or
    • (2) they did not want to provide them.
49. Mr Slonim submitted that it must be because of (2) above. He reiterated that the systems were such that Mr Duggan only applied costs after Mr O’Donnell had given him a percentage which had been determined by “experienced” staff. Mr Slonim expressed some doubt about the reliability of the figures presented by Nufarm. He argued that as Nufarm is a public company, it would have audited accounts. He was incredulous that the company would not know what their costs were.
50. He also submitted that Mr Duggan’s statement (particularly at paragraph 15) was unreliable. He said there was no information that any of the figures produced were reliable.
51. Mr Horan of Counsel for the Party Joined submitted that this was not a case about credit and there was not much gap in the evidence. Mr Horan urged the Tribunal to follow the decision in Kenso Marketing (M) SDN BHD & CEO of Customs & Anor [2010] AATA 445 (“Kenso Marketing”).

Consideration

52. In relation to the accounting evidence, we make the following findings of fact:

(1) Nufarm, the Party Joined, has been dilatory and at times unresponsive in providing relevant information requested.

(2) The systems and procedures adopted by Nufarm are not entirely satisfactory to reveal the true cost associated with production. While Nufarm is entitled to maintain its corporate systems as it pleases, the credibility of the information provided by its officers in response to questions in this case is in serious doubt.

(3) Bills of materials were emphasised by Mr Lavelle as having some very significant shortcomings. It seemed that the labour and overhead costs were applied by the manufacturing manager intuitively, and rather than being based on any detailed recording and analysis, they were based on Mr O’Donnell’s “experience” or that of some of his subordinate managers.

(4) Mr Duggan is accepted as a witness of truth, but the allocation of the labour and overhead costs which he produced were figures which lacked considerable weight because they relied upon the accuracy of Mr O’Donnell’s ‘estimated’ figures. Also, no person from the accounts department or a senior accountant from Nufarm was called. Only the evidence of one professional accountant who undertakes cost accounting work for the company (but is not employed in the Accounting division) was made available to provide evidence. In addition, we note and accept Mr Slonim’s submission that Nufarm did not provide information, even under summons.

53. In respect of this issue, we prefer the evidence of Mr Lavelle to that of Nufarm officers. We are satisfied that Mr Lavelle is an expert witness according to all requirements of the law. He is highly experienced and independent. The factual basis of his opinions is clear (ASIC v Rich (2005) NSWSC 149).
54. In relation to the requirements of s269D(1), the Applicant’s evidence is to the effect that Nufarm does not satisfy s269D(1)(b), that is, it did not, on the application day, produce Trifluralin Technical in Australia because its “factory or works costs of the goods” could not be shown to be not less than 25% of the Australian materials, labour and factory overhead expenses incurred in Australia for the relevant products.
55. We note Mr Horan’s submission that we should adopt a measure of “average cost”, which he says is authorised by Kenso Marketing. Mr Slonim argued that the issue in Kenso Marketing is not the same as the issue here. Mr Northcote for the Respondent argued that the decision should not turn on this issue but, in any event, that Nufarm has conceded that its Trifluralin Technical used solely for the manufacture of herbicides does not satisfy the minimum 25% Australian content requirement, but in respect of TriflurX and 2,4-D Acid, the 25% Australian content test appears to be satisfied.
56. The decision of Kenso Marketing (supra) held that “factory or works costs” means “all actual costs incurred in the transformation of material into finished goods, including packaging and labelling costs” (citing Re Scholle Industries Pty Ltd v Comptroller-General of Customs [1994] AATA 307; (1994) 37 ALD 303 at 306). The Tribunal also held that selling, marketing and administrative costs relevant to a particular product should be excluded from the costings.
57. We agree that the adoption of average costs would be a suitable measure and an appropriate one to be used in many circumstances, depending on the evidence available. Such an approach would be acceptable according to Mr Lavelle’s evidence, and would comply with generally accepted accounting practice and also AASB 101, which has the force of law under the Corporations Act 2001.
58. But that is not the situation here. This current matter should be distinguished from Kenso Marketing (supra) as the Tribunal there noted that there was no challenge to the integrity of the evidence provided by Nufarm and accepted that costs were either actual costs or an accurate representation of what the actual cost was. In this case, however, average cost (or at least a reliable average cost) is not available. The integrity of the Nufarm data in this case has been shown to be wanting. The Tribunal cannot be satisfied that the evidence of costs provided have any accurate relationship to what the true cost or true average cost would be having considered the methods by which costings were undertaken. Therefore, it is not possible on the balance of probabilities to ascertain whether the 25% of costs element is satisfied. In determining the weight of evidence on this aspect, it must be determined by considering the High Court’s principle laid down in Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336 where Dixon J said that a Tribunal of fact must have an actual feeling and belief in the evidence before it can be satisfied on the balance of probabilities. We find that the legal and the evidentiary burden of the Applicant is well established on this issue and that the case of the Party Joined on this issue does not satisfy us to the appropriate standard of proof.

ORDINARY COURSE OF BUSINESS

59. The term “ordinary course of business” is defined in section 269E of the Customs Act and the question for the Tribunal was whether the Party Joined could bring itself within those provisions.
60. The Applicant submitted that the term "ordinary course of business" should be interpreted in the light of the Full Federal Court decision in Amcor Ltd v Comptroller General of Customs (1988) 79 ALR 221, especially at p231. Two comments can be made regarding this submission. Firstly, the passage to which we were taken by counsel was not accepted in its entirety by a later Full Court: see Amcor Limited v Comptroller General of Customs [1991] FCA 622; (1991) 33 FCR 200 at p209. Secondly, section 269E is a codification of what constitutes the ordinary course of business for the purposes of Part XVA of the Customs Act 1901 (as amended).
61. Evidence was given by Messrs Shanahan and O’Donnell that in January 2007, 32 250kg drums of Trifluralin Technical were manufactured by the Party Joined for sale to an associated company. The evidence of Mr O’Donnell, the Operations Manager for Nufarm, was that Nufarm produces Trifluralin Technical annually at its Laverton Plant and in the past and future has been and is prepared to accept orders from customers to supply Trifluralin Technical as a finished good.
62. Given that evidence, it seems to us that Trifluralin Technical was produced by the Party Joined in the ordinary course of business, as defined in section 269E of the Customs Act. In particular, we find that the Party Joined has brought itself within the terms of paragraph 269E(1)(a) in that Trifluralin Technical in 250 kg drums was produced in January 2007, that is, in the two years before the Application for the TCO was lodged.
63. As we cannot be satisfied that the Party Joined produces substitutable goods in Australia, that is, we cannot be satisfied that the provisions of subsection 269D(1) have been met, the decision under review will be set aside and this matter remitted to the Respondent with the direction that the TCO sought by the Applicant be granted.

I certify that the 63 preceding paragraphs are a true copy of the reasons for the decision herein of M D Allen, Senior Member; K Levy, RFD, Senior Member; and Dr T Schafer, Member.

Signed: .............................................................

K. Lynch, Associate

Dates of Hearing 23 to 27 August 2010

Date of Decision 3 November 2010

Counsel for the Applicant Mr J Slonim

Solicitor for the Applicant Mason Siers Turnbull

Representative for the Respondent Mr Northcote, Customs.

Counsel for the Party Joined Mr C Horan

Solicitor for the Party Joined Sylvia Miller & Associates