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Federal Court of Australia |
)
NEW SOUTH WALES DISTRICT REGISTRY ) NG 292 of 1996
)
GENERAL DIVISION )
ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA
BETWEEN: BAXTER HEALTHCARE PTY LIMITED
Appellant
AND: COMPTROLLER-GENERAL OF CUSTOMS
Respondent
CORAM: Burchett, Moore and Merkel JJ
PLACE: Sydney
DATE: 21 February 1997
CORRIGENDUM
The following amendment is made to his Honour Justice Merkel's judgment of 21 February 1997:
Attach the enclosed sheet of illustrations (referred to at p. 7 of Merkel J's judgment) at the conclusion of the judgment.
Associate:
Date: 24 February 1997
CATCHWORDS
ADMINISTRATIVE LAW - appeal from AAT - adequacy of reasons - whether issues of fact or law
CUSTOMS TARIFF - "infusion or transfusion sets" - "parts and accessories" - construction of tariff
APPEAL AND NEW TRIAL - circumstances where appeal should be allowed though literal terms of orders made below were not held to be wrong
Customs Tariff Act 1987 , Sched. 3, item 9018.90.20
Collector of Customs v Pozzolanic Enterprises Pty Ltd [1993] FCA 456; (1993) 43 FCR 280
Minister for Immigration and Ethnic Affairs v Wu Shan Liang [1996] HCA 6; (1996) 185 CLR 259
The Australian Gaslight Company v The Valuer-General (1940) 40 SR(NSW) 126
Hope v The Council of the City of Bathurst [1980] HCA 16; (1980) 144 CLR 1
Agfa-Gevaert Ltd v Collector of Customs [1994] FCA 1336; (1994) 124 ALR 645
Collector of Customs v Agfa-Gevaert Ltd [1996] HCA 36; (1996) 141 ALR 59
Peacock v Zyfert (1983) 48 ALR 549
Rheem Australia Ltd v Collector of Customs (NSW) (1988) 78 ALR 285
Brutus v Cozens [1972] UKHL 6; [1973] AC 854
Sharp Corporation of Australia Pty Ltd v Collector of Customs (1995) 59 FCR 6
Collector of Customs v Sharp Corp of Australia Pty Ltd (1994) 35 ALD 589
N.S.W. Associated Blue-Metal Quarries Ltd v Federal Commissioner of Taxation (1956) 94 CLR 309
Cowell Electric Supply Company Ltd v Collector of Customs [1995] FCA 1031; (1995) 54 FCR 1
Hayes v Federal Commissioner of Taxation [1956] HCA 21; (1956) 96 CLR 47
Australian National Railways Commission v Collector of Customs, South Australia [1985] FCA 312; (1985) 8 FCR 264
Waterscheid Australia Pty Ltd v Collector of Customs (1988) 7 AAR 555
Deputy Commissioner of Taxation v Polaroid Australia Pty Ltd (1971) 46 ALJR 32
Comptroller-General of Customs v Baxter Healthcare Pty Ltd (1995) 41 ALD 251
Attorney-General v Prince Ernest Augustus of Hanover [1957] AC 436
Driclad Pty Limited v Commissioner of Taxation of the Commonwealth of Australia [1968] HCA 91; (1968) 121 CLR 45
Australian Telecommunications Commission v Colpitts [1986] FCA 257; (1986) 12 FCR 395
Secretary of State for Trade and Industry v Rogers [1996] 1 WLR 1569
Landsal Pty Ltd (In liquidation) v REI Building Society (1993) 41 FCR 421
Copperart Pty Ltd v Commissioner of Taxation [1993] FCA 462; (1994) 50 FCR 345
North Sydney Council v Ligon 302 Pty Ltd (1996) 137 ALR 644
BAXTER HEALTHCARE PTY LIMITED -V- COMPTROLLER-GENERAL OF CUSTOMS
NG 292 of 1996
Burchett, Moore and Merkel JJ
Sydney
21 February 1997
IN THE FEDERAL COURT OF AUSTRALIA )
)
NEW SOUTH WALES DISTRICT REGISTRY ) NG 292 of 1996
)
GENERAL DIVISION )
ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA
BETWEEN: BAXTER HEALTHCARE PTY LIMITED
Appellant
AND: COMPTROLLER-GENERAL OF CUSTOMS
Respondent
CORAM: Burchett, Moore and Merkel JJ
PLACE: Sydney
DATE: 21 February 1997
MINUTE OF ORDERS OF THE COURT
THE COURT ORDERS THAT:
1. The appeal be allowed with costs.
2. There be added to the orders made below the following:
2A. IT BE DECLARED that upon its reconsideration of this matter the Administrative Appeals Tribunal is not obliged by law to find that the blood packs in question were parts of "infusion or transfusion sets" within Tariff classification 9018.90.20(d).
NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA )
)
NEW SOUTH WALES DISTRICT REGISTRY ) NG 292 of 1996
)
GENERAL DIVISION )
ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA
BETWEEN: BAXTER HEALTHCARE PTY LIMITED
Appellant
AND: COMPTROLLER-GENERAL OF CUSTOMS
Respondent
CORAM: Burchett, Moore and Merkel JJ
PLACE: Sydney
DATE: 21 February 1997
REASONS FOR JUDGMENT
BURCHETT J:
This case very well illustrates a point made in Collector of Customs v Pozzolanic Enterprises Pty Ltd [1993] FCA 456; (1993) 43 FCR 280 at 286- 287, and recently reiterated by the High Court of Australia in Minister for Immigration and Ethnic Affairs v Wu Shan Liang [1996] HCA 6; (1996) 185 CLR 259 at 271-272. The point is that judicial review of decisions of the Administrative Appeals Tribunal is not concerned with technical legal niceties, looseness of language, or infelicities of expression, but with whether a decision is infected in substance by some error of law. To my mind, the primary argument in the present appeal turns on whether the Tribunal in reality mistook its legal task, or whether it merely strayed into a measure of obscurity in the statement of its reasons, the actual meaning of which can nevertheless be ascertained by some perseverance, and being ascertained, reveals no error.
It is necessary to explain what the dispute before the Tribunal was about. It concerned the correct classification for customs duty purposes of certain goods imported by the appellant. The goods, according to the document headed "STATEMENT OF FINDINGS ON MATERIAL QUESTIONS OF FACT AND REASONS FOR DECISION", which was filed on behalf of the Australian Customs Service in the Administrative Appeals Tribunal, consisted of double or triple blood collection packs made from a specialized plastic for the processing and storage of blood. However, it was not simply as collection, processing and storage packs that the goods were to be classified, in the view of the Comptroller- General of Customs. His contention was and is that they should be considered as part of a complex of instruments and equipment constituting "infusion or transfusion sets for blood or other fluids". That is because the packs, which are sterile bags for the collection and storage of blood or blood products containing anti-coagulant solution, are constructed with an outlet port as well as an inlet port, so that equipment for administering to a patient an infusion or transfusion can be attached to the bag. Thus the bag, having first been used to collect blood through its inlet port from a donor and then to store it, or to collect plasma or other blood products for storage, may later feed its contents into other equipment by which those contents are infused or transfused into a patient. Of course, this does not always happen; blood may be fully utilized at the Commonwealth Serum Laboratories, so that the pack may be thrown away, or blood or blood products may be held in storage for too long to be utilized.
Chapter 90 of Schedule 3 to the Customs Tariff Act 1987 comprehends "Optical, photographic, cinematographic, measuring, checking, precision, medical or surgical instruments and apparatus; parts and accessories thereof". Note 2 of the chapter notes relevantly provides that -
"parts and accessories for machines, apparatus, instruments or articles of this Chapter are to be classified according to the following rules:
...
(b) Other parts and accessories, if suitable for use solely or principally with a particular kind of machine, instrument or apparatus, or with a number of machines, instruments or apparatus of the same heading ... are to be classified with the machines, instruments or apparatus of that kind".
The chapter includes a heading 9018, "INSTRUMENTS AND APPLIANCES USED IN MEDICAL, SURGICAL, DENTAL OR VETERINARY SCIENCES, INCLUDING SCINTIGRAPHIC APPARATUS, OTHER ELECTRO-MEDICAL APPARATUS AND SIGHT- TESTING INSTRUMENTS". Beneath this heading, at the relevant date, there appeared the sub-heading 9018.90.20, which comprehended:
"Goods, as follows:
(a) apparatus for the administration of anaesthetic gases;
(b) drainage appliances (including calibrated drainage bags) with, or designed to be used with, a catheter;
(c) incubators for babies;
(d) infusion or transfusion sets for blood or other fluids;
(e) suction apparatus".
A perusal of the material in the appeal book shows that the case for the Comptroller-General was only presented to the Administrative Appeals Tribunal on one simple basis, which was also the basis of the original decision under review by the Tribunal. The Comptroller- General contended that the packs in question were "infusion or transfusion sets for blood or other fluids" within sub-item 9018.90.20(d). But he did not ever suggest that, considered alone, they fell within those words in the sub-item. He could not have done so, since the packs were incapable in themselves of use to achieve any infusion or transfusion of anything. What he contended was that their function was to contain blood which would be infused or transfused from them into a patient by a "giving set" inserted into the pack and, of course, also into a vein of the patient; and on this basis, the argument was that they were a part of an infusion or transfusion set, and that such a part, although incomplete in itself, was properly to be classified, by virtue of Chapter 90 note 2(b), as falling within the item. Inevitably, if an infusion or transfusion set were to be seen as including these packs, then, ex hypothesi, the packs would be parts of such a set. So, however one might choose to express the argument, at bottom the only question it raised was whether the thing that answered the description in sub-item 9018.90.20(d) of the tariff was, not merely the equipment by which blood was infused or transfused from a container into a patient's veins, but the whole apparatus involved in that operation, including the container itself.
The Comptroller-General's contention, as I have stated it, required one qualification, in so far as by the terms of Note 2(b) a part of a thing will not be classified under the item relating to the whole thing, unless it is "suitable for use solely or principally with a particular kind of machine, instrument or apparatus, or with a number of machines, instruments or apparatus of the same heading". But this qualification, though by no means irrelevant in the event of the Comptroller-General otherwise succeeding, is irrelevant to the question whether the reasoning of the Tribunal discloses an error of law. For the Tribunal never got to the qualification, rejecting as it did the Comptroller-General's argument at the first step.
A preliminary point should be mentioned, since it is important, although little attention was paid to it in argument. Where there is a question whether something falls within a verbal description in a statute (as in a case raising the application of a tariff item), the answer may depend simply on findings of fact as to the meaning of the words constituting the description and as to the nature of the thing itself. With regard to the words, "[t]he question what is the meaning of an ordinary English word or phrase as used in [a] Statute is one of fact not of law": The Australian Gaslight Company v The Valuer- General (1940) 40 SR(NSW) 126 at 137, per Jordan CJ. Nevertheless, once the nature of the thing has been found as a fact, whether it falls within the verbal description will, in many cases, be a question of law. For, in the first place, it may not be a matter of applying merely the ordinary English meaning of words or phrases, but of applying a meaning derived from the statute by a process of construction, which is a process of law: Hope v The Council of the City of Bathurst [1980] HCA 16; (1980) 144 CLR 1 at 10, per Mason J, with whose reasons Gibbs, Stephen and Aickin JJ stated their agreement. The principle that construction is a process of law has never been doubted, although the completeness of the proposition derived from it that "[t]he effect or construction of a term once its meaning or interpretation is established is a matter of law": Agfa- Gevaert Ltd v Collector of Customs [1994] FCA 1336; (1994) 124 ALR 645 at 648, per Gummow J; Collector of Customs v Pozzolanic Enterprises Pty Ltd (supra, at 287), and the relationship between that proposition and the proposition that the meaning of an ordinary word or phrase is a matter of fact, were left in some doubt when Agfa-Gevaert v Collector of Customs was reversed on appeal by the High Court: see Collector of Customs v Agfa-Gevaert Ltd [1996] HCA 36; (1996) 141 ALR 59 at 63-64.
Gummow J, in Agfa-Gevaert Ltd v Collector of Customs, also held (ibid) that it is a question of law "whether the facts as found fall within the terms of the law as properly construed; to this there is the qualification that, where the statute uses words according to their ordinary meaning and it is reasonably open to hold that the facts as found fall within those words, the decision as to whether they do so fall generally is a matter of fact." His Honour added that the limitation "generally" was required, even in this last case, "because the law may use a word in an ordinary sense, but there may be a number of ordinary senses and it then is necessary to select that which is appropriate, and because whilst the word may have but one ordinary meaning that is imprecise, the word will take its colour from the context and that will require construction of the law, a lawyer's task. The result in such cases will be more than the matching of a set of facts with plain words." The proposition that "whether facts fully found fall within the provisions of a statutory enactment properly construed is a question of law" was stated to be sustained by "[m]any authorities" in the judgment of Mason J in Hope v The Council of the City of Bathurst (supra, at 7). The same proposition was subsequently applied by Full Courts of this Court to cases where what was in issue was whether facts as found fell within the provision of a tariff item: Peacock v Zyfert (1983) 48 ALR 549; Rheem Australia Ltd v Collector of Customs (NSW) (1988) 78 ALR 285 at 293, 306. In the former case (at 564-5), Lockhart J said:
"It must be a question of law whether a given description of goods falls within a particular part of the Tariff. Here the question is what particular part of the relevant Schedule, if any, applies. This necessarily involves a question of construction of the Tariff and is a question of law: see Whitton v Falkiner [1915] HCA 38; (1915) 20 CLR 118, per Isaacs J. (at 127)."
See also per Fox J at 555-556.
But as Mason J made clear in Hope at 7-8, and as is also made clear by the passage I have cited from the judgment of Gummow J in Agfa-Gevaert Ltd v Collector of Customs, there are complexities. A consideration of these two judgments shows that there are at least two separate qualifications to the proposition stated in Hope, which arise out of the intrinsic uncertainty of the exact meaning of many words and expressions in the ordinary use of language. One problem, to which Mason J refers, arises in the case where a statute, on its true construction, uses a word which is inherently capable of more than one application. He instanced Brutus v Cozens [1972] UKHL 6; [1973] AC 854, where the word in question was the word "insulting". It was plainly open for a particular set of facts, as found, to involve behaviour that was susceptible of being not unreasonably regarded either as insulting or as not insulting, and the question whether the statutory description was satisfied was inevitably one of fact. Similarly, in Sharp Corporation of Australia Pty Ltd v Collector of Customs (1995) 59 FCR 6 at 14-15, Davies and Beazley JJ (with whom Hill J agreed) held, contrary to the view I had taken at first instance: Collector of Customs v Sharp Corp of Australia Pty Ltd (1994) 35 ALD 589 at 592-593, that the expression "essential character" as used in r 3(b) of the General Rules for the Interpretation of the Tariff "carries its ordinary meaning", but that meaning being complex, the question whether particular facts fell within it was a question of fact, so that the matter should be decided on the basis the decision under review "was one which was open to a reasonable decision-maker". In cases of this kind, it is customary to find illumination, as Mason J did in Hope at 7-8, in the judgment of Kitto J in N.S.W. Associated Blue-Metal Quarries Ltd v Federal Commissioner of Taxation (1956) 94 CLR 309 at 512, where a two-staged process is expounded. First, it is necessary to ask, as a question of law: are different conclusions open as to whether the facts found fall within the words of the statute? Then, "[i]f different conclusions are reasonably possible, it is necessary to decide which is the correct conclusion; and that is a question of fact". See also Cowell Electric Supply Company Ltd v Collector of Customs [1995] FCA 1031; (1995) 54 FCR 1 at 6, 10, 20-21, and 24; Sharp Corporation of Australia Pty Ltd v Collector of Customs (supra) at 16. The two-staged process will, of course, be cut short where only one conclusion is reasonably open upon the facts found, as was held to be the case, for example, in Hope at 9 and in Cowell Electric Supply Company at 10, 24. Consistently with the often- cited general proposition stated by Fullagar J in Hayes v Federal Commissioner of Taxation [1956] HCA 21; (1956) 96 CLR 47 at 51, which is cited again in the joint judgment of the High Court in Collector of Customs v Agfa-Gevaert Ltd at 62-63, that "[w]here the factum probandum involves a term used in a statute, the question whether the accepted facta probantia establish that factum probandum will generally - so far as I can see, always - be a question of law", if a statute uses words less susceptible of a range of meanings than "insulting" or "essential character" and the facts are fully found, then, even though no particular problem of construction is identified, the application of the statute is likely to be a matter of law; and it will be so, unless some degree of imprecision in the meaning of the statutory language may have an impact on the case, requiring some finding of fact.
The other type of case is that to which Gummow J refers in Agfa- Gevaert Ltd v Collector of Customs and to which I had assimilated Sharp Corporation, where the solution to the complexity involved in the uncertainty of the meaning of a word is to be found by a process of construction of the word in its context in the legislation, a matter of law. In such a case, a court or tribunal does not choose between different possible applications of the one equivocal or inexact statutory concept (eg. "insulting") to an evaluation or an appreciation (in the French sense - see 69 ALJ 984) of the facts, but chooses upon the principles of construction between possible concepts conveyed by the statutory expression. Of course, it is conceivable that a particular provision in an enactment will raise both kinds of problem. But Gummow J's remarks in Agfa-Gevaert Ltd v Collector of Customs seem to me to involve that, where the susceptibility of words and expressions to different meanings or shades of meaning is to be resolved by a process of construction of the statutory language in order to determine whether it embraces the facts found, the ultimate question is one of law. This accords with the view of Fullagar J in Hayes v Federal Commissioner of Taxation (ubi supra), with Hope at 10, and with the joint judgment of Sheppard and Burchett JJ in Australian National Railways Commission v Collector of Customs, South Australia [1985] FCA 312; (1985) 8 FCR 264 at 277. In Collector of Customs v Agfa-Gevaert Ltd at 64-65, the joint judgment of the High Court refers to the principle "that the determination of whether an 'Act uses [an] expression ... in any other sense than that which they have [scilicet it has] in ordinary speech' is always a question of law". On that basis, logically it must also be a question of law, in a case where a statutory expression has several ordinary senses, whether it is used in a particular one of them. And as the joint judgment of Neaves, French and Cooper JJ in Pozzolanic Enterprises points out (at 288-289), uncertainties may require to be resolved by reference to a value judgment about the range of the Act, rather than a matching of the facts to the, or an, ordinary meaning of the words. Their Honours said:
"Although the words of the statute are construed according to their ordinary English meaning, that does not mean that their application to a set of facts is simply described as the matching of that set of facts with a factual description. There is necessarily a selection process involved. The range of relationships to which the words apply for the purpose of the Act depends upon a judgment about that purpose. The selection process involved is analogous to that used in determining what causal relationships between conduct and loss attract liability for the purpose of s 82 of the Trade Practices Act 1987 (1974) (Cth): see Elna Australia Pty Ltd v International Computers (Aust) Pty Ltd (No 2) [1987] FCA 230; (1987) 16 FCR 410 at 418-419; Munchies Management Pty Ltd v Belperio (1988) 84 ALR 700 at 712-713. In the end this is not a process of fact finding. The facts are found. What is left is a value judgment about the range of the Act and that is a question of law."
This passage was referred to in the joint judgment of the High Court, without criticism, in Collector of Customs v Agfa-Gevaert Ltd at 63.
In my opinion, the present case involves a question of the construction of the relevant provision of the tariff, and thus a question of law. When that question has been answered, it will be possible to see whether the principle of Peacock v Zyfert applies, or whether some further finding of fact is necessary. But in either case, there will have been no ground for the Court to interfere unless an error of law occurred on the part of the Administrative Appeals Tribunal in its determination of the matter. I turn, therefore, to the Tribunal's reasons.
The Tribunal begins by describing the goods - "blood packs, being bags made from plasticised polyvinyl chloride for the collection and storage of blood or blood products ... manufactured under clean room conditions and then terminally sterilised containing anti-coagulant solution. Each bag has an inlet and outlet port; the first bag in each set having attached to its inlet port a collection tube, blood taking needle and needle protector which allows blood to flow from the donor into the bag. Each bag has an outlet port to allow a 'giving' or 'administration' set to be attached to the bag and blood to be infused into a recipient." The Tribunal added that each "bag also has an eyelet which can be used to suspend the bag plus there are additional outlets with tubing attached connecting one bag to another in a closed sterile system allowing for the movement of blood or blood products between the bags." Next, the Tribunal states the nature of the evidence as to the purpose of the bags. There was evidence of their purchase for blood bank use for collecting donor blood from which products were made and issued to hospitals and the Commonwealth Serum Laboratories, either for transfusion or for manufacture into further products. The Tribunal stated:
"In order to infuse (or transfuse) a patient a 'giving set' is required which is inserted into the blood donor pack."
The Tribunal noted the "distinction between giving sets and blood collection packs", and pointed out that the "Blood Bank purchases blood donor pack sets but does not purchase giving sets because the Blood Bank does not give transfusions on site". Reference was also made to evidence about the use of the packs, which was given by a Dr Wylie, the Director of the Red Cross Blood Bank in New South Wales. Dr Wylie said:
"Your donation may be collected into a single, double, triple or quadruple pack. There will be, what we term, a primary pack, which is where the blood initially goes into when it leaves your vein, it goes through a line and there's a needle at the end of it which goes into your vein. Then the donor line is sealed off and the pack set, only one of a bag which may have - will have blood in it at that time, goes to the fractionation laboratory, processing laboratory, and the pack is then spun down. Now, in the main, we will leave the red cells which is the whole blood line as to plasma in that primary pack, and the plasma, with or without platelets in it as well, will be transferred to one, or perhaps subsequent packs in the system. At that time it's still an integrated pack set and any of those packs from the company that we currently purchased our packs from, will be able to be used as transfusionable products. So from the one donation we may have a red cell product, then a plasma product and a platelet product, which are then - once they're created the individual packs are cut off and sealed so you get three different separate components from that single pack set."
The Tribunal commented that other witnesses agreed with what Dr Wylie said in this passage, "except to add that in most hospitals the secondary products would be pooled prior to infusion to make up the therapeutic dose".
The Tribunal then stated what it clearly regarded as a matter of great significance. It said:
"The fundamental point is, however, that before blood or any blood product can be infused into a patient a giving set is required."
After the statement of this "fundamental point", the reasons break off for a few paragraphs to refer to the terms of the relevant tariff items and to the fact that the expressions "infusion set" and "transfusion set" have no trade meaning. In that situation, it was appropriate to look to the function of the packs in relation to infusion or transfusion. The Tribunal reiterated that "the packs themselves require a 'giving set' before the product can be infused."
There being no trade meaning, the Tribunal's task was to find the meaning of the statutory expression in the usual way by looking at the language, and by the processes of construction of the words in their context. The expression "infusion or transfusion sets" is, of course, ungrammatical. Neither "infusion" nor "transfusion" is an adjective; yet the words appear to be used to describe particular sets. The simplest way to understand the structure of the expression is to see the collocations "infusion set" and "transfusion set" as combinations of words forming expressions referring to sets for the purpose of infusion or transfusion of blood or other fluids. The idea of purpose is in fact conveyed, though not with precision, both by these combinations of words and also by the word "for" in the sub-item - "infusion or transfusion sets for blood or other fluids" - which must convey some purpose of doing something with the blood or other fluids. Without spelling this out, the Tribunal turned to an Australian Standard (AS 2385) which was entitled "Single-use (sterile) infusing sets for general medical use". It was, it seems to me, entirely appropriate that the Tribunal should refer to such a document in order to ascertain what would be involved in a set for general medical use for the purpose of infusion. The material before the Tribunal shows that this standard is referred to in a general publication put out in the name of the New South Wales Blood Bank. I shall return later in these reasons to this publication. There was evidence that transfusion was not in any practical sense different from infusion. Doubtless, as this evidence suggests, the word "transfusion" merely reflects an advertence to the fact that, in a particular case, the infusion may come from some other person, as in a blood transfusion. Having looked at the Australian Standard, the Tribunal found it revealed "that the specific requirements for a blood set (ie a set suitable for use with blood, blood derivatives and intravenous fluids in general) shall [emphasis original] include the following components:
(a) Closure-piercing device.
(b) Drip-filter chamber, or separate filter chamber and drip chamber.
(c) Delivery tube.
(d) Injection site.
(e) Flow regulator.
(f) Adaptor.
The blood set may also include an air-inlet assembly and an intravenous injection device."
The Tribunal then made the important finding:
"None of the above components [is] contained within the subject goods. The subject goods are for the collection and storage of blood."
Obviously, the point of this finding was that the subject goods did not, either wholly or in part, form any part of an infusing set as known to medicine and standardised by the relevant Australian Standard. In fact, they were designed to serve a different purpose, that of the collection and storage of blood.
The Tribunal then referred to some evidence of Dr Wylie, a witness called on behalf of the Comptroller-General, who accepted the nature of an infusing set which he called a "giving set", but nevertheless sought to give "infusion set" a wider meaning, including the pack of blood, salt water or dextrose to be infused into the patient. Dr Wylie was asked:
"Could [you] then describe the complete equipment that one would need to perform, for example, a blood transfusion?"
and answered:
"We need two basic pieces of equipment. You obviously need the blood that you are going to transfuse, and that comes in a pack, and you need a giving set which is inserted into that pack and the two items together are the apparatus required for a blood transfusion."
The Tribunal noted that Dr Wylie had added:
"The term infusion set I think is a somewhat confusing term because even when talking of infusion sets, you need to talk about both the giving set and the pack, whether the pack contains blood or whether the pack contains salt water or dextrose is irrelevant."
Pausing at this point to recapitulate, I note that the Tribunal had found the packs in question to be distinct from the known medical infusing sets the subject of an Australian Standard and to contain no component of an infusing set. The Tribunal had found that the packs were for the collection and storage of blood, and that before the blood could be infused into a patient, in the cases where this was the use to which it was to be put (as distinct from cases where the blood was to be broken down into components such as plasma), the packs required to have applied to them a different piece of equipment which was referred to in the evidence as a "giving set", and was obviously identical with the infusing set the subject of an Australian Standard. The only basis on which it was argued that the packs were in the statutory sense infusion or transfusion sets was that they formed part of a total set, which it was said could be so described, when they were used, in one of their uses, in connection with the medically known infusing sets to give a transfusion of blood or of a blood product. In no sense at all could they be regarded as being in themselves infusion or transfusion sets, and the only wider set suggested, of which they could possibly be held to form a part, was the wider set I have described.
It was in this situation that the Tribunal went on to refer to the dictionary meanings (citing an unspecified edition of the Shorter Oxford English Dictionary) of the words "transfusion" and "infusion", which, it noted, "seem[ed] to be used interchangeably in referring to the sets". Those words, the dictionary made clear, referred in ordinary usage to the action of the pouring of a liquid, and the specific medical meaning of "transfusion" referred to the "process of transferring the blood of a person or animal into the veins of another; the injection of blood or other fluid into the veins", while "infusion" had the medical sense of "injection". These definitions plainly supported the identification of "infusion or transfusion sets" with "infusing sets" as described in the Australian Standard. They did nothing to support the contentions of the Comptroller-General.
Having noted these dictionary definitions of "transfusion" and "infusion", which it considered showed that "the words are synonyms", the Tribunal referred also to the dictionary's definition of the word "set", according to which it said this word had the meaning:
"[a] collection of instruments, tools, or machines customarily used together in a particular operation; a complete apparatus employed for some specific purpose."
It then concluded:
"To my mind the goods cannot be described as 'parts' of a transfusion/infusion set."
The Tribunal referred to my adoption in Collector of Customs v Sharp Corp of Australia Pty Ltd (supra, at 596) of the remarks of Davies J in Waterscheid Australia Pty Ltd v Collector of Customs (1988) 7 AAR 555 at 564, where Davies J said that "an item separate from another may not be a part of the other even though it is essential to its functioning"; referred to the statement of Gibbs J in Deputy Commissioner of Taxation v Polaroid Australia Pty Ltd (1971) 46 ALJR 32 at 34 that "one thing does not become part of another simply because the latter thing cannot be put to proper use without the aid of the former, even if, in use, the two things are fixed together"; and went on to say:
"The proper test in relation to the word 'part' was stated by Gibbs J. in the Polaroid Australia case at 34:
'Obviously a part is something which with others makes up a whole ... '".
There can be no dispute about the relevance of these observations made by Gibbs J and Davies J to the argument put forward by the witness, Dr Wylie, called on behalf of the Comptroller-General that, because a pack containing blood is necessary to the use of an infusing set to effect a blood transfusion, therefore the pack must be regarded as part of a transfusion set. What those Judges said denies the validity of any such argument.
The Tribunal rounded off its conclusion by saying:
"Applying that test [ie. the test stated by Gibbs J. and Davies J.] to the goods in question it can be seen that their essential function is to collect and store blood and blood products. In order to transfuse/infuse blood, additional apparatus, namely an infusion set (or giving set), must be rigged up. Thus they cannot be classed as a transfusion set/infusion set."
The learned judge at first instance (whose judgment has been reported: Comptroller-General of Customs v Baxter Healthcare Pty Ltd (1995) 41 ALD 251) held that these reasons disclosed an error of law. He also held that, as a matter of law, the packs in question are "part" of a transfusion/infusion set. I will return to the second point, which depends on the construction of the tariff item, but it is necessary to note that the first point was an independent one, stated by his Honour (at 258) as follows:
"While the decision-maker gave its reasons as to why the blood pack was not a set, it failed to develop or expose its reasons on the second question, namely whether the blood packs were parts of a set. There is no reference to what is meant by 'parts', or as to what constituted 'the whole', in the present matter.
Although the decision-maker purported to apply the text quoted [scilicet test stated] by Gibbs J., there is no indication as to how it was applied, or by what process the conclusion was reached. Such a central matter should not be left to speculation by the parties as to the possible reasoning. This failure to set out the reasoning process, in my view, amounts in itself, to an error of law."
At the hearing of the appeal, counsel for the Comptroller-General relied on the same process of reasoning. He said:
"In order to see whether the blood packs constituted part of a set you need to know what the set is so the fundamental question here is, well what comprises a transfusion/infusion set in the Customs Act [sic] and you will not find an answer in the AAT because it never tackled that question. That is the fundamental error that was made."
I have set out the tenor of the Tribunal's reasoning at some length, because it was necessary to do so to demonstrate why I cannot accept these arguments. It seems to me to be unreal to suggest that the Tribunal left any room for doubt as to the sense in which it understood the packs were suggested to be "parts" so as to fall within the tariff item; equally unreal to suggest that the Tribunal left any room for doubt as to what was the statutory meaning of "infusion or transfusion sets for blood or other fluids" for which the Comptroller- General had contended, and which it rejected; and, finally, wrong to think the Tribunal left unanswered the question what it is that the tariff covers by the expression "infusion or transfusion sets for blood or other fluids". There was in truth no scope for confusion. For, as I have indicated, only one argument was presented to support the contention that the packs fell within the tariff item. Since they contained no relevant needle or other closure-piercing device, delivery tube or flow regulator, nor any of the other items referred to in the Australian Standard for an infusing set for general medical use, being virtually confined to a bag with inlet and outlet ports, it was never in dispute that they could not in themselves constitute infusion or transfusion sets. The contention, and the only contention, was that such a set must be regarded as including the pack from which the blood was to be transfused. The reason why this was said to be so was that you could not have a blood transfusion without blood, and the blood "comes in a pack, and you need a giving set which is inserted into that pack and the two items together are the apparatus required for a blood transfusion" - to quote Dr Wylie. The whole case depended on this proposition, since, plainly enough, if the infusion or transfusion set included the pack, ex hypothesi the pack was part of the infusion or transfusion set.
In my opinion, if the Tribunal's reasons are considered, not hypercritically but fairly, with a view to ascertaining the process of reasoning involved, it will be apparent that they do satisfactorily reveal the basis of the conclusions reached. The Tribunal drew attention to the difference between, on the one hand, the packs in which blood was collected and contained upon and after donation, stored, processed in some cases (and in most hospitals then pooled prior to infusion), and from which it was transfused when transfusions occurred, and, on the other hand, the "giving sets" which were required before blood or any blood products could be infused into a patient. The Tribunal described this dichotomy as a "fundamental point". It found that there was a standard for the giving sets, which were known as "infusing sets for general medical use", and that none of the components of an infusing set was contained within the subject goods, the subject goods having an essential function that was to collect and store blood and blood products. The Tribunal noted the dictionary meanings of "transfusion" and "infusion", which have nothing to do with storage. Once the facts were analysed in this way, and it was found that the packs' "essential function is to collect and store blood and blood products", while there existed sets known as "giving" or "administration" or "infusing" sets the function of which was to infuse blood and other products into patients, it seems to me that the conclusion actually reached by the Tribunal was quite inevitable. It held that "an infusion set (or giving set)" is an "additional apparatus", ie. additional to the packs, and that the packs "cannot be classed as a transfusion/infusion set". That last conclusion is expressed tersely, but, having regard to the argument under consideration, it must mean that the packs cannot be "classed as" sets within the tariff sub-item as they would be by virtue of Note 2(b) if the sub-item referred to sets (of which they would be parts) comprising both the container of blood or blood products to be transfused and the apparatus for carrying out the transfusion. That is because the tariff sub-item is not wide enough to include the storage packs from which the blood is transfused, but simply refers, in the Tribunal's view, to "an infusion set (or giving set)".
Although the argument for the Comptroller-General had only been put on the basis I have mentioned, that the tariff sub-item referred to sets which included the storage packs, the Tribunal in the course of its reasoning also dealt with a possible argument arising out of the evidence of Dr Wylie. Dr Wylie's suggestion that the packs were essential to the functioning of the administration sets appears to have prompted the Tribunal to refer to the remarks of Gibbs J and Davies J in the cases which have been cited. What their Honours said made it clear that the fact that something is essential to the functioning of something else does not make the first thing a part of the second. The film cartridge in the Polaroid Australia case was as essential to the functioning of the camera in any useful way as the pack of blood or other product was, in Dr Wylie's view, to the functioning of an infusing set. The fact that these additional comments were strictly unnecessary does not mean that any error was involved in the Tribunal's making them.
For these reasons, I do not think the Tribunal's reasoning discloses any error of law of the kind alleged.
Even if I had been of the opinion that the Tribunal erred in its reasoning on the issues in question, there would have remained a further obstacle in the path of the Comptroller-General. As has been indicated earlier in these reasons, and as I pointed out during the argument of this appeal, it seems to me that the question whether the tariff item covers a composite set including the blood packs under consideration is either to be answered as a matter of law, or at least involves a question of law whether it was open to the Tribunal, on the facts which it found in this case, to have given any other answer than that which it gave. If, on either basis, the actual decision reached by the Tribunal should be supported, the appeal ought not to have been allowed by the learned Judge at first instance.
When the Customs Tariff Act was enacted, it included Heading 9018, but not the sub-item with which we are concerned. 9018.90.00 then read "Other instruments and appliances". By the Customs Tariff Amendment Act 1988 , the previous 9018.90 was omitted, and new provisions inserted, as follows:
"9018.90 - Other instruments and appliances
9018.90.10 --- Goods, as follows:
(a) defibrillators;
(b) drainage appliances (including calibrated drainage bags) with, or designed to be used with, a catheter;
(c) infusion or transfusion sets for blood or other fluids
9018.90.20 --- Goods, as follows:
(a) apparatus for the administration of anaesthetic gases;
(b) incubators for babies;
(c) suction apparatus
9018.90.90 --- Other".
Then, by the Customs Tariff Amendment Act 1990 , 9018.90.10 and 9018.90.20 were omitted, and there was substituted the following:
"9018.90.10 ---Goods, as follows:
(a) apparatus for the administration of anaesthetic gases;
(b) defibrillators;
(c) drainage appliances (including calibrated drainage bags) with, or designed to be used with, a catheter;
(d) incubators for babies;
(e) infusion or transfusion sets for blood or other fluids;
(f) suction apparatus".
Then, by the Customs Tariff Amendment Act 1991 and the Customs Tariff Amendment Act (No. 2) 1991, 9018.90.10 and 9018.90.20 were omitted, and there were substituted a new 9018.90.10 referring to "Defibrillators" and a new 9018.90.20 in the form set out early in these reasons, the form of the item which was relevant for the present case. It was enacted in that form by the second of the 1991 Acts on 6 December 1991. There have been further amendments since, and it is interesting to note that by the Customs Tariff Legislation Amendment Act 1995 a new sub-item (b) was added:
"(b) blood packs and blood pack systems used for collecting, processing, storing and administering blood and blood components",
the remaining sub-items being re-lettered accordingly.
In my opinion, this legislative history is relevant. It shows that Parliament, over a short period of years, gave repeated attention to what became and was at the relevant time sub-item 9018.90.20(d). Since the Tribunal found as a fact that the sub-item was not set out in the form of a technical expression, so that the language must be given the ordinary meaning conveyed by it or a meaning arrived at by the processes of construction, it is plainly relevant to know whether at the date of the legislation there existed sets of equipment aptly described by the statutory language. The importance of this is emphasized by the reasoning in Collector of Customs v Agfa-Gevaert Ltd at 66-69. A tariff provision will often be addressed to readers familiar with a technology to which it relates, and an understanding of it will be assisted by some knowledge of that technology and of the terms commonly used in it. I have already referred to the Tribunal's findings concerning Australian Standard 2385 entitled "Single-use (sterile) infusing sets for general medical use", the components of which, as described in the Standard, suggest a set of equipment in close accordance with the statutory language. The Tribunal made no express finding as to the date of this Australian Standard, but there were in evidence a number of extracts from Walsh and Ward's A Guide to Blood Transfusion 5th edition (1990) by Gordon Archer and Grace Parker, endorsed as issued by the Australian Red Cross Society (NSW Division) Blood Transfusion Service. It was not suggested at the hearing of the appeal that the authenticity or authority of this publication was in dispute. At page 142 of it, reference is made to Australian Standard 2385, so this Standard must have been in existence at least in 1990, prior to the enactment of the sub-item in the amending Acts of 1991. At the same page 142, it is also made clear that the Standard was of general application in Australia, and that it related to what could be called "infusion sets" or "giving-sets" or "blood transfusion giving sets". The components of these sets are there stated consistently with the Tribunal's summary of the Standard. It is particularly significant that the Tribunal's reference to "a closure-piercing device" is amplified by the Blood Bank publication as follows:
"A closure-piercing device for entering the blood container".
This, of course, underlines the Tribunal's comment that an infusion set is an "additional apparatus", separate from a blood container. Its components include the closure-piercing device, but not the container to be pierced. It is like an oil pump which must be attached to a drum of oil in use, but which is a piece of equipment quite distinct from the drum.
In my opinion, this material amply justified the Tribunal's conclusion that the statutory language does not embrace blood packs as part of infusion or transfusion sets.
It also seems to me that the context in which the sub-item is found in the tariff strongly supports the Tribunal's conclusion, upon the true construction of the legislation. In Attorney-General v Prince Ernest Augustus of Hanover [1957] AC 436 at 461, Viscount Simonds said:
"[W]ords, and particularly general words, cannot be read in isolation: their colour and content are derived from their context. So it is that I conceive it to be my right and duty to examine every word of a statute in its context, and I use 'context' in its widest sense, which I have already indicated as including not only other enacting provisions of the same statute, but its preamble, the existing state of the law, other statutes in pari materia, and the mischief which I can, by those and other legitimate means, discern the statute was intended to remedy.
... I must admit to a consciousness of inadequacy if I am invited to interpret any part of any statute without a knowledge of its context in the fullest sense of that word."
The immediate context of the sub-item in question is provided by sub- items (a), (b), (c) and (e). Sub-item (a) is plainly limited to the equipment by which anaesthetic gases are administered; it would not include a storage container. In sub-item (b), the draftsman found it necessary to specify a particular form of container which it was desired to include in the sub-item, and it is plain that, apart from this, separate containers would not be included. Sub-item (c) is a self-contained piece of equipment. Sub-item (e), "suction apparatus", is not described so as to include any container utilized in connection with the apparatus. When the sub-item in question is considered in the context of the sub-items that accompany it, it is revealed as part of a series of sub-items each of which is concerned with the performance of a discrete function which will, at least in most cases, involve an association with other pieces of equipment not included in the sub- items.
If, then, heeding the remarks of Viscount Simonds, one turns also to the wider context of the technology addressed, recognizing as it does the existence of sets of equipment, answering the statutory language, which did not include blood packs, the problem of construction is resolved in favour of the appellant. According to the true meaning of the statute, the sub-item does not extend to any such composite item embracing both blood packs and infusing sets as was contended for by the Comptroller-General.
I should add that, in my opinion, the appeal does not involve any question whether the blood packs could have been held accessories. It was not suggested by counsel that such a question had ever been raised in the Tribunal, or before the judge at first instance. The topic of accessories was mentioned in passing in the argument on the appeal of counsel for the Comptroller-General, having been raised by a member of the Court. It was not the subject of any submission that the Tribunal had fallen into any error of law in that respect; in particular, no argument was developed that, if sub-item 9018.90.20(d) did not refer to a set which included a blood pack, the Comptroller-General could succeed on the basis that the packs were accessories to sets consisting only of infusion sets as contemplated by the Australian standard. Notwithstanding any earlier ambiguities, when the Comptroller-General filed, under s.37 of the Administrative Appeals Tribunal Act 1975 , his "statement ... giving the reasons for the decision", he confined himself clearly to a case that the blood packs were "parts". The written submissions filed in this Court were similarly limited.
It seems to me there is good reason why the Comptroller-General did not put forward any argument based on the word "accessories" in Note 2(b). The relevant meaning of "accessory" is given in The New Shorter Oxford English Dictionary (1993), as follows: "An additional or subordinate thing; an adjunct, an accompaniment; a minor fitting or attachment". On no view of the evidence would it be open, in my opinion, to regard the blood packs, with their independent and significant functions of reception of blood donations, storage, and use in processing and further storage and pooling of blood products, as falling within the description of an accessory subsidiary to an infusion set according to the appellant's construction of that expression. Nor, given the appellant's definition of "infusion set", could it be said that the sole or principal use for which the packs were suitable was such a subsidiary role. They unarguably have the independent and significant uses I have mentioned. Of course, if, contrary to the views I have earlier expressed, a finding were both open and were actually made, as a fact, that sub-item 9018.90.20(d) embraces composite sets including the packs, which was the Comptroller-General's submission, the packs would not be accessories of the composite sets but parts of them. In that event, the remaining question would be whether the sole or principal use for which the packs were suitable was as such parts, and again their significant independent uses would stand in the way of the submission.
For these reasons, I would allow the appeal and set aside the orders made at first instance; and in lieu of those orders, I would order that the decision of the Administrative Appeals Tribunal be affirmed. However, the majority of the Court holds that the Tribunal did err in failing to provide an adequate statement of its reasoning process, and that a decision of fact either way would be open, in law, to the Tribunal. Accordingly, the appeal fails insofar as it challenges the orders, made below, setting aside the Tribunal's decision and remitting the matter to the Tribunal for reconsideration in accordance with law. But this Court does not agree with the additional findings of the trial judge designed to restrict the scope of the further hearing in the Tribunal. A right of appeal, of course, relates to a Court's orders, not its reasons: Driclad Pty Limited v Commissioner of Taxation of the Commonwealth of Australia [1968] HCA 91; (1968) 121 CLR 45 at 64; Landsal Pty Ltd (In liquidation) v REI Building Society (1993) 41 FCR 421; Copperart Pty Ltd v Commissioner of Taxation [1993] FCA 462; (1994) 50 FCR 345. Nevertheless, the form of the substantive order as made here leaves open in the Tribunal the effect of the conclusions which this Court holds to be erroneous. Had those conclusions been expressed in some declaration, it would have been set aside or varied: cf. Australian Telecommunications Commission v Colpitts [1986] FCA 257; (1986) 12 FCR 395; Secretary of State for Trade and Industry v Rogers [1996] 1 WLR 1569 at 1577, 1579; North Sydney Council v Ligon 302 Pty Ltd (1996) 137 ALR 644 at 646.
In the circumstances, the appeal should be allowed, and an appropriate declaration should be inserted in the orders.
The Comptroller-General should pay the costs of the appeal.
I certify that this and the preceding thirty-three (33) pages are a true copy of the Reasons for Judgment herein of his Honour Justice Burchett.
Associate:
Date: 21 February 1997
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION No. NG 292 of 1996
ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA
BAXTER HEALTHCARE PTY LIMITED
Appellant
- and -
COMPTROLLER-GENERAL OF CUSTOMS
Respondent
COURT: BURCHETT, MOORE & MERKEL JJ
PLACE: SYDNEY
DATE: 21 FEBRUARY 1997
REASONS FOR JUDGMENT
Moore J: I have read the judgments of Burchett and Merkel JJ in draft form. I do not repeat in its entirety the detailed summary of the Tribunal's decision, the evidence or the relevant legislative history which emerges from them. I am satisfied that the Administrative Appeals Tribunal ("the Tribunal") made an error of law but for reasons that differ in some respects from those of the learned trial judge.
The duty payable on the goods in question depended upon the construction of Schedule 3 of the Customs Tariff Act 1987 (Cth) ("the 1987 Act") as amended. The purpose of Schedule 3 is to identify the rate of duty to be levied on imported goods.
The construction of Schedule 3 generally is governed by Schedule 2 of the 1987 Act which is entitled "General Rules for the Interpretation of the Harmonised System" ("the General Rules"). Some sections and chapters commence with notes dealing with the way they should be interpreted and applied.
In issue was which item in Chapter 90 of Schedule 3 applied to double or triple blood packs imported by the appellant. Chapter 90 is found in Section XVIII. The relevant part of Chapter 90 provides:
"9018 INSTRUMENTS AND APPLIANCES USED IN MEDICAL, SURGICAL, DENTAL OR VETERINARY SCIENCES, INCLUDING SCINTIGRAPHIC APPARATUS, OTHER ELECTRO- MEDICAL APPARATUS AND SIGHT-TESTING INSTRUMENTS
...
9018.90 - Other instruments and appliances
9018.90.20 - Goods, as follows:
(a) apparatus for the administration of anaesthetic gases;
(b) drainage appliances (including calibrated drainage bags) with, or designed to be used with, a catheter;
(c) incubators for babies;
(d) infusion or transfusion sets for blood or other fluids
(e) suction apparatus
9018.90.90 - Other"
Chapter 90 commences with notes concerning its application. Note 2 provides:
"2. - Subject to Note 1 above, parts and accessories for machines, apparatus, instruments or articles of this Chapter are to be classified according to the following rules:
(a) parts and accessories which are goods included in any of the headings of this Chapter or of Chapter 84, 85 or 91 (other than 8485, 8548.00.00 or 9033.00.00) are in all cases to be classified in their respective headings;
(b) other parts and accessories, if suitable for use solely or principally with a particular kind of machine, instrument or apparatus, or with a number of machines, instruments or apparatus of the same heading (including a machine, instrument or apparatus of 9010, 9013 or 9031) are to be classified with the machines, instruments or apparatus of that kind;
(c) all other parts and accessories are to be classified in 9033.00.00."
Note 1 to Chapter 90 deals expressly with "parts" in a provision that says:
"This Chapter does not cover:
(a) ...
(e) Parts of general use, as defined in Note 2 to Section XV, of base metal (Section XV) or similar goods of plastic (Chapter 39);"
The definition of "parts of general use" in Note 2 to Section XV refers to goods in specified items in Section XV. Without repeating what each specified item says in full, they relate to articles which are tubes, pipes, wire, ropes, cables, chains, nails, screws, bolts, locks, mounting fittings, clasps and sign plates or letters. The result is that those articles are parts of general use for the purposes of Section XV and, if made of base metal or plastic, are also parts of general use for the purposes of identifying a limit on the scope of Chapter 90. The Chapter does not apply to those types of parts.
The prefatory words to Note 2 of Chapter 90 identify the subject matter of Note 2 as "parts and accessories for machines, apparatus, instruments or articles". It was common ground in this appeal that para (a) did not apply to the blood packs. Paragraph (b) contains several elements. The clause commencing "if suitable..." and concluding with the closing bracket may qualify only the word "accessories". That view is supported by the structure of para (b). It is also supported by what I view as the meaning of the clause and, in particularly, the meaning of the expression "suitable for use ... principally". It is not an apt expression to use to qualify the word "parts" if that word is given its ordinary meaning of something which, with others, make up a whole. I discuss the meaning of the word "parts" more fully shortly. However, as Merkel J points out, the words "other parts" in para (c) are otiose if the clause in para (b) does not qualify the word "parts" and for that reason I agree with Merkel J that it does. The operation of the clause depends on there being included in a chapter a reference to a machine, instrument or apparatus of a particular kind or that a number of machines, instruments or apparatus are identified in the one heading. The part or accessory must be suitable for use solely or principally with that kind of machine, instrument or apparatus or, if a number, with each of them.
The words "if suitable for" direct attention to the characteristics or features of the goods that render them suitable for use of a particular type. It is likely that if something has characteristics that would indicate it was suitable for use solely with something else, it is also likely that it will be used solely for that purpose. However, the same is not obviously so of something that has characteristics that would indicate that it was suitable for use principally with another thing. The reference to its future use in terms of its principal use involves the acceptance of, at least potentially, a subsidiary use. Thus it may have characteristics that would indicate that it was suitable for use principally with one thing, even though in fact, it is used with another thing in a way that manifests its subsidiary use. This distinction has some significance in the present proceedings. I will return to it after surveying some authorities dealing with the meaning of the word "parts" and "accessories".
What is comprehended by the word "parts" and the word "accessories" has been considered by this Court and the High Court on a number of occasions. In Deputy Commissioner of Taxation v Polaroid Australia (1972) 46 ALJR 32, Gibbs J considered its meaning in a Schedule to the Sales Tax (Exemptions and Classifications) Act 1935 - 1967 (Cth). The Schedule included the following items:
"36. Cameras (including cinematographic and stereo cameras), photomatons and machines for taking photographs ...
37. Photographic enlarging and reducing apparatus ...
38. Accessories and parts for goods covered by items 3 or 37 in this schedule." (emphasis added)
The meaning of the words "parts" and "accessories", arose in relation to the status of film packs and picture rolls used with a Polaroid camera. The schedule did not refer to accessories in the context of their suitability for a sole or principal use. His Honour observed that a thing "does not become a part of another simply because the latter thing cannot be put to proper use without the aid of the former, even if, in use, the two things are fixed together". Gibbs J illustrated the point by indicating that a film was not part of a camera in the same way as a bullet is not part of a gun or petrol is not part of a motor car. His Honour went on to agree with the observations of Owen J in Deputy Commissioner of Taxation v Fowler Rex (NSW) Pty Ltd [1967] HCA 7; (1967) 118 CLR 160, that the word "parts" described those things that in ordinary parlance would be described as spare parts for the various classes of goods mentioned.
Gibbs J also concluded that the film packs and picture rolls were not accessories for a Polaroid camera. His Honour took the view that an "accessory" is an adjunct, which itself is defined as something joined to another but subordinate, as auxiliary, or dependent upon it. His Honour said an accessory for a camera is an extra and additional part of the equipment of the camera itself. Gibbs J instanced a light meter, filter or wide angle lens as accessories.
The issue of what "parts" means arose again in Waterscheid Australia Pty Ltd v Collector of Customs (1987) 7 AAR 555. Davies J was addressing whether a power take off shaft, which was designed to be attached to a stub of a tractor to provide power to equipment external to the tractor, was comprehended by an item in Schedule 3 of the Customs Tariff Act 1982 (Cth) which referred to "parts and accessories for motor vehicles" Motor vehicles were relevantly identified as "tractors ... whether or not fitted with power take offs". His Honour reviewed a number of authorities including some from the United States and concluded that the appropriate test of what was a "part" was that articulated by Gibbs J in Polaroid Australia (supra), namely that a part is something with which others make up a whole. His Honour rejected the contention that a "part" was something that was essential to the functioning of the whole. He instanced ashtrays and armrests in a motor vehicle which I take to be an illustration of something which are parts of a motor vehicle but not essential to their operation.
Davies J went on to consider what was meant by the word "accessory". His Honour concluded that the Tribunal had applied an incorrect test in determining whether a power take off shaft was an accessory. The Tribunal had determined that the shafts played no part in relation to the principal function of the tractor and accordingly could not be described as an accessory. Davies J pointed out that an accessory is an extra or additional part of something and need not relate to the essential function of the thing. His Honour referred to a note in the Schedule to the Customs Tariff Act 1982 which indicated that parts or accessories for goods must be "used solely or principally as parts or accessories for those goods". His Honour simply noted that this requirement was satisfied because, as a matter of fact, 95% of power take off shafts were used in relation to tractors as defined.
What was a "part" was considered by Burchett J in Collector of Customs v Sharp Corporation of Australia Pty Ltd (1994) 35 ALD 589 and on appeal in Sharp Corporation of Australia Pty Ltd v Collector of Customs (1995) 59 FCR 6. In issue was the status of a toner kit used with laser beam printers. The status of the toner kit arose, for present purposes, in application of Schedule 3 of the 1987 Act. It was necessary to determine which of two items applied to the kits. The first item read "8473.30 - Parts and accessories of the machines of 8471". This item was the sole item in a heading: "PARTS AND ACCESSORIES (OTHER THAN COVERS, CARRYING CASES AND THE LIKE) SUITABLE FOR USE SOLELY OR PRINCIPALLY WITH MACHINES OF 8469 TO 8472". The reference in the item to 8471 was to "AUTOMATIC DATA PROCESSING MACHINES AND UNITS THEREOF; MAGNETIC OR OPTICAL READERS, MACHINES FOR TRANSCRIBING DATA ON TO DATA MEDIA IN CODED FORM AND MACHINES FOR PROCESSING SUCH DATA, NOT ELSEWHERE SPECIFIED OR INCLUDED" The second item concerned chemical preparations for photographic uses.
The Tribunal had concluded that three elements in the toner kit were "parts" of a laser printer. This determination that certain elements were parts was a step in the process of applying the General Rules to decide which of two items applied. The application of those Rules is not presently relevant. The Tribunal had concluded certain elements were "parts" on the basis that the elements were indispensable to the operation of the laser printer. Burchett J pointed out that this constituted a misunderstanding of what had been decided by Gibbs J in Polaroid Australia (supra) and Davis J in Waterscheid (supra).
However, the manner in which the Tribunal reached the conclusion about the status of some three elements of the kit did not attract comment from the Full Court. In the leading judgment of the Full Court, Davies and Beazley JJ indicated that the finding of the Tribunal that the three elements were "parts" of the laser printer accorded with the earlier judgments of Gibbs J in Polaroid Australia (supra) and Davies J in Waterscheid (supra).
In these proceedings the trial judge concluded that the Tribunal's decision manifest two errors of law. The first was that the Tribunal failed to set out the reasoning process by which it reached the conclusion that blood packs were not parts of the set referred to in item 9018.90.20.(d). I agree with his Honour's conclusion. In my opinion, the Tribunal has also failed to expose its reasoning process concerning the application of Note 2(b).
The reasoning of the Tribunal from paras 14 to 20 of its decision involve a number of steps. It first set out the components of what Australian Standard AS 2385 described as a "single-use (sterile) infusing sets for general medical use". It noted that blood packs were not one of the identified components. It then referred to evidence of Dr Wylie that two pieces of equipment were needed for transfusion or infusion, that the term infusion set was confusing and it was necessary to talk about the giving set and the blood pack. The Tribunal then referred to definitions of "transfusion" and "infusion" and an earlier decision of the Tribunal about what is a "set". It is in this context that the Tribunal then said the blood packs cannot be described as parts of a transfusion/infusion set. Reference was then made to Burchett J's judgment in Sharp Corporation (supra) and that of Davies J in Waterscheid (supra). The Tribunal then referred to the essential function of blood packs, namely the collection and storage of blood and blood products, noted that an infusing or giving set was required to infuse or transfuse blood, and expressed the ultimate conclusion that the blood packs cannot be classed as a transfusion/infusion set. In this context, the consideration by the Tribunal of whether the blood packs were parts was directed only to whether they were or were not part of a set of the character identified in item 9018:90:20(d) and, as Merkel J discusses, did so without identifying what comprised the set and explicitly eliminating the possibility that the blood packs and the giving set were a set comprehended by the item.
The decision of the Tribunal was to set aside a decision of the Comptroller-General classifying the goods "to sub-heading 9018:90:20" and to substitute a decision that "the goods are properly classified to subheading 9018:90:90". To have reached this conclusion, the Tribunal would ordinarily have considered and rejected the possibility that the blood packs were "parts or accessories ..... suitable for use solely or principally" with "infusion or transfusion sets for blood or other fluids". While the Tribunal concluded the blood packs were not "parts" of infusion or transfusion sets, that conclusion was not expressed to be by reference to Note 2(b). Indeed, Note 2(b) was not mentioned in the decision. The Tribunal was, in my opinion, required to address the operation of Note 2(b). It might be inferred it did because it expressed the view in para 19 of its reasons that blood packs were not parts of a transfusion/infusion set. However the Tribunal appears to have determined that the blood packs were not parts, not when considering the application of Note 2(b), but rather as a step in the process it did not complete of determining what was a set.
Moreover the decision of the Tribunal does not deal with the question of whether the blood packs were accessories. That the blood packs were accessories was, at least arguably, an issue raised in the proceedings by the terms of Note 2(b) and by the evidence. There was material before the Tribunal including the "Statement of findings on material questions of fact and law" prepared by the Australian Customs Service ("the Service") for the purposes of s 37 of the Administrative Appeals Tribunal Act 1975 , and letters from the Service to the appellant of 9 February 1994 and 11 July 1994 determining the classification, which make it clear that the Service was relying on Note 2(b) as the basis for classifying the blood packs under item 9018.90.20
It may be accepted that whether they were "accessories" appears not to have been an issue that assumed any prominence before the Tribunal. We do not have a record of the submissions made to the Tribunal other than the s 37 statement which said, under the heading "Reasons for Decision", the blood packs were classified as "parts" and were "suitable for use solely or principally "with infusion or transfusion sets"". However, from the material before us, the scope of the inquiry was not limited to whether the blood packs were parts. The following appears in the transcript of the proceeding:
"MR HEAZLETT: Mr Ross, from your experience, would you describe a blood collection pack as being a part or an accessory for an infusion or transfusion set and with ...
MR JEFFREY: Objection.
(THE TRIBUNAL): Yes. That is the question I have got to decide eventually."
Mr Heazlett was appearing for the appellant. The question was asked presumably to have the witness, who was an employee of the appellant, say that the blood packs were neither parts nor accessories. The Tribunal appeared to accept that their status as either was a matter he must address.
Moreover, in the letter from the Service of 11 February 1994, the classification of 9018.90.20 was justified on the basis that:
"The goods are identified as an integral component of blood transfusion apparatus/sets. The application of ch 90 note 2(b) therefore places the classification of these goods to 9018.90.20."
This determination that item 9018.90.20 was the correct classification resulting from the application of Note 2(b) was not based on the blood packs being parts rather than accessories. That was left open. In the later letter of 11 July 1994 the determination was expressed to be made on the basis that:
"The effect of this is that the blood packs are considered proper to 9018.90.20 as parts or accessories to transfusion apparatus by application of chapter 90 note 2(b)." (emphasis added)
The Service, whether entitled to do so or not, was relying on the goods being either parts or accessories in justifying the determination that item 9018:90.20 was appropriate.
As indicated earlier, both these letters were before the Tribunal. Further, in a statement of evidence of a witness called by the Comptroller-General, Mr Stuart Myers, the following appears in a discussion about the blood packs:
"8. The features of these goods that make them purpose-built for use in transfusions are:
(1) Entry port
(2) Hanging loop
(3) Side loops
(4) Pack size
(5) Plastic formulation
(6) Anticoagulant'/preservative volume and formulation
(7) Product labelling
(8) Numbered donor line.
9. I consider that the goods are transfusion apparatus used in the transfusion process in conjunction with the transfusion or infusion sets as described by tariff item 9018.90.20." (emphasis added)
The import of this evidence is that while the blood packs are not transfusion or infusion sets they are used in conjunction with them. That view is indicated after a description is given of features of the goods designed to establish they are purpose built for use in transfusions. This evidence is fairly clearly directed to establishing that the blood packs, while not parts, were accessories.
In order to determine whether the blood packs were accessories, if they were not a constituent of a set of the type referred to in item 9018.90.20(d), it would have been necessary to consider the role they played in relation to the set. Part of that inquiry would involve consideration of whether the blood packs are "suitable for use solely or principally" with infusion or transfusion sets in the way I earlier discussed. Having regard to the views of Gibbs J in Polaroid Australia (supra), it may also involve consideration of whether the blood packs had a subordinate or ancillary role to the infusion/transfusion set. Arguably, that is to be assessed only in the context of the use of the blood packs with infusion or transfusion sets. That is, when blood or other fluids within them are being transfused or infused.
Assuming the blood packs are not a constituent of a set of the type referred to in item 9018.90.20(d), the evidence before the Tribunal would indicate that the blood packs are not suitable for use solely with infusion or transfusion sets. Whether they are suitable for use principally with those sets appears to be a question at large having regard to the evidence, though arguably they are.
The evidence before the Tribunal suggests the following. Each pack in a multiple blood pack is purpose built to be used with an infusion or transfusion set. At least the pack containing the red blood cells is, ordinarily, then used with an infusion or transfusion set to transfuse or infuse its contents into a patient. Some of the individual packs containing plasma are also used with an infusion or transfusion set to transfuse of infuse plasma into a patient. The proportion of the double or triple blood packs used for this purpose, when compared with the use of them essentially for storage, appears only to have been addressed by a Mr Ross, and his evidence, in my opinion, is by no means clear. It was not a matter in respect of which the Tribunal made any finding. In any event, as I earlier pointed out, Note 2(b) raises for consideration "suitability" not "actual use".
If the failure of the Tribunal to deal in its reasons with the question of whether the blood packs were accessories suitable for use principally with infusion and transfusion sets was the only apparent error and that contention had not been actually pressed on the Tribunal, then a real issue would arise as to whether an error of law occurred because it did not deal with it. There is authority that suggests that an error of law would not be manifest by the failure of the Tribunal to make a finding it was not asked to make: see Commissioner of Taxation (Cth) v Raptis (1989) 89 ATC 4994 at 4999, Secretary, Department of Social Security v Salvona (1989) 10 AAR 521 at 526-527 and Secretary, Department of Social Security v Cooper (1990) 26 FCR 13 at 18. There is, however, now a body of authority to the contrary, at least where the matter not addressed by the Tribunal is of fundamental importance or of sufficient significance: see Hospital Benefit Fund of Western Australia Inc v Minister for Health, Housing and Community Services [1992] FCA 599; (1992) 111 ALR 1 at 8, Tefonu Pty Ltd v Insurance and Superannuation Commissioner [1993] FCA 412; (1993) 44 FCR 361, Thomas v Repatriation Commission (1994) 50 FCR 112, Mocan v Refugee Review Tribunal (1996) 42 ALD 241.
There would be a further difficulty for this Full Court because the proceedings before the trial judge appear not to have been conducted on the footing that there was an issue about whether the blood packs were accessories or that the Tribunal failed to address the question. It must be said, however, that the question of whether the blood packs were accessories was raised by the Court in the appeal, and counsel for the Comptroller-General relied on the reference in Note 2(b) to "accessories" and submitted it applied to the blood packs.
But the first error of law identified by the trial judge concerned the failure of the Tribunal to set out its reasoning process in relation to the application of Chapter 90 prior to a consideration of Note 2(b). The inadequacy of the reasons does not depend on the Tribunal not having dealt with the issue of accessories. But the fact that it did not, lends further support to the view that they were inadequate. In Muralidah v Minister for Immigration and Ethnic Affairs (1996) 136 ALR 84 a Full Court set aside a decision of the Refugee Review Tribunal because it had failed to comply with a statutory requirement to give reasons. In the leading judgment Sackville J surveyed a number of authorities (at 94-96) dealing with the content of the obligation to give reasons. Much of what his Honour said accorded with the later cautionary remarks of the High Court in Minister for Immigration and Ethnic Affairs v Wu Shan Liang (1996) 185 CLR at 271 - 272.
As to the rationale underlying a statutory duty to give reasons, Sackville J referred to the adoption by the Full Court in Rich River Radio Pty Ltd v Australian Broadcasting Tribunal (1989) 22 FCR 437 of the observations of Woodward J in Ansett Transport Industries (Operations) Pty Ltd v Wraith [1983] FCA 179; (1983) 48 ALR 500 at 507 concerning what might be the response of an unsuccessful party:
"Even though I may not agree with it, I now understand why the decision went against me. I am now in a position to decide whether that decision has involved an unwarranted finding of fact, or an error of law, which is worth challenging."
In the present proceedings, the Comptroller-General was not placed in the position postulated by Woodward J, by the reasons given by the Tribunal. The inadequacy of the Tribunal's reasons discloses an error of law.
The second error of the Tribunal identified by the trial judge concerned the determination of the Tribunal that the blood packs could not be described as parts of a transfusion/infusion set. His Honour expressed the view that it was inevitable, on the facts of the present case, that the packs must be regarded as part of such a set. As pointed out by Merkel J, whether they are parts, or indeed accessories, and the application of Note 2(b) will involve both issues of fact and law. So much is also apparent from the more general discussion by Burchett J of the applicable law with which I agree.
Implicit in a conclusion that an administrative body has erred in law by failing to give adequate reasons is acceptance of the possibility that findings of fact were not made which should have been made or, perhaps more remotely and somewhat artificially, findings were made but not articulated. In those circumstances it is not open to the Court, in my opinion, to then call in aid such findings of fact that were made, or make findings itself, to found a concluded view that, as a matter of law, a statutory provision applied to the events or circumstances raised in the proceedings with a particular result. In this respect, his Honour erred in determining that the conclusion must inevitably be reached, as a matter of law, that the blood packs are parts of an infusion or transfusion set if, as appears to be the case, his Honour was intending to determine conclusively how Note 2(b) operated on the goods in question. I would allow the appeal with costs and, for the reasons given by Burchett J having regard to the decision of the majority, declare that the Tribunal is not obliged by law to find that the blood packs in question were parts of "infusion or transfusion sets" within Tariff classification 9018.90.20(d)
I certify that this and the proceeding twenty-two (22) pages are a true copy of the Reasons for Judgment of Justice Moore.
Associate:
Alexandra George
Date: 19 February 1997
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION No. NG 292 of 1996
ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA
BAXTER HEALTHCARE PTY LIMITED
Appellant
- and -
COMPTROLLER-GENERAL OF CUSTOMS
Respondent
COURT: BURCHETT, MOORE & MERKEL JJ
PLACE: SYDNEY
DATE: 21 FEBRUARY 1997
REASONS FOR JUDGMENT
Merkel J
Introduction
The appellant ("Baxter") entered for home consumption certain items known as "blood packs". The blood packs, which are used for the collection and storage of blood taken from a blood donor came in three different units; a single, a double and a triple blood pack. The description which appears in the Tariff Classification Advice for the single blood pack unit is:
Single Blood Pack Unit, being a bag made from plasticised polyvinyl, chloride for the collection and storage of blood, manufactured under clean room conditions and then terminally sterilised, containing anti coagulant solution. the product is sealed inside an aluminised foil pack to provide three years shelf life.
The double and triple blood pack units are described in the same way save that they are described as consisting of two or three "interconnected bags made from plasticised polyvinyl" respectively.
There was some doubt by officers of the respondent ("the Comptroller- General") as to the correct classification of the blood packs for the purposes of the Customs Tariff Act 1987 (Cth) ("the Customs Tariff"). Eventually the goods were classified by the Comptroller-General as falling under item 9018.90.20 in Schedule 3 to the Customs Tariff being:
"(d) infusion or transfusion sets for blood or other fluids;"
Accordingly, the blood packs were dutiable at the rate of 10%.
Baxter applied to the Administrative Appeals Tribunal ("the AAT") to review the decision to classify the blood packs as falling under item 9018.90.20. The AAT set aside that decision and substituted its own decision which was that the goods did not fall within any defined item under 9018.90 and accordingly, fell under item 9018.90.90 being "Other". Goods falling under that item were free of duty.
Although the AAT review appeared to relate to double and triple blood pack units it is not altogether clear from the material before us that its decision was limited to those packs. However, that matter does not affect the outcome of the present appeal.
The Comptroller-General appealed to the Court from the AAT decision on the ground that the AAT erred in law. The Court allowed the appeal, set aside the decision of the AAT and remitted the matter to the AAT for reconsideration in accordance with law. However, in his reasons for decision the trial Judge, stated that on the remitted hearing the AAT:
"was obliged to find as a matter of law, that the blood packs were part of a transfusion/infusion set".
Baxter contends that as a consequence of that finding the blood packs will be dutiable at 10% being the rate applicable to an infusion or transfusion set for blood or other fluids ("infusion/transfusion sets") or a part thereof.
Baxter has appealed to the Full Court. It has submitted that the trial Judge was in error in allowing the appeal. Baxter contended that the AAT's decision in its favour was one of fact, involved no error of law and should be re-instated, by the appeal being allowed and the setting aside of the orders of the trial Judge.
Schedule 3 of the Customs Tariff
The blood packs are required to be entered for home consumption as items falling within Chapter 90 of Schedule 3 to the Customs Tariff. At the time of the entries for home consumption it is common ground that the relevant provisions were as follows:
CHAPTER 90
Optical, photographics, cinematographic,
measuring, checking, precision, medical
or surgical instruments and apparatus:
parts and accessories thereof
It appears to have been accepted by the parties that the blood packs are instruments or appliances used in medical or surgical sciences and are therefore items falling under the general heading:
9018 INSTRUMENTS AND APPLIANCES USED IN MEDICAL,
SURGICAL, DENTAL OR VETERINARY SCIENCES,
INCLUDING SCINTIGRAPHIC APPARATUS, OTHER
ELECTRO-MEDICAL APPARATUS AND SIGHT-
TESTING INSTRUMENTS
Under the heading 9018.90 which is "Other instruments and appliances" the following items appeared:
9018.90.20 ... Goods as follows:
a) apparatus for the administration of anaesthetic gases;
b) drainage appliances (including calibrated drainage bags) with, or designed to be used with a catheter;
c) incubators for babies;
d) infusion or transfusion sets for blood or other fluids;
e) suction apparatus.
The final item under the 9018.90 heading was:
9018.90.90 Other
Baxter has submitted that the blood packs are instruments or appliances falling within 9018.90 but not within 9018.90.20 and in particular 9018.90.20(d). Accordingly, so it is said, the packs fall within the non-dutiable heading of "other" being item 9018.90.90.
"Parts and accessories" of goods falling within an item in Chapter 90 were to be classified in accordance with Note 2 which, in so far as is relevant, provided:
...... parts and accessories for machines, apparatus, instruments or articles of this Chapter [90] are to be classified according to the following rules:
(a) Parts and accessories which are goods included in any of the headings of this Chapter ...... are in all cases to be classified in their respective headings;
(b) Other parts and accessories, if suitable for use solely or principally with a particular kind of machine, instrument or apparatus, or with a number of machines, instruments or apparatus of the same heading ...... are to be classified with the machine, instruments or apparatus of that kind;
(c) All other parts and accessories are to be classified in 9033.00.00.
If a part or accessory falls within Note 2(a) or (b) it was dutiable at the rate of the relevant item being 10% for infusion/transfusion sets. However, if it did not fall within Note 2(a) or (b), but was within Note 2(c), it was to be classified in 9033.00.00 which was free of duty.
Note 2 and each of its 3 sub-paragraphs refer to parts or accessories for items in Chapter 90. In my view the "suitability for use" referred in Note 2(b) relates to both parts or accessories. If it were otherwise there would be no "parts" which could fall within Note 2(c) and the reference in that sub-paragraph to "all other parts" would be otiose and unnecessary.
In order to properly ascertain the classification of the blood packs under the Customs Tariff it was necessary for the AAT to determine:
(a) whether the blood packs were infusion/transfusion sets for blood or other fluids within the meaning of item 9018.90.20(d) or paragraph (a) of Note 2; and if not
(b) whether the blood packs were parts or accessories for infusion/transfusion sets and if so, whether they were suitable for use solely or principally with a particular kind of infusion/transfusion set or with a number of infusion/transfusion sets within the meaning of paragraph (b) of Note 2.
If both of the questions in (a) and (b) were answered in the negative then the blood packs were to be entered free of duty. That result arises under either, Note 2(c) if the blood packs were parts or accessories but did not fall within Note 2(a) or 2(b) or, item 9018.90.90 for "Other" instruments or appliances, if the blood packs were not parts or accessories within Note 2.
The blood packs
Before turning to consider the decisions of the AAT and the trial Judge it is necessary to outline in a little more detail the function of the blood packs. There appeared to be little dispute between the parties on the basic facts relevant to that issue. The following description by the AAT of the blood packs was adopted by the trial Judge:
"2. ... blood packs, being bags made from plasticised polyvinyl chloride for the collection and storage of blood or blood products and are manufactured under clean room conditions and then terminally sterilised containing anti-coagulant solution. Each bag has an inlet and outlet port; the first bag in each set having attached to its inlet port a collection tube, blood taking needle and needle protector which allows blood to flow from the donor into the bag. Each bag has an outlet to allow a "giving" or "administration" set to be attached to the bag and blood to be infused into a recipient.
3. Each bag also has an eyelet which can be used to suspend the bag plus there are additional outlets with tubing attached connecting one bag to another in a closed sterile system allowing for the movement of blood or blood products between the bags.
4. The purpose of the packs in sets was described by several witnesses. Dr Brendan Wylie, the Director of the Red Cross Bank in New South Wales, stated that the blood donor packs purchased by that service are used for the purposes of collecting donor blood. Products are then made from those donations and issued to hospitals and Commonwealth Serum Laboratories for either transfusion or manufacture into further products. If there is only one pack, then it will contain whole blood and may be directly infused into a patient subject of course to it's shelf life. In order to infuse (or transfuse) a patient a "giving set" is required which is inserted into the blood donor pack.
5. As Dr. Wylie pointed out, there is a distinction between giving sets and blood collection packs. For example, the Blood Bank purchases blood donor pack sets but does not purchase giving sets because the Blood Bank does not give transfusions on site.
6. The actual process in the Blood Bank which demonstrates the use of the subject goods was described by Dr. Wylie thus:
"Your donation may be collected into a single, double, triple or quadruple pack. There will be, what we term, a primary pack, which is where the blood initially goes into when it leaves your vein, it goes through a line and there's a needle at the end of it which goes into your vein. Then the donor line is sealed off and the pack set, only one of a bag which may have - will have blood in it at that time, goes to the fractionation laboratory, processing laboratory, and the pack is then spun down. Now, in the main, we will leave the red cells which is the whole blood line as to plasma in that primary pack, and the plasma, with or without platelets in it as well, will be transferred to one, or perhaps subsequent packs in the system. At that time it's still an integrated pack set and any of those packs from the company that we currently purchased our packs from, will be able to be used as transfusionable products. so from the one donation we may have a red cell product, then a plasma product and a platelet product, which are then - once they're created the individual packs are cut off and sealed so you get three different separate components from that single pack set."
The other witnesses called agreed with that scenario, except to add that in most hospitals the secondary products would be pooled prior to infusion to make up the therapeutic dose.
7. The fundamental point is, however, that before blood or any blood product can be infused into a patient a giving set is required.
In the material there were illustrations of a typical giving set, a typical blood collection pack consisting of a single bag and a typical multiple blood pack system consisting of three bags. The illustrations are set out at the conclusion of these reasons for judgment.
In his evidence before the AAT Dr. Wylie, Director and Chief Executive Officer of the New South Wales Red Cross Blood Transfusion Service, said:
"Q. Could you then describe the complete equipment that one would need to perform, for example a blood transfusion?
A. We need two basic pieces of equipment. You obviously need the blood that you are going to transfuse, and that comes in a pack, and you need a giving set which is inserted into the pack and the 2 items together are the apparatus required for a blood transfusion.
The evidence also established that the single pack is used to collect and store blood obtained from a donor by use of a collection tube and, after collection and storage, is used to infuse or transfuse blood together with a giving set.
However, that is not a complete description of the function of the double and triple packs. In respect of such packs, after the collection and storage of blood, the first bag may be used together with a giving set for infusion or transfusion, but it may also be used to spin the blood in a centrifuge to separate it into red cells and plasma. The red cells may then be stored in refrigeration until cross matched and later transfused for a patient. The plasma can then be spun in a centrifuge to separate out platelets from the plasma. The evidence was that about 70% of the plasma then goes to Commonwealth Serum Laboratories for further processing. The platelets extracted are pooled to form therapeutic doses in a "platelet set" which differs in certain respects from a blood infusion/transfusion set.
After blood from the first bag is spun into the second and third bags in the double and triple packs, those bags are used as containers for pooling with other containers for use in the centrifugal separation process described above or for transfusion. Consequently, the evidence was that less than 50% of the blood collected in the double and triple packs may reach a patient in the pack in which it was originally collected. That evidence before the AAT led Mr. Murdoch, a technical affairs manager employed by Baxter, to say in respect of these packs:
Well, the primary use is the collection and separation of - collection of blood and the separation of components, blood components with the ultimate use of the pack being for transfusion to a patient or some of the components. I mean, a lot of the other components end up for further processing, say at CSL where they are transformed into specialised blood fractions.
As it was submitted on behalf of Baxter that, most and possibly all of the blood packs the subject of the relevant entries for home consumption were multiple packs, the distinction between the functions of these packs and single packs may be significant.
The AAT decision
The AAT found that
(a) the words "infusion or transfusion sets for blood or other fluids" had no trade meaning with the consequence that their meaning in the Customs Tariff was a question of fact for it to determine;
(b) the blood packs were not "infusion or transfusion sets for blood or other fluids".
Neither of these findings was challenged in the appeal to his Honour from the AAT decision. Indeed they appear to have been common ground between the parties. In that regard his Honour concluded:
Accordingly, because the blood pack, by itself, is not an apparatus which can effect a transfusion of blood, I consider that it was reasonably open to the AAT to form the view that the pack, taken alone, did not comprise a transfusion/infusion set for blood or other fluids.
Accordingly, the first of the two questions, which I have referred to in (a) above, was answered by the AAT in the negative. However, as a matter of law the AAT was required to address the second of the two questions being that referred to in (b) above i.e. whether the blood packs were "parts or accessories" for infusion/transfusion sets. The determination of that question necessarily required the AAT to identify the infusion/transfusion set of which the blood pack was a part or to which it was an accessory. The manner in which the AAT dealt with this aspect of the matter, as was pointed out by his Honour, was unsatisfactory.
In its decision, after setting out the relevant facts the AAT said that the question for determination is -
"whether the subject goods can properly be termed infusion or transfusion sets".
After setting out reasons explaining why the blood packs, standing alone, were not transfusion/infusion sets the AAT continued as follows -
18. Mr. Jeffrey, who appeared for the Respondent, referred to the discussion of the word "set" in re Hidesign Pty. Ltd. and Collector of Customs (Unreported Tribunal Decision No. 3876) and the Shorter Oxford English Dictionary definition of the word. More relevant, however, is the Shorter Oxford Dictionary meaning 11.1, namely:
"A collection of instruments, tools, or machines customarily used together in a particular operation; a complete apparatus employed for some specific purpose."
19. To my mind the goods cannot be described as parts of a transfusion/infusion set. In Collector of Customs v. Sharp Corporation of Australia Pty. Limited (Unreported Federal Court Judgment No. 527/94) Burchett J adopted the remarks of Davies J in Waterscheid Australia Pty. Ltd. v. Collector of Customs 7 AAR 555 at 564, namely:
"... as long as it is understood that an item separate from another may not be part of the other even though it is essential to its functioning. As Gibbs J said in Deputy Commissioner of Taxation v. Polaroid Australia Pty. Ltd. (1971) 46 ALJR 32 at 34:
'One thing does not become part of another simply because the latter thing cannot be put to proper use without the aid of the former, even if, in use, the two things are fixed together.'"
His Honour went on to say:
"The proper test in relation to the word "part" was stated by Gibbs J in the Polaroid Australia case at 34: 'Obviously a part is something which with others makes up a whole...'"
20. Applying that test to the goods in question it can be seen that their essential function is to collect and store blood and blood products. In order to transfuse-infuse blood, additional apparatus, namely an infusion set (or giving set) must be rigged up. Thus they cannot be classed as a transfusion/infusion set.
The AAT appears to have merged the two separate questions in (a) and (b) above into one in answering the question originally posed by it for its determination. It did so in paragraph 20 by concluding that the blood packs -
"cannot be classified as a transfusion/infusion set".
By merging the two separate issues in that way it is difficult to conclude that the AAT separately addressed the two questions which it was required to consider, as a matter of law, in arriving at its decision.
In order to conclude that the blood packs were not a part of a "transfusion/infusion" set the AAT had to conclude that the giving set, rather than the blood packs together with the giving set, constituted a infusion/transfusion set. The AAT did not appear to directly or explicitly address or deal with the two alternative views that were open to it on that critical issue. Baxter appeared to contend that the blood packs were not parts or accessories for the giving set which was an infusion/transfusion set. The Comptroller- General appeared to contend that the blood packs were parts of or accessories for an infusion/transfusion set which was constituted by the blood packs and the giving sets. I say "appeared to contend" as the material before the Court was incomplete on this aspect of the matter.
The AAT's reasoning appeared to be -
(a) the giving set was an essential component of an infusion/transfusion set;
(b) the essential function of blood packs is to collect and store blood and blood products;
(c) notwithstanding that blood packs may be essential to the functioning of the giving set they cannot be described as a part of it;
(d) as the blood packs must be rigged up with "an infusion set (or giving set)" they cannot be "classed as a transfusion/infusion set".
Although it may be said to be implicit in that reasoning that the AAT concluded that the giving set was an infusion/transfusion set the AAT failed to explicitly address or deal with the alternative view that both the giving set and the blood packs constituted the transfusion/infusion set. In my view, in the context of the issues arising in the present case, it was incumbent on the AAT to make a clear and explicit finding on this issue after considering the submissions of the parties. It failed to do so.
The AAT, at paragraph 19 of its decision, did state that the blood packs "cannot be described as "parts" of a transfusion/infusion set". However, in explaining at paragraphs 19 and 20 how it arrived at that result, the AAT answered the original question posed by it in concluding that the packs "cannot be classified as a transfusion/infusion set".
In my view the AAT in its reasons for decision failed to determine -
* whether the giving set alone constituted an
infusion/transfusion set; or
* whether the giving set together with a blood pack constituted
an infusion/transfusion set.
Each of those questions was required to be addressed under the Customs Tariff and in particular Note 2. It was only after a determination of these issues that the additional issues arising under Note 2(b) and (c) could be determined.
Note 2 was not referred to or considered by the AAT. This difficulty is compounded by the fact that the double and triple packs, but not the single pack, are also used for the processing of blood products. Accordingly, even if the blood packs are parts or accessories for infusion/transfusion sets, different answers may be given to the questions arising under Note 2(b) and (c) for the single blood packs than for the double and triple blood packs.
In Minister for Immigration and Ethnic Affairs v. Wu Shan Liang [1996] HCA 6; (1996) 185 CLR 259 Brennan CJ and Toohey, McHugh and Gummow JJ, in discussing the practical restraints on judicial review, said at 272 -
It was said that a court should not be concerned with looseness in the language ... nor with unhappy phrasing of the reasons of an administrative decision-maker. The Court continued: "The reasons for the decision under review are not to be construed minutely and finely with any keenly attuned to the perception of error."
These propositions are well settled. They recognise the reality that the reasons of an administrative decision-maker are meant to inform and not to be scrutinised upon over-zealous judicial review by seeking to discern whether some inadequacy may be gleaned from the way in which the reasons are expressed.
These principles do not resolve the difficulty arising in the present case. The failure of the AAT to explicitly address the two questions arising, by the apparent merger of those questions into one, has required the Court to determine whether the AAT has implicitly determined the two questions. In that regard two interpretations are reasonably open. The first is that the AAT has separately determined the two questions, albeit by a looseness of language in doing so. The second is that, for the reasons set out by me, it has not determined those questions. In such circumstances it is not appropriate for the Court to choose between the two competing interpretations. If one of those interpretations involves an error of law, and the other not, the appropriate course is to remit the matter to the AAT for it to determine the matter in accordance with law.
THE DECISION OF THE TRIAL JUDGE
On the appeal from the AAT to the Court the questions of law said to be raised were:
Whether the AAT erred in law by failing to define the meaning of the term "infusion or transfusion sets for blood or other fluids", as used in sub-heading 9018.90.20 of Schedule 3 to the Customs Tariff Act 1987 (as amended) in the course of determining whether the goods, were included in that definition; and
Whether the Tribunal erred in law in finding that the correct classification for the goods was under sub-heading 9018.90.90 of Schedule 3 to the Customs Tariff Act 1987 (as amended).
For the reasons already stated, I am satisfied that -
* the AAT erred in law in failing to define and thereby determine
the item that constituted the infusion/transfusion set in the present
matter;
* the definition of the infusion/transfusion set was an essential
step in determining whether the blood packs were parts or accessories
for the set.
His Honour accepted that it was open to the AAT to form the view that a blood pack, taken alone, did not comprise a transfusion/infusion set. His Honour then concluded that the failure of the AAT to set out its reasoning process and in particular to develop or expose its reasons for stating that the blood packs were not part of a set constituted an error of law. For the reasons I have set out, which differ from those of his
Honour, I have also concluded that the AAT erred in law on this aspect of the matter.
However, his Honour then considered the issue himself and concluded that:
If the test enunciated by Gibbs J in Polaroid is applied to the facts of the present case, namely that "a part" is something which with others makes up a whole, in my view, the conclusion must inevitably be reached, as a matter of law, that the blood packs, together with the giving apparatus, make up a blood transfusion/infusion set, and that the packs must be regarded as a part of such a set.
The function of the blood pack is to extract and store the blood or other fluid with a view to linking it up with giving apparatus in order to transfer the blood or fluid. It is the combination of blood pack and giving set which constitutes the "whole". Without the blood pack, the transfusion/infusion could not take place. Likewise without the infusion device, with which to link and operate in conjunction with the blood pack, it would not be possible to transfuse or infuse the blood into the recipient. Both are vital parts. There is no "set" without both. If a blood pack broke, it would be necessary to obtain a fresh blood pack in order to enable the transfusion/infusion process to be implemented. The pack is, in effect, a spare part of the set. In these circumstances the two elements should be treated as part of the blood transfusion/infusion set.
In my view, the decision of the AAT discloses an error of law, in deciding that the blood packs could not be described as parts of a transfusion/infusion set. The relationship between the blood packs and the giving apparatus is such that the AAT was obliged to find, as a matter of law, that the blood packs were part of a transfusion/infusion set.
In my opinion his Honour erred in determining that the blood packs were part of an infusion/transfusion set. The question of whether the giving set alone, or the giving set and the blood packs, constituted an infusion/transfusion set was a question of fact. To the extent that the question involved interpretation of item 9018.90.20(d), or paragraphs (a) and (b) of Note 2 it involved issues of fact and law. Either way the question, insofar as it necessarily involved issues of fact, was for the AAT, rather than for the Court, to decide.
Further, his Honour did not consider or deal with the operation of Note 2(b) in relation to the blood packs. His Honour's conclusion that the packs were part of infusion/transfusion sets raised, rather than determined, the issues required to be considered under Note 2(b). Although it is true that his Honour referred to Note 2 in summarising the submissions put to him by the Comptroller General he arrived at his conclusions without any further reference to Note 2 or to its terms. As I have explained earlier issues of fact, which were not considered by the AAT or his Honour, require resolution under Note 2(b).
CONCLUSION
For these reasons I have concluded that the appeal ought to be allowed. The matter should be remitted to the AAT to be determined in accordance with law. I have read the draft reasons for judgment of Burchett J and Moore J and agree with the orders proposed. Baxter has succeeded on the appeal and it is appropriate that the Comptroller-General pay Baxter's costs of the appeal.
I certify that this and the preceding 16 pages are a true copy of the Reasons for Judgment of the Honourable Justice Merkel
Associate:
Dated:
Counsel for the Appellant: Mr M.K. Minehan
Solicitors for the Appellant: Corrs Chambers Westgarth
Counsel for the Respondent: Mr P. Roberts
Solicitor for the Respondent: Australian Government Solicitor
Date of hearing: 13 September 1996
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URL: http://www.austlii.edu.au/au/cases/cth/FCA/1997/131.html