R v Collector of Customs (Vic) [1935] HCA 36; (1935) 53 CLR 322 (4 June 1935)

There is little to distinguish this case from R. v. Comptroller-General of Customs; Ex parte Woolworths Ltd.[1], decided to-day.

The importers, who in this case seek a writ of mandamus, have for some years obtained goods through merchants in Japan who, they say, are their buying agents. They pay them the cost of the goods with all charges, among which are included a buying commission of ten per cent and an inspection charge of five per cent on the price paid to the manufacturers. Before 1930, the question had been raised by the customs department whether these commissions should be allowed or should be included in the value for duty as if part of the price of the goods. Duty upon that footing had sometimes been charged, but only to be refunded afterwards. In June 1929 notice was given to the importers requiring a cash deposit under sec. 42 of the amount of the additional duty arising from the inclusion of the charges for buying and inspecting. The form of notice and of security were the same in all respects as those employed in the case of Woolworths Ltd.[2]. Later in the year the importers' documents were seized, and heavy security was taken from them in respect of their current imports. They were told they were absolved from fraud, however, and subsequently the security was refunded. They were permitted to avail themselves of sec. 167, and to pay under protest the increased duty referable to the inclusion of the buying and inspecting charges. This continued until May 1930 when, acting under instructions from the Comptroller-General, the Collector refused any longer to accept payment of the increase in duty under protest pursuant to sec. 167, but required a deposit equal to the amount of that duty on the terms of the departmental form of security already referred to. A reason which the Collector gave for adopting this course was that by so doing he threw the onus on the importer, whereas, if he accepted payment under sec. 167, he was exposed to an action in which he would not be able to substantiate his denial of the genuineness of the invoices. For a month or two such deposits were obtained from the importers, but, after July 1930, they appear to have capitulated, and paid the full duty demanded without further attempt to protest under sec. 167 and without signing the form of security. After following this course for over eighteen months the importers once again resorted to sec. 167. The Collector now permitted them to do so, and from March 1932 until December 1933 accepted payments under protest in respect of duty referable to the inclusion of the two charges in the value of the goods for duty. Then the Collector again refused to accept such a payment, and again the importers resumed making unconditional payments of the duty. During this time the importers were pressing for repayment of the duty in dispute, and threats of legal proceedings were made. In December 1933 some refunds were made of amounts paid under protest in pursuance of sec. 167, and from that time until October 1934 entries were passed without the inclusion of the buying or inspection commission. But, in September 1934, instructions were issued from the Comptroller-General's office in respect of buying commissions and inspection fees on Japanese goods. Cash security was to be taken in the departmental form, and in no circumstances was there to be an acceptance of payment tendered under protest pursuant to sec. 167. This instruction was applied to the prosecutors, and moreover a demand was made upon them for repayment of the duty refunded to them. In common with other importers they had in June 1934 issued a writ to recover payments made for duty on buying commission. They now determined to bring the matter to a head, and took steps to lay the foundation for an application for a writ of mandamus. In respect of a parcel of goods arriving from Japan on 16th October 1934 by the Atsuta Maru they lodged an entry accompanied by invoices which showed the buying commission and inspection fees, but, in calculating the value for duty, they excluded those charges. The Collector refused to deliver the goods, and demanded a cash security equal to the additional duty calculated upon the buying commission and inspection fees. The notification was in the stereo-typed form headed with a reference to sec. 42 and sec. 216. At the foot it bore a reference to the buying commission and the inspection fee, and showed that the amount of the deposit was arrived at by calculating these charges. The importers then tendered the sum to the Collector under protest as in pursuance of sec. 167; the tender was refused. Next the importers, under cover of a letter saying that they did so solely to obtain their goods, made the cash deposit demanded. Thereupon the entry was passed, but apparently with some reference indorsed upon it to the cash security. It was passed with a value for duty from which the commission and fees were excluded. From this time forward the customs department consistently required the importers to make a cash deposit upon the terms of the departmental form in order to obtain their goods arriving from Japan. They say they were in such need of the goods for the purposes of their business that they were unable to resist. But at length on 1st March 1935 a parcel of goods arrived in the Melbourne Maru which they were prepared to leave in the hands of the customs. They refused to comply with the usual demand for a cash security in the departmental form. They tendered the extra duty under protest in pursuance of sec. 167, and demanded the goods. The tender and demand were refused. The importers then obtained the present order nisi for a writ of mandamus. The reasons given in the case of Woolworths Ltd.[3] show that the order nisi must be made absolute. It is quite clear that the Collector has attempted to avoid any definitive assessment of the duty at the amount he wishes to obtain for the revenue. He has resorted to the cash security in this case, as in that of Woolworths Ltd.[4], to enable him to obtain a sum representing or equivalent to the extra duty, and to impound it unless he is personally satisfied thereafter that the importers have on their entry properly described the goods and valued them for duty. Thus he intends to prevent the importers from exercising the right given to them by sec. 167 of the statute to attempt to establish in the Courts of Justice that the duty charged is excessive. It is said that, in refusing to enter the goods unless a cash deposit is made upon the terms that it should become the property of the Crown unless he be satisfied, the Collector is presenting an alternative to the exercise of the power given by sec. 216 of retaining the goods pending proof. Thus when the alternative is refused, as it was in the case of the parcel of goods imported by the Melbourne Maru, he does no more, it is said, than exercise the very power conferred by that provision. The answer is that he is not doing what that section intends. It does not mean anything so absurd as to enable him, because he remains unconvinced of the facts stated by an importer, to withhold for ever the importer's goods, and never to determine what duty is payable upon them. It enables the Collector to ask for evidence that the goods are owned as claimed and are properly described, valued, or rated for duty. It authorizes him to retain the goods and refuse to pass the entry during the time occupied in furnishing what evidence the importer adduces. But when, as in this case, all the evidence the importer says he can produce has been supplied and is in the Collector's possession, the importer says he can do no more and neither side contemplates the furnishing of any further evidence, the section has no application. The process of proof is over, and the Collector is called upon to give his determination thereon. Because he remains dissatisfied of the truth or correctness of the importers' valuation and proof, the Collector cannot deny him his goods and defer indefinitely the levying of the duty. It follows that in the case of the parcel of goods imported by the Melbourne Maru a mandamus should issue commanding the Collector to determine the duty and pass an entry.

The contention of the prosecutors that he should be required to accept the value for duty at which they entered them cannot be sustained. This proceeding is in no way concerned with the question whether in fact the buying commission and the inspection fee are genuine charges for services. It is concerned only with the question whether the Collector is at liberty, by the means he has adopted, to deprive the importers of an opportunity of submitting that question to the Courts for decision. The Collector has done nothing to bind himself to accept the value for duty stated by the importers.

The rule nisi includes the parcel of goods imported by the Atsuta Maru in respect of which the importers gave the cash security which the Collector required of them. Having obtained that security, he did determine the value for duty. He passed the entry at the importers' value. It is true that he would not have done so had he not thus obtained a sum equal to the excess duty which would arise from including the buying commission and the inspection fee in the value of the goods. Nevertheless he did pass an entry; and no mandamus can go on the ground that he has not performed his function of determining the value for duty and passing the entry. It is said that he did demand duty at the higher sum within the meaning of sec. 167, and thus incur an obligation to accept payment under protest under that section. But, however close the two things may be, he appears finally to have succeeded in distinguishing his demand for a cash deposit from a demand for duty, and to have maintained only the latter.

Mandamus is not an appropriate form of relief in relation to cases where a cash security has been given. Nor can the suggestion be supported that he might be compelled to perform duties falling under the terms of the memorandum or in consequence of taking the deposit on those terms.

The Customs Act does not authorize the exaction of a cash deposit upon the terms stated in the departmental form, and by taking it upon those terms the Collector incurred no statutory or other public duty enforceable by mandamus to make determinations under those terms or to make entries upon the document in which they are expressed.

The order nisi should be made absolute with costs for a writ of mandamus commanding the Collector to determine the value for duty of the seven cases of goods imported by the prosecutors on 1st March 1935 in the ship Melbourne Maru, and to demand the duty therefor and to accept payment of such duty under protest pursuant to sec. 167 of the Customs Act 1901-1930, if payment of any part thereof is so tendered, and to pass an entry in respect of the goods accordingly.

Rule nisi for writ of mandamus. Berliner and McDonald are importers into Australia of glassware and other goods. Goods imported are subject to the control of the customs from the time of importation until delivery for home consumption or until exportation to parts beyond the seas (Customs Act 1901-1930, sec. 30). All imported goods must be entered (Customs Act, sec. 68), and an entry is made by delivery of the entry to the Collector of Customs. In the entry the goods are described, and valued for duty. The Customs Tariff Acts impose the duties of customs. When a duty is imposed according to value, the value for duty is the sum of the following: (a) the actual money price paid or to be paid for the goods by the Australian importer, plus any special deduction (such, for instance, as discounts), or the current domestic value, whichever is the higher; (b) all charges payable or ordinarily payable for placing the goods free on board at the port of export; (c) ten per cent of the amounts specified under pars. (a) and (b) (Customs Act, sec. 154). The function of the Collector of Customs is to examine the entry and, if satisfied, pass it. "Entries shall be passed by the Collector placing on the entry the word Passed and adding his signature thereto, and on the passing of the entry the goods shall be deemed to be entered, and any entry so passed shall be warrant for dealing with the goods in accordance with the entry" (Act, sec. 39). Duty is paid accordingly, and the goods are delivered if entered for home consumption. But if the Collector be not satisfied with the information supplied, he may require further proof that the goods are owned as claimed, and are properly described, valued or rated for duty, and may refuse to deliver the goods or to pass any entry relating thereto, pending such proof (Act, sec. 216). Further, the customs shall have the right to require and take securities for compliance with the Act, and generally for the protection of the revenue of the customs, and pending the giving of the required security in relation to any goods subject to the control of the customs may refuse to deliver the goods or to pass any entry relating thereto (sec. 42). The importer may be dissatisfied with the duty claimed, and the Act, sec. 167, provides for this case: "If any dispute arises as to the amount or rate of duty payable in respect of any goods, or as to the liability of any goods to duty, under any Customs Tariff ... the owner ... may pay under protest the sum demanded by the Collector ... and thereupon the sum so paid shall, as against the owner of the goods, be deemed to be the proper duty payable in respect of the goods, unless the contrary is determined in an action brought in pursuance of this section" (sub-sec. 1). The action may be brought "in any Commonwealth or State Court of competent jurisdiction" (sub-sec. 2). The importer must enter his goods and pay duty on any that are dutiable before he can release them from control of the customs or obtain delivery. It is the Collector's main function and duty to examine the entry, and, among other things, ascertain the duty and claim what is payable, in his opinion, according to law; and his powers under secs. 216 and 42 of the Act do not warrant his refusing to perform that duty. They are auxiliary powers, but they are not powers which can be used arbitrarily and capriciously, or in a manner defeating the manifest intention of the Act. Sec. 167 is a provision for the benefit of the importer, of which the Collector cannot deprive him by refusing to perform his duties or by any abuse or arbitrary exercise of power.

It remains to apply this general view of the Customs Act to the facts of the particular case now before the Court. Berliner and McDonald import goods from Japan into Australia. They entered goods at the customs, but claimed that certain buying commissions and inspection fees should not be included in the value of such goods for the purpose of ascertaining the duty of customs payable in respect thereof. It is a common business practice to purchase goods through buying houses abroad, and to pay such houses a buying commission, and also in cases in which inspection is had—inspection fees for inspecting the goods before shipment. Genuine charges such as these cannot be included in "the value for duty" of the goods imported, nor does the Collector claim that they should be so included. But he is not satisfied that the commission and inspection fees which Berliner and McDonald excluded from "the value for duty" of the goods imported by them from Japan are not part of the purchase price; he is not satisfied that they were paid as buying commission and inspection fees. It is unnecessary to go in detail through the many different claims and demands that the Collector has made since 1926 as to these buying commissions and inspection fees, for he now seems to have adopted a definite and settled course of action. It is perhaps best stated in an instruction issued by the Comptroller-General to Collectors of Customs in September 1934:—"In future the charge for buying commission shown on invoices from Japan may be recognized provided evidence is produced to confirm its genuineness. The evidence required must be in the form of a declaration made before the British Consul by the Buying Commission Agent as per Form A herewith, also a statutory declaration by the importer as per Form B herewith. The manufacturer's invoice must also be produced. (Forms of declarations are available in the Correspondence Branch.) If the Collector has no reason to doubt the correctness of the particulars shown in Forms A and B the buying commission may be recognized. Where in any case the Collector for reasons which he regards as sufficient refuses to accept the Forms A and B, a deposit under sections 216 and 42 is to be required pending production of conclusive evidence as to the genuineness of the charges, and payment of the cash security must not under any circumstances be accepted under protest in terms of section 167 of the Customs Act. Full report to be furnished to this office indicating whether the evidence has been accepted or rejected. In connection with paragraph 4 a copy of the Crown Solicitor's opinion, dated 23rd February 1934, dealing with the question generally is forwarded herewith for the Collector's information (Held by Senior Inspector). In those cases where the Collector is already in possession of evidence satisfactorily proving the genuineness of the buying commission, such evidence may be accepted subject to the importer producing within a reasonable time (in the case of Japan say 4 months) declarations in accordance with Forms A and B. As regards past importations no refunds are to be given but any claims for refunds are to be referred to this office, together with full particulars as to whether the extra duty demanded was paid under protest in accordance with section 167 of the Customs Act and whether the importer has complied with the requirements of that section." But Berliner and McDonald have been unable to satisfy the Collector of the genuineness of the buying commission and inspection fees which they claim to have paid. The Collector will not add them to the value of the goods for duty, nor allow them to be deducted. The procedure adopted is illustrated in the case of goods arriving from Japan by the s.s. Atsuta Maru. The goods were entered by means of an import entry, and the value of duty was calculated, without including buying commission. The word "Passed" was not placed upon the entry, but the duty calculated by the importers was paid. The Collector notified the importer that he required proof, by the production of documents, that such goods were properly described and valued for duty. And, pursuant to sec. 42 of the Act, the Collector required the importers to furnish security, to the amount of £11 10s. 6d., by cash deposit, for the protection of the revenue of the customs in connection with the importation of the goods. Pending such proof, or the giving of such security, the Collector refused to deliver the goods or to pass any entry relating thereto. The importers then tendered what is described as a Post Entry. It was substantially as follows:—"Extra duty demanded on Buying Commission and Inspection Fee ... £11 10s. 6d. Duty paid under protest sec. 167. Claimed that same is non-dutiable." The Collector marked this document thus:—"Cannot be accepted under sec. 167. A cash security is required under secs. 42 and 216 of the Customs Act." As, however, the goods were urgently required, the importers subsequently paid the sum of £11 10s. 6d. by way of deposit, and entered into the security required. In skeleton form this security is as follows: "Pursuant to the requirement of the Collector of Customs for the State of ... etc. the sum of ... is hereby deposited with the said Collector as security for the protection of the revenue of the Customs in respect of the above-mentioned goods, and the condition of the said security is that if proof shall within six months from the date hereof or such further period as the said Collector may in writing allow be produced to and to the satisfaction of the said Collector that the above-mentioned goods are in the said Entry properly described and valued for duty, then the amount of the deposit shall be returned to the depositor, otherwise it shall be the property of the Commonwealth." The goods were then released from the control of the customs. The same procedure was followed in a number of other shipments. At last Berliner and McDonald determined that the legality of the Collector's acts should be tested in law. A quantity of goods arrived from Japan by the s.s. Melbourne Maru. An import entry was made of certain of these goods, excluding buying commission and inspection fees from the value for duty. The Collector required a cash deposit of £1 2s. 4d., the duty which would have been payable if buying commission and inspection fees were included in the value for duty, and also a memorandum of cash deposit in the form already mentioned. The importers refused to sign the memorandum, but they tendered an entry: "Additional duty demanded on buying commission and inspection fee £1 2s. 4d," and marked the entry:—"Paid under protest, sec. 167 of 1901-1934 Customs Act. Claimed that the above charges are non-dutiable." The following conversation took place:—"Importers' Agent: I tender you this entry. Officer of Customs: I will not accept it. Agent: I hand you herewith the amount of £1 2s. 4d. in cash. Officer: I cannot take it." The Acting Collector of Customs was then interviewed, and the foregoing conversation was related to him. The importers asked that the goods be delivered to them, but delivery was refused. The importers said they would only pay the amount demanded under sec. 167 of the Customs Act under protest, and tendered the amount, but the Acting Collector declined to receive it. He was asked so to mark the entry form, and he marked it as follows:—"Acceptance of payment of duty under protest refused. What is required is a cash security in terms of secs. 216 and 42 of the Customs Act 1901-34." Delivery of the goods was consequently refused, and they still remain, I understand, under the control of the customs.

It is palpable, from this relation of the facts, that the Collector is acting, and advisedly acting, in the manner described in order that the legality of his action shall not be submitted to the judgment of a Court of law, pursuant to the provisions of sec. 167 of the Act. He apparently accepts the value of the goods for duty shown in the entries, for he never challenges it, and accepts duty upon the value so declared. He has all the material which the importers can give him, but he will not ascertain the duty. He is in no doubt as to the amount of buying commission and inspection fees which the importers declare they have paid, but his doubt is whether those amounts are not part of the price of the goods, and not buying commission and inspection fees at all. But if he regards them as part of the price, why not add them to the value, and claim duty in respect thereof, when it would be for the importer, by action brought pursuant to sec. 167, to prove that they are legitimate? Simply, to my mind, because the Collector fears that he might be defeated in such an action, and desires to substitute his satisfaction for the legal decision contemplated by the Customs Act. But the Collector, by using the powers contained in secs. 42 and 216 for the purpose of defeating the operation of sec. 167, is in truth refusing or neglecting to perform his main function under the Act, namely, examining the entry and ascertaining and claiming the duty payable. It is an abuse of those valuable and even drastic powers, and cannot be supported. Further, the security required by the Collector finds no sanction in sec. 42, or any other section of the Customs Act. The form of security adopted forfeits the importer's money or cash deposit unless the Collector is satisfied within a limited time that goods have been correctly described and valued in the entry, and still leaves the duty of customs payable. Security certainly may be required for the protection of the revenue, but that does not warrant any forfeiture of the importer's money, or any penalty upon him. It is a new form of exaction, and would require explicit statutory authority. No such authority is found in the Customs Act, or elsewhere.

The rule nisi must be absolute for a mandamus to the Collector. But its form requires attention. The directions sought by the rule are inadmissible. All the Court can do is to direct the Collector to perform his duty according to law; the Court cannot perform his duty. Consequently the mandamus should go to consider and examine the entry of the goods ex the Melbourne Maru which is in contest, and to ascertain and claim the duty payable in respect of such goods.

The importation by the Atsuta Maru above referred to stands in a different position. These goods have passed from the control of the customs and the security already mentioned has been taken. It is a security not warranted by the Act. No public duty is cast upon the Collector in respect of this security either by reason of the Customs Act or by the fact that the security has been given. The Court cannot give the directions sought by the rule nisi as to this importation, or similar importations. Mandamus is not an appropriate remedy, whatever other remedy may be open to the importers.

Order nisi absolute with costs for a writ of mandamus commanding the Collector to determine the value for duty of the seven cases of goods imported by the prosecutors on 1st March 1935 in the ship Melbourne Maru and to demand the duty therefor and to accept payment of such duty under protest pursuant to sec. 167 of the Customs Act 1901-1930, if payment of any part thereof is so tendered, and to pass an entry in respect of the goods accordingly. Respondent to be given thirty days within which to comply with the order with liberty to make application to a single Justice in Chambers for directions in case of difficulty in applying the judgment to any particular case.

Solicitor for the respondent, W. H. Sharwood, Crown Solicitor for the Commonwealth.

[1] Ante p. 308.

[2] Ante p. 308.

[3] Ante p. 308.

[4] Ante p. 308.

High Court of Australia

R v Collector of Customs (Vic) [1935] HCA 36; (1935) 53 CLR 322 (4 June 1935)

HIGH COURT OF AUSTRALIA