Case: Air International Pty Ltd v Chief Executive Officer of Customs [2002] FCA 355 ; (2002) 121 FCR 149
Outcome: discussed
In Air International Pty Ltd v Chief Executive Officer of Customs [2002] FCA 355 ; (2002) 121 FCR 149, the Full Court considered whether imported fan assemblies, condensers and evaporators were goods 'of a kind used as replacement components in passenger vehicles' within the meaning of a particular item of the Customs Tariff Act 1995 (Cth). Tamberlin J adopted Gummow J's approach to the classification of a genus of goods in Hygenic Lily and considered whether the components in their nature, adaptation or quality could properly be characterised as 'replacement' components. His Honour had regard to evidence of actual use of the goods in deciding whether the goods are 'of a kind', stating at 160 [53]: 'It is helpful to look at actual use, if any, when deciding whether goods are of a kind used as replacement components. Where they are so used, then that points to a conclusion that they are "of a kind" so used. The words "of a kind" add a further level of generality to the expression "used" so that even if (to use the Tribunal's expression) the goods are not so used but are within a range of goods of a type which are used, then they satisfy the required description.' Tamberlin J considered that it was open to the Tribunal to find, as it did, that the goods were of a genus of goods that were used as replacement components. O'Loughlin J agreed with Tamberlin J. In his dissenting judgment, Hill J said at 158 [35]: 'In my view the proper approach to the question of classification here, where it is obvious that the imported parts are capable of being used either as original parts for the assembly of motor vehicle air conditioning units or to replace parts that had previously been imported and used in the assembly of such motor vehicle air conditioning units is to consider what the essential character of the particular imported goods is. It can be accepted both from the language of the particular subheading and from the fact that customs duty will be payable on entry and before actual use, that the question how the particular parts are in fact used, will, subject to the comments below, be irrelevant to the question. That does not mean, however, that the purpose for which the goods are imported will be irrelevant.' On the facts of the case, Hill J found that it was not possible to classify the goods by reference to their essential character and that, accordingly, it was necessary to classify the goods by reference to the exclusive or primary purpose for which they were imported. Hill J explained the reasons why that was so in the following passage, at 158-159 [37]: '... I am of the view that goods cannot, for customs classification, be treated as belonging to more than one "kind". Further, where no distinction exists between articles which are of the kind used as replacement components, and those which are not, (and the present is such a case) the only way in which the relevant kind can be ascertained will be by ascertaining what the exclusive or primary purpose is for which the goods are imported. Subsequent use, may be the best evidence of that purpose. In my view it will generally be the case with goods of the present kind, that they will take their character from the purpose of the importing, rather than anything which is an inherent quality of the goods themselves.' 85 In contrast, Tamberlin J said that the intent or purpose of the manufacturer or importer is not the criterion to be applied: at 159 [46]. 86 In my opinion, in the context of s 74A(2)(a) of the TPA, the essential character test is relevant, but the inquiry does not end there. The statutory question cannot be answered without a broader inquiry into the evidence concerning the design, marketing, pricing and potential uses of the type of goods in question.