Carter Holt Harvey Manufacturing Group Ltd v Comptroller-General of Customs [1996] QCA 24 [1997] 1 Qd R 1

IN THE COURT OF APPEAL [1996] QCA 024 SUPREME COURT OF QUEENSLAND Appeal No. 177 of 1995 Brisbane Before Fitzgerald P. Pincus J.A. Mackenzie J. [Carter Holt Harvey Manufacturing v. Comptroller-General of Customs] BETWEEN: CARTER HOLT HARVEY MANUFACTURING GROUP PTY LTD (Plaintiff) Appellant AND: COMPTROLLER-GENERAL OF CUSTOMS (Defendant) Respondent REFERENCE UNDER S. 165 OF THE CUSTOMS ACT 1901 (CTH) JOINT REASONS FOR JUDGMENT - FITZGERALD P. AND MACKENZIE J. Judgment delivered 27/02/1996 The plaintiff, Carter Holt Harvey Manufacturing Group Pty Limited, has sued the defendant, Comptroller-General of Customs, for declaratory relief, and a defence and counterclaim and a reply and answer have been delivered. Pursuant to R.S.C. O. 38 r. 1, the parties have stated the following questions of law for the opinion of the Court: (a) Does s. 165 of the Customs Act 1901 (Cth) operate to preclude the defendant from recovering from the plaintiff duty in respect of goods entered for home consumption and assessed for duty more than 12 months before demands for payment of duty were made? -- 1 of 11 -- 2 (b) By whom and in what proportion (if any) should the costs of and incidental to these proceedings be paid? The parties are agreed that the answers to the questions posed will dispose of all matters in issue between them in this proceeding, and further that the declarations sought by the plaintiff should be made if question (a) is answered in the affirmative and that, if question (a) is answered in the negative, judgment should given for the defendant against the plaintiff in the sum of $297,446.95. There is no suggestion that any of the relevant statutory provisions were materially altered in the periods to which the current dispute relates. For present purposes, the starting point is Part IV of the Customs Act - “Importation”. Division 4 concerns “The Entry, Transhipment, Landing and Examination of Goods”. Broadly speaking, the owner of those goods to which s. 68 applies which are imported into Australia must enter those goods for home consumption if that is what is proposed: sub-ss. 68(2)(a) and (3). Provision is made for an “import entry” by s. 71(A), which must be made and communicated to the Australian Customs Service by document or computer. By sub-s. 71B(1) the Australian Customs Service must give an “import entry advice”, which must state that, subject to the payment of any designated amount, the goods will be cleared for home consumption, etc., or are required for further examination: sub-ss. 71B(2) and (3). Upon payment of the amount specified in the import entry advice, the Australian Customs Service must authorise the person to whom the import entry advice was given to take the goods into home consumption, etc.: sub-s. 71B(4). Further provision is made in sub-ss. 71B(5) to (8) for the imposition of conditions on the authority referred to in sub-s. (4), the cancellation of such an authority, etc. Of the remainder of Part IV Division 4, ss. 71C to 77, it is necessary to refer only to ss. 71D and 72. The -- 2 of 11 -- 3 former provision permits an officer of the Australian Customs Service to refuse authority to deal with goods included in an import entry until particulars of the goods shown in the import entry have been verified or the officer is satisfied of any other matter that may be relevant to the grant of the authority to deal with the goods, and for that purpose may require the owner of the goods to supply documentation or other information. Section 72 provides that, if any import entry is not made in respect of imported goods which are required to be entered, the goods may be removed and secured by the Australian Customs Service and, in due course, sold or otherwise disposed of. By sub-s. 72(3), the Australian Customs Service has a lien on such goods for any associated expenses. Many other matters are dealt with by the Customs Act, which is quite complex and has sometimes been criticised; for example, Part VII - “The Duties” includes detailed provisions with respect to the “Valuation of Imported Goods”. It is unnecessary to analyse such matters. Broadly speaking, the discussion to this point has identified two different situations; the first involved the payment of duty (or the provision of security) as a prerequisite to obtaining an authority to take imported goods for, inter alia, home consumption. The other situation related to the failure to make an import entry followed by the retention of the imported goods by the Australian Customs Service and their possible sale and disposal. The recovery of duty or further duty in both situations is dealt with in Part VIII, with other provisions later providing for penalties equivalent to, or a multiple of, unpaid duty. The various provisions are not without difficulty, and include some areas that overlap and some circumstances in which a penalty can be imposed even for unintentional error by a person by whom duty is payable. However, there is no particular purpose in presently pursuing a consideration of the penalty provisions. -- 3 of 11 -- 4 So far as civil recovery is concerned, the primary section is 153, which is in Division 1 - “The Payment and Computation of Duties Generally” and provides: “Recovery of duties 153. All duties shall constitute Crown debts charged upon the goods in respect of which the same are payable and payable by the owner of the goods and recoverable at any time in any court of competent jurisdiction by proceedings in the name of the Collector.” That provision is plainly applicable where an import entry has not been made, duty has not been paid, and an authority to deal with imported goods has not been obtained. Division 3 of Part VIII is concerned with a different topic “Deposits, Abatements, Remissions, Premiums, Refunds and Rebates of Duties”, all matters related to the situation in which an import entry has been made and communicated to the Australian Customs Service and further activities, anticipated or otherwise, have occurred. For example, s. 162 provides for imported goods which are to be exported to be delivered to the importer provided that security is given for payment of duty in the event that conditions imposed are not complied with and the goods are not exported in the prescribed time. Section 162A also permits specified goods or goods imported by specific persons or for specified purposes to be brought into Australia on a temporary basis without payment of duty; provision is again made for security for duty and payment of duty in certain circumstances. There is no present occasion to discuss s.162B “Pallets Used in International Transport” or ss. 164, 164A, 164AA, or 165A, which are related to rebate of duty in respect of diesel fuel used for certain purposes. Section 163 “Refunds etc.of Duty” permits refunds, rebates and remission of duty in circumstances related either to goods -- 4 of 11 -- 5 generally or to specified classes of goods, while s. 166 precludes any refund of duty in other circumstances. The provision relied on by the plaintiff is s. 165, which, like s. 153, makes provision for the recovery of duty by the defendant. Section 165 provides: “Short paid duty etc. may be recovered 165. (1) When any duty has been short levied or erroneously refunded the person who should have paid the amount short levied or to whom the refund has erroneously been made shall pay the amount short levied or repay the amount erroneously refunded on demand being made by the Comptroller within twelve months from the date of the short levy or refund. ... (3) Where a rebate of duty has been paid to a person and the whole or a part of the rebate was not payable to him, he shall repay the whole or that part, as the case may be, of the amount of rebate paid to him on demand being made by the Comptroller within 12 months from the date on which the rebate was paid. ...” (Sub-section 165(4) however limits the authority of the Comptroller to demand repayment of a rebate of part of a rebate unless the person to whom the rebate was paid “has been convicted of an offence against this Act in respect of the obtaining of that rebate or has been required to pay a penalty under sub-section 164AA(1) or (1A) in respect of the application for that rebate and has paid that penalty”.) At the various times when the goods the subject of the present dispute were imported into Australia, goods imported from New Zealand which were manufactured in New Zealand within the meaning of sub-s. 151(7) of the Customs Act were entitled to entry for home consumption at a concessional rate of duty, namely “Free”. Upon each importation of goods during the material period, the plaintiff completed import entries for home consumption which indicated that the goods were, upon their entry for home consumption, entitled to that concessional rate of duty and they were so assessed by the defendant. -- 5 of 11 -- 6 -- 6 of 11 -- 7 For the purpose of this proceeding, the parties are now agreed that the goods were not manufactured in New Zealand within the meaning of sub-s. 151(7) of the Customs Act, and were not entitled to entry into Australia at a “Free” rate of duty. Accordingly, demands for ad valorem duty have been made by the defendant, totalling $297,446.95. It is agreed that that amount is payable by the plaintiff if s. 153 applies, but is not payable if s. 165 applies to preclude the defendant from recovering the duty because the goods were entered for home consumption and assessed for duty more than 12 months before the demands for duty were made by the defendant. The latter conclusion seems to us plainly correct. The goods were imported in compliance with the import entry process; even if a mistake was made, the process was followed and assessments made, albeit that the amount of duty was “short levied”. The matter therefore falls within Part VIII Division 3, not Division 1. The questions asked should be answered (a) yes, and (b) the defendant, and the declarations sought by the plaintiff are to be made. Question: (a) Does s. 165 of the Customs Act 1901 (Cth) operate to preclude the defendant from recovering from the plaintiff duty in respect of goods entered for home consumption and assessed for duty more than 12 months before demands for payment of duty were made? Answer: Yes. Question: (b) By whom and in what proportion (if any) should the costs of and incidental to these proceedings be paid? Answer: The defendant, and the declarations sought by the plaintiff are to be made. ___________________________________________________________________________ CATCHWORDS: FIRST HEARING - short levy of import duty - whether s. 165 of the -- 7 of 11 -- 8 Customs Act 1901 (Cth) operates to preclude recovery of duty in respect of goods entered for home consumption and assessed for duty more than 12 months before demands for payment of duty made - inter- relationship with s. 153 of the Customs Act - issue of costs. Customs Act 1901 (Cth) Part IV, VII, VIII, Ss. 68, 71-77, 151, 153, 162- 165. Counsel: R Gotterson Q.C. with him P Bickford for the appellant. P R Dutney Q.C. with him R G Maguire for the respondent. Solicitors: Mallesons Stephen Jacques for the appellant. Australian Government Solicitor for the respondent. Hearing date: 13/02/1996. -- 8 of 11 -- 9 IN THE COURT OF APPEAL SUPREME COURT OF QUEENSLAND Appeal No. 177 of 1995. Brisbane Before Fitzgerald P. Pincus J.A. Mackenzie J. [Carter Holt Harvey Manufacturing v. Comptroller-General of Customs] BETWEEN: CARTER HOLT HARVEY MANUFACTURING GROUP PTY LTD (Plaintiff) Appellant AND: COMPTROLLER-GENERAL OF CUSTOMS (Defendant) Respondent REFERENCE UNDER S. 165 OF THE CUSTOMS ACT 1901 (CTH) REASONS FOR JUDGMENT - PINCUS J.A. Judgment delivered 27/02/1996 I have read the reasons of the President; I agree with his Honour’s conclusions and, in general, with the reasons stated for them. The expression "short levied" in s. 165(1) of the Customs Act 1901 (Cth) quoted in the President’s reasons, might at first sight be thought capable of referring only to instances in which some amount of duty, but not enough, has been charged on the relevant goods, but as excluding instances in which no duty at all has been charged. But the parties are agreed that duty may be "short levied" -- 9 of 11 -- 10 although the amount charged is nil, as here, and I think we should accept that view of the provision. -- 10 of 11 -- 11 The result is that the conclusion for which the plaintiff contends must be accepted, unless a substantial qualification is to be read into s. 165(1). The defendant argues in effect that one should treat s. 165(1) as if there were inserted in it, at an appropriate place: "but this provision does not limit the Comptroller’s right to recover amounts short levied where the short levy has been brought about by a lack of diligence or by dishonesty on the part of the person who should have paid". It is said that the contrary view is "capricious or irrational", but what was put in favour of that proposition is merely a policy consideration. As presented to us, then, the point in the case is a relatively short one. We are invited to make a substantial judicial amendment to s. 165(1) and that is an invitation which I would unhesitatingly decline. -- 11 of 11 --