Defiance Enterprises Pty Ltd v Collector of Customs for the State of Queensland & Anor; Kelly (Comptroller-General of Customs for Cth of Aust) v. Defiance Enterprises Pty Ltd [1990] QSC 305

10 30 40 50 60 IN THE SUPREME COURT OF QUEENSLAND CIVIL JURISDICTION BEFORE MR. JUSTICE LEE BRISBANE, 10 SEPTEMBER -1990 .. No. 66 of 1989 ..__,________-!: REVISED COPIES -ISSUED Court Reporrng Eureau Date, c?/ I 9 I 9 D ----~----•-m4• 10 (Copyright in this transcript is vested in· the Crown. Copies thereof must not be made or.sold without the written authority of the Chief Court Reporter,Court Reporting Bureau.) BETWEEN: .. " DEFIANCE ENTERPRISES PTY. LTD. -and- THE COLLECTOR OF CUSTOMS FOR THE STATE OF QUEENSLAND -and- COMMONWEALTH OF AUSTRALIA · -and- Plaintiff First Defendant Second Defendant No. 880 of 1989 BETWEEN: FRANCIS IVOR KELLY (Suing in his capacity as Comptroller-General of Customs for the Commonwealth of Australia) .-and- DEFIANCE ENTERPRISES PTY. LTD . .. BY ORIGINAL CLAIM -and- DEFIANCE ENTERPRISES PTY. LTD. -and- FRANCIS IVOR KELLY -and- COMMONWEALTH OF AUSTRALIA BY COUNTERCLAIM -Govt. Printer, Qld. 1 .. " Plaintiff Defendant Plaintiff First Defendant Second Defendant 20 30 40 50 60 -- 1 of 75 -- 10 JUDGMENT HIS HONOUR: As will emerge from the somewhat lengthy reasons which I am about to publish, this matter was fraught with all sorts of complications. Many issues were raised and the matter was fought with considerable intensity on behalf of the Collector of customs, as was li½:,ewise :d$Jfnded on o;;"'/ a • behalf of the defendant Defiance Enterpri_se~ :i?ty-. ,:Ltd. As will emerge from the reasons, I conclude as follows, and then I make some alternative observations in the event that the first conclusion is wrong: 10 20 20 30 40 50 60 (1) The machines in question have a'capacity not greater than 2,500 pieces per hour and so fall within Tariff Concession Order No. 8533726~ (2) Defiance Enterprises Pty. Ltd. is entitled to a declaration that the seized bakery machinery is not forfeited. Declare accordingly. (3) Order that Francis Ivor Kelly in his capacity as Comptroller-General of Customs for the Commonwealth of Australia, release or discharge the security given by Defiance Enterprises Pty. Ltd. and National Australia Bank Ltd. in order to secure the release of the goods seized. (4) Order that there be judgment for Defiance Enterprises Pty. Ltd. in action 66 of 1989 against the Collector of Customs for the State of Queensland and the Commonwealth of Australia, together with costs of and incidental to that action to be taxed. (5) Order that judgment be entered in action 880 of 1989 for Defiance Enterprises Pty. Ltd. against Francis Ivor Kelly (suing in his capacity as Comptroller-General of Customs for the Commonwealth of Australia), together with costs of and incidental to that action to be taxed. (6) Declare that at the time the goods were seized pursuant to s.203, Desmond John Adsett, an officer of Customs, believed on reasonable grounds on the information then available to him that the goods the subject of the seizure were forfeited goods. This disposes of both actions. However, I go on to make certain findings in the event that my finding as to . ~-,~•er, Old. 2 30 40 50 60 -- 2 of 75 -- ~ ; '.(_ 10 30 40 50 60 capacity is held to be incorrect, and the parties can read those for themselves. The formal orders will be as I . h.a.v.e ·_indicated. I publish my reasons. ... . .. ,,t. Pr!--ter, Qld. 3 10 20 30 40 50 60 -- 3 of 75 -- i' IN THE SUPREME COURT OF QUEENSLAND Before Mr. Justice Lee BETWEEN: DEFIANCE ENTERPRISES PTY. LTD. AND: No. 66 of 1989 Plaintiff THE COLLECTOR OF CUSTOMS FOR THE STATE OF QUEENSLAND First Defendant AND: COMMONWEALTH OF AUSTRALIA Second Defendant No. 880 of 1989 BETWEEN: FRANCIS IVOR KELLY (Suing in his capacity as Comptroller-General of Customs for the Commonwealth of Australia) AND: DEFIANCE ENTERPRISES PTY. LTD. BY ORIGINAL CLAIM AND: DEFIANCE ENTERPRISES PTY. LTD. AND: FRANCIS IVOR KELLY AND: COMMONWEALTH OF AUSTRALIA BY COUNTERCLAIM JUDGMENT: LEE J. Plaintiff Defendant Plaintiff First Defendant Second Defendant Delivered the 10th day of September, 1990. -- 4 of 75 -- CATCHWORDS: Cu~_t.,oms and Excise - Smugglem-q - Evasion of Duty - "False" entry - ~nture scatement in INVO'.rt:!E - Customs prosecution by civil action - ~/hether mens rea an element of offences against s. 234(1)(d), (e) of the Customs Act 1901 - \o/hether honest and reasonable but mistaken belief as to facts applicable under s. 24 of the Criminal Code (Q) to exculpate importer from criminal responsibility - whether seizure of goods justified - hlhether goods forfeited - ~ Customs Act 1901, ss. 203; 229(1)(a), (i); 233; 234(1) (d), (e); the Criminal Code (Q) s. 24. Counsel: Solicitors: J.A. Logan for Plaintiff P.D. McMurdo for Defendants Australian Government Solicitor for Plaintiff Feez Ruthning for Defendants Hearing dates: 7th, 8th, 9th, 10th, 11th and 14th July, 1989 and 15th December, 1989 -- 5 of 75 -- 1' IN THE SUPREME COURT OF QUEENSLAND BETWEEN: AND: BETWEEN: AND: DEFIANCE ENTERPRISES PTY. LTD. THE COLLECTOR OF CUSTOMS FOR THE STATE OF QUEENSLAND No. 66 of 1989 Plaintiff First Defendant COMMONWEALTH OF AUSTRALIA Second Defendant No. 880 of 1989 FRANCIS IVOR KELLY (Suing in his capacity as Comptroller-General of Customs for the Commonwealth of Australia) DEFIANCE ENTERPRISES PTY. LTD. Plaintiff Defendant BY ORIGINAL CLAIM DEFIANCE ENTERPRISES PTY. LTD. Plaintiff FRANCIS IVOR KELLY First Defendant AND: COMMONWEALTH OF AUSTRALIA Second Defendant BY COUNTERCLAIM JUDGMENT - LEE J. Delivered the 10th day of September, 1990. These two actions were closely contested over six full sitting days and on a subsequent further day when additional -- 6 of 75 -- 2 evidence was placed before the Court when the case was reopened. The proceeding was prosecuted on behalf of the Collector of Customs for the State of Queensland with considerable intensity and raised many issues. Because the matters in dispute in each action were supstantially the same, the two actions were consolidated by order of de Jersey J. in the Commercial Causes Jurisdiction on 16th March, 1989 with the plaintiffs in 880/1984 having the carriage of the consolidated actions. The first action in point of time is 66/1989 commenced 10th January, 1989 by Defiance Enterprises Pty. Ltd. against the Collector of Customs for the State of Queensland and the Commonwealth o~ Australia seeking a declaration that the goods referred to in a notice of seizure dated 30th June, 1988 purportedly under s .. 203 of the Customs Act 1901 ( "the Act") are not forfeited to the Crown and consequential relief. The statement of claim was delivered on 10th January, 1989. By defence and counterclaim delivered 15th March, 1989 the defendants in that action pleaded various facts to which reference will later be made. By counterclaim, the first defendant claimed the sum of $31,747.71 representing the shortfall in the duty alleged to be due plus interest under s. 72 of the Common Law Practice Act ( Qld) . The second defendant claimed~ declaration that the seized baking machinery is and has been at all material times forfeited under the Act, and also the sum of $275,097.90 being the amount of security provided by the plaintiff on 1st July, 1988 in order to secure the release of the goods in question. During .addre.ss counsel for the defendant also sought a declaration which was not pleaded viz. that reasonable -- 7 of 75 -- 3 grounds existed for seizure of the goods in question by Customs: s. 203. The second action 880 of 1989 was commenced on 14th March, 1989 by Francis Ivor Kelly ( in his capacity of Comptroller- General of Customs for the Commonwealth of Australia) against Defiance Enterprises Pty. Ltd. seeking various declarations to the effect that the defendant allegedly committed some 12 offences against the Act i.e. four offences of like kind with respect to the importation into Australia on three occasions of certain dough dividing and moulding machines. Mr. Kelly also seeks entry of convictions against the defendant in respect of each of the alleged offences, the imposition of a pecuniary penalty in respect of each, and an order under s. 21B of the Crimes Act that the defendant make reparation to the Commonwealth in respect of any loss which the Commonwealth may have suffered. The statement of claim in the second action (ex. 38) was delivered on 15th March, 1989 and is virtually the mirror image of the defence and counterclaim delivered in action 66 of 1989. Defiance Enterprises Pty. Ltd. delivered a defence and counterclaim on 4th April, 1989 (amended on 7th August, 1989 by ex. 1) and added the Commonwealth of Australia as second defendant to the counter-claim. This was not objected to notwithstanding the allegation in para. 7 of the plaintiff's reply and answer relying on s. 221 of the Act. It also was virtually a mirror image of the statement of claim delivered by Defiance Enterprises Pty. Ltd. in action 66 of 1989. A reply and answer was delivered by the plaintiffs in action 880 of 1989 on 11th April, 1989. I shall refer to Francis Ivor -- 8 of 75 -- 4 Kelly as "the Collector" and Defiance Enterprises Pty. Ltd. as "Defiance". This includes a reference to "Sottoriva Australia" being the relevant name under which Defiance traded. Where necessary, the Commonwealth of Australia (second defendant in 66 of 1989 and second defendant-by counterclaim in 880 of 1989) will be referred to as "the Commonwealth". A not inconsiderable time was taken up with the nature of these proceedings. It was accepted as a "Customs Prosecution", being a proceeding for the recovery of a penalty: s. 244. A long line of cases was referred to by counsel for the Collector dealing wit~ the history df such a proceeding, his submission being that it was a ci vi 1 proceeding. The consequence he submitted was that the Collector must prove its case on the balance of probabilities only, although having regard to the gravity of the issues involved; Briginshaw v. Briginshaw (1938) 60 C.L.R. 336 at 362-3 per Dixon J. It was further submitted that even if the proceedings have a highbred character this does not alter the standard of proof: Jack Brabham Holdings Pty. Ltd. v. Minister for Industry and Commerce (1988) 85 A.L.R. 640 per Kirby P. at 652, 653. Counsel for · Defiance did not accept that this was the standard of proof. He submitted that even if it was, the test in Briginshaw was appropriate. He went further on the question of mistake of fact, his submission being that if the output capacity of the bun dividing machines was held to exceed 2,500 pieces per hour to accord with the submissions for the Collecto:i;-, Defiance could not be guilty of any offence because of the existence of an honest and reasonable but mistaken belief as to -- 9 of 75 -- ' ' 5 a state of things pursuant to s. 24 of the Criminal Code of Queensland, the onus being on the "prosecution" to exclude any such honest and reasonable but mistaken belief beyond a reasonable doubt. Defiance, a body corporate, carries on and carried on at all material times the business as importers, distributors and manufacturers of baking machinery and equipment under the name "Sottoriva Australia". This dispute hinges around the importation by it into Australia of three lots of machines used in the baking industry. On or about 16th March, 1988 at Brisbane, Defiance brought , into Australia 12 units of semi-automatic roll/bun dividers and rounders Olympia Type 4, and two units of automatic roll/bun dividers and rounders Olympia Type 4. On or about 26th April, 1988 at Sydney, Defiance brought into Australia, 14 semi- automatic units of the same type. On or about 29th May, 1988 at Sydney, Defiance brought into Australia, 12 semi-automatic and two automatic units of the same type. These amounted in all to 38 semi-automatic units and four fully automatic units. Entries for Home Consumption as required by ss. 68(1), 36(1) of the Act and regs. 36, 37 of the Customs Regulations were lodged by Defiance's customs agent or broker Boyce Wallace Pty. Ltd. by its employees Kingsley Ross Roberts and Malcolm Ross McNeil. It was not undisputed that these agents acted for and with the knowledge of Defiance. See also s. 183A(1). Accompanying and attached to each Entry for Home Consumption were supporting documents. -- 10 of 75 -- 6 In the case of ex. 2 (entry 3B.8126.0152D) there was attached an invoice from Paul Busse Hamburg, Germany dated 21st April, 1988, No. 88.104/ta covering 12 semi-automatic and two automatic units (ex. 3). In the case of ex. 4 (entry ~ 3B.8061 .0195J) there was attached ex. 5 consisting of some four documents from Paul Busse, the document of particular relevance being Paul Busse invoice No. 88.034 dated 5th February, 1988 covering 12 semi-automatic units and two fully automatic units. The remaining documents do not appear to. have any particular relevance. In the case of ex. 6 (entry 3B.8103.0290K) there was attached ex. 7 consisting of three documents from Paul Busse and in particular an invoice dated March 18th, 1988, No. 88.095 covering 14 semi-automatic units. These three entries embraced .all of the 38 semi-automatic and four fully automatic units imported by Defiance. Counsel for the Collector sought to tender the attachments as separate exhibits from the three entries themselves because he submitted that the invoices were the subject of separate charges and would facilitate identification. This was not opposed al though it may not be without relevance that the invoices and other documents were attached to the entries which were lodged at the same time to the Customs Department. It might be wondered whether each entry consisted not only of the actual entry itself but also all of the documents attached to it and probably incorporated with it. Each of the entries respectively claimed a tariff concessiqn order "TCO8533726" which allowed duty at the rate of two per cent on the value of the goods for Customs purposes (the value is not -- 11 of 75 -- 7 in dispute in the case). This tariff concession order is contained in ex. 37 (Commonwealth of Australia Gazette TC86/3, 29th January, 1986) at p. 12 and is set out in para. 8 of the statement of claim in the following terms:- "BAKERY EQUIPMENT being EITHER of the following: (a) dividers, dough, having an output capacity NOT greater than 3,000 pieces/h; (b) dividing and moulding machines, dough, having an output capacity NOT greater than 2,500 pieces/h." There was no dispute that this was the operative tariff concession order in force with respect to each of the three•lots of goods imported and that the goods were and are dough dividing and moulding machines. What was seriously in dispute and what is the crux of the case is whether or not the units imported had an output capacity not greater than 2,500 pieces of dough per hour as contended for by Defiance, the Collectbr on the other hand contending that the output greatly exceeded this limit. I was informed by counsel for the Collector that the duty otherwise payable for units of capacity greater than 2,500 pieces per hour was 15 per cent of the value for Customs purposes. The duty set out on each entry and the actual duty claimed by the Collector to be due is set out in the statement of claim and may be summarised as follows:- As entered by defendant Claimed as:due by plaintiff Exhibit 2 $1,674.79 $10,886.15 Exhibit 4 $1,744.69 $11,340.54 Exhibit 6 $1,454 _~77 i 9,521.02 Totals $4,884.25 $36,631.96 -- 12 of 75 -- 8 These are listed in the order in which the documents were tendered at the trial and do not correspond with the order in which the allegations are pleaded in the statement of claim. The Collector alleges in paras. 18, 33 and 48, that Defiance in each case paid the sums as appeared in the entry totalling $4,884.25 rather than the total duty which the Collector contends is due viz. $36,631.96 resulting in an alleged short payment of $31,747.71. This is the basis of one of the items raised by counterclaim in action 66 of 1989 and .i~ also the basis of the reparation order sought by the Collector in action 880 of 1989. It is also the basis of three charges against Defiance pursuant to s. 234(1)(a) of the Act namely that Defiance evaded payment of duty which is payable, as well as one of the bases relied upon to sustain each of the three separate charges of smuggling as prescribed bys. 233(1) of the Act. See the definition ins. 4. It is also one of the bases relied upon for the claim that the goods are forfeited to the Crown pursuant to s. 229. In order to understand the issues involved, and in particular the very serious allegations against Defiance tantamount to fraudulent concealment or deception extending back several years, it is necessary to refer to the lengthy history of the dispute in some detail to place matters in proper context. On 10th May, 1988, Desmond John Adsett, a senior investigations officer with the Investigations Section of the Australian Customs Service at Brisbane, examined entry, ex. 2. Following that examination he issued a "que·ry .memorandum" on th~t date directed to the Customs Agent (ex. 8). His queries with -- 13 of 75 -- 9 re.spect to semi-automatic and fully automatic units were as follows:- "1 . Please produce order, order confirmation, contracts and/ or agreements among and between all parties. 2. Please provide I.D.M. to support claim for TC8533726." It appears that Mr. Adsett did not accept as sufficient proof, the statements in each of the accompanying invoices issued by the supplier Paul Busse identical in all three except as to the description of the quantity in each shipment. For example, ex. 3, after referring to 14 cases marked for Defiance (Sottoriva) and the ship "Fine Eagte" from Hamburg, West Germany to Brisbane, as per Defiance's order 254-10354, and to otner details as to weight, continued:- "containing: 12 units of semi-automatic roll/bun divider and rounders OLYMPIA Type 4 capable of producing up to 2,500 dough pieces per hour each piece having a weight of max. 140 grams. 415 volts/three phases/SO cycles, each with three moulding plates, in strictly neutral finish, machine body white varnished, hoods orange varnished in SOTTORIVA colours. 2 units of fully automatic roll/bun divider and rounders OLYMPIA Type 4 all details as mentioned with item 1." Then followed value F.O.B. Hamburg and other matters not relevant to this case. The reference "I. D. M. " on the query memorandum was accepted by .all witnesses as "illustrative descriptive material" or illustrated literature or brochure$. Until such queries are satisfied, Customs will not give a clearance advice and hold up the shipment. The Customs agent -- 14 of 75 -- 10 signs the back of that document undertaking to pay any duties that may be later levied. Following delivery of that memorandum, the agent obtained information from a responsible officer of Defiance (Maree Clarke) and submitted this to Customs on 1st June, 1988. These documents are contained in ex. 9 and consist of a letter dated 20th May, 1988 from Defiance to the agent enclosing a copy of the order 10354 dated 10th February, 1988 to Germany for the 14 units (12 semi-automatic plus two automatic), confirmation of receipt by fax messages, a copy of a leaflet of a "KEMPER" semi-automatic bun/roll divider and rounder and a copy of a Customs query memorandum No. 2482 of 28th October, 1982. The "KEMPER" brochure is of co.nsiderable significance in the case. The agent, following discussions with Maree Clarke and as set out in her letter, endorsed the brochure "Oppositions machine. Basically the same as the Paul Busse machine". Maree Clarke informed the agent that there were no brochures available although the letter said there were brochures currently on order from Paul Busse. The brochure of the Kemper machine which on all the evidence is a machine comparable with the Olympia Type 4, shows an hourly capacity of approximately 2,000 pieces. This was in no way challenged throughout the case. It is also produced in Germany and is imported into Australia by various importers including G.G. Benjamin & Co. Pty. Ltd. of Peakhurst, New South Wales, for use in small hot bread kitchens and bakeries. It is a competitor of the Olympia Type 4. Also of signJficance in that bundle of documents is the query memorandum no. 2482 of 28th October, 1982. This was -- 15 of 75 -- 11 directed to a company called Univent Nominees Pty. Ltd. of South Australia and related to similar Olympic semi-automatic units. The query in that case asked for verification that the Type 4 model produced "up to and including 2,500 pieces/h" for by-law purposes. The evidence, particularly that of Mr. Brown from whom Defiance acquired the bakery machinery importing business under the name of Sottoriva Australia in December 1984, establishes that this particular enquiry was satisfied and that he had prior to this time and subsequently imported the Olympia Type·4 models in question into Australia under the relevant corresponding tariff concession (in the early stages by by-law and later by tariff concession of 7th November, 1984 (ex. 36) which was replaced by the relevant tariff concession order on 29th January, 1986 (ex. 37)). I accept Mr. Brown's evidence generally. The evidence also discloses and I accept that this information together with supporting documentation was passed on by Mr. Brown to Defiance on the acquisition by Defiance of Mr. Brown's business in late 1984. Thereafter he also assisted Defiance in certain carry-over imports under and pursuant to that particular concession. Indeed, exs. 40 and 41 are invoices from Paul Busse dated 18th September, 1984 and 20th November, 1984 respectively directed to Sottoriva (Australia) Pty. Ltd., 16A High Street, Unley Park, South Australia, the company then owned by Mr. Brown under his name Uni vent Pty. Ltd. Those invoices are endorsed in identical fashion as to the capacity of the Olympia units as set out in ex. 3 and the other two accompanying invoices attached to each of the three relevant Entries for Home Consumption lodged on behalf of Defiance. The existence of these -- 16 of 75 -- 12 latter two invoices and certain other documents was apparently not known to Mr. Adsett at the time of his investigation. It appears from the date stamp on ex. 3 (the Paul Busse invoice 88104, 21st April, 1988 accompanying the entry ex. 2) that this particular invoice was also stamped 1st June, 1988. Mr. Adsett explained some confusion at p. 11 of the record. He did not accept the Kemper brochure or the other material as sufficient proof. He contacted the agent who informed him that the notation that the Kemper machine was basically the same as the Paul Busse machine was endorsed with the authority of Defiance's shipping clerk. This was not disputed. Mr. Adsett informed the agent that he was not prepared to release the goods until such time as he had actually seen a brochure relating to the machines in question. Some time on or after 1st June, 1988 Mr. Adsett spoke to the agent but the time does not clearly emerge. The next contact was from the agent who on 24th June, 1988 under cover of a Boyce Wallace "with compliments" slip, sent a facsimile of an OLYMPIA Type 4 semi-automatic divider and rounder ex. 10. That document had come into the agent's hands from Defiance and showed the Olympia semi-automatic unit with a capacity "up to 2,500 rolls/buns per hour". That facsimile of a brochure was apparently sent. by Paul Busse from Hamburg and appears regular on its face.· The capacity and other information is contained thereon both in English and German. Mr. Adsett was still not satisfied, no doubt because as it will . appear, the Customs had a 1985 file which contained a brochure showing a capacity of "up to 10,000 rolls/buns per -- 17 of 75 -- ,. 13 hour": (ex. 20) relating to semi-automatic OLYMPIA machines and ex. 21 relating to OLYMPIA automatic machines. On 28th June, 1988 he swore an information in front of a Justice of the Peace and obtained a Form 61 Notice to Produce. notice proceeded as follows:- See ex. 11. "WHEREAS information in writing has been given on oath that it is intended by you to unlawfully import, export, under value, enter, or illegally deal with goods." That Then are set out the 12 semi-automatic and two automatic units, the name of the vessel and the entry No. 3B.8126.0152D (ex. 2). This procedure is authorised by s. 214 ( 1) of the Act. The notice, in accordance with the section, required Defiance to produce and hand over to Mr. Adsett all books and documents relating to the goods in question and relating to all other goods imported or exported by Defiance at any time within the ~eriod of five years immediately preceding the request, and to allow Mr. Adsett to make copies of or extracts from all such books or documents of any kind whatsoever wherein any entry or memorandum appeared in any way relating to any such goods. At about 9.15 a.m. on 29th June, 1988 at Defiance's head office at Wooloowin Brisbane, ("the first visit"), Mr. Adsett spoke to Mr. Conwell, the managing director of Defiance, to whom he handed the Form 61. Mr. Conwell informed him that Defiance had a file for each order located at · the Strathpine office. Mr. Conwell said "Are you aware that we went through this exercise a few years ago?" Mr. Adsett replied, "Yes. I am still not satisfied with the applicant's claim". Mr. Conwell express~d surprise at the enquiry and said that a machine called a "Fortuna" used to be listed and that all machines are the same -- 18 of 75 -- 14 made by the same people. Mr. Adsett said, "Yes, they are much the same". Mr. Conwell then produced the original of the fax copy leaflet, (ex. 10), to which was annexed a Paul Busse letter dated 23rd June, 1988. This was handed to Mr. Adsett (ex. 12). Exhibit 12, unlike ex. 10, has printing on the back thereof. There are set out some nine models of the OLYMPIA machine of which Type 4 is but one, being the type of machine in dispute in this case .. Affer some expected conversation with Mr. T. O'Brien, the Chief Executive of Defiande, and after obtaining legal advice, Mr. Conwell went with Mr. Farrell and Mr. Adsett to Defiance's other premises at Strathpine. Mr. Conwell authorised a search of the general office and filing cabinets with the aid of Miss Clarke. Mr. Adsett retained a folder, issued a receipt (ex. 13), and then left Defiance's premises and proceeded back to his office where he examined the file. As a result of the examination of those documents, Mr. Adsett formed the view that there were further documents covered by the Notice to Produce. He returned to the Wooloowin premises of Defiance next day, 30th June, 1988 ( "the second visit'') where he again spoke to Mr. Conwell at about 2.30 p.m. He told Mr. Conwell that the documents located at Strathpine included a letter dated 3rd June, 1988 addressed to Paul Busse which in turn referred to a letter faxed by the defendant on 31st May, 1988. He said that the last mentioned letter was not on the file. Mr. Conwell asked his secretary to remove a manilla folder from the filing cabinet in the office. Mr. Conwell quickly looked at the contents and without hesitation handed the ? ' -- 19 of 75 -- 15 entire folder over to Mr. Adsett. Mr .. Adsett took that folder away and arranged to return at 9.30 a.m. the next morning, 1st July, 1988 to have a further discussion with Mr. Conwell. Mr. Conwell. agreeq to that course. At 9.30 p.m. on the 1st July, 1988 ("the third visit"), Mr. Adsett with an accompanying officer conducted an interview which was recorded on a tape-recording device with Mr. Conwell's consent. The transcript and accompanying tapes were tendered and marked ex. 14. Copies of the tapes were handed to Mr. Conwell who subsequently agreed that the transcription in ex. 14 was accurate. Mr. Adsett in the course of that interview showed Mr. Conwell various documents including the invoice ex. 3, the entry ex. 2, the letter of 20th May, 1988 from Defiance (ex. 9) with its contents, the query memorandum (ex. 8), facsimile brochure produced 24th June, 1988 (ex. 10), the original brochure (ex. 12) and various other documents to which it is necessary to refer in.some detail. These were not presented in order of date and ar~as follows:- (i) Exhibit 15 - A letter from Defiance to Paul Busse dated 3rd June, 1988 in which Mr. Conwell referred to his fax letter of 31st May, 1988 and to the acute problem with the machinery in that Customs would not release them unless Defiance could submit a manufacturer's brochure or instruction book or some such similar document produced by the manufacturer to show that the units would do up to 2, 50.0 buns per hour. Mr. Conwell told Mr. Busse that this was needed urgently by a fax in the first instance followed up by the original document. -- 20 of 75 -- 16 (ii) Exhibit 16 - A fax copy telex 20th June, 1988 from Paul Busse to the defendant stating inter alia as follows:- "Though the capacity of our Type 4 30 pieces bun divider varies with the speed of the. baker, it is apparent such a machine cannot produce,significantly more than2,000 units per hour. Therefore it is our pleasure to confirm our bun divider/rounder Olympia can make up to and including 2,500 buns per hour but not more. If you want to produce more than 2, 5 0 0 units, we recommend an industrial divider/rounder,· like the Debag~Plant, for which kindly find a leaflet attached. To emphasise the difference, we also attach a leaflet of our bun divider, still showing the old shape, and an ,instruction manual. Our. new catalogues will be available by Wednesday, i.e. due to our printer, we will fax you a copy and .send you 100 leaflets immediately then." (iii )Exhibit 17 - A fax from Defiance to Paul Busse dated 17th June, 1988, despatched 1. 30 p .m. containing inter alia the following:- "We have sitting on our premises the last container of bu~ dividers still in the container and under Customs bond. We are.not allowed to open the seal until we have from the manufacturers the brochures and/or instructions that these machines do up to and including 2,500 units per hour. We expected these this week but as yet have not arrived. Please fax immediately when they will be received by us." (iv) Exhibit 31 - a letter, 31st May; 1988 from Defiance to Paul Buss~ stating inter alia as follows:- iir would advise that we do need these leaflets showing 2,500 buns per hour as soon as possible. I think I mentioned to you at the time of your visif·that the Customs people were looking into these machines, and it is possible that if we cannot convince them of 2~500 buns per hour, our Customs duty will increase considerably, which of course means less· sales. Would you please send some off to me and forward them by airmail." -- 21 of 75 -- 17 Then followed the showing of other documents which Mr. Adsett obtained from what he called the "1985 Australian Customs File" which he had in his possession. These documents relate to events up to and including 3rd May, 1985 which may for convenience be called "the 1985 enquiry". These documents are as follows:- (v) Exhibit 19 Paul Busse Hamburg Invoice 85.049, 9th February, 1985 covering 15 semi-automatic units again with the similar endorsement thereon by Paul Busse referring to the capacity of "up to and including 2,500 buns/rolls per hour, II That invoice was directed to Sottoriva (Australia) Pty. Ltd., 16A High Street, Unley Park, South Australia (Mr. Brown's company) and obviously was a further carry-over order previously lodged by Mr. Brown before Defiance bought Mr. Brown's company in December, 1984. (vi) Exhibit 20 - photocopy one page only of a brochuie headed Olympia Semi-automatic showing a capacity "up to 10,000 rolls/buns per hour". Stamped thereon was "Sottoriva (Australia)" with the notation that this was a division of Defiance Enterprises Pty. Ltd. Lutwyche, Queensland. The date it was produced to Customs is illegible from the Customs stamp. It came from the Customs File for 1985 and was apparently produced to Customs by Defiance in that year prior to a test conducted on 24th April, 1985. See Mr. Sofronoff's memorandum 7th May, 1985 (ex. 35) and his reference to Customs Folios 17/18. This document is number 18. -- 22 of 75 -- 18 ( vi) Exhibit 21 ....:. photocopy one' page of an Olympia brochure covering automatic units showing an "output of 10,000 rolls/buns per hour". This had been produced to Customs on 15th April, 1985. This brochure did not say "up to" 10,000 rolls/buns per hour whereas ex. 20 used the expression "up to 10,000 rolls/buns per hour". (viii)Exhibit 22 - query advice 19th March, 1985 from Customs in Brisbane directed to Defiance. (ix) Exhibit 23 - telex 2406 dated 27th March, 1985, Paul Busse to Defiance, stating inter alia that the units were "capable of producing . . . at a rate up to and including 2,500 pieces per hourn. This telex was sent by Busse in response to a telex sent by Mr. Conwell (No. 175) at 4.15 p.m. on 27th March, 1985 (ex. 32) wherein Mr. Conwell set out "for Customs purposes for entry under concession rates of duty", the precise terms of the telex required by Defiance which accords with that in fact sent by Paul Busse (ex. 23). The telex ( ex. 32) came into Mr. Adsett' s possession during his search of Defiance's premises at Stratppine on 29th June, 1989. No attempt was made to conceal it. It was not suggested to Mr. Conwell that he had conspired with Busse to provide a false telex. (x) Exhibit 24 - photocopy of two telexes from the Customs file. The first is No. 237 dated 24th April, 1985 despatched at 4.10 p.m. by Mr. Conwell for Defiance to Busse see.king answers to four specific questions in the following terms:- -- 23 of 75 -- ., ' " ' 19 "Owing: to difficulty, in obtaining importation of Olympia Bun machines at concessional rates of duty we require answers to the following:- 1. The brochure on the semi-automatic Olympia states a production rate of 10,000 rolls per hour. Is this correct? 2. If it is not coFrect why has it been stated? 3. What in your opinion is the (true) capacity of rolls per hour for the machine? 4. Do you have any technical information to back up the claimed figure?" On its face this is a perfectly normal business enquiry seeking clarification. The other telex on ex. 24 is telex 2296 from Paul Busse dated 24th April, 1985 replying to telex 237 providing inter alia as follows:- "1 . Sorry to inform You production rate of 10,000 rolls per hour is not correct. 2. The capacity of 10,000 rolls per hour refers to the fully automatic bun divider/rounder Olympia. Unfortunately wrong figure was taken to semi-auto b.d.r. 's brochure, spoiling our catalogue. Capacity of semi-automatic machine can of course not be that large. 3. In our opinion, the machine can work abt. 1,800 to 2,000 buns per hour. In case a very skilled baker works on it, being assisted by a helper and if dough conditions are ideal, maybe production rate can be increased to 2,500 rolls. 4. (A lengthy explanation of what a baker must do in operating the machines)." Customs had these telexes in 1985. See Customs Folio 31, ex. 34. (xi) Exhibit 25 - brochure - Kemper semi-automatic unit showi~g an hourly capacity of approximately 2,000 pieces per hour. This capacity was not challenged. As indicated, all of the -- 24 of 75 -- 20 expert evidence· shows that the Olympia Type 4 was comparable with this and other similar machines such as the "Fortuna". Mr. Adsett also said · 11 yes they are much the same". (xii) Exhibit 26 - telex 229'5, 24th April, 1985 from Paul Busse to Defiance which Mr. Adsett had obtained from a folder handed to Mr. Adsett by Mr. Conwell in his office at Wooloowin in the afternoon of 30th June, 1988 i.e. on the second visit. It was received by Defiance on 25th April, 1985 and refers to Defiance's telexes 237/238. The essential part of that telex is as follows:- 111. Brochure on semi-automaticbdr is quite ok will send tlx. for Customs purposes." This telex was heavily relied upon on behalf of the Collector and is one of the ground relied upon in the notice of seizure of 1st July, 1988 (ex. 28). Mr. Conwell explained this telex in context with telex 237 (ex. 24) and 238 (ex. 42). (xiii)Exhibit 27 - copy telex 833, 20th December, 1985 by Frank Connolly for Defiance to Paul Busse as follows:- "Please send the 100 brochures immediately available with up to 10,000 pieces per hour. Thank you for the Australian edition up to 2,500 pieces per hour with· our name stating us as sole Australian agents. Please send these wpen they are available." It. was alleged for the Collector during this hearing that this telex showed a continuing acceptance by Defiance that the capacity was up to 10,000 pieces per hour. It was the last of . . . : . the documents shown by Mr. Adsett to Mr. Conwell during the course of the interview. Having completed that interview, Mr. Adsett said amongst other things that he was still of the opinion that a breach of -- 25 of 75 -- 21 the Act had ,been committed. He said in evidence that he informed Mr. Conwell that he had reasonable cause to seiz~ the current shipment of the un.i ts still in Defiance's possession. He explained the process of seizure to Mr. Conwell and Mr. T. O'Brien and served the ~otice of seizure ex. 29 dated 1st July, 1988, relying on the brochure showing a capacity up to 1~,000 rolls/buns per hour, and on Busse's telex 2295 of 24th April, 1985 (ex. 26) responding to the telex 237 dated 24th April, 1985 (first part of ex. 24). The total number of units imported pursuant to the three relevant entries were 38 semi-automatic units and four automatic units. ~~he units subject to the seizure (ex. 28) were only 29 semi-automatic and three automatic units The units subject to the seizure (ex. 28) were only 29 semi-automatic and three automatic units. The notice stated that the goods were imported between 18th March, 1985 and 30th June, 1988. This cannot be so on the evidence but no point was taken as to the dates contained therein. The validity of the seizure and the alleged forfeiture consequent thereon were seriously in dispute. Consequent upon the seizure, Defiance under the hand of Mr. Conwell and Mr. O'Brien by letter dated 1st July, 1988 (ex. 29), claimed ownership of the 29 semi-automatic and three automatic units under s, 205(6) of the Act and requested the Collector to release the goods under s. 208 on the production of adequate security. This was provided on 1st July, 1988 (ex. 30) in the form of a National Australia Bank Limited guarantee by which Defiance was bound to the Commonwealth in the sum of $275,097.00 subject to certain conditions set out therein. -- 26 of 75 -- 22 Mr. Adsett gave evidence of the Customs query in 1985. So did Mr. A. G. s·ofrbnoff and Mr. N. P. Wynne, Customs Investigators who conducted the 1985 investigation and attended a test of the output of the machine in Defiance's premises on 24th April, 1985. See in particular the report of Mr. Wynne dated 3rd May, 1985, ex. 34 and the memorandum signed by Mr. Sofronoff on 7th May, 1985, ex. 35. Mr. Conwell, Mr. Connolly and Mr. Curitan (the baker involved in the test) also gave evidence. There is no doubt from ex. 34 and from the evidence generally that Messes. Wynne and Sofronoff were entirely satisfied with the result of the test itself namely that the output of the machine in question was between 1,800 and 2,000 pieces per hour; notwithstanding that they had in their possession a brochure showing up to 10,000 pieces per hour. See para. 6 of ex. 34 and the comment, as well as ex. 35. It is quite clear that the telexes, ex. 24, (Customs Folio 31) were relied upon by Messrs. Wynne and Sofronoff only as confirmation of the findings of ~he test on 24th April, 1985. They were not misled by the contents. At that test were present various well experienced representatives from Bakery Equipment firms including Mr. Brown. A bakery convention was· held in Brisbane at that ·time. All persons accepted that the practical output of the machine in question was about 1,800 pieces per hour in normal operation. This accords with the previous history in South Australia accepted by Customs t:nere for some years as well as the evidence of experts involved in its practical day to day use in conditions for which :tt was designed. -- 27 of 75 -- ,:,1'\,' 23 Counsel for the Collector sought to attack that test on the basis that it was performed only in unreal conditions. This basis of attack is rejected on the evidence. The operator was experienced and the evidence generally shows that even an apprentice after being shown how to operate it can. operate it well after some training. Indeed, the Customs officers present formed the view that the persons conducting the test were competent. It was also conducted under the scrutiny of hard headed men experienced in this industry. This does not necessarily conclude what is the true output capacity of the Olympia Type 4 machine in the light of all the evidence now adduced but it is a matter to which weight must be given. It is also a matter which, along with all of the other evidence, is relevant to the formation of an honest and reasonable belief held by Defiance through its servants and agents, Mr. Conwell and Mr. Connolly and others that this particular machine's output capacity, whatever it is in fact, fell below the limit required by the tariff concession in order to attract duty at the rate in which it was entered in the three Entries for Horne. Consumption. In addition to this, I accept without hesitation the evidence of Mr. Conwell and Mr. Connolly confirmed .as it is by Mr. Brown that Defiance simply carried on importing these machines on the same basis that Mr. Brown had imported them for some years prior to the take-over on 24th December, 1985. Indeed, part of ex. 9 ( the letter of 20th May, 1988 from Defiance to the Customs agent and produced to Customs on 1st June, 1988), is an Australian Customs Query Memorandum, 28th October, 1982 -- 28 of 75 -- 24 addressed to Univent Nominees Pty. Ltd. in Adelaide (Mr. Brown's holding company) . That document which was issued by Customs expressry required that "verification that Type 4 model produced 'up to and including 2,500 dough pieces per hour for by-law'". Customs were apparently satisfied as a result at that time also Much was made of the fact that the invoices from Paul Busse used words to the effect that the machines were capable of producing "up to and including 2,500 pieces per hour". It was submitted for the Collector that this alone was suspicious because the Kemper brochures showed an output of "approximately 2,000 pieces per hour", whereas the documents covering the Olympia machine were couched in terms precisely of the wording of the by-law. Given that the first enquiry was made by Customs requiring verification expressly to accord with the wording of the by-law (see Query Memorandum 28th October, 1982, part of ex. 9), this submission is rejected as having no substance. This first enquiry was back in 1982 and the method by which the output capacity "up to and including 2,500 pieces per hour" on invoices was started by Mr. Brown as a result of that enquiry and has been followed ever since. See, for example, invoices 18th September, 19B4, 20th November, 1984 (ex. 40, 41) apparently not previously available to Mr. Adsett. There is nothing sinister in this form of words on the invoices. Insofar as ex~ 15, · 16, 17, 18 and 31 are concerned, it is clear that Defiance had for some time been endeavouring to obtain brochures on the Olympia Type 4 machine. These exhibits show no more than that D~fi~nc~ was endeavouring to answer the specific enquiry raised by Mr. Adsett in the query memorandum, ex. 8, i.e. -- 29 of 75 -- 25 the request to provide illustrated leaflets or brochures on the machines in question .rather than brochures on a comparable machine. It appears that Busse was lax in the preparation of illustrated brochures and in their contents. It had become a matter of extreme. urgency to Defiance to secure the release of the subject goods. Defiance is a commercial enterprise. Delay in clearance of goods through Customs and their availability for on-sale was a matter of normal business concern to it. In my view, nothing sinister can be attached to that particular line of communication between Defiance and its overseas supplier. It was a normal exchange undertaken in the ordinary course of Defiance's business to satisfy the Customs enquiry and was based on a long standing history of importation of similar units by Brown and then by Defiance at the concessional rate of duty. This had been accepted by Customs previously in South Australia and in 1985 in Brisbane notwithstanding the handing over to Customs in 1985 by Defiance. of a brochure showing an alleged capacity of "up to 10,000 pieces per hour". It was regarded by Defiance and by Customs Officers as incorrect. It was after the last fax message from Busse dated 20th June, 1988 (ex. 16) that the fax copy of the brochure (ex. 10) arrived and was produced to Customs on 24th June, 1988, followed by the original leaflet, (ex. 12) on 28th June, 1988 (delivered in person to Mr. Adsett). Notwithstanding the information then available to Mr. Adsett, he formed the view set out in Form 61 - Notice to Produce Documents (ex. 11) that Defiance intended to unlawfully import, export, under-value, enter or illegally deal -- 30 of 75 -- 26 with the goods referred to. ·To enable him to form the view he obviously held at that t"ime, he was then in possession of other inforrria-tion from the 1985 file. This included the brochure showing an output capacity ·of "up to 10,000 pieces per hour". By reason of the interpretations-Mr. Adsett placed on all of the material then available to him, he held a suspicion that Defiance acted or proposed to act unlawfully with regard to the goods in question. Much emphasis was placed by counsel for the Collector on what had occurred in 1~85 as throwing light on subsequent events. It was submitted that Defiance had deliberately misled Customs back in 1985 as well as in 1988. The evidence suggests that the query advice raised by Customs on 19th March, 1985 (ex. 22) was due to the fact that this was the first occasion when the Olympia Type 4 machines were imported into Brisbane and was a normal query because, unlike Customs in Adelaide who had for many years allowed importation by ~r.- Brown at the concessional rate, Customs in Brisbane had no prior experience with this particular model. The query required the production of illustrated leaflets or brochures. The response was that no such literature was available with the statement that a copy of the Fortuna machine was the only . comparable information available. The memorandum stated that a telex declaration frorri the supplier was attached in the hope that this information was sufficient. The memorandum also records that Customs regarded this information as insufficient to support the tariff concession claimed. This· resulted in the test conducted in the presence of Mr. A.G. Sofronoff and -- 31 of 75 -- •I,,,' 27 Mr. N.P. Wynne together with other experienced members of the baking industry ~t Defiance's premises on 24th April, 1985. Support for the attack on Mr. Conwell's bona fides was said to exist with respect .to e.x. 26 ,. the telex of 24th April, 1985 which Mr. Adsett obtained from a folder handed to him by Mr. Conwell in his office at Wooloowin on the second visit on 30th June, 1989. Counsel for the Collector submitted that Mr. Conwell had deliberately refrained from producing this document in compliance with a notice to produce dated 28th June, 1988 (ex. 11) at 9.15 a.m. on 29th June, 1988 at Defiance's Wooloowin office on the first visit. On that day, Mr. Conwell after conferring with Mr. 0' Brien, went with Mr. Adsett and others to Strathpine where the substantive file relating to various i terns imported was produced. It was submitted that Mr. Conwell should have produced the above telex (ex. 26) and any other file from the Wooloowin office immediately on that day and no doubt before the visit to Strathpine. It was said that his failure to do so was a deliberate withholding of the telex thus imputing knowledge to him that what had occurred in 1985 was also a deception. In spite of these allegations, they were not directly put to Mr. Conwell in cross-examination. It is true that this telex (ex. 26) was not produced until a second visit on 30th June, 1988 by Mr. Adsett when he. made an express request for a letter dated 31st May, 1988 (ex. 31) from Mr. Conwell to Paul Busse which letter had been referred to in other documents produced on the first visit. On the second visit on 30th June, 1988 when Mr. Adsett specifically requested that letter, Mr. Conwell without the slightest hesitation instructed -- 32 of 75 -- 28 his staff to produce any other documents that may have been in his personal file. Mr". Conwell made no attempt to locate any files himself. An employee forthwith produced a manilla folder, handed it to Mr. Conwell who examined the contents in the presence of Mr. Adsett and passed the entire folder immediately over to him. There was no attempt to remove any documents from that file. Included in the file was the letter of 31st May, 1985 (ex. 31) along with the copy telex 2295 of 24th April, 1985 from Paul Busse to Defiance (ex. 26) set out above. In an organisation the size of Defiance with its various branches, and after a period of some four years or more, it is m6sf unreasonable to suggest that the managing director of such an enterprise, with all of his responsibilities, and with staff to handle matters of detail, should have constantly at his fingertips intimate memory and knowledge of the whereabouts of every document which might have been relevant to Customs enquiries. Indeed, the procedure following on the issue of the notice to produce (Form 61) may be likened to the normal·process of discovery in civil litigation. The contents of one document might well lead by direct or indirect reference to other documents which the person seeking the production is entitled to foliow up in the ordin~ry way. This in my view is all that happened in this particular case. There was no attempt whatsoever by Mr. Conwell o~ any of his staff to conceal these or any other documents but just to the contrary. Had there been any fraudulent intent, o~ any attempt at boncealment, it would ·have been · a very simple· matter for him or his staff to have disposed of all other documents aft~r the first visit. -- 33 of 75 -- ,' \. '' 29 I do not regard anything sinister in telex no. 175 (ex. 32) sent by Mr. Conwell to Paul Busse on 27th March, 1985, requiring a telex in a particular form. . This accords with the genuine belief held by him, Mr. Connolly, Mr. Brown and all members of the staff based upon whaJ had occurred in Mr. Brown's business for a number of years prior to Defiance purchasing it in December 1984 and since. It was a normal enquiry by a person engaged in commerce. There is no reason to doubt Mr. Conwell's evidence generally although naturally his knowledge and memory of details of events years earlier was not precise. This is to be expected of a busy managing director who has staff to handle matters of detail. The suggestion that there was something sinister in the wording is inconsistent with the voluntary handing over to Customs in 1985 of the brochure showing a capacity of up to 10,000 pieces per hour, a capacity which Mr. Conwell, Mr. Brown and many other expert witnesses said was wholly incorrect. It was not used in Australia with that capacity stated thereon. Nor are the words "for customs purposes" sinister. After all, a telex was all that could be hoped for in the absence of printed brochures. The telex was not sought for any other purpose, and it was required urgently. During Mr. Conwell's evidence, a further telex from him to Paul Busse no. 238 dated 24th April, 1985 was tendered. It indicated that Mr. Conwell proposed to ring Mr. Levin (Paul Busse's representative) at 9.00 a.m. It should have been 9.00 p.m. when the call was in fact made. Telex 2295 from Paul Busse of 24th April, 1985 (ex. 26) refers to Defiance's telexes nos. 237-238. Mr. Adsett in his interview with Mr. Conwell -- 34 of 75 -- 30 referred only to telex 237 (part of ex. 24) and said that the fact that he did not refer to number 238 was an oversight. It was suggested on behalf of the Collector that because Mr. Conwell sent telex no. 238 after telex 237, (no. 238 in terms set out specific questions requiring answers), he must have connived with Levin of Paul Busse to produce the ultimate result in telex 2296 (part of ex. 24). The precise sequence of events is not entlrely clear. From the numbers on the telexes themselves, number 237 was sent by Defiance at 4.10 p.m. So was telex 238 advising of an intended telephone call which Mr. Conwell made at 9.00 p.m. Queensland time and 12 noon Busse's time in Germany. Mr. Conwell said that Busse sent one telex before his phone call and one after, because he had already spoken to Busse before Busse advised him to use his private home number due to the time gap. This suggests that Busse advised his private number for future purposes, and in no way related to the particular telephone conversation. I accept Mr. Conwell's explanation of what occurred and the submissions made by Defiance's counsel to the· effect that it is not to be unexpected that Mr. Conwell would have telephoned Mr. Busse's representative to ensure that the information sought was properly answered. Defiance had for some time been endeavouring to get accurate brochures from Paul Busse. However, it is perfectly understandable how these telexes would raise suspicion, in the absence of a full explanation. This serious allegation has not been proved by the Collector, but in the end the matter is of little consequence. Also· an explanation for Busse' s telex 2295 may well be that the brochures ✓ ', -- 35 of 75 -- '' 31 showing 10,000 pieces per hour were "quite ok" in all other respects, or because they covered an entire range as Mr. Connolly said, so that Defiance could utilise them in the meantime with an appropriate alteration. There were simply no other brochures available to hand out to customers. With respect to the telexes exchanged by Mr. Connolly on behalf of Defiance in December 1985 (see ex. 27), further telexes and documents tendered during the case for Defiance render a totally innocent explanation as to the purpose of that telex. It was submitted for the Collector that because Mr. Connolly had asked Paul Busse to send 100 brochures immediately showing a· rate gf up to 10,000 pieces an hour with an expression of thanks for "the Australian edition up to 2,500 pieces per hour" (ex. 27), Defiance had recognised throughout that the capacity of the machine was 10,000 pieces per hour (viz. in excess of 2,500 pieces per hour) and that the so-called Australian edition was "for Customs.purposes only" the purpose being to deceive·Customs. By letter of 2nd August, 1985 (ex. 45), Mr. Conwell advised Paul Busse that some recent brochures received still showed the capacity as up to 10,000 rolls/buns per hour. He requested Mr. Busse to have some prepared showing the correct figure of up to 2,500 in case Defiance ran into more trouble on importation. In spite of other reminders, these were not forthcoming and on 19th December, 1985, Mr. Connolly by telex No. 831 (ex. 46) to Busse requested 300 brochures on Olympia machines for a Sydney Exhibition in February of 1986. He requested that these be sent as soon as possible. -- 36 of 75 -- 32 To that telex, Paul Busse replied by telex 3049 (e~. 44) on 19th December, 1985, agreeing to send brochures with the statement "we can let you have 100 brochures immediately indicating up to 10,000 pieces per hour" and that by the beginning of January Busse could mail the Australian edition showing up to 2,500 buns per hour with Defiance's name ("Sottoriva Australia") on it setting out Defiance as the sole agent in Australia. It was to that telex that Mr. Connolly replied by telex 833 on 20th December, 1985 (ex. 27) accepting 100 brochures "immediately available with 10,000 pieces per hour" and thanking him for the Australian edition showing up to 2,500 pieces per hour. The incorrect brochures were all which were then available and were accepted as a stop gap for urgent use at an impending Trade Fair after they had been duly altered by Mr. Connolly to show 2,500 pieces per hour. Mr. Connolly said in evidence that the leaflet was "a general purpose brochure covering a number of machines". During the interview with Mr. Adsett, Mr. Conwell explained what was meant by the Australian edition to hand out to clients, to accord with the Australian industry's understanding of the true output, and to prevent any suggestion that Defiance would be prosecuted under the Trade Practices Legislation or otherwise for false representation by overstating the true capacity of the machine. Mr. Conwell explained in the interview that Mr.Connolly's telex (ex: 27) was in reply to a telex from Busse. This is the telex ex. 44 of the 19th December, " 1985 now in evidence. Mr. Conwell not only in the interview (ex. 14) but in his evidence said that Mr. Connolly changed the figure on the • ,, '' I -- 37 of 75 -- '' 33 brochures. Mr. Conwell was not cross-examined on the point. I accept Mr. Conwell's explanation that at all times Defiance was simply trying to get correct brochures from the suppliers showing what Defiance and its employees and other persons in the industry had believed to be the true outp?t capacity of the machine in question. On the other hand, there is probably some substance in the submissions of counsel for the Collector that Paul Busse's agent in Germany may have been "economical" with the truth and may have been prepared to state an inflated capacity which might assist sales anywhere in the world and perhaps in places where correct ,advertising was not insisted upon. Having considered all of the evidence, it is by no means clear that the output of 10,000 pieces per hour was intended to relate to the Olympia Type 4 rather than to a range of models as Mr. Connolly said. If the brochure gave that impression, it may have simply been a printing error. But whether that be so or not, Defiance at no time accepted or acted upon the figure of 10,000 units per hour. This is amply supported by the fact that Defiance in 1985 handed over such a brochure to Customs Officers in Brisbane. If the figure of 10,000 was an "economical" statement of the truth by Paul Busse, this cannot be attributed to Defiance. Whatever be the true output of the machines, I am completely satisfied on all of the evidence that Defiance, through its responsible servants and agents, .supported as it is by other experienced persons in the bakery industry, held the honest and reasonable belief right from the time when Defiance first commenced importing the Olympia Type 4 machines, that the output -- 38 of 75 -- 34 of those machines did not exceed 2,500 pieces per hour. I also accept that they honestly and reasonably held the belief that the correct classification for duty purposes was as contained in the three Entries for Home Consumption attracting a rate of duty of two per cent. Whether the latter belief was as to a question or law or fact, there can be no suggestion of any fraudulent intent or any conduct indicating an intention to evade duty or indeed any intention to make any incorrect entry or untrue statement in any document: See per Connolly J., Lee v. Anderson [ 1987] 2 Qd. R. 170 at 180. From the foregoing it appears that Mr. Adsett did not have available to him when he conducted his investigation and arrived at his decision to seize the goods, all of the material which has now been placed before the Court. Also, serious allegations of fraud or concealment or conniving with others, whether they be in relation to production of documents or whether they be in relation to proof of a mental element in accordance with specified provisions of the pleaded and strictly proved. Customs Act, must be precisely The Collector in this respect has not attained the relevant standard of proof. To the contrary, Defiance has negatived any such allegations. This leaves the question of the true output capacity of the machines the subject of this dispute. There is a considerable body of evidence some of which has already been referred to. Several persons experienced in the baking industry and in the management and use of these machines gave evidence. Two further tests were conducted, one on 1st March, 1989 by Defiance at the College of Tourism and Hospitality, Coorparoo. The other was I ' -- 39 of 75 -- 35 conducted by Mr. Peter James Donohue a baker of some 29 years standing at his bakery premises at Loganlea Palms Shopping Centre, Loganlea on 11th July, 1989 on behalf of Customs. Mr. Adsett and Mr. Donohue attended by invitation the test conducted at Coorparoo. There were 16 cuts completed in a period of 13 minutes. Mr. Adsett said that this worked out at an hourly rate of 2,215 pieces per hour. This allowed for the process where the buns or pieces of dough were placed on baking trays which apparently resulted in an hourly rate of 2,057 pieces per hour. He said that the tests were being conducted by third year apprentices in a classroom situation. There were two basically doing the work with a third assistant doing preparation work on the bench. The evidence shows that the machines can be successfully operated by any person after some instruction. These tests were criticised on various bases by the Collector. The tests subsequently conducted at Loganlea on 11th July, 1989 were also attended by Mr. Adsett and a video was taken of them. A representative of Defiance was present. Mr. Adsett designed the form of the tests to be conducted having regard to recommendations Mr. Donohue had made to him following the demonstration conducted on behalf of Defiance at Coorparoo on 1 st March, 1989. It appears that Mr. Donohue operated the machine himself but he was assisted by an experienced baker. He was also assisted by a further experienced baker and at times by his son Anthony, a pastry cook by trade. It appears that the dough has first to be mixed and "scaled off". The dough is mixed in a machine, pulled out and placed in a lump by weight so that each cut is about the same weight. It -- 40 of 75 -- 36 is then allowed to sit for a while to rest on the bench and is usually covered with cheesecloth. Another baker mixed the dough, placed it on the tray and removed it later after it had been divided by the machine and rounded. It appears that pre-test preparation work was conducted so that a certain amount of dough was already made up before the test actually commenced. Mr. Adsett did not recall the times taken in the first of three tests by the mixing, scaling off and the setting of the dough to allow it to rise. He said that test number 1 was exactly the same type of test as that conducted at Coorparoo. The timing was from when the dough was first placed on the ~ctual cutting trays th~ough the cycle when the last tray was cut to the end of the cycle, at which time the baker places the dough on the baking tray. The result achieved was 870 buns in 12 minutes 26 seconds which converts to an hourly rate of 4,198. Mr. Adsett then stated that from the time the first tray or cut was placed into the machine to the time the last of the 29 trays was removed from the machine, a period of 1 0 minutes 55 seconds elapsed which converted to an hourly rate of 4,781 pieces. No time was included for preparation beforehand, and mixing the dough, scaling -it off, and allowing the dough to rest before it was placed on the. cutting plates for insertion into the machine. The second test was conducted with "long" rolls which are produced after the dough goes through the machine in question to another machine. There were 20 cuts involving 20 trays at 30 pieces each giving a total of 600. The time taken was 5 minutes 28 seconds which Mr. Adsett indicated converted to a rate of 6,585 pieces per hour. This rate, however, was achieved from the -- 41 of 75 -- 37 time when the first cut was actually placed into the machine until the last one was actually taken out. Again it is clear that no time was allowed for mixing, preparation, or for placing the dough initially on the tray and allowed to rest. In all, a total of 15 minutes was taken transferring these pieces to another machine which converted the rolls into "long" rolls. It appears that 9 minutes 32 seconds was taken in that operation which produced only 252 "long" rolls out of the 600 pieces which converted to an hourly rate of 1,586 rolls per hour. As to test 3, Mr~ Adsett said in evidence:- "Test number 3 initially I planned to run for a full hour to see how many pieces we could actually produce from the machine in that time. However, because the obvious amount of dough around and the wastage, it reduced it to - we are looking at approximately half an hour. In fact what we did or the baker's did - they prepared a total of 79 cuts each of 30 pieces, which gave us a figure of 2,370 pieces cut through in 17 minutes and 26 seconds. That was timed from the time the first cut went into the machine until•the last cut was removed from the machine." He said that mathematically this result converted into a figure of 8,156 pieces per hour. However, after being asked whether there was some time involved in preparation for that test, he said:- "Yeah, for those 79 cuts in fact allowing for preparation time of 13 minutes - I beg your bardon - my mathematics are no good - 23 minutes, from the time it was first prepared and at the time, the last cut came out of the machine was 40 minutes 26 seconds which - that converts to 3,516 pieces per hour." Evidence was also given with respect to that test by Mr. Peter James Donohue. Mr. Anthony Norman Steinberner, an employee of the defendant engaged as National Sales and Technic~l Services for Defiance Flour Mills, attended those tests and gave -- 42 of 75 -- 38 evidence.· I have considered all of this evidence carefully as well as the videos taken. A great deal of dritibism was directed at the nature of these tests which it was submitted were conducted in an unreal situation far removed from that which prevails in a normal commercial environment for which these machines were designed. It is clear from Mr. Steinberner's evidence (and this is supported by Mr. Donohue) that in Mr. Donohue's premises, not more than 600 pieces could have been successfully produced and baked in an hour. · This was due to the limit on oven capacity typical ·of many small hot bread kitchens, bakeries and the like for which the entire industry accepts that machines of the size of the Olympia type 4 and competitive makes such as Kemper, Fortuna and others are designed and used. It was submitted that it is unreal to ignore all of the factor~ which go into the proper operation of these machines. There are so many limiting factors which control its hourly output. These include necessary repairs, cleaning and changing of plates, oiling, inserting and removal of trays, the quality and consistency of the dough, the variety of rolls used in it (e.g. bread rolls of different sizes, or buns of various sorts). The tests conducted at Mr. Donohue' s premises were conducted with stop watches in accordance with a predetermined pattern, designed by Mr. Adsett after consultation with Mr. Donohue, both of whom had seen the tests at Coorparoo. Whilst ·it may be said that the dough pieces produced during the test were generally of commercial quality (subject to time taken ·to round by hand ·a small number of them), the pieces when taken out of the machine, -- 43 of 75 -- . ' 39 were simply. thrown qnto the counter and eventually dumped. No attempt was made to have them stacked into trays and tr~ys placed in the oven for baking as is the end product or purpose of their preparation in normal. us.e. Up to three men were engaged in the operation whereas the evidence generally shows that it is usually operated by one man. Against this, counsel for the Collector submitted that the capacity of the machine must be governed by what the machine itself is capable of doing and should not be limited by any factors such as the intensity of the labour involved, the experience or efficiency of .the operators, other factors such as all the preparation involved before dough can be mixed and put through the machine, or the time taken to put the pieces onto a tray, later place them in the oven for baking, removing those trays eventually and cleaning them, etc. It was submitted that the end product being a roll available for sale was not relevant to what the machine itself was capable of doing. It did not matter. that the end product of the machine, the dough pieces produced, were dumped, rather than baked. In this regard, Mr. Steinberner agreed that in fairly artificial circumstances, the machine was capable of producing pieces in excess of 2,500 per hour, although he qualified this statement from time. to time. He said that the machine was capable of cutting and moulding three trays per minute,. i.e. from the time a tray was actually fed into the machine and removed, the next inserted and removed and so on without the operator doing anything else normally as part of the whole process. Each tray contains 30 pieces so if measured in this extreme fashion, -- 44 of 75 -- 40 the machine is capable of-producing 90 pieces were mihute. This multiplied by 60 minutes comes to 5,400 pieces per hour. ~owever, I believe-this to be a highly artificial and incorrect approach to what is the true design capacity of these machines in normal operating circumstances. Indeed, para. 4 of the manufacturer's telex number 2296 of 24th April, 19885 (part of ex. 24) is instructive in this regard. Other witnesses said that the capacity is about one tray (30 pieces) per minute or 1800 per hour. No test was conducted for a continuous hour as Mr. Adsett hoped to achieve in the third test but was unsuccessftil ih ~oing so because too much dough would have been wasted. The uncontested evidence from all experts including Mr. Donohue and Mr. Ste{nberner shows that these machines and others of their kind are comparable in output capacity. Leaflets were placed in evidence ( part of ex. 9 ( vi) and ex. 25) which show that a Kemper, a comparable machine, had an hourly capacity of approximately 2,000 pieces. So also is the Fortuna and other makes. This was in no way challenged by the Collector and indeed was accepted by all who gave evidence on the point. Mr. Donohue, during his evidence in chief, spoke of his experience with the class df machines such as Everhardts, Fortuna and the like. He said "With the Fortuna I have done up to two and a half thousand an hour". The following evidence then occurred by his counsel and finally by me. "Is that dozen or rolls?-- Yes. Dozen?-- Yeah - that's with four men working. -- 45 of 75 -- BY HIS HONOUR: hour, you said?-- rolls, ,sorry. " 41 Two and a half thousand dozen per No, two and a half thousand bread This output was with four men working (rather than the usual one operator) and even then it produced only up to 2,500 pieces were hour. Mr. Donohue also said that there was not the capacity to run any such machine for a full hour in any event. He said that if anything the subject machine was a little slower than the others, although the evidence as a whole warrants the conclusion that their respective outputs are approximately the same. Mr. Steinberner, after stating that there was no smaller type machine available which does the job of cutting and moulding dough P~.eces at a slower rate than the Olympia type 4, said that all machines in this category were virtually of the same speed. If such a machine was not wanted, then the job of cutting and moulding dough pieces for the making of rolls would have to be done by hand. He said that the next larger machine in the range was the Integra which was a semi-automatic machine. This is used in bigger establishments and it has.been accepted by the experts to have an output capacity in the order of 4,500 to 5,000 pieces per hour. He said that with three people, it could produce an output of this sort but it could not exceed 5,000 and achieve up to 10,000 per hour as put to him by counsel for the Collector. It would be surprising if the Olympia, on the tests conducted at Mr. Donohue' s premises, was capable of an output of anything like 5,000 per hour as some of the "tests" were said to demonstrate. Whilst Mr. Steinberner said that for a short period the Olympia type 4 machine was capable of cutting three trays of 30 pieces each per minute, without taking into account the previous -- 46 of 75 -- 42 preparation or what happ~n~d to the pieces after they were cut, he criticised in some re~pects the test carried ·out at Mr. Donohue' s premises. He said that the machine capacity ·depended entirely upon the availability or · consistency · of dough prepared and fed to it as well as' the capacity of the oven at the other end. Machines of this category were not used for long and sustained runs and were used in a large bakery only in an emergency breakdown situation when the larger Integra type machine was not operating due to breakdown so as the maximum number of staff could then by concerted effort dispose of ready mixed dough at an abnormally rapid rate to avoid wastage. The pieces cut and rounded are baked for sale and not dumped. His evidence shows that the usual practice was to put the dough pieces in drawers to stop the air putting skin on them rather than putting a cloth over them, although apparently the cloth method was an alternative. It was not the usual method of throwing dough onto the table and just to keep moulding at the machine itself. Usually the work was done in rotation. If the dough was thrown on the table as occurred during the tests, eventually there would be trouble pulling them apart because the yeast would be working all the time and "you might as well have not rounded them up". ·He also said that at the end of a 20 minute period, the person operating the machine was slowing down substantially·. The manufacturer has stated and the industry throughout Australia accepts that it has an output ranging from 1,800 up to a maximum of 2,500 per hour. There is no direct evidence of detrimental effect to the Olympia Type 4 machine ±fit operated -- 47 of 75 -- 43 at an excessive rate per hour for a long period. There is evidence that plates have to be cleaned which takes varying times depending upon the dough used, its quality and consistency and the type of bun or .roll. being made; there is also evidence that oiling and maintenance is ordinarily required. See ex. 16. It may be compared with the carrying capacity of other goods. A utility may be designed for carrying a half tonne yet be capable of being overloaded. So also with the carrying capacity of passengers in an ordinary motor car or the output of a photocopying machine which might be capable of photocopying a certain number of sheets in an hour of ordinary operation or a family washing machine which performs well if used three times weekly but will fail in a laundromat. Merely because a vehicle or any machine is physically capable of exceeding its design limit, at least for a short burst, it does not mean to say that that is its capacity. I accept that these machines are designed for and ordinarily used in hot bread kitchens and "in-store" bakeries. Rarely, they have been used in a larger bakery but only in an emergency situation where there is need when the major machine breaks down. As Mr. Taylor said at pp. 96-97, the machine is usually operated in a small establishment. It is part of a production process with limitations as to oven capacity and manpower both before and after the machine does its cutting and rounding. In all of the circumstances, I find the approach contended for on behalf of the Collector artificial and unconvincing. It seems to me that counsel for Defiance is correct when he submitted that output capacity could be determined only in the -- 48 of 75 -- 44 context of defined conditions of use and not by reference to artificial "test" conditions which achieve no proper commercial resuit. He submitted that the tariff concession should be given a commercial or practical construction, having regard to the purpose of a tariff concession.order: see Part XVA of the Customs Act 1901, esp. s. 269C(1)(a) and (b). Reference was also made by both counsel through various provisions of the Acts Interpretation Act, Commonwealth, said to bear on the question of construction. Whilst not directly bearing on the finding of capacity, some comfort in this approach is derived by the evidence that there is no known machine anywhere available in Australia or elsewhere which has a capacity less than the Olympia Type 4 or its competitors, to which this particular tariff concession could apply. Below their output, all cutting and dividing of dough must be done entirely by hand. No machines of the types in question are made in Australia and must be imported. There is a demand for them in smaller establishments. Australian manufacturers make only equipment of much higher capacity. Counsel for Defiance referred to the policy of the legislation designed to assist industry and so as not to compete with local manufacturers. Debate occurred on the latest hearing as to the admissibility of, or use which could be made of, material annexed to the affidavit of Simon Maxweli Gerber sworn 15th December, 1989. It appears that the solicitors for Defiance after refusal by the solicitors for the Collector to discover documents leading to the reasons for the introduction of the Tariff Concession -- 49 of 75 -- 45 Order, and in particular Tariff Concession Order 8533726 dated 29th January, 1986, obtained material under the Freedom of Information Act 1982 which indicates the contact between customs and Australian manufacturers of bakery equipment, to ascertain whether they would be detrimentally effected by the proposed Tariff Concession Order, and for the purposes of rationalising various Tariff Concession Orders. Baker Perkins Pty. Ltd. advised customs on 12th September, 1985 that it was the sole manufacturer in Australia of "industrial bakery type dividing and moulding equipment which is used in industrial plant bakeries such as Sunnicrust, Tip Top etc.'' It advised that the capacity of that equipment exceeded 2,500 rieces per hour, and also that its equipment which performed a dividing function only had a capacity exceeding 3,000 pieces per hour. That company had no objection to the proposed Tariff Concession Order. Questionnaires were sent to several Australian manufacturers who apparently did not produce machines of the type covered by the proposed order and did not object to it. In particular Baker Perkins Pty. Ltd. advised customs as follows:- "Do not anticipate problem with suppliers importing 2 dividers each rated at 2,000 pcs/hr to satisfy client requiring 4,000 pcs/hr plant. This system would not fit into bakery lay-out to give efficient operating conditions." Counsel for Defiance argued that this material was directly relevant as an aid to construction of the Tariff Concession Order as well as to the reasonableness of the belief held by Defiance based on industry views throughout Australia that the capacity of the machines in question was not greater than 2,500 pieces per -- 50 of 75 -- 46 hour. Counsel for the Collector opposed the admissibility of this material, but if it was admitted he submitted that it would not establish the actual capacity of the machines in question or the belief of the industry generally as to their capacity. I accept this submission and do not admit this material. The conclusion I have arrived at is based upon all evidence properly admitted in the case. I conclude that the leaflet showing up to 10,000 pieces per hour is grossly incorrect if it was intended to refer only to the Olympia Type 4 r~ther t~an to all Olympia units in the range. No "test" achieved anything like this result. It is no guide to capacity. Even the larger Integra is not capable of anything like that output. The leaflet either refers to several models or is a mistake or false sales puffing by persons for whom Defiance is not responsible. In the result, I conclude that the machines have an output capacity not greater than 2,500 dough pieces per hour so that the rate of duty claimed as applicable is correct. This is sufficient to dispose of the action in. favour of Defiance but in the event that this finding is incorrect, some reference should be made to the other issues raised. The Collector seeks entry of convictions against Defiance on the following charges:- 1. Three offences of smuggling contrary to s. 33(1)(a) on or about 16th March, 1988, 26th April, 1988 and 29th May, 1988; 1 ' -- 51 of 75 -- ,, 47 2. Three offences of evasion of Customs duty contrary to s. 234(1)(a) on 16th March, 1988, 26th April, 1988 and 10th June, 1988; 3. Three offences of making a false entry contrary to s. 234(1)(d) on or about 1st March, 1988, 13th April, 1988 and 5th May, 1988; 4. Three offences of producing a document containing an untrue statement contrary to s. 234(1)(e) on 2nd March, 1988, 13th April, 1988 and 1st June, 1988. The Collector also seeks declarations that:- (a) each of the entries referred was wilfully false· or, alternatively, wilfully misleading; and 2. each of the invoices referred to contain a statement which was wilfully untrue. These declarations are based upon s. 229(1)(i) which provides one basis upon which goods shall be forfeited to the Crown. i.e. "All goods in respect to which any entry invoice declaration answer statement or representation which is false or wilfully misleading in any particular has been delivered made or produced." The Collector's allegations in this respect relate to the alleged offences against s. 234(1)(d) and (e) referred to above. This is the sole basis alleged by Mr. Adsett in the notice of seizure issued by him under s. 203(2) on 30th June, 1988 (ex. ·28). That section allows an authorised person which includes an officer of Customs, to seize forfeited goods. Defiance in its statement of claim in action 66/1988 pleaded the basis of the seizure as limited to the allegations that the entries were false and/or wilfully misleading, as contained in -- 52 of 75 -- 48 the notice ex: 28, and in c!i.ccord~nce" with s. 229( 1) ( i). The Collector in its defence ahd counter claim al 66/1989 introduced a concept of "wilfully falsely and/ or wilfully misleadihg." Also in paras. 2 and 21 6f that pleading, the Collector denied th~t the sole basis for forfeiture was that the entries and/ or invoices were false and/or wilfully misleading; s. 229(1)(i), and in para. 11 he alleges that s. 229(1)(a) also provides a basis i.e. smuggling. This is no doubt correct as a matter of law if the allegation is sustained, but it is clear that if the allegation was also to be relied upon, it should have been included in the notice of seizure. It may be that at the date of the notice of seizure Jx. 28 on 30th June, 1988, Mr. Adsett had not formed the view that smuggling had occurred or had considered that the .grounds stated were sufficient. The notice of seizure is not otherwise invalid, based as it is ons. 229(1)(i) alone if the allegations urider that subparagraph are made out. Defiance in its statement of claim in 66/1988 and in its defence and counterclaim of 880/1989 seeks a declaration that the machinery is not forfeited to the Crown. If the finding that the capacity of the machines is correct (i.e. not greater than 2,500 pieces per hour) it follows that Defiance must succeed. If that finding is incorrect, the Collector will succeed on this issue only if the offence of smuggling is made out and/or a finding is made that the entries and/or invoices were false and/or wilfully misleading. It was not explained why the word "wilfully" was added by the Collector in the pleading before the word "false". It does not appear ins. 229(1)(i). -- 53 of 75 -- 49 Multiple charges have been brought by the Collector against Defiance arising out of alleged conduct which occurred at the one time in respect of each of the three imports. In order to support the charge of smuggling under s. 233 (paras. 4, 20, and 35 of the statement of claim in 880/1989), and evasion of duty under s. 234(1) (a) (statement of claim paras. 33, 18, 48) (offences which each carry the same very severe penalty), the Collector is relying on the same particulars. When expressly asked by me for particulars, his counsel stated that to sustain the charge of smuggling, which involves the importation of goods with the intention to defraud the revenue, and also the charge of evasion of duty, he relied upon the bringing of goods past Customs under cover of false papers and" upon payment of insufficient duty. He relied upon the alleged incorrect (or false) entries; s. 234(1)(d) and the alleged untrue statements in the invoices; s. 234(1)(e). To these he added that the short payment of duty (which is a consequence of the alleged "false" entries or "untrue" statements) giving rise to an alleged "evasion" of duty pursuant to s. 234(1) (a), was also a particular of the charge of smuggling. In addition he relied upon the evidence which, he submitted, showed that there had been a deliberate withholding of information from Customs i.e. ex. 26, the telex of 24th April, 1985 from Paul Busse indicating that the brochure showing 10,000 pieces per hour was "quite ok" and that a telex would be sent "for Customs purposes". Counsel for Defiance opposed this added allegation on the basis that it was so serious that it should have been particularised in the statement of claim as being tantamount to -- 54 of 75 -- 50 fraud or fraudulent· concealment. In my opinion, this objection is correct. This allegation should have been pleaded. However, in view of the findings already made on the facts, nothing in the end will turn on this omission. Thus it is alleged that separate offences occurred against s. 234(1)(d) and (e), s. 234(1)(a), and s. 233 whilst at the same time each of the "lesser" offences against s. 234(1)(d)(e) constitute particuiars of the more serious offences up the scale including evasion of duty which is also cumulative upon the lesser offences and in combination provide particulars for the charge of smuggling. At first sight this seems strange but appears to be permissible at least in some circumstances: L. Vogel & Son Pty. Ltd. & Anor. v. Anderson, Minister of State for Customs and.Excise for the Commonwealth of Australia (1967-8) 120 C.L.R. 157, and particularly where there is separate conduct on difference occasions, although doubtless the Collector has a discretion whether or not to bring multiple charges arising out of the same facts all of which occurred at the one time. However, in addition to relying upon the alleged false entries under s. 234(1)(d) and the alleged untrue statements and invoices under s. 234{1)(e) as particulars of each of the charges of smuggling and evasion of duty, the Collector seeks separate convictions with respect to the alleged breaches against each of those sections. See paras. 12, 27 and 42 of the statement· of claim in 880/1989 as to the false entries and paras. 15, 30 and 45 in relation to the alleged untrue statements and invoices. The facts pleaded in that statement of claim which are said to give rise to offences against each of those two subparagraphs, -- 55 of 75 -- 51 allege that the lodging of the entries and the production of the corresponding invoices occurred at different times when in fact all of the invoices and other documents were attached to the respective entries and lodged with the Collector at the one time. This is clear from Mr. Adsett' s sworn evidence. Compare paras. 5 and 13, paras. 21 and 28, and paras. 36 and 43 respectively of the statement of claim. It has been noted that the entries and invoices were separated and tendered separately in evidence. It may therefore be wondered whether on these facts separate offences were capable of being committed under each of s. 234(1)(d) and s. 234(1)(e) on each of the three occasions. Whilst s. 36 and Reg. 36, 37 show that an entry should be in the manner prescribed and should contain the particulars required by the Regulations, there is nothing in the section or regulations which prohibits the attachment of separate documents to an entry so as to form part of it by incorporation. Apart from the references to the tariff concession and the rate of duty applicable, the factual details from the invoices have merely been transcribed onto the entries themselves and are all attached together and produced as one. If there is a falsity and an untrue statement, they both occurred simultaneously so that from the Collector's point of view, only one false picture was presented to Customs at the one time. The situation may be quite different if the invoice was tendered to the Customs separately and at a later time, and particularly after a query by a Customs Officer in relation to the entry itself. A second false statement then becomes a much more serious matter. -- 56 of 75 -- 52 On the other hand, if t:he invoices are to be construed as being part of each entry, and if the statements therein as to output capacity of the machines are incorrect, this might overcome the submissions by counsel for Defiance that for an entry to be false, it must be something more than a mistake or conclusion of law i.e. the statement as to an incorrect tariff concession applicable. He submitted that there could be no false entry if the only :falsity was as to a matter of law. The invoices showing the output capacity would if incorrect, be an incorrect statement of fact forming part of the entry. This may account for the reason why counsel for Defiance made no speci'f ic submissions in relation to that aspect, notwithstanding that it was raised during the hearing. Offences against s. 234(1)(d) ahd (e) each attract the same maximum penalty of $5,000. I now consider each offence separately:- 1. Smuggling. s. 233 As submitted for the Collector, "smuggling" in s. 233 is not confined to getting goods past the Customs under cover of darkness without payment of duty such as in a rowboat furtively proceeding around a headland at night to a deserted cove. Smuggling occurs in relation to any importation of goods, with intention to defraud the revenue. There is no dispute that importation of the relevant goods occurred by Defiance on three separate occasions in issue. What the Collector must prove (whether according to Briginshaw or beyond reasonable doubt) is that at the relevant time, there was an intention to defraud the revenue. It is alleged that the intention arose by a combination of facts - the lodgment of false entries, presenting untrue -- 57 of 75 -- 53 invoices, the re~ulting evasion of duty as well as an alleged fraudulent concealment of the telex ex. 26 of 24th April, 1985, the latter not being pleaded. Counsel for the Collector fairly conceded that the Court will not lightly find an intention to defraud: R. v. Amenores [1980] 2 N.S.W.L.R. 34; Noyes Bros. Pty. Ltd. v. Johnson [1988] V.R. 787 at 815. He submitted that an intention to defraud may be regarded as ~n intention to prevent something getting into the revenue which the revenue is entitled to get: The King v. Australasian Films Ltd. (1921) 29 C.L.R. 195 at 218; Stephens v. Abrahams (1901-1902) 27 V.L.R. 753. On the findings of fact I have made, even if the capacity of the machines exceed. 2,500 pieces per hour, the Collector has not discharged the onus of proving an intention to defraud which is a specific element of the offence. Without proof thereof, the offence is simply not made out. It is not necessary to consider .whether a "defence" of honest and reasonable mistaken belief as to fact applies in relation to it although such a belief was held. On the other hand, I am satisfied on all of the evidence that Defiance has negatived completely any intention to defraud the revenue. These three charges are dismissed. 2. Evasion of duty which is payable: s. 2~4(1)(a) An offence against this provision attracts the same maximum penalty as smuggling. Each counsel agreed that this offence can be established only if there is some blameworthy act or omission by Defiance, the onus being on the Collector of proving such conduct to the requisite standard. The word "evade" involves more than a mere failure to pay duty: Wilson v. Chambers & -- 58 of 75 -- 54 Company Pty. Ltd. (1926) 38 C.L.R. 131. Higgins J. said that the word "evade" would.seem to connote the exercise of will in avoiding; whereas a mere failure to pay may be by accident or mistake. His Honour at 148 referred to s. 241 which has since been repealed in 1981. This repeal was relied upon by counsel for Defiance particularly in relation to the charges against s. 234(1)(d)(e) dealt with below. Particulars of this allegation was again said to comprise a combination of circumstances including the allegedly false entries and invoices as well as the alleged withholding of the telex ex. 26 viz. the withholding of information lest the Customs should consider an importer liable to a greater extent than the importer was prepared to concede. It was said that this is conduct which if the result is to avoid duty, would justify a finding of evasion: Deni ver Chemical Manufacturing Co. v. Commissioner of Taxation (N.S.W.) (1949) 79 C.L.R. 296 at 313 per Dixon J., followed in Australian Jamee Pty. Ltd. v. F.C.T. (1953) 88 C.L.R. 23 at 38-39 per Fullagher J. and in other cases. It is difficult to see how there has been a withholding of information via the telex ex. 26 of the 24th April, 1985. I accept the submission that Mr. Conwell and Mr. Connolly thought that this telex was wholly irrelevant. In any event the Collector has not proved what it was intended to convey and there are explanations inconsistent with a fraudulent intent or concealment. A brochure (ex. 20) had already been voluntarily given to Customs by Defiance at that time which showed an alleged capacity of up to 10,000 rolls/buns per hour which Mr. Conweil and Mr. Connolly and all other experts in the case regarded as -- 59 of 75 -- 55 totally wrong. Indeed, Mr. Donohue (and others) said that the capacity of a Fortuna was the same as an Olympia type 4 machine and that the Olympia if anything was a little slower than the Fortuna. He said that with four men operating it rather than the usual one man, he had achieved up to 2,500 pieces per hour. Also Mr. Adsett said to Mr. Conwell on the first visit on 29th June, 1988, in response to a statement that the Fortuna and other machines were the same said "yes, they are much the same". This was reaffirmed by a question put to Mr. Conwell in cross- examination. I accept that it is not evasive if there is a failure to produce a document which is considered to be both wrong and irrelevant. It was not put to either Mr. Conwell or to Mr. Connolly that they had, in some blameworthy way decided to withhold whatever information is thought to be contained in that particular telex. demonstrated. Nor has any other blameworthy act been The Collector has not discharged the onus proof, even if the capacity of the machines in fact exceeds 2,500 pieces per hour. Again it is not necessary to consider whether an honest and reasonable mistaken belief as to facts would otherwise excuse Defiance from criminal responsibility although such a belief was held. The whole of the evidence satisfies me that there was no blameworthy act and no other conduct which would justify a finding of evasion of duty. dismissed. These three charges are also 3. False entry: s. 234(1) (d) and untrue statement in a document : s . 2 3 4 ( 1 ) ( e ) -- 60 of 75 -- 56 It is convenient to de~l wit~ ~hese provisions together. The section at the relevant time provided:- "A person shall not - (d) make or give any entry which is false in any particular) ( e) make in any declaration or document produced, given, delivered or furnished to any officer any statement which is untrue in any particular or produce, give, deliver or furnish to any officer any declaration or document containing any such statement; (f) mislead any officer in any particular likely to affect the discharge of his duty;" Each of those three subparagraphs was omitted from the Act on the 1st July, 1989 by Act 24 of 1989 and replaced by one composite subsection (d) as follows:- " a person shal.l not - (d) knowingly.or recklessly: ( i) make a statement to an officer which is false or misleading in a material particular; or (ii) omit from a statement made to an officer any matter or thing without which the statement is misleading in.a material particular;" At the same time (1st July, 1989) s. 229(1)(i) was deleted. It is set out in full at p. 47 of these reasons above. It was submitted on behalf of the Collector that for well nigh a century, these offences were regarded as "absolute" offences and that mens rea was not relevant. Reference was made to a long line of cases none of which dealt with a Customs prosecution in this State. He submitted that whilst the -- 61 of 75 -- 57 "defence" of honest and reasonable but mistaken belief applied in an appropriate case to an offence under the Customs Act, it could not apply in a case of an offence involving strict or absolute liability. Counsel for Defiance submitted that no case had ever squarely decided the question and that s. 24 of the Criminal Code of Queensland was applicable when a Customs prosecution was brought in Queensland. Counsel for the Collector conceded that Chapter 5 of the Criminal Code is capable of applying to a Court exercising Federal jurisdiction by virtue of ss. 68, 79 and 80 of the Judiciary Act 1903 (Cth.), subject to any Commonwealth law to the contrary. Indeed he referred to R. v. Drury [1984] 1 Qd. R. 356 and particularly at 369, 370 per G~N. Williams J. That case involved a prosecution of a charge against s. 233B of'the Customs Act and was concerned principally-with the question of whether s. 632 of the Criminal Code applied with respect to evidence given by an accomplice. G.N. Williams J. at 370 said obiter that " ... if any issue of 'criminal responsibility' was raised at the trial it would have to be determined in accordance with Chapter V of the Criminal Code of Queensland, and not in accordance with the common law." In Walker v. Chapman [1904] St.R.Qd. 330, a prosecution under the Excise Act 1901 Chubb J. appears to have decided or at least assumed that ss. 22, 23 and 24 of the Code applied. However His Honour did not determine whether mens rea was an element of. the offence under consideration. That case was decided before subsequent authorities binding on courts in Queensland held that it is no longer permissible to have recourse -- 62 of 75 -- 58 to the common law doctrine of mens-rea: Widgee Shire Council v. Bonney (1907) 4 C.L.R. 977; Thomas v. McEather [1920] St.R.Qd. 166; Anderson v. Nystrom [1941] St.R.Qd. 56; Brimblecombe v. Duncan; ex parte Duncan [1958] Qd.R. 8; Hunt v. Maloney; ex parte Hunt [ 1959] Qd. R. 1 64; Gerald ton Fishermens' · Co-op. Ltd. v. Munroe [1963] W.A.R. 129. Those cases also indicate that in considering whether the operation of s. 24 may be excluded by the express or implied provisions of the law relating to the subject, recourse must be had to the particular legislation in question. The matter must be resolved on the basis of statutory construction only. In Hunt v. Maloney, Stanley, Mack JJ. held that the Health Acts. in.question did not expressly or by necessary implication exclude the operation of s. 23 of the Code. Their Honours held that there must be a different approach in Queensland to that adopted by the various authorities which applied the common law doctrine of mens rea. One can no longer look at the object of the statute and that the subject matter of the statute cannot exclude the operation of the section. Prima facie, this would appear to be a different approach to the interpretation of provisions of the Customs Act in places where there is no provision such ass. 24 of the Criminal Code. More recently the point has been adverted to by Connolly J. in a strong assenting judgment in Lee v. Anderson [1987] 2 Qd.R. J70 at ]80. The Full Court was concerned with whether mens rea was an element of an. offence created by s. 234 ( 1 ) ( e) . The majority held that the offence was.absolute and that mens rea was not an element. Connolly J. at 180 said:- -- 63 of 75 -- 59 " it is important to remember that we are not dealing with the defence of honest and reasonable mistake of fact. I do not think that reliance on a New South Wales license could amount, in the circumstances to a mistake of fact, but it is by no means incredible as a foundation for a state of mind which is not consistent with guilty knowledge." In the Supreme Court of Western Australia (also a "Code" State) in Stitt v. CBI Constructors Pty. Ltd. (Appeals Nos. 1125- 1130 of 1989, 6th February, 1990 unreported) Franklyn J. analysed the authorities relating to offences against s. 234 ( 1 ) ( d) . Whilst recognising a doubt, he concluded on the authorities which bound him that proof of a mental element was not necessary for an offence against that subsection. He added: "Although the matter was raised by me it was not the respondent's case and it was not argued that even were mens rea not an essential ingredient of an offence under s. 234(1)(d), a defence of honest and reasonable mistake was open and disclosed by the evidence and that the facts giving rise thereto were not negatived by the prosecution (see He Kaw Teh v. R. (supra) Gibbs C.J. at p. 623)" As to the passage from the judgment of Gibbs.C.J. see also (1985) 157 C.L.R. 523 at 532-534 where the Chief Justice discussed this aspect in considerable detail. Before these questions are considered, it is necessary to refer to the submissions by counsel for Defiance that there could be no offence against s. 234(1) (d) because the only matter alleged by the Collector to be "false" is the rate of duty claimed therein, assuming that the capacity of the machines exceeded 2,500 pieces per hour. The Collector submitted that a wrongful classification or duty rate can constitute ·falsity in any entry. He relied on Noyes Bros.· Pty. Ltd. v. Johnson per Southwell J. at 822 and R. v. Lyon (1906) 3 C.L.R. 770. -- 64 of 75 -- 60 Defiance submitted that it followed from Sternberg v. R. (1953) 88 C.L.R. 646 and Davidson v. Watson (1984) 28 A.L.J.R. 63 that for an offence to be committed against this sub para., the false entry must be "contrary to fact". (See pp. 653, and 64 respectively of those reports). It was submitted that the approach of Southwell J. in Noyes Bros. v. Johnson ought not to be followed and that in any event, His Honour thought it relevant that his view would not in practice work harshly "for the reason that any importer in doubt as to the correct classification may apply before entry for a tariff classification advice". It was said that there is no such procedure available for advice as to the applicability of the tariff concession orders. R. v. Lyon dealt with a question both of law and of fact and so does not assist one way or the other. The only case on the point seems to be Noyes Bros. Pty. Ltd. v. Johnson. Whilst no other authority was located by Counsel on the point, it should be observed that the High Court in Sternberg v. hand Davidson v. Watson were concerned only with an incorrect statement of fact in the respective entries, in the context of whether knowledge on the part of the appellant as to the falsity was an ingredient. It is difficult to say that the High Court laid down a principle that an entry cannot be false if it contains an incorrect classification or rate of duty. The fact is, if it be a fact, that a wrong classification or rate of duty was stated, based upon a view taken of the law applicable. Whilst the point is not free of difficulty, there seems to be no reason why an entry cannot be regarded as false if it has an error of this kind however it arose, even if it is an error -- 65 of 75 -- 61 of law. The entry is "incorrect" and in that sense it is "false". However, even if this cannot be regarded as a mistake of fact by Defiance, "it is by no means incredible as a foundation for a state of mind which is not consistent with guilty knowledge" per Connolly J. in Lee v. Anderson at 180. That is another question to which I now turn. There seems to be two separate questions as Connolly J. adverted to in Lee v. Anderson:- 1. Is a mental element a part of these offences i.e. must knowledge that the entry is false or that the invoice was untrue be proven as part of the offence? If yes, on the findings I have made, the Collector has simply failed to prove his case. 2. Where knowledge is not an element of the offence, is the defence of honest and reasonable but mistaken belief available to exculpate Defiance from criminal responsibility? On the first question, the Collector sought to distinguish Murphy v. Farmer (1988) 165 C.L.R. 19 on the basis that it concerned s. 229 ( 1) ( i) now repealed which included the word "wilfully" in the phrase "false or wilfully misleading". The majority (Deane, Dawson and Gaudron JJ.) held that it was not necessary to give the same meaning to "false" in both s. 229(1)(i) and s. 234(1)(d), thus, it was argued, recognising the authorities dealing with s. 234(1)(d), (e), i.e. no proof of mental element was needed; Sternberg v. The Queen; Davidson v. Watson. -- 66 of 75 -- 62 Counsel for D~fiance submitted that the High Court in ruling that the meaning of the word "false" in s. 229(1)(i) meant purposely, deliberately or intentionally untrue, based as it was upon the very serious consequences of forfeiture which would flow from Ia finding under that. paragraph, did not determine the meaning of "false" in s. 234(1) (d) or "untrue" in s. 234(1) (e) . . Rather, he submitted, it was a pointer to the view that the words "false" and "untrue" in those sub-paragraphs also clearly required a mental element. He submitted that other cases such as Cameron v. Holt (1980) 142 C.L.R. 342, as well as Murphy v. Farmer and He Kaw Teh v. R., indicated a tendency in the High Court to the view that a mental element was in truth an element of these. offences. He relied on the comments of Connolly J. in Lee v. Anderson at 181 which indicated that the views expressed in Sternberg v. The Queen were not part of the ratio oecidendi. The High Court said that cases of that description'~ere not of a kinp in which special leave to appeal should be granted. Counsel for Defiance also submitted that the abolition of s. 234(1.)(d), (e), (f), and s. 229(1)(i) on 1st July, 1989 and the replacement of the two sub paras. now under consideration by a single sub-paragraph (d) which clearly requires proof of a mental element, indicates a legislative recognition of the fact that mens rea was an element of the offences all along. He also relied on the abolition.of s. 241 which was repealed in 1981 long after the decisions in Sternberg v. R., and Davidson v. Watson. That section provided:- "Any person may at any time be charged with an offence against this Act and with an intent to defraud the revenue and if in addition to such offence he is -- 67 of 75 -- 63 convicted of such intent the maximum penalty shall be doubled that otherwise provided." That section was said to generally recognise that at least in certain offences, an intent was not necessary, but if it was shown, then a separate offence occurred involving a double penalty. Since the repeal, there has been a substantial increase in the penalties provided by other sections which, it was submitted, was a legislative indication that whilst an intent may not previously have been an element because of s. 241, that intent has now been "transferred" to other sections with the removal of s. 241. It does not appear whether this point was raised before the Full Court in Lee v. Anderson. On this point it might also be noted that with the repeal of s. 234(1)(d), (e), ( f) and s. 229 ( 1) ( i), on 1 st July, 1989, the penalty provided for ins. 234(2)(c) in the case of offences against paras. (1)(d), ( e) of not exceeding $5,000 was deleted and replaced by an entirely new sub-section (3) as follows:- "Where a person is convicted of an offence against paragraph (1)(d) in relation to a statement made, or an omission from a statement made, in respect of the amount of duty payable on particular goods, a Court may, in relation to that offence, impose a penalty not exceeding the sum of $5,000 and twice the amount of the duty payable on those goods." Thus it was submitted that not only the repeal of the former s. 241 but the repeal and replacement sections inserted on 1st July, 1989 indicated that mens rea was in truth an element of these offences all along. This point does not seem to have been dealt with in any decided case. In Murphy v. Farmer, the majority, speaking of s. 229(1)(~) said at 28-29:- -- 68 of 75 -- 64 "The provision is, in our view, properly to-be seen-as penal or quasi penal in character and is attracting the rule that 'those who contend that a penalty may be inflicted, must show that the words of the Act distinctly enact that it shall be incurred under the present circumstances. They must fail, if the words are merely equally capable of a construction that would, and one that would not, inflict the penalty': Dickenson v. Fletcher; in Lyons v. Smart, Barton J. quoted the above words of Lord Esher (then Brett J. in Dickenson v. Fletcher." That passage is a strong indication of the current attitude of the High Court. Offences against sub-paragraphs now under consideration must be seen as penal or quasi penal in character. Some of the possibilities which flow from Murphy v. Farmer were discussed in Cals Information [1988] C.I.B. 284, 289. The note indicates that Murphy v. Farmer reverses authority such as Toy Centre Agencies Pty. Ltd. v. Spencer (1983) 46 A.L.R. 351 which held that falsity ins. 229 which leads to forfeiture of the goods, should be equated with the authorities on the word "false" in s. 234 of the Act and brings into question the authorities on the meaning of "false" ins. 234. There could have been serious consequences flowing from a conviction under that section. It was an offence in respect of goods: Vogel and Sons Pty. Ltd. v. Anderson and could have lead to a condemnation in certain circumstances e.g. s. 262, if the requirements of s. 229(1)(i) were satisfied. Kneipp J. in Lee v. Anderson said that apart from authorities at that time, he would have little doubt in holding that mens rea was an element of an offence under s. 234, but ruled that it did not apply unless and until the High Court indicated otherwise. This was also the approach of Franklyn J. in Stitt v. CBI Constructors Pty. Ltd. Since Lee v. Anderson, ·, ' -- 69 of 75 -- 65 Murphy v. Farmer was decided, but it cannot be said that it overruled any question decided by the majority in Lee v. Anderson. There is also the long line of cases which have stood without legislative amendment, even afters. 241 was repealed in 1981 . Whilst for my part, I would have been prepared to hold that mens rea is an element of offences against s. 234(1)(d), (e). I consider myself bound by the Full Court in Lee v. Anderson. It goes without saying that if mena rea is an element, the Collector has not made out a case under either provisions. However, this conclusion does not mean that s. 24 of the Criminal Code is not applicable to exculpate Defiance from criminal responsibility, at least with respect to the offence alleged against s. 234(1)(e) which involves a misstatement of fact. On the submissions of counsel for Defiance, although the point is far from clear, it may be difficult to say that it would apply with respect to the offence charged against s. 234(1)(d), the submission being that the entry simply contained a wrong conclusion of law. I have difficulty in the submission on behalf of the Collector that a defence of honest and reasonable but mistaken belief cannot apply to an offence against the Customs Act where no mental element is involved in the offence in question. In other words, it was submitted that this "defence" was available only in a case where a mental element was an ingredient. To say that a statement made without knowledge that it is true, is no basis for holding that an offence has not been committed in the sense that mens rea is not an element, is one thing. It may be -- 70 of 75 -- 66 quite another thing where there is a positive state of knowledge i.e. the possession of a honest and reasonable but mistaken belief as to a state of facts which if true would render the conduct innocent. Having regard to the Queensland authorities which establish that in the process by which any law should be construed to see if it excludes the operation of s. 24, it is not permissible to look at the object and purpose of the statute. It is an exercise only of statutory construction: Hunt v. Moloney. In considering whether the Customs Act and in particular the provisions of ss. 234(1)(d), (e) are so inconsistent with s. 24 of the Code as to exclude its operation with respect to offences against those paragraphs, it is not enough that particular offences are created by the Customs Act. See for example the remarks of Griffith C.J. in argument in Molloy v. Hallam [1903] St.R.Qd. 282 at 285. There are difficulties in this area and obvious disadvantages in having an interpretation which might differ depending upon the State in which a prosecution is launched. The problem was recognised by Wilson J. (dissenting} in He Kaw Teh v. The Queen and in particular at 559 where His Honour said that his conclusion had the merit of bringing the common law in Australia on the question of honest and reasonable mistake into line with the law in the Code States of Queensland, Western Australia and Tasmania. He referred to Brirnblecombe v. Duncan and Geraldine Fisherman's Co-operative Ltd. v. Munro. Not without hesitation, I adopt the submissions of counsel for Defiance and rule that s. 24 of the Code operates so as to exculpate Defiance from criminal responsibility for an offence -- 71 of 75 -- 67 at least against s. 234(1)(e) of the Customs Act (untrue statement in an invoice) if an offence against that provision is otherwise made out. As indicated, if mens rea is an element, the Collector has simply failed to prove an offence against that sub- paragraph as well. as against s. 234(1)(d). The onus is on the Collector to exclude operative mistake and this he has not done. If it be correct that no mental element is necessary in an offence against s. 234(1) (d), and if an offence against that sub:- paragraph may be committed by an incorrect statement of law ( assuming that a false classification or rate of duty is an error , of law) so that s. 24 of the Code does not operate, the Collector has discharged the onus of proving all necessary elements of the offence. This of course is on the basis that the true capacity of the machines exceeded 2,500 pieces per hour. This leaves the question of forfeiture of the goods pursuant to s. 229 ( 1) ( i). I have already held that no offence of smuggling has been made out because the constituent elements of that offence was not established. This leaves the only basis alleged pursuant to s. 229(1)(i). By virtue of the decision in Murphy v. Farmer, it is not possible to conclude that any entry, invoice or declaration was purposely, deliberately or intentionally untrue. No other basis was suggested or proven on which forfeiture could occur. So even if the capacity of the machines exceeded 2,500 pieces per hour, no basis has been established by the Collector for the declaration sought in the defence and counter-claim in Action 66 of 1989 that the seized bakery machinery is and has been at all material times to this action forfeited under the Act. Nor is the Collector entitled -- 72 of 75 -- 68 to the sum of $275,097.90 being the amount of security provided by Defiance on 1st July, 1988 to secure the release of the machinery seized. On the other hand, Defiance is entitled to a declaration that the machinery is not forfeited and an order that the plaintiff release or discharge the security given by Defiance and the National Australia Bank Limited. In the result I conclude as follows:- 1. The machines in question have a capacity not greater than 2,500 pieces per hour and so fall within Tariff Concession Order No. 8533726. 2. Defiance Enterprises Pty. Ltd. is entitled to a declaration that the seized bakery machinery is not forfeited. Declare accordingly. 3. Order that Francis Ivor Kelly in his capacity as Comptroller-General of Customs for the Commonwealth of Australia, release or discharge the security given by Defiance Enterprises Pty. Ltd. and National Australia Bank Ltd. in order to secure the release of the goods seized. 4. Order that there be judgment for Defiance Enterprises Pty. Ltd. in Action 66 of 1989 against the Collector of Customs for the State of Queensland and the Commonwealth of Australia, together with costs of and incidental to that action to be taxed. 5. Order that judgment be entered in action 880 of 1989 for Defiance Enterprises Pty. Ltd. against Francis Ivor Kelly (suing in his capacity as Comptroller-General of Customs for the Commonwealth of Australia), together with costs of and incidental to that action to be taxed. -- 73 of 75 -- 69 6. Declare that at the time the goods were seized pursuant to s. 203, Desmond John Adsett, an officer of Customs, believed on reasonable grounds on the information then available to him that the goods the subject of the seizure were forfeited goods. This disposes of both actions. However, if the finding as to the capacity of the machines is not correct, I indicate the following:- ( a) No offence of smuggling or evasion of duty has been established by the Collector. (b) No mental element is necessary to sustain a conviction for an offence against s. 234(1)(d) or (e) of the Act. (c) An offence has been established against s. 234(1)(d) of the Act assuming that the finding as to no mental element is correct and that s. 24 of the Criminal Code does not operate so as to exculpate Defiance from criminal responsibility. (d) The Collector has not discharged the burden of excluding beyond reasonable doubt the existence of an honest and reasonable but mistaken belief by Defiance as to facts which exculpate Defiance from criminal responsibility for an offence against s. 234(1)(e) so that no offence was committed against that provision. (e) If any offence is established against Defiance whatever the capacity of the machines in question, I would in the circumstances of this case act under s. 19(B) of the Crimes Act 1914, having regard to the matters set out in that section, and discharge Defiance on condition that it pays -- 74 of 75 -- 70 the total duty outstanding of $31,747.71 together with interest thereon pursuant s. 72 of the Common Law Practice Act at 12 per cent per annum calculated on each amount of duty due and payable from the date of each of the respective entries for home consumption to the date hereof. ( f) The goods subject of the seizure are in any event not forfeited goods so that Defiance is entitled to a declaration to that effect as well as for an order that the security given be released or discharged by the Collector. The formal orders are as set out in numbered paras. 1 to 6 inclusive above. -- 75 of 75 --