FEDERAL COURT OF AUSTRALIA

 

South Blackwater Coal Limited v Chief Executive Officer, Australian Customs Service [2000] FCA 1398

ADMINISTRATIVE LAW – judicial review under ss5 and 6 of Administrative Decisions (Judicial Review) Act 1977 (Cth) and section 39B (1A) of the Judiciary Act 1903 of a decision and conduct leading to the decision of the CEO Australian Customs Service not to make a determination under s273 of the Customs Act 1901 that item 45 of Schedule 4 (relating to concessions for customs duty) to the Customs Tariff Acts 1987 and 1995 applied to certain equipment for a colliery project – Ministerial policy requiring demonstration of absence of Australian manufacturing capacity – further Ministerial policy against application for concessions being made after commitment to importation – what constituted an application for concessions – whether application retrospectively made – whether rejection of application occurred without regard to merits – construction of s273 – whether inconsistency of decision-making occurred.

WORDS AND PHRASES – Change of policy – onus of proof – unreasonableness

 

Khan v Minister for Immigration and Ethnic Affairs (unreported Fed Ct of Aust 11 December 1987 Gummow J) applied

Bruce v Cole (1998) 45 NSWLR 16 applied

Surinakova v Minister for Immigration, Local Government and Ethnic Affairs (1991) 33 FCR 87 applied

Re Drake and Minister for Immigration and Ethnic Affairs  (1978-1986) 2 ALD 634 distinguished

Attorney General (NSW) v Quinn (1989-1990) 170 CLR 1 at 35-37 applied

BHP Direct Reduced Iron v Chief Executive Office Australian Customs (1988-9) 55 ALD 665 distinguished

Minister for Aboriginal Affairs v Peko-Wallsend (1986) 162 CLR 24 applied

Minister for Immigration and Ethnic Affairs v Teoh (1995) 183 CLR 273 at 290 applied

Enichem Anic Srl v Anti-Dumping Authority (1992) 39 FCR 458 at 469 applied

Save The Showground For Sydney Inc v The Minister for Urban Affairs and Planning (1997) 95 LGERA 33 applied

ACI Operations Pty Ltd v CEO Customs (1998-9) 53 ALD 86 at 91 applied

Swan Television and Radio Broadcasting Ltd v Australian Broadcasting Tribunal (1985) 8 FCR 291 cited

Drake v Minister for Immigration and Ethnic Affairs (1979) 46 FLR 409 at 420-2 distinguished

Abebe v Minister for Immigration and Multicultural Affairs (1999) 162 ALR 1 at 54 applied

Mohamed v Minister for Immigration and Multicultural Affairs (1998) 83 FCR 234 distinguished

 

SOUTH BLACKWATER COAL LIMITED v CHIEF EXECUTIVE OFFICER, AUSTRALIAN CUSTOMS SERVICE

CONTI J

SYDNEY

4 OCTOBER 2000

 

 

FEDERAL COURT OF AUSTRALIA

 

SOUTH BLACKWATER COAL LIMITED v CHIEF EXECUTIVE OFFICER, AUSTRALIAN CUSTOMS SERVICE [2000]

 

 

Index to Judgment

 

 

Heading                                                                                                                                 Page

The Legislation                                                                                                                         1

The 18 October 1993 Application                                                                                            4

Government Statements Concerning Industrial Policy 1994-5                                                    10

The 13 October 1995 Application                                                                                            16

ACN 94/27 ACN 95/55 and ACN 95/74                                                                                19

ACN 96/32                                                                                                                              26

ACN 98/22                                                                                                                              30

Correspondence and Dialogue Between Coal and Customs 1997-8                                          33

The 20 July 1999 Application                                                                                                   42

Statement of Reasons                                                                                                               56

Policy and Merits Generally                                                                                                      60

Australian Content                                                                                                                    68

The Inflexible Applicant of Policy                                                                                              80

Retrospectivity                                                                                                                          82

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N 1518 OF 1999

 

BETWEEN:	SOUTH BLACKWATER COAL LIMITED (ACN 011 026 154) APPLICANT
AND:	CHIEF EXECUTIVE OFFICER, AUSTRALIAN CUSTOMS SERVICE RESPONDENT
JUDGE:	CONTI J
DATE OF ORDER:	4 OCTOBER 2000
WHERE MADE:	SYDNEY

 

THE COURT ORDERS THAT:

 

1.                  Application be dismissed.

2.                  The Applicant to pay the costs of the Respondent of the Proceedings.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N 1518 OF 1999

 

BETWEEN:	SOUTH BLACKWATER COAL LIMITED (ACN 011 026 154) APPLICANT
AND:	CHIEF EXECUTIVE OFFICER, AUSTRALIAN CUSTOMS SERVICE RESPONDENT

 

JUDGE:	CONTI J
DATE:	4 OCTOBER 2000
PLACE:	SYDNEY

REASONS FOR JUDGMENT

1                     This is an Application for Judicial Review of a decision of the Chief Executive Officer of the Australian Customs Service (“Customs”) to refuse to make a determination in favour of South Blackwater Coal Limited (“Coal”) under section 273 of the Customs Act 1901 (Cth) in respect of certain component parts of mining equipment imported into Australia for the purposes of Coal’s Kenmare Colliery Project, being componentry comprising thirteen (13) controlled start transmission units, to which I will refer as the subject units. The Application involves a complex series of events extending over a period of about six years, and I have found it necessary, having regard to the way in which Coal has presented its submissions, to trace those events in some detail.

The Legislation

2                     The terms of section 273 are as follows :

 

“273 Determinations

 

(1)               The CEO may determine, by instrument in writing, that, subject to the conditions, if any, specified in the determination, an item, or a proposed item, of a Customs Tariff that is expressed to apply to goods, or to a class or kind of goods, as prescribed by by-laws shall apply, or shall be deemed to have applied, to the particular goods specified in the determination.

(2)               The CEO may make a determination under the last preceding subsection for the purposes of an item, or a proposed item, of a Customs Tariff whether or not he has made a by-law for the purposes of that item or proposed item.

(3)               Where, under this section, the CEO determines that an item, or a proposed item, of a Customs Tariff shall apply, or shall be deemed to have applied, to goods, that item or proposed item shall, subject to this Part and to the conditions, if any, specified in the determination, apply, or be deemed to have applied, to those goods as if those goods were specified in a by-law made for the purposes of that item or proposed item and in force on the day on which those goods are or were entered from home consumption.”

This section does not purport to limit the range of considerations open to Customs for the purpose of making, or declining to make, any such determination. The making or refusal of any such determination is discretionary: ACI Operations Pty Ltd v CEO Customs (1998-9) 53 ALD 86 at 91.

3                     The reference in section 273 to “CEO” is to the Chief Executive Officer of Customs.  The expression “Customs Tariff” is defined by the Customs Act to mean “… an Act imposing duties of customs, and includes such an Act that has not come into operation.”  At the time of commencement of the events narrated below, there was in force legislation of that description, namely the Customs Tariff Act 1987 (Cth).  That Act underwent amendment in 1989 and 1991, and was replaced by the Customs Tariff Act 1995 (Cth), the operation of which commenced on 1 July 1996.  The Customs Tariff (Miscellaneous Amendments) Act 1996 (Cth), which also took effect on 1 July 1996, provided for saving and transitional provisions to apply to certain by-laws made under section 273 of the Customs Act, including the presently relevant By-law 45 which was framed in similar form under Schedule 4 to both the 1987 and 1995 Customs Tariff Acts. Schedule 4 has at all times provided for “Concessional Rates Of Duty” for goods imported into Australia on or after the respective dates of commencement.  From and after 12 March 1991, Item 45 of Schedule 4 to the Customs Tariff Act 1987 stipulated as follows :

“Goods designed for use in the mining and minerals processing industries, as prescribed by by-law.                                                         Free”

The Customs Tariff Amendment Act (No. 1) 1996, the operation of which commenced on 15 July 1996, substituted the following Item 45 as follows:

“Capital equipment for use in the mining and resource processing industries, as prescribed by by-law.                                                                 Free”

Such alteration was not material for present purposes. There is no dispute that the subject units constituted “capital equipment”.

4                     Section 10 of the Customs Tariff Act 1995 provides as follows :

“(1)     Unless the contrary intention appears, if the word “Free” is set out in Section 16 or 18 or in a rate column, that word is a rate of duty.

(2)               Unless the contrary intention appears, any words, or words and figures, set out in a rate column, that enable the duty to be worked out in respect of goods, are a rate of duty.”

Other amendments were made to the Customs legislative package which took effect in July 1996, but it is appropriate that I postpone further reference to the same until [36] below in order to maintain a measure of chronological sequence in describing the background to the present Application.

5                     What may be described as the Policy By-Law Scheme of the Customs Tariff legislation, being the scheme for prescription of By-laws referred to in section 273 of the Customs Act, has been administered by Customs since May 1994. Prior to that time, administration was undertaken jointly by Customs and the Department of Industry Technology and Regional Development (“the Department”).  Such scheme has involved the periodic publication of Government or Ministerial policy taking the form of Australian Customs Notices (“ACNs’). The issue of such ACNs occurred over a number of years prior to the Customs decision now sought to be reviewed by Coal which was made on 21 September 1999. By reason of the complexity of circumstances leading to the Statement of Reasons of Customs for such decision made on 20 October 1999 pursuant to section 13 of the Administrative Decisions (Judicial Review) Act 1987 (Cth) [66], and by reason of the various ways in which Coal has framed its case for administrative review by reference to events occurring over the period of six years from October 1993 to September 1999, it is necessary to set out below in considerable detail the material or potentially material events and the content of documentation brought into existence over that period of time which might bear upon the resolution of the ultimate controversies that have emerged.

6                     The original Respondents to this Application were the Chief Executive Officer of Customs and the Secretary of the Department. By consent the Secretary of the Department was omitted from the Application.

The 18 October 1993 Application

7                     On 18 October 1993 Coal made application to Customs for admission under Item 45 of Schedule 4 of the 1987 Act of the “Goods for the Kenmare Colliery Project being components for any of the following…”, and thereafter was set out nine categories of major equipment, including that the subject of the present Application, which was described as “e) Tailgate, main heading and drift conveying equipment”, and which have been referred to in the evidence as underground conveyors. The subject matter of the litigation are not major items of imported equipment but imported components for major items of equipment being assembled in Australia, namely underground conveyors. The application was copied to the Department. Such application, and the written submissions and documents subsequently put forward on behalf of Coal to Customs and the Department, were framed and advanced on behalf of Coal by Rodda Castle and Hind, Customs and Trade Consultants, but for the purposes of these reasons for judgment, the convenient course is to include that firm within the general description “Coal”, except in the few situations where it has been necessary to distinguish between Coal and that of its said Consultants.  That application contained the following descriptive material concerning the Project :

“The project requires surface preparation in addition to the underground development work including the installation of a longwall mining machine system.  For the completion of the project, South Blackwater will seek to involve Australian manufacturers to a maximum.  The majority of the imported componentry will involve the installation of a longwall mining machine system.  Longwall mining machines are not manufactured in Australia, notwithstanding that some of the components of the system can be locally manufactured, and are classified to tariff sub-heading 8439.31.00 (duty free).

Other major components of the project are the surface and overland coal handling equipment, the tailgate, main heading and drift conveying equipment, and the pit top coal handling facility used to convey the extracted coal from the underground mine to the coal preparation plant.  This machinery will be manufactured in Australia and will comprise components from various sources, some of which will be imported from overseas suppliers, with the remainder being either locally sourced or manufactured.  Any decision to use imported components will be made after sourcing local manufacturers with consideration given to :

(a)               availability;

(b)               compatibility;

(c)               quality;

(d)               price;

(e)               warranty; and

(f)                delivery.

The acquiring of the abovementioned capital equipment is in the main  to increase production in the extraction of coal from the Kenmare Colliery.

…

Attached is a summary of the equipment items intended to be acquired for the project.  We are advised by South Blackwater that while they are seeking maximum Australian content into the building of the project, the requirement by some contractors to use imported components is necessary.  It is for this reason an application for by-law under Item 45 is being submitted.  The granting of a by-law under Item 45 will reduce input costs by means of minimising duty liability and subsequently a reduction in input costs.  We anticipate the benefits achieved by the granting of an Item 45 by-law will total approximately $3 million in capital costs and will assist in the continuance of using Australian manufacturers to a maximum.”

Such “… summary of the equipment items intended to be acquired for the project” was not produced in evidence, presumably because the issue involved in this Application concerns not so-called “equipment items”, but as already indicated, components of such equipment items. Why there was a “requirement by some contractors to use imported components” was not stated.

8                     In respect of each such category of equipment, the estimated date for calling of tenders (varying from September 1993 to mid 1994) and for commissioning of the project (varying from late 1994 to late 1995) were set out, those relating to the underground conveyors being respectively mid 1994 as to tender and late 1995 as to commissioning. In the events which happened, the area of dispute the subject of this Application For Judicial Review became confined to the thirteen (13) controlled start transactions units already mentioned in [1] above, which formed part of the componentry for underground conveyors. Senior Counsel for Coal explained in address that such units comprised machinery which were placed periodically along the seven kilometres of the conveyor belt forming part of the Colliery extension infrastructure.

Such letter of application also sought “project status” to be granted to “the minesite”, the implications or purposes of which do not directly involve any controversy in the context of the present proceedings: see [9-10], [19] and [28] below. “Project status” was apparently granted on 4 May 1998. Coal has submitted that this letter of 18 October 1993 is to be characterised by its boldly transcribed heading, namely “APPLICATION FOR BY-LAW UNDER ITEM 45 – KENMARE COLLIERY”.

9                     At the time such application to Customs was made by Coal, there was in force Australian Customs Notice (ACN) No 91/122 which had taken effect on 11 July 1991, and which stipulated certain Item 45 qualification procedures. Such procedures generally provided for an application to be made in the first place for a so-called Tariff Concession Order (“TCO”) in order to test whether goods were made in Australia or were capable of being made in Australia (as to which see [18] and [29] below), or if not granted, for an application to be made for an Item 45 By-law concession. In the latter case, such ACN 91/122 stipulated that Customs in conjunction with the Department would examine the reasons for TCO refusal and might communicate with local manufacturers to confirm the nature and extent of local manufacture in the ‘normal course of business’. Any such Item 45 application was required to take the form of “a well reasoned submission, setting out the case for consideration”. By this Coal letter of 18 October 1993, Coal purported to apply for Item 45 concessions without seeking a TCO. It appears that the view was taken at the time of writing of such letter of 18 October 1993 that for the purpose of facilitating Coal’s Item 45 concession application, it was more appropriate to seek such abovementioned “project status”. Under the heading “Background”, the following appeared in ACN 91/122:

“The initial press release announcing Items 45… indicated that these concessional items were available for mining… equipment not made in Australia in the normal course of business. In conjunction with the Department of Industry Technology and Commerce (DITAC), normal course of business has been defined as:

-                     producing now for production line items, or

-                     having made the specific goods within the last two years for one off items.”

ACN 91/122 concluded that final approval would be at the discretion of the Minister.

10                  The initial response of Customs contained in a letter of 1 November 1993 was to state that Coal’s letter of 18 October 1993 had been considered by Customs and forwarded on for Item 45 assessment by the Department. Following a meeting with Coal, the Department notified Coal on 28 February 1994 as follows (inter alia):

“…

The application does not specify an operative date for the concession.  If the operative date is a considerable time before the application date, the goods may not be included in the approval.  However, it is our understanding that the mine is new, therefore retrospectivity should not present difficulties.

Your letter asks for ‘project status’ to be granted to the minesite.  Although the application does not provide details of the equipment expected to be imported, it seems to us that there will be a considerable quantity of imported goods. We agree that it is not necessary to pursue TCO’s on the imported goods, but we will require information that satisfies us that the imported goods are not made in Australia in the normal course of business.

As we discussed at the meeting, the application identifies, in very broad terms, the major facilities that make up the operating colliery.  Would you please identify more specifically the equipment being imported for the project, together with information to enable us to determine that the ‘not made in Australia in the normal course of business’ criterion of Item 45 is satisfied.  This information should include an explanation of the efforts made by the applicant to source goods locally, and an explanation of the reasons for sourcing goods from overseas.

…

In conclusion, based on the information currently available to us, we are not able to recommend to the Minister that he approve the Item 45 concession.  To assist you in gathering the information that we require, the copy of our ‘Advice to Applicants’ given to you at the meeting would be useful.  This is a draft at present and requires some improvements and clarification, but it should provide a good guide.”

Thus it was clearly signalled at the outset to Coal that more information and detail would be necessary for the obtaining of Item 45 duty concessions for imported components of the equipment proposed to be acquired, and that the requirements of ACN 91/22 as to “a well reasoned submission, setting out the case for consideration” had not been complied with and improvement in the information provided and explanations were required of Coal. As will later appear, it was not at this point in time certain what components of the major items of equipment would definitely be imported, so that understandably Coal was not then in a position to advance this application.

11                  The document attached to such Department letter addressed the same theme as to the need to establish entitlement to concessional importation of overseas manufactured components, by reference to the unavilability of similar manufactured components in Australia, in the following terms:

“Applicants are asked to provide a well researched, well reasoned submission covering the following points :

…

Costings

 

·        Total investment (excluding the purchase of land)

·        Breakdown of costing for project into :

-                     imported equipment, machinery and components

-                     local equipment, machinery and components

-                     construction costs – please indicate if there is imported content

-                     labour costs

-                     services costs.

-                      

Imported Content

 

·        Broad listing of the major imported components.

·        What efforts were made to source these major components locally?

·        Reasons for importing each major component – it would be useful to classify these imported components to determine if some are free in their own right in the tariff or are eligible for duty free entry via tariff concession orders.

Local Content

 

·        The value of local content and percentage?

·        Local sub-contractors and their involvement in project

·        Do any of the goods supplied by local sub-contractors incorporate imported components?  If so, please indicate.”

12                  It follows that at an early point in time, Coal was put on notice that significantly more information would be needed for an adequate Item 45 concession application, albeit without any supervening need for a TCO application, before a favourable recommendation to the Minister would be made, and that the information in the Coal letter of 18 October 1993 fell short in the detail needed concerning proposed imported components of the nine major items of equipment described in the letter in order to gain concessions under Item 45. On the other hand, as the letter stated, at this point in time, “retrospectivity” of application for such concessions was not seen to cause difficulties to the Coal application, but understandably so because tenders had not by then been invited. There was no explicit reference to “retrospectivity” in ACN 91/122, but the text of the same implied that applications were required to be lodged in advance of importation by reason of the expression “potential local manufacturers”.

13                  Coal does not appear to have further advanced this 18 October 1993 application to any material extent by 27 April 1995, that is to say, within the succeeding eighteen months, because on that day the Department referred by letter to the absence of receipt of any further information from Coal and warned Coal as follows :

“Based on the information we have, we would recommend that the application be refused.  If you do not provide the additional information by 18 May 1995 we will recommend  to the Minister and to the Australian Customs Service that the application be refused.

In the meantime, the contract for the assembly of the underground conveyor equipment had been entered into by Coal on 16 March 1995, following upon acceptance of the successful tender on 15 November 1994 by Australian Conveyor Engineering Pty Limited (which later changed its name to Continental Ace Pty Limited) (see schedule to Coal’s letter of 28 September 1995 to Customs referrable to “U/G Conveyors”).

14                  Yet the first shipment of the relevant component of the underground conveyors comprising the subject controlled start transmission units (the first five of a total of thirteen) had already arrived in Australia on 5 April 1995, which was more than one year after Coal had been notified by the Department by the earlier letter of 28 February 1994 of the inadequacy of its Item 45 concession application, being an inadequacy which had not by then been remedied. Moreover the next shipment of the subject units was due on 21 May 1995 for a further six of such total of thirteen. In his Affidavit sworn in support of the present Application, Mr Rodda (a principal of Coal’s consultants), stated that “As at 28 February 1994, no tenders had been let for any of the goods listed in the application [of 18 October 1993] other than the coal handling and preparation plant. It was therefore not possible at that time for the applicant to provide the information requested by the letter”. However Coal had already allowed in excess of one year to pass by without taking further steps with Customs or the Department.

15                  It now becomes appropriate to interpolate reference to a series of announcements and communiques which took place at Government and Industry levels, before returning to a narrative of Coal’s communications with Customs on the subject of its applications for concessions foreshadowed by its letter of 18 October 1993.

Government Statements Concerning Industrial Policy 1994-5

16                  The Minister issued on 4 May 1994 an “Industrial Policy” news release which referred to “new industry policy framework and initiatives” and “the principles for industry policy framework and initiatives”, and set out “the principles for industry policy in Australia.”  Under the heading “Other arrangements”, the Minister then stated, so far as is material :

“The government has also decided to take action on a number of related industry assistance arrangements.

…

Administrative arrangements for the Engineering Policy by-Laws will be refined, and no further retrospective claims will be considered except for Items 43 and 52 relating to split assignments, and then only in exceptional circumstances.”

Since the Item here relevant was Item 45, this was a critical news release from Coal’s perspective. Whilst Coal had earlier been informed that “retrospectivity should not present difficulties” [10], Coal was by this time put on notice nearly one year prior to the first importation of part of the subject equipment (ie the 13 controlled start transmission units) that Item 45 concessions would not be granted retrospectively. In the events which happened, Coal did not heed that warning, and as will be seen, did not make any further application of relevance to Customs until 13 October 1995 [26].

17                  Such news release was followed by the Minister’s letter of 9 December 1994 to the President of the Australian Mining Industry Council, which stated (inter alia) :

“… the government has instituted procedures whereby duty free entry of certain goods otherwise dutiable may be allowed for specified industry policy reasons.  The Government, through various decisions over a number of years, has revised the Tariff Concession System and introduced the Policy By-laws (PBL) system to facilitate this aim …

The Policy Items that may be of relevance to your members are Item 45, covering goods for the mining and minerals processing industries …

… I have instructed my Department and the Australian Customs Service that the system should be administered in a manner that gives both sides, ie. Project proponents/importers and potential local suppliers, a better opportunity to comment on proposals for the concessional entry of goods, particularly when a high value of imports is involved.

… I would encourage contact early in the design of projects with potential Australian suppliers, including through relevant supplier industry associations and the Industrial Supplies Offices, so that potential local suppliers are not ‘designed out’ of the project.  My desire is not only the process be transparent and sound, but that competitive Australian suppliers be given genuine opportunity to bid for contracts.  In this way, I am sure that local industry will develop and expand with consequential benefits for the economy and project developers.

…”

Thus the facility of the Industrial Supplies Offices, as one means of satisfying Customs of the merits of a By-law 45 application was highlighted to the mining industry, and as will be seen, continued to be so highlighted. Moreover the requirement of prospectivity of application, was inherent in this communique.

18                  Subsequently on 21 June 1995, the Minister wrote to the Customs Brokers Council of Australia Inc in the following terms (inter alia) emphatic of what was described as the “fundamental principle”:

“I am responsible for the Policy By-law Scheme and the process of considering applications for by-law concessions, which requires my Department to seek advice from me in respect of whether an application meets the Government’s policy intent.

… I see the Policy By-law System as an industry development tool, with project proponents giving genuine opportunities to local manufacturers in return for duty-free entry of goods not made in Australia.

The fundamental principle is that only goods that are not made in Australia should be given duty-free entry.  The requirement to apply for Tariff Concession Orders (TCO’s) is the process whereby local manufacturers are identified, and the claims of importers are assessed against the capabilities and products of local producers.  In this way, the Government’s fundamental principle can be implemented in a transparent and consistent manner…

…”

19                  As earlier indicated, Coal had already determined to proceed by way of the By-law system and involving the grant of project status, rather than by way of the TCO system, but the need to establish the absence of Australian capacity to manufacture equipment proposed to be imported remained paramount if tariff concessions were to be obtained for any imported equipment.  The Minister then proceeded to repeat by this letter of 21 June 1995 how the By-law system would be allowed to take its course, with continuing emphasis on the need to establish absence of Australian capacity to manufacture equipment and its componentry required for mining projects, and the availability of appropriate assistance from the Industrial Supplies Offices in order to identify existing Australian manufacturing sources, as follows:

“the practice of considering ‘project status’ in relation to an Item 45 Application is one which has developed as an administratively convenient form of assistance for the project proponents.  But what does project status really confer?  It merely confers an agreement to waive the requirement to apply for a TCO in respect of the dutiable imported goods related to a specific Policy By-law application.

While I do not have any problems in-principle with this practice, I am keen to ensure that the decision making process for applications for project status is transparent.  Also, I do not wish to see this practice used to circumvent procedures that have been established for very good reasons.  Australian industry must be given proper opportunity to make its capabilities known and, where possible, to demonstrate those capabilities.  Accordingly, I have instructed my Department and the Australian Customs Service that the Policy By-law System should be administered in a manner that gives both the project proponents (or importers) and local suppliers a better opportunity to comment on proposals for the concessional entry of goods, particularly when a high value of imports is involved.

Consequently, I actively encourage project proponents to identify and make contact with potential Australian suppliers early in the design of projects, so that potential suppliers are not ‘designed out’ of a project.  Relevant supplier industry associations and the network of Industrial Supplies Offices can provide assistance to identify potential Australian suppliers.  I have held discussions on this matter with a number of industry associations, including AMIC, and specifically made my views clear in a letter I sent on 9 December 1994.  Also, in this context.  I am sure that you and your clients are aware that world best purchasing practice recognises the benefits of sourcing locally, and of building ‘partnering’ or strategic relationships with those suppliers for the domestic and overseas markets.  I believe that it is in the best interests of the management of the company to look at adopting these approaches, just as the Government has done in its acquisition practices to enhance opportunities for local companies in its purchasing requirements.”

20                  And specifically in relation to Item 45 concessions, this Ministerial communication indicated the following in effect as an adjunct to the Government policy of advancing Australian based product manufacturers of mining equipment and its componentry for the Australian mining industry :

“… in the case of Item 45, the fact that goods meet the terms of that Item ‘goods designed for use in the mining and minerals processing industry’ does not mean that they can necessarily enter duty free.”

21                  The Minister thereafter concluded with the following explanations which would have conveyed an emphatic warning to industry participants, then in the position of Coal and its Consultants, concerning the need for obtaining adequate information and supporting material as to the absence of capacity of Australian based manufacturers of relevant equipment and its componentry, in advance of placement of orders overseas, in order to gain Item 45 concessions :

“Applicants that successfully apply for a Policy By-law concession provide information sufficient to demonstrate that the Government’s policy objectives are being met.  Too often applications, particularly (it seems) those prepared by consultants, fail to provide sufficient information to allow simple processing.  Applicants are required to demonstrate that they meet the criteria for a by-law and that the granting of a by-law will contribute to the government’s industry policy objectives.

For example, too many applicants fail to demonstrate that any reasonable level of action, consistent with the Government’s industry policy objectives, has been taken to identify potential local suppliers.  Few invite local industry involvement in the early design stages of a project – something that demonstrably reduces costs and often improves outcomes – and this is a point on which I am very firm.  Companies are able to place orders from overseas, but they cannot expect my support for a by-law concession unless they clearly demonstrate that they have taken appropriate action to identify local suppliers.

…

As I stated above, I view the administration of the Policy By-law System primarily as one mechanism to achieve the Government’s industry policy objective, rather than merely a means of achieving a monetary benefit to a company through an exemption of duty.  The latter, unfortunately, generally appears to be the sole aim of many applicants who ignore the ultimate intent of the policy.”

22                  By way of response to the Minister’s above communication of 21 June 1995, the Customer Brokers Council of Australia Inc published for the benefit of its members the Minister’s views and policies in a document headed Policy By-laws, which included the following :

“Applicants that successfully apply for a Policy By-law concession provide information sufficient to demonstrate that the government’s policy objectives are being met.  Too often applications, particularly (it seems) those prepared by consultants, fail to provide sufficient information to allow simple processing.  Applicants are required to demonstrate that they meet the criteria for a by-law and that the granting of a by-law will contribute to the Government’s policy objectives.

For example, too many applicants fail to demonstrate that any reasonable level of action, consistent with the Government’s industry policy objectives, has been taken to identify potential suppliers.  Few invite local industry involvement in the early stages of a project – something that demonstrably reduce costs and often improves outcomes – and this is a point on which I am very firm.  Companies are able to place orders from overseas but they cannot expect my support for a by-law concession unless they clearly demonstrate that they have taken appropriate action to identify local suppliers.”

Again, emphasis was thus made upon the need for demonstration of qualification for concessions before placement of orders overseas, rather than resorting to mere assertion of absence of Australian capacity. The foregoing criticism of the shortcomings of consultants in terms of failing to undertake sufficient research and to provide sufficient information for by-law applications may also be observed, bearing in mind that virtually all communications on the part of Coal referred to in this Judgment were undertaken on Coal’s behalf by its Consultants.

23                  Finally as to notifications of Government policy up to and including 1995, I should extract part of the Minister’s announcement on 18 October 1995 concerning the significance of the role of the various Industrial Supplies Offices, to which I have already made reference in [17] and [19] (abbreviated therein as ISOs), in the administration of the Policy By-laws System :

“The PBL System provides the Australian Customs Service with the authority to permit the concessional entry of certain goods provided such goods are not made in Australia and they meet the policy and administrative intent of the relevant PBL item.

‘I expect companies seeking concessions of duty to demonstrate that they have first examined through a transparent process the capabilities of Australian industry to supply the goods in question, before a decision to import and to seek concessional entry for the imported goods is taken,’ Senator Schacht said.

One way in which project proponents can identify and make contact with potential Australian manufacturers early in the design of projects is through the Industrial Supplies Offices.

All States and the Northern Territory established ISOs in the mid 1980s, with the objective of assisting industry to source more of its requirements within Australia.

The ISOs are accordingly ideally suited to providing information to potential PBL applicants on Australian industry capability and competitive Australian suppliers for a wide range of industry sectors, including the petroleum exploration, mining and minerals processing, agricultural, food processing and good packaging, engineering, chemicals, plastics, paper, electrical and electronic and general manufacturing industries.

A list of ISOs are attached.”

The foregoing notification of policy again emphasised the need for determination of Australian manufacturing capacity in advance of importation, and the availability of the Industrial Supplies Offices to assist the sourcing of such capacity, and the necessity for demonstration of any absence of such capacity to Customs.

24                  The material in evidence does not disclose the making or the results of any enquiries which Coal may have undertaken at any material time with any Industrial Supplies Offices prior to 16 August 1999 in relation to equipment required for its Kenmare Colliery Project, and in particular in relation to the 13 controlled start transmission units which it imported, that is to say, until immediately prior to Coal’s letter to the Department of 24 August 1999 extracted in [59] below: the reference to such 16 August 1999 occurrence is at [61]. At this early point in time (October 1995), two shipments of the controlled start transmission units involving eleven in number had already been imported by Coal in April and May 1995, and the third and final shipment of the remaining two of such units was due in Australia during the following month of November 1995 [26], so that unless Coal had done its homework already, the task of appropriate research and enquiry was necessarily going to be undertaken subsequent to importation and thus contrary to Ministerial policy.

25                  Returning then to the narrative of the contemporary dialogue taking place between Coal and the Department and subsequently between Coal and Customs, a meeting between representatives of Coal and the Department occurred in Canberra on 17 May 1995.  Handwritten notes of what was said and achieved at that meeting were tendered in evidence on behalf of Coal, and the same indicate that Coal obtained at the meeting an extension of time until 9 June 1995 to provide the information requested in the Department’s letter of 27 April 1995 [13], but that Coal’s representatives were also informed that the onus of proof lay upon Coal to prove its case and support its claims with facts concerning its attempts to source the requisite equipment locally. In that regard such handwritten  notes contain the words “Onus of proof… Back up your claims – evidence attempts source locally – ISO’s. Facts to back up application”.

The 13 October 1995 Application

26                  On 13 October 1995, Coal submitted to Customs by letter headed “APPLICATION FOR ITEM 45 BY-LAW…” what it described as “… further information relating to each of the functional units referred to in our original application dated 18 October 1993”, and commented “Please note that this information was previously offered to [the Department] in June this year to facilitate the Department’s processing of this application” but that “We were advised… it would be appropriate for this material to be directed to you”. The delay of about four months in so doing was not explained. Under the heading “Project Overview”, the following appeared:

“Details of the project in toto are set out in Attachment A. This document was provided some time ago to [the Department], but it is unclear from our file whether a copy was forwarded to [Customs] with our original submission.

All equipment items required for this project were or are to be the subject of invitations to tender published in national daily newspapers and by direct invitation.”

The reference to “all equipment items” would appear to have been used by way of distinction from componentry for equipment.

Coal relies on this letter, and its earlier letter of application of 18 October  1993, either individually or together, as constituting applications for Item 45 By-law concession in respect of an array of componentry for the major items of equipment for the Kenmare Colliery, including the subject thirteen controlled start transmission units to comprise one of two categories of components for the underground conveyors, the other being belting. It may again be emphasised that by this time, eleven out of the thirteen controlled start transmission units had already been imported in April and May of 1995, and the final two would arrive in Australia at the beginning of November 1995.

Thus on pages 10 and 11 of the letter of 13 October 1985, under the heading “Underground Conveyors”, the following appeared:

“7.       Underground Conveyors

(a)               Identification

 

The goods covered by this section of the project are tailgate, maingate and drift conveyors installed underground to remove coal from the stage loader/crusher after extraction by the longwall system.

Such goods are classified in subheading 8428.31.00 and are currently dutiable at 8% General.

(b)               Tenders

The successful tenderer was Australian Conveyor Engineering Pty Ltd of Wyong, NSW.

The value of the successful bid was A$10,171,079. Australian labour and materials totalled A$8,719,339 (85.8%) and imported componentry totalled A$1,451,740 (14.2%).

The principal imported components were the following

(i)                 Dodge CST transmission modules ex USA valued at A$966,568

(ii)               1600mm PVC belt ex UK valued at A$439,100

The unsuccessful tenderers and brief details of their offers are as follows:

(i)                 Gulf Conveyor Systems Pty Ltd

 

Tender included the use of Dodge CST drives with tender options to use 1500mm TBA Europa of 1600mm Imas belting, both of which are imported.

(ii)               Nepean Mining Pty Ltd

Tender included the use of Flender drives from Germany and 1600mm belts from Fenner in UK.

(iii)             Prok Group

Tender included use of Toshiba drives from Taiwan and Fenner belts from UK.

(iv)             Continental Conveyor/ESS Pty Ltd

Tender made no mention of where components were being sourced.

(c)               Tariff Concession Order

Australian content in the successful tender exceeded 85% thus precluding any possibility of a TCO for these goods. No TCO application was lodged pursuant to the DIST decision dated 28 February 1994.

(d)               Commissioning Date

This stage of the project was scheduled for completion by April 1995.”

27                  Apart from the above described componentry of so-called “underground conveyors”, this letter of 13 October 1995 made application also in relation to the componentry of “Coal Handling and Preparation Plant”, “Continuous Mining Equipment”, “Ventilation Equipment” and “66kV-11kV Power Supply Equipment”. The letter concluded as follows:

“In view of the amount of material provided in this matter to date and the likelihood that further material may be required by [Customs] to support individual sections of this application, we consider it would be prudent for a meeting to be held between [Customs] and ourselves before proceeding further. To that end, we would be grateful if an appointment would be arranged, at a mutually convenient time, to examine the documentation provided and to determine the nature and extent of any additional material that may be required.”

In his Affidavit, Mr Rodda (Coal’s Consultant) described such letter of 18 October 1995 as containing all of the relevant information relating to the subject units. However as just indicated, the letter concluded by explaining “… the likelihood that further material may be required by [Customs] to support individual sections of this application…”, and in the File Note coversheet to each group of Annexures to the letter there appeared the following:

“Specific details as to imported/local machinery and local/overseas suppliers are not included.”

Customs took a different view as to the adequacy of the information provided by this 13 October 1995 letter: see [30-31] below.

ACN 94/27, ACN 95/55 and ACN 95/74

28                  On 6 May 1994, Customs had published ACN 94/27 which stated that “… no retrospective claims will be considered apart from Items 43 and 52 relating to split consignments, and then only in exceptional circumstances”. What is solely here relevant is of course Item 45. On 11 September 1995, Customs published 95/55 which confirmed such policy against retrospectivity. As variously indicated elsewhere in this Judgment, the arrival of the shipments of the subject units in Australia occurred on 5 April 1995, 21 May 1995 and 1 November 1995.  And on 14 December 1995, Customs published the more comprehensive ACN 95/74 containing the following under the policy sub-heading “Maximisation of Australian Industry Participation” under the heading “Specific Policy Issues”:

“Project proponents should assess the benefits of a PBL concession as part of the purchasing decision process. Project proponents are encouraged to identify and make contact with potential Australian suppliers early in the design of projects, so that local suppliers are not “designed out” of a project. Also, in this context, world best purchasing practice recognises the benefits of sourcing locally, and of building “partnering” or strategic relationships with those suppliers for the domestic and overseas markets. It is in the best interests of the management of the company to adopt these approaches, which also will enhance opportunities for local companies.

Where applicants cannot demonstrate that they have given consideration to potential Australian suppliers in the early planning stage of projects, it is unlikely the applications will succeed. This issue is particularly important in industry sectors where Industry Development Deeds exist.

For this reason applicants should:

·                    seek to maximise the opportunities for local industry to become involved in the provision of major equipment and/or the development of projects; and

·                    demonstrate in their applications that they have made serious efforts to seek out local manufacturers, or potential local manufacturers, of the goods to be imported.

The maximisation of Australian industry participation should be demonstrated by the use of the TC System. This may be waived if project status is granted (see Section 6.2). If project status is granted project proponents should use alternative methods to demonstrate the maximum of Australian participation such as open tendering processes, Industrial Supplies Office network (ISOs) or through contact with relevant supplier industry associations.”

Coal places strong reliance in this Application upon the above reference to “open tendering processes”. Under the heading “Retrospective Applications”, the following appeared:

“Consistent with Government policy of maximisation of Australian industry participation retrospective PBLs will normally not be granted, except for Items 43 and 52, relating to split consignments, and then only in exceptional circumstances. This position was previously notified in ACN 94/27.

Applicants should be aware that the date of importation, not the day of entry for home consumption, will be compared to the application date (generally the date of receipt of the application by Customs) to establish whether an application is prospective or retrospective.”

And lastly under the heading “Details of approaches to local manufacturers” the following appeared:

“…

All applications… must give detailed information on the applicant’s efforts to source goods from local manufacturers. Evidence of approaches to relevant supplier industry associations and ISOs, tender documents and replies from local manufacturers will be taken into account when evaluating the application.”

29                  The purpose of ACN 95/74 was described in the Customs Affidavit evidence in the following terms :

“… ACN 95/74 … consolidated and clarified information provided in all previous Policy By-Laws ACNs … [and] confirmed that Policy By-Laws concessions differ from those available under the Tariff Concession.”

As to the TCO system, ACN 95/74 stated that “Concessions available under the TC system must be pursued in the first instance before importers seek concessional entry under the PBL System. A successful TCO application negates the need for a PBL concession or establishes a rate of duty”.

30                  Returning to Coal’s submission of a large bulk of information under cover of its said letter of application of 13 October 1995 [26], an internal Customs examination thereof was undertaken at some length to ascertain “… whether the information supplied is sufficient to enable the delegate to make a decision on this application”.  Such examination was completed and recorded in a lengthy Customs Minute Paper of 24 January 1996 by Mr Praks, and was summarised in a contemporaneous Customs Minute Paper of Mr Kittler reading as follows :

“ ITEM 45 : SOUTH BLACKWATER COAL MINE-KENMARE COLLIERY

Mr Prax (sic) has done an extensive analysis of RCH’s further submission (f251-256).

In short the current position is that

·        two of the major items of equipment the longwall miner and the shearer are duty free anyway and shouldn’t be part of the Item 45 application.

·        the actual goods being imported are not identified.

·        the designed for use test has not been addressed.  At least some of the gear eg. computer hardware would not meet the test.

·        there is no evidence only assertions that local industry can’t make or doesn’t make suitable equipment.

Suggest meeting with RCH to explain shortcomings of submission in week or so to coincide with your movements.”

The underlining was that of Mr Kittler.

31                  Thus by this time, namely late October 1995, with only 2 out of the 13 controlled start units yet to be imported into Australia, on the basis of Customs’ examination of the material thus far provided by Coal, the processing of any Item 45 concession for Coal had not even reached the first base from Customs perspective of identification of equipment the subject of any discrete Item 45 concession application or applications, much less evidence as to absence of Australian manufacture thereby. Mr Kittler’s Report made no reference to the factor of retrospectivity, but the text thereof suggests an unawareness on his part of the shipment arrival times and circumstances at least in respect of the subject controlled start transmission units. His focus was upon the existence or otherwise of capacity for local manufacture of the componentry of the major items of equipment, in relation to which he reported a lack of relevant detail and concluded as follows:

“

·        The application is a conglomerate of various systems/projects and components, some of which are free in the Tariff, and some of which would not satisfy the criterion – designed for use in the mining and minerals processing industry.

·        Sufficient information as to description of goods, suppliers and efforts to source locally, has not been provided in the latest information in relation to certain systems/projects listed in the original application at folio 15.

·        Tenders for certain systems/components had not been finalised as at October 1995 – no further information has been supplied to date.

·        Tender documents, obtained from successful tenderers for some systems/ projects and components have been supplied in most instances, but very few of those documents differentiate between imported and locally sourced goods.

·        Details of successful and unsuccessful tenderers have been supplied in most instances, but sufficient information as to why the successful tenderers were chosen over other suppliers has not been supplied ie, reasons for sourcing imported goods.”

32                  As earlier indicated already in [27], I have difficulty in comprehending how the assertion of Mr Rodda’s Affidavit that “By letter dated 13 October 1995, I, on behalf of RCH, supplied to the ACS (ie. Customs) all of the relevant information relating to the equipment items” could have been realistically justified, at least in terms of the subject thirteen controlled start transmission units. Customs wrote back to Coal on 14 March 1996 following a meeting between Coal and Customs on 27 February 1996, and drew attention to the requirements of ACN 95/74 and to shortcomings in the information thus far provided, and concluded :

“Your application will be further processed on receipt of a complete list of imported dutiable goods, together with evidence to demonstrate that those goods are/were not made in Australia in the normal course of business.”

33                  Coal’s response to such Customs requests for further information contained in the Customs letter of 14 March 1996 was made by a lengthy and strongly worded letter of 2 July 1996 (written as usual on its behalf by its Consultants), which commenced as follows :

“A copy has been supplied to our clients with a view to obtaining the further information requested in respect of imported goods and evidence to demonstrate (where appropriate) that those goods were not made in Australia in the normal course of business.  We will respond to your request as soon as circumstances permit and ask that you note in the interim that much of this information is to be obtained from the contractors who actually performed or who have been contracted to perform the assembly or construction of the plant and equipment under consideration.”

34                  Coal’s said response of 2 July 1996 continued to the effect that Coal’s application for Item 45 concessions lodged on 18 October 1993 “… was entirely consistent in content and format with other applications for Item 45 By-laws lodged by ourselves and by other consultants prior to and around the same time”, and examples were given, and further that Coal had been advised by Customs that assessment of that application had been completed from Customs perspective by 1 November 1993, and further again that “It remains unclear to us why this matter seemingly requires further consideration by the ACS in 1996.”  I am unclear as to how such a conclusion could have been justifiably attributed by Coal to the content of Customs’ letter of 1 November 1993 [10], particularly in the light of Customs’ subsequent letter to Coal of 27 April 1995 [13]. In any event, Coal did not gainsay Customs’ assertions of inadequacy of the materials presented, but sought to justify the content of what it had already provided to Customs by reference to precedent. Any such precedent would have become inconsistent in material respects with the Department’s letter of 28 February 1994 [10-11] as to the need for detailed information concerning the sourcing of equipment the subject of concession applications, and with the Ministerial statements made during 1994 and 1995 [16-23], and with the published Australian Customs Notices concerning Item 45 concessionary requirements comprising ACN 94/27 [28] and ACN 95/74  [28-29]. Such Coal response of 2 July 1996 then referred to ACN 95/74 and continued :

“With respect, we do not believe it is open to you to attempt to rewrite history in the manner reflected in ACN 95/74, and to then proceed with the processing of applications for policy by-laws in a manner which directly conflicts with the principles which were on the public record (through earlier ACNs) and in the public knowledge at the time those applications were lodged.”

Nevertheless it may be here observed that any such suggested “rewriting of history” by ACN 95/74 had occurred against the context of prior statements, if not warnings, concerning Government policy or approach contained in the written materials reviewed in [9-12] and [16-23] and contained also in ACN 94/27 and ACN 95/55 [28-29].

35                  Other complaints and criticisms were advanced by Coal in such response of 2 July 1996 and the same concluded with the following broadly expressed assertion :

“Your letter acknowledges that we provided to you copies of the successful tender documents and details of unsuccessful tenders.  Your letter then goes on to suggest that it is not clear in some instances as to whether the successful tenderers offered imported or locally manufactured equipment.  Our understanding is that the material provided to you makes clear that local content has been maximised in all of the major equipment items and that any componentry imported for use in those major equipment items was imported only because local manufacturers do not manufacture a comparable component in the normal course of business.  If that matter is not clear in our letter, please provide further details of the specific items in respect of which that additional information is required.” (the underling was made by Coal’s Consultants).

Coal was thus contending that favourable conclusions should have been already reached by Customs in relation to imported componentry for major equipment, because local assemblers of major equipment should be presumed not to have imported componentry for such major equipment in circumstances where local componentry was available, a thesis which Coal persistently advanced as being inherent in the nature of the “open tendering” process.

36                  Customs’ reply by letter dated 2 August 1996 to Coal’s lengthy letter of 2 July 1996 was confined as follows :

“Changes to the Policy By-Law (PBL) System recently implemented by the parliament and set out in the Customs Amendment Act 1996 and the Customs Tariff Amendment Act 1996 require that as from 15 July 1996, any undetermined application must be assessed under the new PBL System criteria.  Administration of the new system is explained in Australian Customs Notice No. 96/32.  I have enclosed a copy of this ACN for your information.

Once the South Blackwater submission has been assessed against the new criteria as required by the Parliament, I will write to you again.”

One such statutory amendment having effect from 15 July 1996 has already been referred to in [3] above, namely that relating to By-law 45, which change was inconsequential for present purposes. Taking effect from the same date was the replacement for ACN 95/74, namely ACN 96/32 (see [37] below). Most significant of all changes taking effect from 15 July 1996 were the following amendments to the Customs Act 1901:

“42.     Revocation of certain by-laws and determinations

(1)               This item applies:

…

(b)               to any determination made under section 273 of that Act in force immediately before that time;

if that by-law or determination is taken to be made in relation to item … 45 … of Schedule 4 to the Customs Tariff Act 1995 ….

(2)               A determination to which this item applies is to be taken to have been revoked with effect from the commencing time.

…

(3)               If:

(a)               a person had, before the commencing time, requested that the CEO make a determination under section 273 of the Customs Act to enable goods to be covered by an item referred in sub item (1); and

(b)               that request was still outstanding at that time;

that request is to be treated as if it were a request made under the Customs Act as amended by this Act.”

Counsel for the Respondent described the effect of the amendments in terms of “wiping the slate clean of all the Section 273 by-laws that then existed prior to 15 July 1996” and requiring all pending decisions to be made under ACN 96/32. Significantly for the purposes of this Application, no decision had yet been made under the purported Item 45 applications of 23 October 1993 and 13 October 1995, and consequently if the same were to be determined during the life of ACN 96/32, the latter would represent the applicable policy.

ACN 96/32

37                  Such new ACN 96/32 bore the date 10 July 1996, and the same did purport to replace Notice 95/74 effectively from 15 July 1996, with the changed so-called Policy By-law (PBL) System.  On 18 July 1996 and 9 September 1996, two Ministers of the incoming Federal Government publicly endorsed ACN 96/32 as representing the intent of continuing Government Policy.  Eligibility for consideration of By-law concessions pursuant to Item 45 (inter alia) would henceforth require demonstration of the following four matters which I extract from the Overview on page 3 of ACN 96/32 :

“In order to be eligible for consideration of a PBL concession, applicants will be required to demonstrate that :

-                     the goods to be imported satisfy the legal terms of the relevant Item in Schedule 4 to the Tariff;

-                     that the granting of a PBL concession for the specific goods is consistent with prevailing Government policy, as contained in this ACN;

-                     that applicants have implemented, as part of their project development considerations, measures to adequately consider local supply, before orders are placed overseas; and

-                     that the imported goods are not available from an Australian manufacturer.

38                  The following warning to applicants for By-law concessions was provided by such ACN 96/32, in a context which continued the emphasis upon utilisation of Industrial Supplies Office assistance, as well as the need for particularity in identification of equipment required for concessionary treatment :

“Importers should not assume that their request will be automatically approved.  Each request will be considered on its merits.  In all cases the ACS will conduct an evaluation of the request to ensure that the established legal and policy criteria have been satisfied.  Broadly based or unsupported assertions on the part of applicants that goods are not available from Australian manufacturers will not be accepted.  The revised PBL System places an obligation on applicants (other than for item 43, 52 and 55) to ascertain the capacity of Australian industry to manufacture the particular goods that they require.”

39                  And further that :

“Applicants will also be expected to identify and make contact with potential Australian manufacturers early in the design phase, particularly to ensure that local manufacturers are not ‘designed out’ of a particular project.  The types of processes envisaged include use of the existing TCO procedures, open tendering, seeking active participation and advice from the Industrial Supplies Office (ISO), or local equivalent thereof, and/or pursuing direct contact with relevant industry associations, Chambers of Commerce and the like, which represent the interests of local manufacturers.

Where applicants cannot demonstrate that they have given adequate consideration to potential Australian manufacturers in the early planning stages of particular importations or major projects, it is unlikely that a PBL request will be successful.

To reiterate, applicants for concessional treatment under the PBL system will be required to satisfy certain industry policy objectives by demonstrating that they have :

-                     maximised the opportunities for local industry to become involved in the provision of major equipment and/or the overall development of the particular project; and

-                     made serious efforts to seek out local manufacturers, or potential local manufacturers, of the required goods, prior to committing to overseas orders.”

 

I refer in particular to that part of the foregoing Policy recommendations as to alternative ways of establishing the absence of local manufacture, including “open tendering” as an alternative to TCO procedures or utilisation of the Industrial Supplies Office. Reference to those procedures also appeared in ACN 95/74 [29]. The process of establishing the absence of Australian manufacture of particular goods at material times by way of implementation of “open tendering” was one which Coal has pressed virtually as decisive in the circumstances of this Application. There was a lengthy account of “open tendering” by or on behalf of Coal for componentry in Coal’s letter of 13 October 1995 and summarised in [26] in relation to the underground conveyors. Similar detail appeared in relation to the other four main equipment items identified in [27]. As already noticed Coal adopted the position with Customs to the effect that if Australian Industry tendered for equipment upon the basis of its intended inclusion of imported componentry, it must follow as a matter of realistic implication that such componentry was not manufactured in Australia.

 

40                  On the further matter of retrospectivity the following appears in ACN 96/32:

“It is fundamental to the objectives of the PBL system that importers seeking PBL concessions should first take appropriate steps to maximise the opportunities for Australian manufacturers to produce the particular goods.  To accord with that philosophy, government industry policy dictates that the PBL System should be prospective in nature.  Clearly, the lodgement of a request for a PBL concession after goods have been imported would be inconsistent with this objective.

In the interests of uniformity, it is proposed to retain the practice, adopted in 1994, whereby PBL concessions will not be granted retrospectively.

Applicants should be aware that the date of importation of the goods, not the date the goods are entered, will be compared against the date of receipt of the request by Customs (including a facsimile advance copy) to establish whether the concession sought is prospective or retrospective.”

This policy as to determination of the time by which retrospectivity/prospectivity issues were to be judged, namely the time of importation, was applied by Customs in the circumstances of this Application.

41                  Under the heading “Information Required”, reference was made by ACN 96/32 to the kind of “reasonable endeavours to source goods locally before making arrangements to purchase goods from overseas suppliers” which should be undertaken by applicants for Item 45 concessions.  And then under the heading “Undetermined PBL Requests”, the following statement of policy was enunciated in relation to the subject of retrospectivity/prospectivity, consistently with what has already been recounted in [36] above:

“Policy By-law instruments (either by-laws made under section 271 of the Customs Act or determinations made under section 273 of the Customs Act) made in relation to items 43, 45, 46, 52 and 56 of the Tariff are taken to be revoked from the 15 July 1996 commencement of the CAA Act.  The same legislation also provides that all requests for concessions under these items which are undetermined at 15 July 1996, the date of commencement, will be treated as if they were received at the commencement of the new legislation.  Applicants with undetermined requests might therefore elect to submit a fresh request addressing the new requirements set out in this ACN.  Such requests will be subject to the new legislative and policy requirements now applying to these PBL items.”

The reference to the “CAA Act” was to the Customs Amendment Act 1996 (Cth) earlier referred to above [37], which as there indicated, provided legislative authority to subject undetermined By-law 45 applications to new policies. The consequence to Coal of this Policy change was that if it could rightly be postulated that Coal’s letters of 18 October 1993 and/or 13 October 1995 constituted Item 45 concession applications in relation to the componentry consisting of the subject thirteen controlled start transmission units, the same would henceforth constitute an “undetermined request” within ACN 96/32.

42                  In that regard, the special “in transit” provisions made in the Customs Amendment Act 1996 (which took effect on 15 July 1996) relating to goods falling within Item 45 (inter alia) were confined to three particular situations as follows :

-                     “goods which have been imported on or before the 15 July 1996 date of revocation of the concession instrument, provided they are entered for home consumption within 28 days of that date;

-                     goods on direct shipment to Australia before the 15 July 1996 date of revocation of the concession instrument, provided they are entered for home consumption within 28 days of importation; or

-                     goods which are made-to-order capital equipment (as defined for the purposes of the Tariff Concession System), provided such goods are imported and entered for home consumption under one of these items by 15 February 1997.”

Coal’s circumstances were however that the subject units had been imported in three shipments respectively arriving in Australia on 5 April 1995, 21 May 1995 and 1 November 1995. Therefore such in-transit provisions would appear to have had no application to the subject units, and the status of the contentious Coal application of 13 October 1995 would be from Customs’ perspective “undetermined” within ACN 96/32. In the events which happened, no determination was made in relation to the subject units during the life of ACN 96/32

43                  The foregoing impact upon “undetermined” Item 54 concession applications was recorded internally in the Customs contemporaneous Minute Paper of 10 July 1996 as follows :

“It is possible that a limited number of importers whose applications were not resolved at the time of commencement of the new legislation will express concern that their applications will now be assessed under the new rules.  This is an intended outcome of the new legislation, designed to close off inconsistencies that had become apparent in the old PBL System”.

44                  Prior to the making of the decision the subject of this Application, three further Notices relating to Customs By-laws were published by Government, the first on 30 June 1997 (ACN 97/49), the second on 27 February 1998 (ACN 98/18), and the third on 23 June 1998 (Notice 98/22).

45                  ACN 97/49 did not add any significantly different requirements for Item 45 concessions at least of materiality here.  The emphasis continued to be on the need for evidence as to the absence of Australian manufacturers being able to perform a similar manufacturing function to a manufacturer of imported goods, and on the need for clear identification of the goods proposed to be imported free of duty.  ACN 98/18, which was supplementary to ACN 97/49, set out certain “Capital Equipment Guidelines” that do not require special mention.

ACN 98/22

46                  ACN 98/22 was comprehensive in scope, purporting as it did to set out “the policy and administrative criteria to be applied when processing requests for duty concessions on certain items of imported equipment”, which included proposed Item 45 equipment.  ACN 98/22 was expressed to replace what was known as the Policy By-law System with the Project By-law Scheme (“PBL Scheme”) as from 1 August 1998, and ACN’s 96/32, 97/49 and 98/18 were stated to cease to have effect on that day. As will be later seen, it was by reference to the policies of ACN 98/22 that Customs undertook its decision-making in relation to the subject units. A joint Media Release was issued by the relevant Ministers on 23 June 1998 which declared (inter alia) as follows :

“The new scheme … will also clarify the responsibilities that project proponents have to ensure that Australian industry has the opportunity to supply items of capital equipment for major projects.

…

…Industrial Supplies Offices in the States and Territories would play a key role in promoting Australian goods and services for major projects.

…

The changes relate to concessional items 45 … of Schedule 4 of the Customs Tariff Act, which permit duty-free entry of capital equipment that isn’t manufactured here.

…

In order to demonstrate that items of capital equipment are not manufactured in Australia, project proponents will need to quote a Tariff Concession Order, or provide a statement from the Industry Supplies Office Network … and show that they have nationally advertised their capital goods requirements.”

Thus according to such Media Release, the role of the Industrial Supplies Office in providing demonstration of absence of local manufacture of imported goods received not just continuing but exclusive emphasis, save as to circumstances where a TCO of relevance was also subsisting, and the previous recognition by ACN 95/74 and ACN 96/32 of “open tendering” as one possible process of establishing absence of local manufacture [29] and [40] was now omitted.

47                  The text of the ACN 98/22 was not quite the same. The following require citation, referring as they do to the continuing need for specific demonstration of the absence of Australian manufacturing capacity for equipment sought to be imported free of duty and conversely the unacceptability of broadly based or unsupported assertions, and of the need for prospectivity of applications :

“Applicants should not assume that their requests would be automatically approved. Each request will be considered on its merits. In all cases, Customs will conduct an evaluation of the request to ensure that established legal and policy criteria have been satisfied. Broadly based or unsupported assertions by applicants that equipment is not available from Australian manufacturers will not be accepted.  The new PBL Scheme placed an obligation on applicants to ascertain the capacity of Australian industry to manufacture the particular goods that they require.

Applicants should contact Customs at an early stage in order to provide details of the preposed project and to receive advice on the PBL Scheme.

…

The Government policy directive is that the PBL Scheme operates on a prospective basis.  Therefore the project advice and the goods request must be lodged before the capital equipment is imported.  If either the project advice or the goods request is lodged after the equipment has been imported, the request is retrospective and will be refused.

Project proponents must demonstrate that they have advertised in national newspapers or trade journals and with relevant industry associations for expressions of supply from Australian manufacturers…

An applicant must demonstrate that the capital equipment to be imported is not produced in Australia in the ordinary course of business.  This can be demonstrated by :

·        identifying a Tariff Concession order (TCO) for the equipment which is in force when the goods request is lodged; or

·        Providing a statement from Industrial Supplies Office (ISO) stating that it is not aware of an Australian manufacturer producing or capable of producing the equipment or an equivalent good for the applicant’s  project.

…

… Goods are equivalent goods if they meet the applicant’s engineering and technical requirements.  They do not need to be identical to the equipment to be imported, nor do they have to meet the applicant’s unduly specific criteria in terms of proprietary materials, technologies or the like.

…

After an applicant’s project advice has been accepted, Customs will consider goods requests that have been lodged for that particular project …

…

Where a request does not include the information required by this [Notice], it will be refused.

…

It is in the interests of applicants to lodge goods requests well in advance of the date of importation. The goods request must precede the date of importation of the particular goods. Where a PBL Scheme request is retrospective it will be refused.”

ACN 98/22 then proceeded to stipulate, importantly for present purposes, for “transitional arrangements” in the following terms:

“21.     Transitional Arrangements

The guidelines outlined in this ACN will apply to all items 45, 46 and 56 requests for duty concession received from 1 August 1998.

Any PBL requests lodged before 1 August 1998, for which no decision has been provided, will be assessed as follows:

Project advice stage

Undecided project advices will be assessed against the Project By-law criteria set out in this ACN.  Where Customs has provided a decision on the project advice stage.  Customs will honour that decision.

Goods request stage

Where Customs has provided a formal decision on the duty-free entry of capital equipment under item 45, 46 and 56, Customs will maintain this decision.  Where Customs has not provided a formal decision on the duty-free entry of capital equipment under items 45, 46 or 56, Customs will assess the goods request under Project By-law criteria.  The sole means of demonstrating that the imported goods are not made in Australia will be by a current TCO or ISO advice.

It is strongly recommended that item 45, 46 and 56 applicants who have lodged duty concession requests with Customs before the commencement of this ACN review their requests to determine whether they should lodge additional information in accordance with this ACN’s requirements.”

In the events which happened, Customs treated this ACN 98/22 as constituting the policy charter by which the concession application in relation to the subject units fell to be considered. Even if there was already an adequate Coal Item 45 application or applications in relation to the subject units before Customs, in the form of the 18 October 1993 and/or 13 October 1995 letters, or both, notwithstanding that Customs had signalled that the same could not be the subject of decision-making without more [10-13] and [30-32], it was ACN 98/22 which would henceforth apply if such applications were to be pursued, renewed, expanded or recast.

Correspondence and Dialogue Between Coal and Customs 1997-8

48                  It is appropriate now to return to a narrative of the events involved in connection with Coal’s application for By-law 45 concessions, following upon Coal’s lengthy letter of 2 July 1996 to Customs, and Customs’ response of 2 August 1996 [34-37].  On 17 March 1997, Coal wrote to Customs and complained of discrimination in favour of unidentified competitors and asserted invalidity of policy criteria relating to ACN’s 95/74 and 96/32 concerning Item 45 concessional applications.  A threat of litigation was made by Coal, and further dialogue was sought. Subsequently by letter of 19 March 1997, Coal made further complaint by reference to the circumstance that after the publication of ACN 95/94, Coal had applied for a TCO for component parts for an armoured face conveyor for the longwall mining system (TCO 9605410), in the light of the reference therein to “The maximisation of Australian industry participation should be demonstrated by the use of the TC System” [28]. Plainly this letter was not addressing the circumstances of the componentry for the underground conveyors. The letter went on to refer to Customs’ rejection of Coal’s TCO application, but in circumstances where Coal seems to me, for what it may matter, to cite from page 7 of ACN 95/74 to an extent which was not entirely accurate. Such page 7 did contain the text of what appears under the heading “Details of approaches to local manufacturers”, part of which has been already extracted at [28]. By a further letter of 7 April 1997, Coal made complaint inter alia of the “inordinate length of time taken to date by [Customs] to process our original Item 45 application, and of change in policy by-law criteria over the preceding two years”, complaints which I find hard to follow in the light of what appears at [10-13] and [30-32]. This letter of 7 April 1997 then concluded with the request “… that our client’s Item 45 application be given proper consideration on its merits”, and with the offer “As we have indicated on a number of occasions, we are willing to provide any further information or assistance that may be required by the ACS to bring our client’s application to finality.” Customs purported to address these assertions in correspondence to which does not appear necessary to refer, other than the following passage in Customs’ letter to Coal of 30 April 1997:

“A fundamental requirement of any PBL request is that the goods for which a determination is sought are clearly identified.  ACN 96/32 calls for written and descriptive material and the classification of the goods for which a determination is sought.  While you have identified the type of goods in broad generic terms for the mine systems, Customs requires identification of the particular goods in the form that they are to be imported (or have been imported) for the project.”

The imposition of such requirement was consistent with Customs’ ACNs preceding ACN 96/32 and the Ministerial and Customs communications which I have earlier reviewed. Also at this point in time, Customs was uncertain as to what componentry had already or had not yet been imported, as the last sentence of Customs’ letter to Coal of 30 April 1997 just extracted would indicate. As the above letter then proceeded to infer, the Coal letter of 2 July 1996 [34-36] related mainly to component parts for the longwall system, and much the same can be said of Coal’s next correspondence, including Coal’s letter to Customs of 29 May 1997 (so much is evident also from paragraphs 14 and 15 of the Affidavit of Coal’s Consultant Mr Rodda filed in support of Coal’s Application). Such Coal letter of 29 May 1997 also contained the following in relation to componentry other than that of the longwall system, and thus related to the subject units:

“Details of the componentry imported for incorporation in the other items of capital equipment for this project, described in our letter of 13 October 1995, have not been provided as the 28 day period specified in your letter was impossible to meet.  The other componentry was imported at various times over the past three years or so.  The large number of organisations involved, and changes in personnel within that time, precluded any possibility that your deadline could be met.”

49                  Custom’s next letter of 4 July 1997, written in the context of Coal’s last letter of 29 May 1997, said as follows :

“Once you have adequately identified the particular goods, you will need to present arguments as to why these goods satisfy the legal and policy terms of item 45…

The PBL scheme requires that applicants involve Australian industry early in the design phase and no determination will be granted where there is local manufacture of the particular goods.

…

…As required by [Notice] 96/32, when considering whether to grant an Item 45 determination, the delegate must give consideration to the policy requirement as to whether Australian industry involvement has been maximised in the development of the whole project.

Applicants are also expected to make reasonable endeavours to source goods locally and to demonstrate that full consideration has been given to the capability of Australian manufacturers to provide the goods prior to placing orders overseas. All requests are to provide detailed information on the applicant’s efforts to purchase particular goods from Australian manufacturers.

In summary, before Customs could consider granting an item 45 [By-law] determination(s) you will need to provide:

·        identification of the particular goods (as imported) and relevant TA’s;

·        arguments as to why these goods meet the legal and policy requirements of the PBL scheme;

·        arguments as to how Australian industry involvement has been maximised and why the particular goods could not be purchased from Australian manufacturers.”

50                  Coal’s response to the above Customs letter was communicated on 18 August 1997 over eight pages of detail, putting the case for concessions forcibly in the following material parts extracted below:

“As noted in our original application and subsequent correspondence, all major equipment items purchased by our clients for utilisation in this project were manufactured in Australia, all contracts were awarded after an open tendering process and the successful tenderers in respect of each item purchased were Australian companies who had a well established manufacturing capability in respect of each of the items they were contracted to supply.

In each case, the contracts were awarded to the tenderer whose offer incorporated the highest level of local content, consistent with the engineering requirement that equipment offered must reflect ‘world best’ technology and be fully compatible with the operating characteristics of each of the other capital equipment items to be purchased. The question of whether the individual items of capital equipment to be supplied by the successful tenderers were wholly or only partly manufactured in Australia was left to the successful tenderers themselves. From the Applicant’s perspective, everything that could be done to ensure that local content was ‘maximised’ was in fact done.

In our letter of 29 May, we mentioned that we were endeavouring to obtain details of the goods imported by the successful tenderers for the equipment items other than the longwall system. Our efforts to date have revealed the following –

…

3.                  Underground Conveyor

 

The successful tenderer was a company formerly known as Ace Conveyors Pty Limited of Wyong, NSW. It is now Continental Ace Pty Limited of Somersby, NSW. Mr John Clack, Director Engineering of this company can provide, and has given us also the names of the subcontractors from whom some of the major components were purchase.

The principal subcontractor was Fenner Conveyor Belting of Revesby NSW. Mr Ron Hill, General Manager of Fenner, has provided some information relating to 3500 metres of 1600mm belting imported for supply to Ace Conveyors for incorporation in the underground conveyor belting for mining industry use, belting of 1600mm width is not manufactured here. Mr Hill has undertaken to locate the original import documents and will advise us further in due course.

The flameproof electric motors required for installation in the conveyor system were purchased from Toshiba International Corp Pty Ltd of Lane Cove NSW. Mr Phil Bond, Sales Manager of that company, has provided details of the particular motors imported for supply to Ace Conveyors. He has undertaken to locate the import documentation and to advise us further.

…”.

As will be seen, the abovementioned “original import documents” were not located until immediately prior to the Coal letter of application of 20 July 1999 [57]. One significant part of the foregoing extract was the following:

“The question of whether the individual items of capital equipment to be supplied by the successful tenderers were wholly or partly manufactured in Australia was left to the successful tenderers themselves.”

Customs’ reaction by letter of 23 September 1997 demonstrates the gap between the parties as to what was necessary for qualification to Item 45 concessions, and a joining of issue in particular on Coal’s thesis as to the sufficiency of an Australian manufacturer’s acceptance of an overseas tender for componentry in order to establish the absence of Australian manufacture of such componentry:

“In seeking a duty concession under the PBL Scheme, the onus rests on the applicant to present arguments, in accordance with ACN 96/32 to support a claim for duty free entry. As early as 28 February 1994, Customs requested that you provide sufficient information so that the goods being imported could be clearly identified, demonstrate that the imported goods were not made in Australia as well as present any efforts made to source the goods locally.

The general assertions… to the effect that individual purchasing decisions were left to successful tenderers is not considered evidence of efforts to maximise Australian content.

I wish to advise that as a delegate of the Chief Executive Officer for the purposes of sub-section 273(1) of the Customs Act 1901 and on the basis of information received to date, I am not satisfied that any goods of your request meet the PBL criteria to be eligible for Item 45 consideration.  In view of the considerable time that has elapsed, and of the opportunities which have been offered to the applicant to provide information in the necessary form, I do not believe it is in the interests of either Customs or your client to prolong evaluation of this request.

However, I am prepared to give a further one month to your client to provide substantive information in support of individual goods requests.  I strongly recommend that you use the structured format identified in ACN 97/49.  It is my intention to make formal decisions on this submission prior to the end of October, using what information is in Customs possession by c.o.b. 27 October 1997.”

Confronted with this ultimatum, a meeting was sought by Coal with Customs, and the same duly occurred on 9 October 1997.

51                  Customs Minute Paper concerning the meeting with Coal on 9 October 1997 written by Mr Kathage, and to be found in the bundle of material attached to Mr Rodda’s Affidavit, recorded the ensuing “DISCUSSION”, including the apparent assertion made on behalf of Customs that Coal had not presented any evidence of absence of local manufacture of whatever goods may have been discussed at the meeting, and further that Coal had not provided any supporting information, and further still that the tender documents were so general as to be “really irrelevant”. A second Customs Minute Paper of the same meeting, written again by Mr Kathage, expressed “concerns” on the part of Customs as to the need for (inter alia) :

“1.       Clear identification of the actual goods being imported as any determination would need to specify the actual goods for which duty relief was sought.

Thereafter a purported summary of “the final position agreed by the meeting” was recorded by Mr Kathage, which included the following :

“5.       Customs still expected that the requested information would be presented by cob 27 October 1997.

…

7.         Customs, on the information presented and its own knowledge of Australian manufacturing capability would see little scope in obtaining an item 45 PBL determination for items other than the AFC components.  These other goods had problems in establishing a strong case that there was no capability to manufacture the goods locally.  Customs is aware of Australian capability to manufacture many of these goods.

8.                  Customs could only see some scope for ‘AFC parts’ – however it was always a matter for the applicant to decide what items were pursued in an item 45 PBL request.”

52                  Following the above Coal/Customs meeting, Coal wrote to Customs on 24 October 1997.  Again the focus was upon the longwall mining system rather than for instance the underground conveyors, and on that reference was made to componentry described as armoured face conveyors, stage loaders and roof support machines.  The letter pursued the theme of “open tendering” but nevertheless offered to obtain further evidence as to the “involvement of local industry” and “potential local capability in relation to manufacture” in the following terms:

“From the applicant’s point of view however, it is submitted that if the tender for supply of the longwall system was awarded to the only companies in Australia capable of manufacturing the goods in question, the applicant has sought to maximise the involvement of local industry.  If this observation is inadequate for your purposes, we would be grateful if you would explain to us what it is that you actually require so that we may obtain it.  We are still endeavouring to obtain information concerning potential local capability in relation to manufacture of the other items of capital equipment purchased in this project.”

 

and concluded :

“We undertake to provide the information you require in relation to the other goods to which our application relates as soon as it is received.  In the interim, please advise if any further information is required.”

Thus it would seem that as a result of the meeting, Coal had seemed to have come to an understanding that irrespective of any significance to be accorded to the fact that an Australian manufacturer of major equipment had awarded an offshore contract for the supply of components, nevertheless more was needed to satisfy the absence of Australian manufacturing capacity for such components.

53                  Following upon such letter of 24 October 1997, Coal did as foreshadowed submit to Customs by letter dated 14 November 1997 “… copies of Tariff Advices issued by the Regional Director of Customs for New South Wales in respect of the dutiable components of the armoured face conveyor for the longwall mining system previously included in the applications lodged by [Coal]”. As already indicated, the armoured face conveyor componentry did not include the thirteen (13) controlled start transmission units the subject of the later correspondence that has provoked the present Application. Nevertheless Coal contends in the Application before me that the circumstances attending this application relating to armoured face componentry was indistinguishable from the subsequent application relating to the subject units. Two internal reports made by Customs’ officers on 23 April 1998 therefore require examination.

54                  In the first of such reports called “Project Advice Assessments Report”, which is virtually identical to the other Report called Goods Assessment Report, it was observed that “The detail of the goods covered by the request has been refined over the period since the request was first lodged in 1993” (page 3), referring thereby to the Coal letter of 18 October 1993, and the same concluded as follows:

“The goods have been adequately described and identified, for the purpose of determining project status. I consider, for the purposes of determining project status, that the request is prospective.”

The reference to “prospective” was made because the First Report also stated as follows:

“The issue of the goods covered by the request has been the subject of much correspondence between the applicant and Customs since the matter was first brought to the attention of Customs. See copies of correspondence between Customs and the applicant identified in Parts 3 and 4 of the temporary files.

…

This submission was received on 1 March 1994. The arrival date for the goods was March April and May 1996…. There is some question over whether the request is prospective. I consider sufficient information had been provided prior to the goods arrival to conclude for the purpose of determining the project status of the request, that the request was prospective.”

Such identification of 1996 arrival dates demonstrates that the components of the armoured face conveyor were imported in the year following the importation of the componentry comprising the 13 units the subject of this Application.

This first Report then made the following “Comment” favourably to Coal, but only of course in the context of the then application related to componentry of the armoured face conveyor equipment:

“The applicant has attempted to maximise the involvement of local suppliers and manufacturers in the project, specifically by use of an open tendering process.  South Blackwater Coal has originated all enquiries and tenders through Australian based companies and has approached the most technical qualified firms known to them.

On the basis of the information provided it would appear that local manufacturing capacity existed at the time the goods the subject of this project advice were ordered and supplied.  A pragmatic approach would be to accept that local involvement has been maximised.  It was the local industry itself which made the decision to import the goods and as (sic) it was the local industry’s view at that time that it could not manufacture the particular items itself.”

Such “pragmatic” approach seems to have drawn a distinction between incapacity to manufacture and inability to manufacture which I find difficult to follow. The conclusion was as follows:

“I am satisfied that significant efforts have been made to source the goods from Australian sources.  The use of open tendering and the fact the decision to import the components of the AFC was made by the local industry supports this.”

The significance asserted by Coal to this armoured face conveyor componentry application is the circumstance that Customs was prepared to treat the use of “open tendering” by Australian manufacturers for the supply of equipment which included imported components as sufficient demonstration of the absence of manufacturing of the imported components in Australia. At this stage, ACN 96/32 was still operative, and ACN 98/22 had not yet taken effect, with its explicit confinement to only two methods of establishing absence of local manufacture, “open tendering” [46] and not being one of them. As has been seen, “open tendering” had been referred to in ACN 95/74 [28] as well as in ACN 96/32 [39].

The first Report further concluded, critical of Coal, with the following note as to “Exceptional circumstances”:

“This matter has been under consideration for some time.  The consultant has been reluctant to provide information requested over an extended period.  The loss of the file has delayed finalisation of the matter.”

and with the following “Recommendation”:

“I find that the Kenmare Colliery Project is a single project, defined as a mining project for the purposes of item 45. See A5.

I find that the project has a capital equipment value in excess of $10 million.  See A3.

I consider that the applicant has adequately evaluated Australian manufacture for supply of the imported goods and maximised the opportunities for local industry to become involved in the provision of major equipment.  See A7.

I recommend the project be accepted.”

The second of such Reports of 23 April 1998 called “Goods Request Assessment Report” specifically addressed the armoured face conveyor components, gear boxes and gears, and recommended most items for approval for Item 45 concessions. It referred to what appears to have been a fair amount of “homework” in relation to the existence or otherwise of Australian production by reference to enquiries made of Joy Mining Machinery etc, and such Report was able to conclude as follows:

“I am satisfied that significant efforts have been made to source the goods from Australian sources. The use of open tendering and the fact that the decision to import the components of the AFC was made by the local industry supports this.”

55                  Following the writing of the foregoing Internal Reports, correspondence between Coal and Customs took place in relation to the project generally and various components comprising the armoured face conveyor in particular, which correspondence concluded with a favourable determination of the By-law Item 45 applications the subject of the Reports referred to in [54] above, that is to say, in relation to “Armoured Face Conveyor Parts, Gearboxes, Gears And Other Parts”, but a rejection of any such determination in relation to “Armoured Face Conveyor – other transmission and other parts” upon the basis that the latter were not “capital equipment” within  Item 45: see Customs letter dated 31 July 1998. Such basis of rejection is immaterial for the purposes of this Application.

The 20 July 1999 Application

56                  About one year following the resolution of the Item 45 application relating to the armoured face conveyor etc components, Coal assembled an application for a By-law 45 Determination relating to the subject thirteen (13) controlled start transmission units, which application took the form of a letter of 20 July 1999 which was faxed to Customs on 27 July 1999. This letter was headed “Application for Determination under Item 45…”, and commenced with following explanation for the delay in so applying, being an explanation that boiled down to previous loss of import transaction documents:

“We refer to earlier correspondence in the above matter and to Determination MD 344238 issued on 31 July 1998 by the National manager, Industry in respect of capital equipment for the longwall system stage of the above project.

As mentioned in that earlier correspondence we have been endeavouring for some time to locate import documents for other items of capital equipment supplied for other stages of the project.  We have now been supplied with the originals of the import documentation relating to controlled start transmission units (“CST units”) supplied to South Blackwater Coal Ltd (“SBAL”) as components of the underground belt conveyor system manufactured in Australia by Continental Act Pty Ltd (“Continental”).  These goods were specifically referred to in our letter dated 13 October 1995 in relation to this project …

The successful tenderer for that stage of the project was Australian Conveyor Engineering Pty Ltd (“ACE”) of Wyong, NSW.  The reason for the delay in providing details of the specific goods imported is that ACE was taken over in late 1995 by the US based Continental Group and now trades as Continental Act Pty Ltd.  Documents relating to import transactions undertaken by ACE were placed in storage at the time of the takeover and have only been located in the past few weeks.

Please note that the CST units in question were entered incorrectly at the time of entry for home consumption by the customs agents acting for Australian Conveyor Engineering Pty Ltd, a matter which was the subject of recent correspondence between ourselves and the Regional Director of Customs in Sydney in our application for a Tariff Advice (the goods were wrongly entered as parts for passenger motor vehicles, despite having been correctly described on the individual entries for home consumption).”

The letter thereafter referred to such Tariff Advice as having been lodged on 21 June 1999 and as having been operative from that date and numbered TC9705621, and attached (inter alia) Coal’s letter to Continental Ace of 12 June 1997 [49] without comment.

The letter also attached what it described as “… a schedule in the format required by ACN 98/22 describing the goods in issue”, and significantly did not purport to put in issue the operation of ACN 98/22 in relation to the application made by this letter.

The letter concluded as follows:

“In relation to the requirement that information be provided to demonstrate that goods serving a similar function were not manufactured in Australia at the time the orders were placed for the imported goods, we draw your attention to the following Attachments –

M -      letter dated 28 February 1994 to RCC from the Department of Industry, Technology and Regional Development advising that applications for Tariff Concession Orders are not required for the imported goods

I -        Tariff Concession Order TC 9705621 which as TA 1484700 indicates, would have applied to the subject goods if imported on or after 27 June 1997

L -       letter from Continental advising that CST units were not manufactured in Australia in early 1995, a proposition reinforced by the subsequent promulgation of TC 9705621.”

57                  Such letter of 28 February 1994 was not put in evidence, and presumably said nothing of materiality beyond what has been mentioned about the functions of TCOs in [9-10] above. As to the attached TCO 9705621, the subject units were of course not imported after 27 June 1997 but two years earlier, and TCO 9705621 related to gearboxes and drive axles and not to the subject units. As explained in [9] above, Coal never sought a TCO in relation to the subject units. The last of the three attachments, namely a letter dated 22 June 1999 from the abovementioned Continental Ace Pty Limited (previously known as Australian Conveyor Engineering Pty Limited) to Coal, whose role has already been mentioned in [50] above, was however of potential relevance and was in the following terms:

“We acknowledge receipt of your letter dated 15 June 1999 and advise as follows :

(a)               We supply herewith a brochure describing the CST units supplied to South Blackwater Coal Ltd (SBAL).  These units were incorporated into the underground conveyor system we supplied to SBAL for the Kenmare project.  We also have a copy of an engineering drawing showing the location of the CST unit in the conveyor belt.

(b)               There is no manufacture in Australia of CST units for underground conveyors and never has been.  Continental Ace is Australia’s principal manufacturer of underground coal conveying systems and local content is usually around 80%.  Most components for our conveying system are manufactured in house, but we do buy in components from other local manufacturers.  Imported content is located only to those components which we cannot manufacture ourselves, and which other Australian manufacturers cannot supply.  These goods include CST units, large flameproof electric motors and some bearing housing’s which are imported under Tariff Concession Orders.

(c)               The function of a CST unit in an underground mining conveyor is to drive the conveyor system, controlling the torque from the output shaft. CST being developed for that specific purpose.  The CST units supplied to SBAL represented about 10% of the costs for the conveyors supplied.”

The references to “CST” is of course to controlled start transmission. Accordingly Coal had now finally placed before Customs not just an Item 45 concession application in relation to the subject units but also the emphatic statement from Continental Ace to Coal as to the absence of manufacture in Australia of such units “… at the time the orders were placed for the imported goods”. Continental Ace was the Australian manufacturer and assembler of Coal’s underground conveyors pursuant to the award by Coal upon the basis of Continental Ace’s “open tender”, and the subject controlled transmission units were componentry of such underground conveyors.

58                  The initial response to this By-law 45 application emanated from “AusIndustry”, apparently a section within the Department. Such response took the form of a “Goods Request Checklist” bearing date 9 August 1999 which “ticked” all subjects except “Availability of local equipment addressed”, and elaborated as follows :

“

Goods Request not considered as being valid.

Operative date is not set.

Request is retrospective (request received 6 August 1999 and goods imported on 5.4.95, 21.5.95 & 1.11.95).

Availability of local equipment criteria not satisfied.”

The delay in receipt of the Coal letter of application of 20 July 1999 was caused by a relocation of Customs’ offices in Canberra.

An adjacent “Comment” referred to ACN 98/22 as containing the guidelines for consideration of requests for duty concession received from 1 August 1998 and added :

“Policy contained on page 4, heading ‘7.  Prospective Requests’ directs that the goods request must be lodged before the capital equipment is imported, otherwise the request is retrospective and will be refused.

Heading ’10.  Availability of Local Capital Equipment’ requires that equivalent goods are not produced in Australia.  This may be demonstrated by availability of an applicable TCO or supporting statement from the Industrial Supplies Office.”

Thus it is apparent that the Department required something more than the letter of Continental Ace [57] in order to satisfy its requirement as to demonstration of absence of local manufacture at the material time. As above stated, the Department was putting the onus onto Coal to demonstrate the unavailability of manufacture of the subject united in Australia at the material times, and indicating that such demonstration might be effected in either of the two modes above extracted required either an “applicable” TCO for the equipment or a statement from the Industrial Supplies Office, in conformity with ACN 98/22 (see [47] above). There was of course no “applicable TCO” in relation to the subject units (see [57] above). Consequently it was obvious that the Department was looking for an Industrial Supplies Office Statement concerning circumstances prevailing in relation to the supply of controlled start transmission units at a point in time prior to Coal’s commitment to Continental Ace on 15 November 1994 [13], and demonstration otherwise by Coal of the production capacity of Australian industry at that time for such goods, or of equivalent goods, as explained in ACN 98/22 [47].

59                  The response of Coal by letter to the Department of 24 August 1999 was in essence as follows, this being the first time when Coal made reference to utilisation on its part of the Industrial Supplies Office information in correspondence with Customs or the Department, at least so far as concerned the subject controlled start transmission units:

“We will shortly forward a detailed response to the issues raised in your letter.  In the interim however, we advise that we do not consider our application to be ‘retrospective’.  A general description of the equipment to be purchased for use in the Kenmare project was contained in our original application dated 18 October 1993.  Details of all of the equipment items imported or intended to be imported for use in this project were set out in our letter dated 13 October 1995.  Both of those documents contained all of the material which the ACS, at those respective dates, required applicants to produce in support of a policy by-law application.  The reasons for our clients’ inability to provide details of the Customs entries on which the goods were entered for home consumption were set out in our submission dated 20 July 1999.

The Industrial Supplies Office has advised that Nepean Conveyors Pty Ltd manufactured a type of conveyor drive similar to controlled start transmission units in 1995.  We will be meeting shortly with our clients at the mine site to establish what information, if any, was made available to our clients by Nepean Conveyors Pty Ltd and the successful tenderer in relation to conveyor drives.”

In other words, the Department (and as a consequence Customs) had become placed on notice to the effect that the Continental Ace assertion as to entire absence ever of manufacture in Australia of controlled start transmission units (see [57] above) was contradicted by the Industrial Supplies Office. The reference above made to “… the successful tenderer in relation to conveyor drives” was to the USA manufacturer of Dodge CST drive units (see Coal’s letter to its Consultants secondly extracted in [61] below).

60                  An internal Customs document was prepared on 26 August 1999 by the Assistant Manager Policy By-laws which traced comprehensively in chronological sequence the correspondence between Customs and the Department on the one hand and Coal on the other, commencing with the original Coal letter of application of 18 October 1993, which internal document was described as “Application … made to Customs for project status” (as to which concept see again [8]) and concluded with the Customs letter of 31 July 1998 relating to the Item 45 application for the armoured face conveyor parts. A Goods Assessment Report was prepared internally within Customs on 8 September 1999 which noted that “The controlled start transmission units are components of the underground belt conveyor system manufactured in Australia by Continental Ace Pty Ltd”, and firstly concluded that “… the goods meet the legal terms and policy requirements of item 45, in that they are capital equipment for use in the mining and resource processing industries”.  The report then however made “Comment”  as follows :

“Whilst the letter of 28 February 1994 from [the Department] agreed that it was not necessary to pursue TCOs on the imported goods, it also stated that information was required to satisfy them that the imported goods are not made in Australia in the normal course of business (see folio 12).

(The abovementioned letter of 28 February 1994 is at [10]).

TC 9705621, with an operative date of 27 June 1997, does not provide proof that the goods were not capable of being manufactured in Australia in the normal course of business at the time the goods were imported, in 1995.

The applicant stated in their letter, dated 24 August 1999 (folios 55-56), that the Industrial Supplies Office has advised that Nepean Conveyors Pty Ltd manufactured a type of conveyor drive similar to controlled start transmission units in 1995.  This would indicate that local manufacturing capability may have existed at the time.”

and then secondly concluded as follows :

The Applicant has not demonstrated that the goods as imported were not available from local manufacture at the time of importation.”

Under the heading “Exceptional circumstances”, this Report continued :

“As detailed above, the submission, received on 6 August 1999, does not meet all of the policy requirements of item 45 in that :

1.                  the request is retrospective (see GR2); and

2.                  the availability of local equipment criterion has not been satisfied (see GR6).

The applicant has claimed in the letter dated 20 July 1999 (see folios 48-50) that mention was made in earlier correspondence that he had been endeavouring for some time to locate import documents for other items of capital equipment supplied for other stages of the project.  He stated that he had now been supplied with the originals of the import documentation relating to controlled start transmission units supplied to South Blackwater Coal Ltd as components of the underground belt conveyor system manufactured in Australia by Continental Ace Pty Ltd (Continental).  He has also pointed out that the goods were specifically referred to in their letter of 13 October 1995.

They have argued that the reason for delay in providing details of the specific imported goods, is that the successful tenderer for that stage of the project, Australian Conveyor Engineering Pty Ltd (ACE) of Wyong, NSW, was taken over in late 1995 by the US based Continental Group and now trades as Continental Ace Pty Ltd.  Documents relating to import transactions undertaken by ACE were placed in storage at the time of the takeover and have only been located in the past few weeks.

The applicant has been requested on numerous occasions since 1995 to provide information on each of the imported goods for which a concession was being sought (see summary of ‘key dates for correspondence received/sent in relation to project’ at folios 58-62).  However, it is only now, four years after importation of the goods, that the applicant is pursuing a concession in relation to the controlled start units, without any specific indication of intent in the meantime.

In the light of the above, there does not appear to be any circumstances which would warrant departure from the policy and administrative guidelines regarding the ‘prospectivity’ requirement nor the ‘availability of local equipment’ criterion.”

The Report concluded with the “Recommendation” that an Item 45 determination not be granted due to :

“1.       the request being retrospective

3.                  the availability of local equipment criterion not being satisfied.”

The Department thereafter by letter dated 8 September 1999 notified Coal essentially in the following terms:

“On the basis of the information contained on file, I would consider it unlikely that a concession would be granted.  However, I am willing to withhold a final consideration of your request until 15 September 1999, and allow you the time to submit any further relevant information.”

61                  Coal’s response was by letter dated 14 September 1999 in the following terms:

“1.       Availability of Local Equipment Criterion

This application was originally lodged in October 1993, when the Kenmare Colliery project was still in the planning stages. At that time it was the policy of the PBL administration that it was not necessary for TCOs to be sought on goods imported for incorporation in other goods to be manufactured in Australia for supply to a mining project.  An exemption from the requirement to pursue TCOs for any items imported for this project was given in express terms on 28 February 1994 by the then Department of Industry, Technology and Regional Development.  You have a copy of that letter on file.

South Blackwater Coal Ltd called for tenders to supply the underground conveyor system in mid-1994. A copy of the tender document is attached.

Offers to supply were received from five companies, viz :

1.                  Australian Conveyor Engineering Pty Ltd

2.                  Gulf Conveyor Systems Pty Ltd

3.                  Nepean Mining Pty Ltd

4.                  Prok Group

5.                  Continental Conveyor/ESS Pty Ltd.

Each of the companies listed at 1 to 4 above included imported drives and conveyor belting in its tender.  The fifth made no mention of the origin of componentry.

Information taken from the tenders of all of those companies was summarised in our submission dated 13 October 1995.  It is apparent from examination of the offers that none incorporated drives of Australian origin.  Our clients consider that in the circumstances, they are entitled to conclude that, at the date of purchase of their underground conveyor system, there was no local manufacture, in the normal course of business, of drive systems suitable for the required purpose.

To confirm the accuracy of this fact, we spoke on 16 August 1999 to Mr Paul Burns, Hunter Region Manager of the NSW Industrial Supplies Office.  Mr Burns advised that Nepean Conveyors (NSW) Pty Ltd is a manufacturer of underground conveyor drives known to the ISO.  (Nepean Conveyors (NSW) Pty Ltd is, as we understand it, an affiliate of Nepean Mining Pty Ltd.  These companies share the same address and telephone numbers at Picton, NSW).

As examination of attached extracts from the Nepean Mining Pty Ltd tender indicates (Attachment B), the drives offered in that tender were Flender drives of German origin.  Nepean conveyors’ “Boss” unit was not offered although, as noted above, it had been referred to in discussions which took place early in tender process.

We have requested further information from South Blackwater Coal Ltd in relation to evaluation of the tenders and will provide that information to you when it is received (expected to be by this Friday).

2.                  Goods Request Retrospective

Information relating to the goods covered by this application was supplied to you in our submission dated 13 October 1995.  For reasons that have already been explained to you, we have not been able until just recently to provide details of entry numbers and other information relating specifically to the import transactions.  Our submissions dated 13 October 1995 contained all of the information which the administrative guidelines for the PBL system at that time required applicant to provide.

We note that the administrative requirement for a Goods Request to be lodged prior to importation of goods was not introduced until 30 June 1997 (ACN 97/49).  That ACN  stated, in its preamble that it was to be read in conjunction with ACN 96/32, which related to applications for policy by-laws lodged after 10 July 1996.

The goods in question were imported in 1995 and are plainly outside the ambit of ACNs 96/32 and 97/49, a fact which you appear to have taken into account in July 1998 when Determination No. MD 344238 was issued in respect of components of longwall mining machinery imported by Joy Mining Machinery for use in construction of the applicant’s longwall mining system.

We note also that ACN 97/49 does not explain what is the “policy” consideration underlying the so-called prohibition on retrospective requests.  That issue is however explained in ACN 96/32, which states (page 6) –

            ‘It is fundamental to the objectives of the PBL system that importers seeking concessions should first take appropriate steps to maximise the opportunities for Australian manufacturers to produce the particular goods. To accord with that philosophy, Government industry policy dictates that the PBL system should be prospective in nature.  Clearly, the lodgement of a request for PBL concession after goods have been imported would be inconsistent with this objective.’

We again point out that our application for an Item 45 by-law is (sic) respect of goods imported for the Kenmare Colliery project was lodged in October 1993.  All stages of the project were developed through the open tendering process.  The applicant has not failed to comply in way with the objectives underlying the PBL scheme.”

The extracts from the abovementioned Nepean Mining Pty Ltd tender were duly attached as above stated. As foreshadowed in the above letter of 14 September 1999, which was as usual written on its behalf by its Consultants Rodda Castle & Co., Coal did provide information in relation to the evaluation of tenders, but the same was incorporated into a letter of 15 September 1999 addressed by Coal to its Consultants in the following terms:

“This letter confirms the advice given at our meeting last week in relation to the above matter.

South Blackwater Coal Limited received several offers in response to its Invitation to Tender for the above equipment. The successful tenderer was Australian Conveyor Engineering Pty Ltd of Wyong, NSW (now called Continental ACE Pty Ltd). The successful tender was for an Australian manufactured system which incorporated a very high level of local content (about 86%). There were only 2 imported items in the tender, Dodge CST drive units of USA origin valued at $966,568 and a Fenner belt of UK origin valued at $439,1000.

The offer from Nepean Mining Pty Ltd although a much lower price ($6.33 million compared to $10.17 million for the ACE offer) was also primarily Australian manufactured with a high level of local content. The Nepean Mining offer incorporated Flender drives of German manufacture valued at $127,938 and a UK Fenner belt valued at $298,656.

Nepean Mining did offer a system incorporating its “Boss” drives in early tender discussions, but withdrew those drives in the final offer and substituted the Flender drives for them.

As our final choice indicates, price was not a consideration in our decision. We decided to purchase the ACE conveyor system for the following reasons:

(i)                 the ACE system incorporated drive units operating on the low speed side of the gearboxes, minimising the likelihood of overheating during normal operations.

(ii)               the ACE system capacity was compatible with the output from the longwall operations, eliminating any possibility of bottlenecks in production. The Nepean Mining system, operating at the level we determined to its optimum capacity was only about 60% of the ACE system output. Its capacity therefore fell short of our operating requirements.

(iii)             the ACE drive system was of modular construction and skid mounted. We determined that this design would result in the lowest possible downtime on production operations in the event of drive breakdown or during  routine maintenance operations.”

62                  Such response did not produce any change of mind within the Department or Customs.  In the AusIndustry Minute of 17 September 1999, it was observed that “The submission seeks to respond to our concerns regarding the retrospectivity of the request and the availability of local equipment criterion, but simply restates earlier arguments and expands on them.”  The Minute then proceeds as follows :

“1.       Goods Request Retrospective

The latest submission again argues that the 13 October 1995 submission contained all of the information which was required, at that time, to be produced by applicants.  If that was the case, we may well question why a concession was not granted at that time.  However, whether or not the 1995 submission complied with the policy and administrative guidelines applicable at that time has no relevance to processing the latest goods request which was received on 6 August 1999.  The current guidelines published in ACN 98/22 under heading “21.  Transitional Arrangements” states that the guidelines contained therein will apply to all Item 45, 46 and 56 requests for duty concession received from 1 August 1998.  It further states that any PBL requests lodged before 1 August 1998, for which no formal decision has been provided, will be assessed under Project By-Law criteria.  We have no choice therefore other than to assess the request under current guidelines.

The request is clearly retrospective and there are no circumstances which would warrant departure from the policy and administrative guidelines regarding the ‘prospectivity’ requirement.  The applicant has had ample opportunity and has been requested on numerous occasions since 1995 to provide information in respect of the particular goods to be imported but has failed to do so.

2.                  Availability of Local Equipment Criterion.

The applicant again claims that an exemption from the requirement to pursue TCOs for any items imported for this project was given in express terms on 28 February 1994 by the then  Department of Industry, Technology and Regional Development.  He chooses to ignore the advice, which was given at the time, that information would still be required to satisfy that the imported goods are not made in Australia in the normal course of business.

ACN 98/22, under this criterion, directs that determinations for item 45 will only be granted where evidence in the form of a TCO or ISO advice is available that the equipment in the form that it is imported is not available from local manufacture.”

And the Minute thereupon recommended that the request be refused on the grounds, first, that the same was retrospective, and secondly, due to the availability of local equipment criterion not being satisfied.

 

63                  The formal decision of the Customs was conveyed to Coal by the Department’s letter of 21 September 1999, the signatory thereto (Mr Noel Gallagher) being an Acting Assistant Manager within the Department as well as a delegate of the Chief Executive Officer of Customs.  It was Mr Gallagher who later signed the Statement of Reasons pursuant to section 13 of the Administrative Decisions (Judicial Review) Act (post). The full text of such decision letter is as follows :

“KENMARE COLLIERY PROJECT – THIRTEEN (13) CONTROL START TRANSMISSION UNITS –GOODS REQUEST 1012/2

I refer to your item 45 Project By-Law (PBL) goods request on behalf of South Blackwater Coal Ltd seeking duty free entry for goods associated with the Kenmare Colliery Project.  In particular you have sought duty free entry for goods (ref 1012/2) identified as thirteen (13) control start transmission units.

Under current interim arrangements, decisions on Project By-laws will be made with reference to the legal, policy and administrative guidelines outlined in the Australian Customs Notice (ACN) 98/22.

Item 45 consideration by a delegate

For an item 45 Project By-law determination to be granted the goods the subject of the request must meet both the legal terms of item 45 as well as the underlying Government policy as expressed in ACN 98/22.

Item 45 consideration

The legal terms of item 45 state :

            Capital equipment for use in the mining and resource processing industries, as prescribed by by-law.

I understand the imported goods to be thirteen (13) control start transmission units which were imported in three shipments on 8 April 1995, 24 May 1995 and 4 November 1995 and that the tariff classification claimed for all the separate importations is 8483.40.90 as per Tariff Advice (TA) 14847400.  TA 147847400 describes the goods as controlled start transmission systems.  I note customs entries indicate the goods were actually entered under tariff heading 8483.10.91.

With respect to the legal terms of item 45, I have found that the goods request meets the legal terms of item 45.

Policy considerations

 

As to whether the Project By-law goods request meets the underlying policy guidelines, I have examined the submission and am satisfied that it meets some of the Government’s item 45 policy requirements in that :

·        the goods request is linked to an accepted ‘project’ with a capital requirement value over $10m;

·        a detailed description of the goods has been provided;

·        the required detail has been provided in tabular format; and

·        supporting arguments have been provided as to why the goods as imported meet the terms of item 45.

However, I am not satisfied that the request meets all of the Government’s policy criteria.

I have considered all the information contained on file including the additional information provided in your submission of 14 September 1999.  I have found that the request is retrospective and the submissions have not substantiated your claim that at the time the thirteen (13) controlled start transmission systems were imported they were not produced in Australia in the ordinary course of business.

I have therefore concluded that the item 45 goods request does not meet the Government’s policy requirements as outlined in ACN 98/22.

I have looked for reasons within your submissions as to why I should set aside these policy considerations but have not identified any sufficient [basis]to warrant me doing so.

Consequently, as a Delegate of the Chief Executive Officer of Customs for the purposes of sub-section 273(1) of the Customs Act 1901, I have decided to refuse the goods request for a duty concession under item 45 of the Customs Tariff Act 1995 for the thirteen (13) controlled start transmission units, the subject of goods request 1012/2 for the Kenmare Colliery Project.”

64                  The response of Coal was immediate. By letter to the Department dated 22 September 1999, it was submitted as follows :

“It is a matter of the gravest concern to us that the guidelines published in relation to administration of the Policy By-Law and Project By-Law systems contain no reference to the objective standard against which the ‘non-availability of local equipment’ criterion is to be assessed.  We have noted from page 5 of ACN 98/22, under the heading ‘Availability of Local Capital Equipment’, that an applicant for a Determination is required to demonstrate that the capital equipment to be imported is not produced in Australia in the ordinary course of business.  The ACN explains that this fact can be demonstrated by –

·        identifying a Tariff Concession Order (TCO) for the equipment which is in force when the goods request is lodged; or

·        providing a statement from the Industrial Supplies Office (ISO) stating that it is not aware of an Australian manufacturer producing or capable of producing the equivalent or an equipment good for the applicant’s project.

The ACN also explains that the ‘equivalent good’ criterion is a more design specific criterion than the ‘substitutable goods’ criterion applied to a TCO assessment, and says that goods are ‘equivalent goods’ if they meet the applicant’s engineering and technical requirements.  It also says that the ‘equivalent goods’ do not need to be identical to the equipment to be imported, nor do they have to meet the applicant’s unduly specific criteria in terms of proprietary materials, technologies or the like.

As pointed out in our submission dated 14 September 1999, the only known local manufacturer of underground mining conveyor drives was one of the tenderers for this stage of the Kenmare project.  That tenderer elected to include German-manufactured ‘Flender’ drives in its offer rather than its own products.  We submit that the reasons for this may be deduced from our clients’ letter dated 15 September 1999 (a copy of which was supplied to you at the 15 September 1999 meeting) wherein it as explained that the unsuccessful tenderers’ conveyor system, when operating at optimum capacity, fell significantly short of the end user’s operating requirements, which required compatibility with output from longwall mining operations.  It is plain that the locally manufactured drives did not meet the applicant’s engineering and technical requirements, and could therefore not be regarded as ‘equivalent goods’ in accordance with the ACT definition.”

And a request was thereafter made in such letter for a written statement of reasons. Such letter concluded :

“We would be grateful therefore if you would provide to us a written statement explaining the basis upon which you believe that an administrative requirement was not introduced until 30 June 1996 has application to goods that were imported in 1995.”

Statement of Reasons

65                  Thereafter Mr Gallagher in his abovementioned dual capacity issued a formal Statement of Reasons under Section 13 of the Administrative Decisions (Judicial Review) Act (Cth) (“ADJR Act”) under cover of a letter of the Department dated 20 October 1999 to Coal. By that Statement of Reasons, reference was made to some thirty-nine communications under the heading “My Findings On Material Questions Of Fact”, virtually all of which communications I have recorded already in this Judgment.  Such Statement also recorded reference to each of the Customs Notices (‘ACNs”) which I have earlier reviewed and summarised. Under the heading “The Reasons For The Decision” there appears the substance of what has already been extracted above from the Goods Assessment Report of 8 September 1999 [60], the AusIndustry Minute of 17 September 1999 [62], and the Department’s letter to Coal of 21 September 1999 [63].  Initial findings of the present relevance were expressed in the following terms:

“56.     I noted that the submission of 13 October 1995 provided descriptions for a range of goods which would comprise key items of the project. I  found the submission included a reference to goods described as an unknown number of Dodge CST transmission modules ex USA valued at A$966,568. I noted that subsequent information provided with the submission dated 20 July 1999 indicated that, as at 13 October 1995, 11 of the 13 controlled start transmission units had already been imported. I noted that this submission did not provide descriptive or illustrative material to enable a clear identification of the goods for which duty relief was being sought and their role within the project as proposed. I noted that the submission provided no details of:

(1)               the quantity of the goods to be imported;

(2)               a tariff classification for the goods;

(3)               the applicable duty rate;

(4)               details of the Tariff Concession Order;

(5)               the estimated date of importation and supplier;

(6)               customs entry details, and

(7)               claims why the goods as imported met the legal terms and policy requirements for item 45.

59.              I considered claims in the submission dated 20 July 1999 that these goods were specifically referred to in the submission dated 13 October 1995. I found that at no time until 6 August 1999 was consideration of a concession under item 45 able to have been undertaken.

60.              I found that it was not until 6 August 1999 that sufficient information was available for consideration of an item 45 concession, some four years after the majority of the goods had been imported.

61.              I found that a claim of no local manufacture of the controlled start transmission was based on a Tariff Concession Order (TCO) which was operative from 27 June 1997, which was after the 13 units were imported. I took into account claims that the 13 controlled start transmission units were not produced in Australia in the ordinary course of business. I took into account the letter from DITARD which indicated that it was not necessary to pursue TCOs on the imported goods, but that DITARD had required information that satisfied it that the imported goods are not made in Australia in the normal course of business. I also took into account the claims that controlled start transmission units were not manufactured in Australia in early 1995 which it was claimed was supported by the information contained in the numerous submissions and attached correspondence.”

66                  The concluding findings were as follows:

“Consideration of Australian manufacturing capability

71.              I found that a Tariff Concession Order had been nominated against the goods the subject of the request. I noted that the Tariff Concession Order applied to goods if imported on or after 27June 1997. On this basis, I was not satisfied that there was no local manufacturer of substitutable goods and that Australian manufacturing capability had been maximised. I took into account the additional information provided in support of claims that the subject goods were not produced in Australia in the ordinary course of business. I found this additional information did not convince me that the subject goods were not produced in Australia in the ordinary course of business at the time the goods were imported.

72.              I also considered whether exceptional circumstances existed sufficient to warrant departure from the policy guidelines set out in ACN 98/22. I concluded that on balance there were insufficient grounds to warrant such a departure.

Prospective goods requests

73.              This request was received on 6 August 1999. The goods were imported in three shipments on 5 April 1995, 21 May 1995 and 1 November 1995. I noted that two of these shipments had an arrival date prior to the date the goods were claimed to have been initially identified in the submission dated 13 October 1995. Consequently, I found the request to be retrospective.

74.              I also considered whether exceptional circumstances existed sufficient to warrant departure from the policy guidelines set out in ACN 98/22. I concluded that on balance there were insufficient grounds to warrant such a departure.

Conclusion

75.              On the basis of the information available to me, I decided that the request was retrospective and that the applicant had not provided information sufficient to convince me that at the time the goods were imported they were not produced in Australia in the ordinary course of business and as a result the request did not comply with Government policy set out in ACN 98/22.

76.              I found that there were no exceptional circumstances which compelled me to depart from the guidelines set out in ACN 98/22 and grant the determination sought for the thirteen (13) controlled start transmission units.  Consequently, I decided not to make a determination under s.273 of the Customs Act 1901”.

67                  Coal contends that the decision of Customs to refuse Coal’s request for a determination to the effect that Item 45 of Schedule 4 of the Custom Tariff Act applied to the thirteen (13) controlled start transmission units was void and should be set aside principally upon the following six grounds as set out in the Further Amended Application for an Order of Review (“the Application”):

“1.       The making of the decision was an improper exercise of the power conferred by section 273 of the Customs Act 1901.

Particulars

(a)               The respondent exercised the power by reference to government policy and administrative guidelines without regard to the merits of the particular case.

(b)               Further or in the alternative, the respondence exercised the power by reference to government policy and administrative guidelines without sufficient regard to the merits of the particular case, in that the respondent failed properly to consider whether exceptional circumstances existed sufficient to warrant departure from the policy guidelines set out in Australian Customs Notice 98/22.

(c)                Or in the alternative, the respondent exercised the power by reference to government policy and administrative guidelines that were not formulated or were otherwise not applicable as at the date of importation of the goods.

(d)        Or in the alternative, the respondent, in deciding that the application was retrospective, exercised a power not conferred by section 273 of the Customs Act 1901 and as such the decision involved an error of law.

 

2.                  The respondent failed to take into account a relevant consideration in the exercise of the power to make the decision.

 

Particulars

 

(a)               The respondent seriously misconstrued the terms or misunderstood the purpose of Australian Customs Notice 98/22 in the course of making the decision.

(b)               Further and in the alternative, the respondent failed to take into account of a relevant consideration namely that the relevant legislation for the purpose of the determination was Item 45 in Schedule 4 to the customs Tariff Act 1987.

(c)                Further and in the alternative, the respondent failed to take into consideration the fact that the goods in issue were imported prior to the date upon which ACN 98/22 was published or became operative.

 

3.         The respondent took into account an irrelevant consideration in the exercise of the power to make the decision

 

Particulars

 

(a)               The respondent had regard to the terms of Australian Customs Notice 98/22 in the exercise of the power in relation to thirteen controlled start transmission units for the Kenmare Colliery Project imported into Australia before Australian Customs Notice 98/22 was published and adopted.

 

4.         The respondent based the decision on the existence of the particular fact and that fact did not exist.

 

Particulars

 

(a)               The respondent based the decision on the fact that at the time of importation there was a local manufacturer of substitutable goods and that fact did not exist.

(b)               The respondent based the decision on the fact that at the time of importation the goods were produced in Australia in the ordinary course of business and that fact did not exist.

 

5.         The making of the decision and the Respondent’s state of satisfaction that “there was no local manufacturer of substitutable goods and that Australian manufacturing capability had been maximised” was unreasonable.

 

Particulars

 

(i)                 The only materials available to the respondent, being those materials particularised in Ground 4 hereof, established that there was no local manufacturer of substitutable goods and that Australian manufacturing capability had been maximised.

(ii)               There were no materials available to the respondent upon which he could conclude that there was an available local manufacturer of substitutable good and that Australian manufacturing capability had not been maximised.

(iii)             Inadequate weight, or no weight, was given by the Respondent to those materials particularised in Ground 4 hereof;

(iv)             Excessive weight was given by the Respondent to ACN 98/22.

 

            6.         There was no evidence or other materials available to the respondent upon which he could form his specific state of satisfaction.”

 

Principles as to adherence to and departure from Government policies.

 

Policy and Merits Generally

68                  In its presentation of written submissions, the Applicant (Coal) has regrouped its attack upon Customs’ decision-making as set out in its Further Amended Application into three segments respectively called “Australian Content”, “Inflexible Application of policy” and “Retrospectivity”, and the convenient course is to address the Coal submissions principally in accordance with such threefold characterisation of the issues raised in the Application for Review. Before addressing such three segments sequentially, it is appropriate to cite from authority concerning the government process of formulation of and adherence to policy for the purpose of administrative decision-making. It is in relation to Ministerial policies as to “Australian content”, in the sense of the necessity for demonstration, for the purposes of Item 45 concession applications, of the absence of Australian capacity to manufacture similar equipment or componentry of equipment to that intended to be imported, and as to the further need for prospectivity of applications for Item 45 concessions, which form the basis of Customs’ rejection of Coal’s Item 45 application in relation to the subject controlled start transmission units [66]. Coal’s principal basis of attack in this Application seeks to counter such reliance upon policy considerations by a postulation of omission on the part of Customs to have regard to the merits and exceptional circumstances of its case presented to Customs.

69                  A convenient starting point for consideration is the dictum of Gummow J in Khan v Minister for Immigration and Ethnic Affairs (Federal Court of Australia 11 December 1987 unreported) as follows:

“… what was required of the decision-maker, in respect of each of the applications, was that in considering all relevant material placed before him, he give proper, genuine and realistic consideration to the merits of the case and be ready in a proper case to depart from any applicable policy.”

This passage has been since cited with approval many times since, although as pointed out in Judicial Review of Administrative Action (Aronson and Dyer) (2^nd Ed) at page 225 (note 27), the antidote is often added, as did the Court of Appeal in Bruce v Cole (1998) 45 NSWLR 163 at 186, to the effect that such propositions “must be treated with care, so that the relevant/irrelevant considerations ground is not expanded to permit review of the merits”. In referring to such dictum in Khan, Hill J in Surinakova v Minister for Immigration, Local Government and Ethnic Affairs (1991) 33 FCR 87 at 98 expressed the principle in this way:

“There can be no challenge to a decision merely because a decision was made in accordance with a policy. To ensure consistency of administrative decision-making, it will often be appropriate for a policy to be issued containing guidelines… . However, a decision-maker must take care to ensure that he does not slavishly follow a policy and disregard the particular circumstances of a case.”

70                  In his capacity as President of the Administrative Appeals Tribunal, Brennan J. in Re Drake and Minister for Immigration and Ethnic Affairs (1978-1980) 2 ALD 634 at 640 had earlier said in relation to the adoption of and adherence to policy:

“There are powerful considerations in favour of a Minister adopting a guiding policy. It can serve to focus attention on the purpose which the exercise of the discretion is calculated to achieve, and thereby to assist the Minister and others to see more clearly, in each case, the desirability of exercising the power in one way or another. Decision-making is facilitated by the guidance given by an adopted policy, and the integrity of decision-making in particular cases is the better assured if decisions can be tested against such a policy. By diminishing the importance of individual predilection, an adopted policy can diminish the inconsistencies which might otherwise appear in a series of decisions, and enhance the sense of satisfaction with the fairness and continuity of the administrative process.

Of course, a policy must be consistent with the statute. It must allow the Minister to take into account the relevant circumstances, and it must not serve a purpose foreign to the purpose for which the discretionary power was created.”

And at 645 His Honour elaborated as follows:

“When the Tribunal is reviewing the exercise of a discretionary power reposed in a Minister, and the Minister has adopted a general policy to guide him in the exercise of the power, the Tribunal will ordinarily apply that policy in reviewing the decision, unless the policy is unlawful or unless its application tends to produce an unjust decision in the circumstances of the particular case. Where the policy would ordinarily be applied, an argument against the policy itself or against its application in the particular case will be considered, but cogent reasons will have to be shown against its application, especially if the policy is shown to have been exposed to parliamentary scrutiny.”

A failure to take into account a relevant consideration will of course only be made out if the decision-maker fails to take into account a consideration which he or she is obliged to take into account in making the decision, being an obligation ultimately to be construed from the legislation conferring the discretionary power (Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24 at 46 per Mason J).

71                  Subsequently in Attorney General (NSW) v. Quinn (1989-1990) 170 CLR 1 at 35, 36 and 37, Brennan J as a member of the High Court explained the absence of any curial role in intruding into debate upon the merits of an administrative decision, so long as of course the decision-maker has given the same appropriate consideration as indicated for instance in the foregoing authoritative dicta:

“The duty and jurisdiction of the court to review administrative action do not go beyond the declaration and enforcing of the law which determines the limits and governs the exercise of the repository’s power. If, in so doing, the court avoids administrative injustice or error, so be it, but the court has no jurisdiction simply to cure administrative injustice or error. The merits of administrative action, to the extent that they can be distinguished from legality, are for the repository of the relevant power and, subject to political control, for the repository alone.

The repository of administrative power must often balance the interests of the public at large and the interests of minority groups or individuals. The courts are not equipped to evaluate the policy considerations which properly bear on such decisions, nor is the adversary system ideally suited to the doing of administrative justice… .”

72                  As appears from the Customs decision on Coal’s item 45 By-law application in relation to the subject thirteen (13) controlled start transmission units, being Customs’ decision communicated by its letter to Coal of 21 September 1999 extracted in [64] above and in its Statement of Reasons extracted in [65-6] above, the same was based on non-conformity with two policy considerations stipulated in ACN 98/22, the first being failure on Coal’s part to substantiate or demonstrate to Customs’ satisfaction an absence of Australian production capacity for such units existing prior to the time of importation, and secondly being an absence of prospectivity of the application at the time of making thereof on 20 July 1999. As earlier indicated, ACN 98/22 took effect as from 1 August 1998 and remained in force beyond the time of decision-making on 21 September 1999 the subject of this Application. The policy provisions of ACN 98/22 have been extracted at [46-47]. Customs adopted the position that ACN 98/22 so applied, because it was not until 20 July 1999 that Coal submitted an adequate Item 45 application in respect of the subject units, “adequate” in the sense of an application which was capable of being the subject of decision-making on an informed basis [56-57]. The status of the purported earlier applications of 18 October 1993 and 13 October 1995 had remained undetermined, and if the same were even to be determined, the same would have required resubmission for consideration in conformity with the policies of ACN 98/22: see again the amending 1996 legislation at [41]. Coal seems to have initially accepted that ACN 98/22 would apply to such 20 July 1999 application by providing a schedule in the format required by ACN 98/22 [56]. Coal’s attack the subject of this Application was directed to the legal correctness of the two bases for rejection of such Item 45 application upon essentially the two grounds summarised below.

73                  As to Customs’ decision-making relating to Australian manufacturing capacity, being decision-making reflected in paragraphs 71 and 72 of the Statement of Reasons [66], Coal submits that Customs’ decision communicated on 21 September 1999 [63] failed to pay proper regard to relevant merits of Coal’s By-law 45 application in relation to the subject units, being the merits revealed by the consequences of Coal’s engagement in an “open tendering” process prior to its acceptance of the tender for the underground conveyors by the Australian manufacturer Continental Ace. Such consequences were said to demonstrate that there was not included in any of the tenders lodged, including in particular one tender lodged by an Australian manufacturer of controlled start transmission units (Nepean Mining) thereby indicating that such units were not then manufactured in Australia as componentry for underground conveyors at least of the specification appropriate for the Kenmare Colliery project.

It is submitted that although the Industrial Supplies Office had informed Coal on 16 August 1999 of the manufacture by Nepean Mining in Australia of such componentry for underground conveyors, the further inference must necessarily be drawn that the Nepean mining product lacked the capacity required by Continental Ace for the underground conveyors for which it successfully tendered. Such matters were articulated in Coal’s submissions to Customs in its correspondence at [56] [59] and [61].

74                  Coal’s further attack upon Customs’ decision-making related of course to the second limb of Customs rejection of Coal’s case, namely the absence of prospectivity of its By-law 45 application, and was to the effect that the letter of application submitted on 20 July 1999 should have been treated by Customs upon the basis that such application was originally set in train by Coal’s prior letters to Customs of 18 October 1993 and/or 13 October 1995, and that Customs failed to pay regard to the same on that basis.

75                  I will address these grounds of attack in detail subsequently within the three segments following namely “Australian Content”, “Inflexible Application of Policy” and “Retrospectivity”, that is to say, in accordance with the segments framed by Coal in its submissions. At this stage of the Judgment, I will make certain preliminary findings concerning the complexity of events which I have earlier outlined by way of narrative. Commencing chronologically back in October 1993, I would point out that Customs did not respond to Coal’s purported By-law 45 applications submitted by the letters of 18 October 1993 and 13 October 1995 as applications susceptible to decision-making, essentially because the same did not contain enough information (see paragraphs 60 and 61 of Customs Statement of Reasons at [65]). Subsequently to the writing of each of such letters, Coal did not, require Customs’ response thereto in terms of decision-making. At the time of writing the Coal 18 October 1993 letter [7-8], it was not known what componentry was going to be imported for assembly within any of the nine categories of major equipment set out therein, including that relating to underground conveyors, and such information would only be known when tenders had been finalised by acceptance. Customs made it clear to Coal from the outset that such purported application of 18 October 1993 for Item 45 approval was premature and would have to be treated as unsuccessful as then framed [10] and [13]. Coal did not further pursue any purported Item 45 concession application until the submission of its 13 October 1995 letter [26].

76                  Coal’s 13 October 1995 letter was written at a time when in relation to the subject units, Coal was so committed to the acquisition thereof as to have already imported eleven out of thirteen thereof, with the arrival in Australia of the remaining two shortly to occur. Whilst such 13 October 1995 letter indicated that tenders had been awarded to Australian manufacturers for at least most of the major equipment items involved, and that such Australian manufacturers had in turn awarded tenders for much of the componentry for such major equipment, including such of the componentry for the underground conveyors as was in the form of the subject units, and whilst the unsuccessful as well as successful tenderers were generally identified [26], such letter of 13 October 1995 spoke of the likelihood that further information might be required by Customs to support individual sections of the application, and Coal sought a meeting with Customs (inter alia) to determine the nature and extent of any additional material which might be required by Customs. Nothing was contained in the 13 October 1995 letter to the effect of what might have been done to research, investigate and ascertain in advance of importation the existence of capacity of Australian manufacturers to produce such componentry, including the subject units, that being a policy requirement which Customs and the Department had made clear to intending importers of mining equipment before this time by its communications extracted at [11], [17], [19], [21] and [22]. Coal considered that the fact that a process of “open tendering” had occurred in relation to the major items of equipment, being a process undertaken by Australian manufacturers, implied an absence of manufacture of componentry thereof in Australia, in circumstances where such manufacturers included in their respective models the subject of tender imported componentry. Customs adopted the position in relation to this 13 October 1995 application that there were significant shortcomings in the adequacy of the material and information provided in respect of componentry inclusive of the subject units, and so informed Coal [30-32]. Such position was initially contested by Coal [33-35]. Nevertheless in response to Customs’ insistence upon identification of goods componentry to be imported, and for reasons why there would be satisfaction on Coal’s part of “the legal and policy requirements of the PBL scheme” [49], Coal provided to Customs on 18 August 1997 an update on its so-called “efforts to date” to provide the required information in relation to (inter alia) the componentry for the underground conveyors [50], which Customs continued to characterise as inadequate and as not having provided criteria for Item 45 consideration by Customs [50]. As to the subject units in particular, Coal informed Customs by such letter of 18 August 1997 merely that Continental Ace as the successful tenderer for the underground conveyors “… has undertaken to provide such information as his company can provide, and has given us also the names of the subcontractors from whom some of the major components were purchased”. Customs described Coal’s submissions as ‘general assertions… to the effect that individual purchasing decisions were left to successful tenderers”, and was justified in so doing. Coal’s admission contained in its letter of 18 August 1997 that “The question of whether the individual items of capital equipment to be supplied by the successful tenderers were wholly or only partly manufactured in Australia was left to the tenderers themselves” [50] demonstrated a lack of full appreciation of ACN 95/74 and ACN 96/32 policies. Such lack of appreciation was seemingly on the path of remedy however, because in Coal’s next letter to Customs of 24 October 1997, Coal spoke of its endeavours in train to “obtain information concerning potential local capability in relation to manufacture of the other items of capital equipment purchased in this project” [52]. It was only after such manufacturer of the underground conveyors (Continental Ace) had later been able to locate “import documents” which had been placed in storage that Coal made the comprehensive application to Customs by its letter of 20 July 1999 [56] for Item 45 concession in respect of such of the imported componentry as comprised the subject units. In the meantime, and prior to the Coal application of 20 July 1999 in relation to the subject units, the only other Item 45 application which was formulated by Coal and submitted to Customs appears to have been that relating to the armoured face conveyor componentry [52-54]. Significantly, the opening words of the said Coal 20 July 1999 letter were as follows:

“As mentioned in that earlier correspondence we have been endeavouring for some time to locate import documents for other items of capital equipment supplied for other stages of the project. We have now been supplied with the originals of the import documentation relating to controlled start transmission units…” [56]

77                  It follows that Customs was justified in treating the 20 July 1999 application as the first competent Coal Item 45 application placed before Customs in relation to the subject units. I use the word “competent” in the sense of  requiring decision-making on Customs’ part. As appears from the Coal submissions to be addressed hereafter in this Judgment, controversy in this Application for Review arises as to whether Customs was obliged in law to take into account in connection with its decision-making in 1999, within the Peko principles referred to in [70] above, the recognition by ACN 95/74 and ACN 96/32 of the “open tendering” process therein referred to as one of the authentic means of determining whether there was an absence of manufacture of the subject units in Australia at the material time prior to importation, or probably to be more precise, prior to the time of commitment to importation. A contention to such effect on the part of Coal will be addressed in the next segment of this Judgment. Coal is not to be denied validity to that proposition merely because no reference was made to the “open tendering” process in any ACNs preceding ACN 95/74, notwithstanding that such ACN did not take effect until 14 December 1995, that is to say, after importation of all of the subject units had been completed by 1 November 1995. I would infer that such process was recognised by Customs as one potential means of assisting the demonstration of absence of relevant Australian manufacture prior to ACN 95/74 taking effect, notwithstanding an apparent absence of explicit reference thereto in precursor ACNs. And of course explicit reference to such process was continued during the operation of ACN 96/32 until it was superseded by ACN98/22 on 31 August 1998, whereafter no reference to such process has appeared in any statements of Government policy. The difficulty nevertheless for Coal is that its By-law 45 application of 20 July 1999 relating to the subject units was not made until ACN 98/22 had taken effect, and though ACN 98/22 used the permissive language “This can be demonstrated by…” (my emphasis and see the full context of such extracted words in [47] above), the contemporaneous Media Release was emphatically expressed to the effect that the only permissible modes of demonstrating entitlement to Item 45 concessions would henceforth be by way of an applicable TCO or by way of provision of an appropriate statement from the Industrial Supplies Office, and further that such Office was to play “a key role”: see [46] above. I think that to the extent I have just indicated, ACN 98/22 effected a significant or material change to existing policy, if the Media Release and ACN 98/22 should be read together, as I think they must. Of course, Governments are entitled in principle to change or vary policy for the time being in a manner consistent with any applicable governing statute: Save The Showground For Sydney Inc v Minister for Urban Affairs and Planning (1997) 95 LGERA 33.

78                  Against the context of my foregoing discussion of the circumstances appertaining to each of the Item 45 concession applications purportedly made by Coal, namely those said to have been constituted by each of the Coal letters to Customs of 18 October 1993, 13 October 1995 and 20 July 1999, and of the implications to such letters of application of the ACNs covering the period of some six years in question, I will now seek to address the three segments of Coal’ submissions upon Customs’ decision-making foreshadowed in [68] above.

Australian Content

79                  Set out below for ease of reference are paragraphs 12 and 13 of Coal’s written submissions on the subject of “Australian Content” as so described in Coal’s submissions:

“12.     The substance of the Applicant’s 1993 and 1995 application was that:

·                    it recognized, from the outset the need to “involve Australian manufacturers to a maximum”;

·                    tenders were thereafter invited and received and all tenderers who disclosed the source of the goods proposed to import such goods;

·                    when consideration was ultimately given to the application in August and September 1999 and when concerns were then raised as to the availability of local equipment, those concerns were immediately addressed by inquiries being made of the Industrial Supplies Office (ISO) and confirmation being provided that the only possible source of an Australian manufacturer (Nepean Conveyors (NSW) Pty Ltd) itself proposed to import the relevant goods and that such goods as it did have only had an “optimum capacity…[of] about 60%… and [its] capacity therefore fell short of our operating requirements…”.

13.              An expressed state of satisfaction that substitutable good were not produced in Australia is unsustainable in that such a conclusion:

·                    is founded upon the fact that fact does not exist or such a finding of fact is not supported by an reliable evidence; and

·                    disregards or fails to take into account such evidence as was before the Respondent.

Any contention that the Applicant’s submissions could be dismissed or not given proper weight because such submissions could be described as ‘unsupported assertion” fails to address the fact that one tender was in fact provided to the Respondent and all other tenders were offered and made available to the Respondent for inspection. A respondent, it is contended, cannot refrain from verifying summary information from readily available material and then dismiss the summary as “unsupported assertion”. This places an onus of proof upon the applicant that is not permitted.”

The reference to “not” on line 1 would appear to be a mistake. I will address these submissions below.

80                  As has been recorded already, ACN 98/22 and its accompanying Media Release [46-47] cast upon applicants for Item 45 concessions as from 1 August 1998 the onus of demonstrating to Customs the absence of Australian manufacturing capacity, and to do so prior to importation. And as indicated in [77] above, a reading together of the contemporaneous Media Release and ACN 98/22 carried the consequence of requiring the identification of an applicable TCO or the provision of a statement as to such absence of capacity from the Industrial Supplies Office. Moreover as in the case of earlier Government enunciations of policy, such Media Release emphasised that broadly based or unsupported assertions that equipment was not available from Australian manufacturers would not be accepted. Such policy requirements were not inconsistent with Section 273 of the Customs Act, stipulating as it does for decision-making of a discretionary nature [2]. The information so required, I would infer, would be within the capacity of importers to obtain and provide, particularly having regard to the assistance to be obtained from the Government’s Industrial Supplies Office which was located in branches throughout Australia, such Office having been nominated by Government as the source of authentic data which was required by way of alternative to obtaining TCO status in respect of relevant goods (as earlier indicated, Coal did not put in train such procedure in relation to the subject units [9]) [57], though it did so in relation to the armoured face conveyor componentry [53]. No contention was advanced by Coal to the contrary adverse to the ready and efficient availability of such Industrial Supplies Office facility at all material times. The requirement for importers to satisfy Customs as to the absence of Australian manufacturing capacity was not novel to ACN 98/22: see [10-13], [17-23], [28] and [37-40] for preceding policy statement to similar effect. The two alternative methods of satisfying Customs as to entitlement to relevant concessions stipulated by ACN 98/22, namely TCO status appertaining to particular goods or utilisation of information obtained from the Industrial Supplies Offices, had been stipulated, as to TCO status as early as ACN 91/122 [9], and as to the Industrial Supplies Offices, as early as the Minister’s letter to the Australian Mining Industry Council of 9 December 1994 [17]. As indicated in [9], Coal chose at the outset not to pursue the TCO mechanism (see also [49], [57], [58], [61], [63] and [66], and paragraph 71 of the Statement of Reasons [66], as to the consequences to Coal of so doing), yet so far as the evidence extends, Coal did not seek recourse to the Industrial Supplies Offices facility until 16 August 1999 [61] in respect of any componentry. As will be indicated at [92] below, TCO was subsequently sought in relation to the armoured face conveyor equipment, but never in respect of the subject units. It may be said that the text of Coal’s letter of application 20 July 1999 [56] was implicitly framed in terms of reliance on the “open tendering” process referred to in ACNs 95/74 and 96/32, in the light of the annexure referred to at the culmination of such letter (ie the Continental Ace letter at [57]), notwithstanding the omission of reference thereto ACN 98/22.

81                  Addressing then specifically paragraph 12 of Coal’s submissions extracted in [79] above, Coal’s alleged recognition of the need to “involve Australian manufacturers to a maximum”, an expression stated in Coal’s letter of 18 October 1993, was qualified by reference to the six factors therein set out [7], namely availability, comparability, quality, price, warranty and delivery of relevant componentry. In the events which happened, the only one of such qualifying factors which Coal ultimately raised as a basis for entitlement to Item 45 concession for the subject units was that of availability: see the reference by Coal in its letter of application to Customs of 20 July 1999 to Continental Ace’s letter in [57]. There was not here invoked circumstances as to excessive price of Australian goods or delay in manufacture in Australia, as in BHP Direct Reduced Iron Pty Limited v CEO Customs (1998-9) 55 ALD 665, where BHP proved to the Court that a price differential of 26.8% was involved, and that additionally delay in manufacture in Australia would mean loss of sales of $52.2 million. It was correct for Coal to submit that “… all tenderers… disclosed the source of the goods proposed to import…”, at least to the extent that in its subsequent letter of 13 October 1995 to Customs, Coal disclosed at least the componentry, including the subject units, to be imported from overseas for assembly here within the major equipment the project, and Australian manufacturers of the major equipment which had tendered for the same [26], but in merely so doing, Coal did not purport to demonstrate the kind of “well researched, well reasoned submission” as to “efforts… made to source these major components locally” so stipulated by the Department to Coal as early as the Department’s letter of 28 February 1994 [10], and thereafter repeated by Government to similar effect ([17], [19], [21], [22], [29] and [37-38]). As the Department warned Coal in its letter of 27 April 1995 [13], it was one thing to disclose overseas sources for imported components, but another to justify recourse thereto to the extent required by policy, particularly disclosure after commitments to importation had already been made and perhaps even completed. That was a warning given to but not heeded by Coal, well prior to Coal’s letter of application of 13 October 1995.

82                  For Coal’s submissions next to speak of Customs giving “consideration… ultimately… to the application in August and September 1999… when concerns were then raised as to the availability of local equipment” (paragraph 12 of the Coal Submissions in [79] above) does not portray the reality of what occurred between 18 October 1993 and the making of the application for By-law 45 concession in relation to the subject units on 20 July 1999 [56], being the period of more than five years which I have traced earlier in this Judgment. So much is inconsistent with the reason for delay proffered by Coal in that letter of application to Customs of 20 July 1999, namely “As mentioned in that earlier correspondence we have been endeavouring for some time to locate import documents for other items of capital equipment supplied for other stages of the project”. It was not until as late as 24 August 1999 that Coal informed Customs that “The Industrial Supplies Office has advised that Nepean Conveyors Pty Ltd manufactured a type of conveyor drive similar to controlled start transmission units in 1995” [59], being information Coal obtained from such Office on 16 August 1999 [61], and indicated that it would seek to establish further information on the subject (there is no evidence of subsequent communication between Coal and the Industrial Supplies Office in relation to the subject units after 16 August 1999). As for the continuing Coal submission of paragraph 12 [79] “… and confirmation being provided that the only possible source of supply by an Australian manufacturer (Nepean Conveyors (NSW) Pty Ltd) itself proposed to import the relevant goods and that such goods as it did have only had… an optimum [of] about 60% capacity”, as will be seen, such material as is in evidence does not permit a submission to such effect to be expressed so emphatically. Moving then to Coal’s letter of 14 September 1999 to the Department [61], Coal there asserted that the Industrial Supplies Office had indicated that Nepean Mining Pty Ltd (an affiliate of Nepean Conveyors), an Australian manufacturer of the underground conveyor equipment, had tendered for the Kenmare Colliery project in relation to such equipment upon the basis that the controlled start transmission componentry (ie the subject units) to be incorporated by Nepean into such underground conveyors would not be Nepean manufactured “drives” branded as “Boss” units (thereby referring to Nepean controlled start transmission units of such description manufactured in Australia), but would be instead componentry of such equipment manufactured in Germany under the brand “Flender”. Attached to such letter of 14 September 1999 was the Coal letter of 15 September 1999 addressed to Coal’s Consultants (secondly extracted in [61] above), which contained the assertion “The Nepean Mining System, operating at the level we determined to be its optimum capacity was only about 60% of the ACE system output. Its capacity therefore fell short of our operating requirements.” To such material I would add reference to Coal’s subsequent letter to the Department of 22 September 1999 extracted in [64], which culminated with the contention “it is plain that the locally manufactured drives did not meet the applicant’s engineering and technical requirements, and could therefore not be regarded as ‘equivalent’ goods in accordance with the ACT definition” (such “ACT definition” was presumably intended to refer to the description “… the equipment or an equivalent good for the applicant’s project’ in ACN 98/22 [47]. That was the case for Coal as it was finally left with Customs, that is to say, a case not based on an applicable TCO or Industrial Supplies Office statement in writing as stipulated in ACN 98/22, but a combination of an account of an “open tendering” process consisting of tenders for underground conveyors whereof the subject units would be imported components, combined with a hearsay verbal statement from the Industrial Supplies Office orally given on 16 August 2000 in broadly unspecific terms.

83                  A pricing comparison between the Continental Ace (formerly Australian Conveyor Engineering) underground conveyors (whereof the controlled start transmission units the subject of Coal’s subject Item 45 concession application comprised as already indicated only components), and the Nepean Mining underground conveyors (whereof Nepean’s controlled start transmission units also comprised only components) would provide some inferential support for the assertion, contained in Coal’s said letter of 15 September 1999 to its Consultants secondly extracted in [61], to the effect that the former underground conveyor system had greater capacity than the latter, but it did not necessarily follow that Nepean did not have the capacity in its Australian plant, had it been so commissioned, to manufacture a size or capacity of componentry in the form of controlled start transmission units for an underground conveyor system, being units which would have had the same capacity as the “Dodge CST drive units of USA origin” incorporated by Continental Ace into the underground conveyor system for which it was the successful tenderer. Put another way, assuming that Nepean’s tender had been framed in terms of underground conveyors containing controlled start transmission units of similar capacity size as those which were the subject of the Continental Ace’s tender, there was no material placed by Coal before Customs that demonstrated that Nepean did not possess the capacity to manufacture in Australia at least controlled start transmission units up to such larger capacity size, any less than its capacity to manufacture to the lower or smaller capacity size for the purposes of the underground conveyors which in the events which happened were in fact the subject of Nepean’s tender. Consequently the central plank to Coal’s case on the merits, for which it contends Customs should have paid regard, namely that “the locally manufactured drives did not meet the applicant’s engineering and technical requirements”, was not in my opinion substantiated by Coal to Customs to the effect required, and I think to have been reasonably required, by Customs. The critical qualification for concessionary treatment was demonstration on the part of importers that there was no manufacturing capacity in Australia at the material time (ie prior to importation) for producing the requisite imported goods. In this regard, I would emphasise the expression “capable of producing” in ACN 98/22 [48], which reflected the word “capacity” in ACN 96/32 [39], the expression “potential manufacturers” in ACN 95/74 [29], the expression “capabilities… of local producers” in the Minister’s letter of 21 June 1995 [18] and the expression “potential local suppliers” in the Minister’s letter of 9 December 1994 [17]. The fact that Nepean tendered for the supply of underground conveyors, which were to embody the relevant imported German componentry (“Flender”), instead of its own Australian manufactured componentry branded “Boss”, did not necessarily mean that Nepean did not have the capacity to manufacture in Australia the same size and capacity of such componentry. Why Nepean did not ultimately proffer its own Australian componentry instead of the imported Flender drives remained unexplained to Customs by Coal, but the obligation was placed by Government policy upon Coal to demonstrate its case to Customs, it was not unreasonable, certainly in the “Wednesbury” sense, for Customs itself to have pursued any enquiries of its own (Minister for Immigration and Ethnic Affairs v Teoh (1995) 183 CLR 273 at 290; Enichem Anic Srl v Anti-Dumping Authority (1992) 39 FCR 458 at 469).

84                  Customs’ decision-making of 17 September 1999 was confronted with the following considerations concerning the merits or otherwise of Coal’s Item 45 concession application relating to the subject units:

(i)         Continental Ace had emphatically asserted on 22 June 1999 [57] that there had never been any manufacture of controlled start transmission units in Australia, an assertion thereafter effectively contradicted, according to Coal’s letter to the Department of 24 August 1999, by the Industrial Supplies Office upon enquiry of that Office belatedly and apparently orally instigated by Coal on 16 August 1999 [59-60]; thus as matters were ultimately left with Customs for decision-making, such letters provided some evidence to Customs that there did exist Australian manufacturing capacity in relation to the subject units at a material point in time, and such information, such as it was, was not contradicted by the subsequent Coal letters of 24 and 25 September 1989 [61].

(ii)                In elaboration of (i) above, when Coal had made inquiry of the Industrial Supplies Office apparently for the first time ever on the topic of the subject units, that is to say, only after Coal’s receipt of the Customers’ Goods Request Checklist dated 9 August 1999 marked “Availability of local equipment criteria not satisfied” [58], Coal said that it then ascertained that Nepean Conveyors (related to Nepean Mining referred to in [82-83] above) “… manufactured a type of conveyor drive similar to controlled start transmission units in 1995” [59]; yet the policy of applicants for Item 45 concessions utilising the information providing services of the Industrial Supplies Office ahead of decision-making to import equipment had been emphasised by Customs since at least late 1994 [17], and repeated thereafter several times [19] [23] and [39], such emphasis having culminated in the expression of that Office’s “key role” contained in the Media Release for ACN 98/22 [46]. Coal had seemingly paid no heed to such policy until early August 1999; how “similar” Nepean Mining’s relevant componentry in 1995 was to that which it manufactured in 1999 remained unclear on the evidence in this Application;

(iii)               Coal did not by its final responses of 14 and 15 September 1999 [61] provide Customs with any documentary information upon the scope of Nepean’s manufacturing capacity in relation to the subject units, that is to say, its capacity in 1994 to manufacture controlled start transmission units which may have been comparable to those of “Dodge CST drive units of USA origin”; instead Coal’s case to Customs was expressed in terms of broadly based assertions, unsupported independently by way of an Industrial Supplies Office statement in writing as required by ACN 98/22[47].

85                  Contrary therefore to paragraph 12 of Coal’s submissions [79], for reasons already explained, I do not think that it is correct for Coal to contend that “… when concerns were then raised as to the availability of local equipment, those concerns were immediately addressed by inquires being made of the Industrial Supplies Office (ISO) and confirmation being provided that the only possible source by an Australian manufacturer (Nepean Conveyors (NSW) Pty Ltd) itself proposed to import the relevant goods and that such goods as it did have, to cite from Coal’s letter of 15 September 1999 [61], only an “optimum capacity… [of] about 60%… and [its] capacity therefore fell short of our operating requirements…” The obligation was placed upon Coal by ACN 98/22 to demonstrate the absence of relevant Australian capacity at a material time prior to importation, in order to obtain the benefit of the exercise of Customs’ discretion in Coal’s favour, and the substance of that Policy was that such demonstration would be achieved by the provision of a statement to Customs from the Industrial Supplies Office. There can be no reason in principle why a decision-maker, particularly where the exercise of a discretion is involved, cannot require as a matter of policy that an entity seeking the benefit of such exercise of discretion fulfil the task of satisfying its entitlement to a concession from Government according to a specified level of description of proof, subject only to the decision-maker’s obligation implied by law to take any merits of the applicant into account [69-70].

86                  Essentially for the reasons thus given, I am unable to distil the existence of any merits or exceptional circumstances, contrary to Coal’s submissions, which attended the Coal application for Item 45 concessionary treatment in relation to the subject units, and to which Customs should have taken into account but failed to do so. As stated in paragraph 71 of the Statement of Reasons [66], Customs took into account all such additional information as was provided by Coal’s letter of application of 20 July 1999 and its subsequent letters to Customs. Coal’s application in relation to the subject units failed to observe the ACN 98/22 warning that “Broadly based or unsupported assertions by applicants that equipment is not available from Australian manufacturers will not be accepted….”, and did not satisfy the ACN 98/22 requirement that “an applicant must demonstrate that the capital equipment to be imported is not produced in Australia in the ordinary course of business”. The Coal material extracted at [61] went some distance, but I cannot distil any error on Customs’ part in deciding that it was insufficient. To return to the Department’s letter to Coal of 28 February 1994 and the attachment thereto [11], I do not think that it can be asserted that there was presented by Coal to Customs “a well researched, well reasoned submission covering… efforts… made to source… major components… locally” for the reasons I have explained, particularly bearing in mind that Customs was being required to determine facts concerning Australian manufacturing activity which existed five years earlier. A supporting authentic statement from the Industrial Supplies Office itself (see again [47]) should have been provided to Customs, in contrast to an assertion by Coal to the general effect of what such Office had told Coal orally. The policy requirements of Customs as to demonstration of absence of local manufacture were not novel to the formulation of ACN 98/22, such that the adoption by Customs of the policy of that Notice would necessarily have made any difference to Customs decision-making. As earlier explained, the Government policy statements published from at least the beginning of 1994 up to the time of introduction of ACN 98/22 were similar in essential theme. Although Coal’s seemingly preferred position, according to its written submissions, was that its importation of the subject units fell to be governed by ACN 95/74, paradoxically a position earlier repudiated by Coal’s letter of 2 July 1996 [34], ACN 98/22 did not involve any major departure from the principles as to demonstration of entitlement based upon absence of local manufacture set out in ACN 95/74 [28]. To explain the adoption of an “open tendering” process, without more, did not have the consequence of relieving the applicants from the need for demonstration of absence of relevant capacity of Australian manufacturers for the purposes of satisfying ACN 95/74, yet Coal did not do much more than that. And for the interval of time between ACN 95/74 and ACN 98/22, there was in force of course ACN 96/32, which had also duly maintained such policies as to the demonstration by applicants of the absence of local manufacturing capacity, despite the continuing recognition of the “open tendering” process by a means to assist such demonstration. For completeness on this subject see also [45] concerning ACN 97/49’s statement policy.

87                  Moving next to paragraph 13 of Coal’s submissions extracted in [79] above, Coal contends that Customs has failed to address the fact that one tender for controlled start transmission units was in fact provided to Customs and all other tenders for supply of the same componentry were offered and made available to Customs for inspection, and that what Customs did was refrain from “verifying information from readily available material”, and dismissed such summary “information” as “unsupported assertion”. In so doing, Coal contends that Customs thereby “placed an onus of proof upon the applicant that is not permitted”. The tender so provided to Customs was that of Nepean, which was attached to the Coal letter of 14 September 1999 [61], and “the other tenders” are referred to in such letter. As to Customs’ alleged refrain from “verifying information from readily available material, no identification of the same is specifically provided, and I would refer to the authorities cited in [83] above. Coal relies however upon the principle of law to the effect that it is rarely appropriate to speak in terms of onus of proof in relation to administrative decision-making: see for instance Swan Television and Radio-Broadcasters Ltd v Australian Broadcasting Tribunal (1985) 8 FCR 291 at 297, but this principle has been applied in different contexts to that here involved. The context here is the implementation or otherwise of successive policies of Government, being policies which have imposed obligations upon importers to demonstrate or satisfy the discretion of the Government decision-maker as to entitlement to fiscal concessionary treatment from Government. There can be no objection in principle to Government formulating policies stipulating for the discharge of an onus of demonstration, and understandably so where as here the information needed to be demonstrated is required to accommodate the favourable exercise of Government discretion.

88                  Moreover the Coal submission referred to in [87] above incorrectly describes the Customs’ finding and reasons for decision, as well as the substance of Coal’s submissions to Customs of 24 August 1999 [59] and 14 September 1999 [61]. The circumstances that Nepean did not choose to incorporate its locally manufactured componentry into its tendered underground conveyor model, or that Coal did not award the contract for the underground conveyors to Nepean because of the insufficiency in capacity size of Nepean’s underground conveyor model the subject of its tender which equipment incorporated Nepean’s own manufactured control start transmission units, being an insufficiency in capacity size compared to that of the successful tenderer, did not operate to produce the consequence that there was evidence before Customs of the fact of an absence of capacity on the part of Nepean to manufacture in Australia such units of componentry as those incorporated by Continental Ace into its underground conveyor model. Contrary to Coal’s submission, Customs did not purport to found its decision upon “a fact” that Nepean manufactured in Australia in early 1994 or thereabouts the subject units to the capacity size of those imported USA units assembled by Continental Ace in its underground conveyors, but upon the circumstance that Coal had not demonstrated to Customs an absence of Nepean’s capacity to manufacture in Australia units of the capacity size needed to accommodate the capacity performance of Continental Ace’s underground conveyors (see again paragraphs 60, 71 and 75 of the Statement of Reasons [65-66]. The fact that Coal asserted in its letter of 15 September 1999 to its Consultants (lastly extracted in [61]) that “Nepean Mining did not offer a system incorporating its [Australia made] ‘Boss’ “drives in early tender discussions, but withdrew those drives in the final offer and substituted the Flender drives for them” did not demonstrate any conclusion about Nepean’s capacity to manufacture in Australia “drives” to a capacity size of that incorporated by Continental Ace in its successful tender for the underground conveyors. In any event, the Coal submission does not adequately come to grips with the requirements of the prevailing policy that Government was demanding, namely the provision by Coal of an authoritative statement in writing from the Industrial Supplies Office.

89                  Thus it is to be appreciated that Customs did not express “a state of satisfaction”, as Coal submits, but importantly in relation to the terms of ACN 98/22, Customs expressed a state of dissatisfaction; see Customs’ notification of decision of 21 September 1999 [63] where under the heading “Policy considerations”, the following appears:

“However, I am not satisfied that the request meets all of the Government’s policy criteria… I have found… the submissions have not substantiated your claim that at the time the thirteen (13) controlled start transmission systems were imported they were not produced in Australia in the ordinary course of business.”

As I have previously indicated, there is no reason in principle why Customs could not adopt and put into effect the policy requirements of ACN 98/22, and thereby place on importers the obligation to satisfy Customs as to fulfilment of applicable aspects of policies regulating their concessionary entitlements. Contrary to Coal’s submission, by so doing Customs did not require Coal to produce corroborative evidence in the sense described in Mohamed v Minister for Immigration and Multicultural Affairs (1998) 83 FCR 234 at 246, but rather to demonstrate its claims to alleged entitlements. Of course, Customs had to take into account in the decision-making process any merits appertaining to Coal’s Item 54 application in relation to the subject units [69-70], but in the light of the analysis of the evidence undertaken in [82] to [86] above, I have not been able to identify the existence of merits in the terms for which Coal contends. It was one matter to demonstrate the kind of “open-tendering” process as described by Coal in its submissions to Customs of 20 July 1999 [56-57], and of 24 August 1999 [59], and of 14 and 15 September 1999 [61], but another matter to establish authentically from Nepean directly the extent of its relevant manufacturing capacity in Australia at the material time, or from the Industrial Supplies Office in relation for instance to Nepean by way of written statement in conformity with ACN 98/22. I would not accept the descriptions of the “open tendering” processes as provided by and on behalf of Coal to have occurred as proof of that conclusion which Coal was required by ACN98/22 to establish to Customs. Inferences may be drawn from the circumstances of an “open tendering” process as to what is a manufacturer’s capacity to create the very thing for which it has tendered, but not

as to the limits of its capacity to create larger or different items of equipment if so commissioned.

90                  In the result, I would reject the Coal contention contained in paragraph 13 of Coal’s submissions that Customs disregarded or failed to take into account such information as was placed by Coal before Customs within the Peko test [70]. On my reading of the Statement of Reasons [65-66], such material was taken into account. And in any event, for what it may matter and for the reasons I have explained, I would not think that such information could have been necessarily characterised as sufficiently meritorious in any event.

91                  Coal next submits in the context of its segment as to “Australian Content”, but referrable also to its segment as to “Inflexible Application of Policy”, that “What forever remains unexplained is why the approach being urged upon [Customs] was accepted, on both the grounds of retrospectivity and local content in indistinguishable circumstances for some goods (referring thereby to the armoured face conveyor components, gear boxes and gears) but shunned in the present case”. In that regard Coal has pointed to the Goods Request Assessment Report of 23 April 1998 which was in terms similar to the contemporaneous Project Advice Assessment Report, extracted in [54], both of which were prepared in the context of Coal’s letters of 24 October 1997 and 14 November 1997 addressed in [52] and [53]. Coal contends that all that was so submitted in connection with Coal’s Item 45 application in relation to the armoured face conveyor components was also true of Coal’s Item 45 application in relation to the subject units, and that Customs had been inconsistent in its decision-making, and unreasonable by virtue of such inconsistency, citing Drake v Minister for Immigration and Ethnic Affairs (1979) 46 FLR 409 at 420-2 (per Bowen CJ and Deane J), and the decision in Drake below in the Administrative Appeals Tribunal (1979) 2 ALD 634 (per Brennan J). I do not think that the relevant circumstances of such two Coal Item 45 concession applications were indistinguishable.

92                  As indicated in [54] above, the detail concerning the armoured face conveyor componentry as initially provided by Coal to Customs was reported internally within Customs on 4 May 1998 to have been “refined” since Coal’s original letter of application of 18 October 1993. Coal’s Item 45 application concerning the armoured face conveyor componentry had been lodged with Customs on 1 March 1994, and the goods had been imported thereafter in March, April and May 1996, and upon such basis the application was found by Customs to be prospective [54]. It is true that as further indicated in [55], what was reported in terms of maximisation of involvement of Australian suppliers in relation to this componentry seems to have been largely demonstrated by reference to the “open tendering” process which had occurred, but at the time that such Report was compiled on 4 May 1998, ACN 96/32 was still current, along with its express approbation of the “open tendering” process, and in any event, more investigation as to local manufacture had been undertaken by Coal, for the reason explained in [54], than appears to have been the case in relation to the subject units. In addition and in any event, this By-law 45 application carried the benefit of a TCO relating to the equipment the subject of the application, or at least most of it: see [53] and [56]. Consequently at least for those reasons, in terms of both absence of Australian manufacture and prospectivity of application, Customs came to different conclusions than it did in relation to the subject units. I would therefore reject the submissions as to the presence of inconsistency in decision-making on the part of Customs, and of failure to take into account relevant matter placed before Customs for the purpose of decision-making.

The Inflexible Applicant of Policy

93                  In this segment of Coal’s submissions, Coal seeks judicial review by reference to Customs findings set out in the following passages of decision-making.

As to Customs’ letter of 21 September 1999 [63], from that part of what appears under the heading “Policy Considerations”, which indicates the following conclusions upon the subject of Retrospectivity:

“I have considered all the information contained on file including the additional information provided in your submission of 14 September 1999. I have found that the request is retrospective and the submissions have not substantiated your claim that at the time the thirteen (13) controlled start transmission systems were imported they were not produced in Australia in the ordinary course of business.

I have therefore concluded that the item 45 goods request does not meet the Government’s policy requirements as outlined in ACN 98/22.”

As to the Statement of Reasons, the following paragraphs already extracted in [66] above, namely 61 and 71-76.

94                  The submissions as to such inflexibility of applications is said to be revealed as follows:

“20.     Such inflexibility of application is revealed by:-

·                    the basis upon which the Respondent rejected the Applicant’s reliance upon an identified Tariff Concession Order; and

·                    the failure to place any weight upon a statement from the ISO; and

·                    the fact that a determination was made in respect of indistinguishable goods and indistinguishable facts – if the merits of one application dictated a favourable determination, it is only the inflexible application of policy which dictates an adverse decision in the present case.”

95                  As to the basis upon which Customs rejected Coal’s reliance upon such “Tariff Concession Order”, I would refer to the brief reference thereto at the conclusion of the Coal letter of application of 20 July 1999 in [56] and my explanation in relation thereto at [57]. I would also refer to the extracts from the Customs’ internal report of 26 August 1999 concerning this TCO (correctly to be numbered 9750621) extracted at [60]. Significantly, Coal did not pursue this issue further in its final contentions to Customs of 14 September 1999 [61], and on the contrary appears to eschew any further purported reliance upon the same in [64].

96                  There is no merit in this TCO contention. As indicated in [80] above, Coal elected to base its By-law 45 application in relation to all componentry for the Kenmare Colliery project from the outset without recourse to a Tariff Concession Order [9]. The circumstance that Coal subsequently adopted a change of course in relation to the armoured face conveyor componentry (see [48] above) does not assist Coal, because it did not do so in relation to the componentry comprising the subject units. To have attached TCO 9705621 to the 20 July 1999 application [56] in relation to the subject units created an irrelevancy. As Customs reported internally on 26 August 1999 [60], TCO 9705621 concluded nothing about the capacity to manufacture goods such as the subject units imported in 1995, and in any event related to gear boxes and drive axles [57].

97                  As to Coal’s submissions as to Customs “failure to place any weight upon a statement from the ISO,” the same is of course a reference to the oral information which Coal reported to Customs as having been communicated to Coal by the Industrial Supplies Office on 16 August 1999 [59]. Again this submission is without proper foundation. It cannot rightly be said that Customs placed no weight on such ISO statement which it so reported to Customs. The situation rather was that Coal having reported this statement to Customs in the hearsay terms which it did, without obtaining the written statement from the ISO as required by ACN 98/22,which may well have been more specific and otherwise informative for Customs, Coal thereafter sought to render nugatory such ISO information by its comprehensive submissions to Customs of 14 and 15 September 1999 [61].

98                  As to this segment of Coal’s written submissions concerning “indistinguishable goods” and “indistinguishable facts”, it suffices to repeat what has already been said above in relation to the armoured face conveyor componentry in [91] above.

Retrospectivity

99                  Coal first submits that “The policy of retrospectivity seeks to ensure that applicants maximise the opportunity for Australian manufacturers to participate in the project so far as they are able”. I cannot identify any such notion underpinning the policy against retrospectivity. The policy against retrospectivity, consistently formulated in the context mainly of ACNs, has been already summarised historically in [28] as to both ACN 95/55 and 95/74, [40] as to ACN 96/32, and [47] as to ACN 98/22. It may also be inferred that there existed a policy against retrospectivity of lodging applications prior to the writing of the Department’s letter of 28 February 1994 to Coal having regard to the content of such letter [12]. The policy is plainly directed at lest primarily to convenience and effectiveness of public administration. The lodgment of applications for Item 45 concessions after commitment to importation, and all the more so after completion of importation, has the inherent tendency or potential to render the task of bureaucratic investigation and verification more difficult, and more uncertain in outcome. Moreover, retrospective applications in relation to Item 45 matters are antithetical to the other principal policy as early identification of the existence or non-existence of manufacture of relevant equipment in Australia as an incident to effective demonstration of such non-existence to Government.

100               Coal further submits that no policy can validly preclude the making of a determination subsequent to the date of importation, by reason of the presence of the expression “or shall be deemed to have applied” in sub-section 273(1) of the Customs Act [2]. Upon that footing, the provisions of ACN 98/22, extracted in [47] above, which I repeat below for ease of reference, are said to be invalid:

“The Government policy directive is that the PBL Scheme operates on a prospective basis. Therefore the project advice and the goods request must be lodged before the capital equipment is imported. If either the project advice or the goods request is lodged after the equipment has been imported, the request is retrospective and will be refused.”

There is no substance in this contention. The expression “particular goods” is directed to classifications of goods, in the sense of types of goods differing according to utility or function, such as those used for major resource processing and agricultural based products, or for construction or shipbuilding. It would not make sense nor serve any contextual purpose for section 273 to be purporting, by implication of the use of the words “or be deemed to have applied”, to merge the distinction between goods which have been already imported and those which have not yet been imported.

101               Coal then submits alternatively that the policy against retrospectivity expressed in ACN 98/22 has been inflexibly applied by Customs in its decision-making of 17 September 1999 [62], where the following appears:

“The request is clearly retrospective and there are no circumstances which would warrant departure from the policy and administrative guidelines regarding the ‘prospectivity’ requirement.”

Coal points to the following circumstances, first, that the Coal letter of 13 October 1993 foreshadowed that a determination was being sought, and secondly, that the Coal letter of 23 October 1995 preceded at least the last of the three shipments, namely that which arrived in Australia on 1 November 1995. Such submissions overlook a number of intervening matters to which reference has already been made, which I repeat below:

(i)                  whilst the letter of 13 October 1993 did foreshadow that a determination under By-law 45 would be sought, it did not identify the subject units, nor could it have then done so because of the uncertainty as to what componentry would be the subject of ultimate application; to have merely foreshadowed such application served no utility to the administration of Customs, as it made clear to Coal [10-12];

(ii)                Notwithstanding the Government policy statements made from 4 May 1994 to 21 June 1995 [16-22], Coal took no steps in pursuit of an Item 45 application until its letter of application of 23 October 1995, despite its importation of eleven out of the thirteen subject units prior to the writing of such letter, and its completion of importation within a week or so after writing such letter;

(iii)               Virtually the only utility of the letter of 23 October 1995 for the purpose of this present Application for Review was to identify the subject units, and such letter did not advance any By-law application to any material extent: on the contrary see the internal Customs reports summarised at [29-30], and Customs’ response to Coal of 14 March 1996 [32]. Even if the letter of 13 October 1995 had constituted a competent By-law 45 application, as a result of subsequent statutory amendment the same was reconstituted as a fresh application [36];

(iv)              In the result, no application for a Item 45 By-law determination in respect of the subject units was made until 20 July 1999, a delay which Coal sought to explain in such letter of application by reference to mislaid documentation [56].

It was partly in the foregoing context that Customs entered upon the examination of an application made for the most part about four years after the subject units had been imported, hardly a case of merits or exceptional circumstances persuasive of a favourable exercise of discretion.

102               Coal then submit that “Both the statutory provision and administrative guidelines contemplate that consideration should be given to such matters as:

“

·        whether the importation of the goods in question will in fact discourage, rather than encourage, the development project which is proposing to import the goods from investing in Australia

·        whether the importation of the goods will in fact detrimentally affect assistance to Australian manufacture of goods

·        whether the importation of the goods will in fact detrimentally affect the maximisation of Australian industry participation in a project or opportunities for local industry in the provision of major equipment.”

These factors are referred to in ACN 95/74 and ACN 96/32. But such factors do not so operate within such ACNs as to derogate from or in any way modify the policy as to retrospectivity, which, as has been seen, received perhaps the predominant emphasis in the Ministerial communications and ACNs which I have reviewed in this Judgment. Indeed all such three factors extracted concern policy in relation to potential limitations upon importation of goods.

103               By addressing the Applicant Coal’s written submissions in the way which I have, commencing with my own initial segment headed “Policy and Merits Generally”, I have covered all of the grounds for review advanced by the applicant’s Further Amended Application For An Order Of Review and extracted at [67], save as to the issues as to weight raised by my particulars to its “Wednesbury” grounds set out in paragraph 5. I think that it suffices to say that weight was clearly a matter for the Respondent: Abebe v Minister for Immigration and Multicultural Affairs (1999) 162 ALR 1 at 54.

104               I therefore dismiss the Applicant and order the Applicant to pay the Respondent’s costs.

I certify that the preceding one hundred and four (104) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Conti.

Associate:

Dated:              4 October 2000

Counsel for the Applicant:	Dr G Flick SC Ms P Sibtain
Solicitor for the Applicant:	Dixon Holmes du Pont
Counsel for the Respondent:	Mr S Gageler Mr S Lloyd
Solicitor for the Respondent:	Australian Government Solicitor
Date of Hearing:	17 August 2000
Date of Judgment:	4 October 2000