Australia: Why the wheelie bin tariff classification case is not a load of rubbish

A recent Federal Court case held that wheels for a wheelie bin should not be classified as part of a vehicle. The layman will say that this was stating the obvious, a wheelie bin is clearly not a vehicle. Customs brokers will see this as another case in a long line of odd classification arguments. In recent years we have seen Customs try to argue that wontons are pasta and that ceiling fans should be classified as lights. Many of these cases seem to have little relevance beyond the goods the subject of the decision. However, the wheelie bin case has valuable lessons for all involved in classifying goods.

The case

The original decision by Customs

The case concerned the classified of plastic wheels (fitted with a tyre) for plastic wheelie bins. The importer was advocating for classification under heading 8716.90.00 which applies to parts for "other vehicles". The classification was important as a concession would apply only if the goods were classified to that heading.

For the goods to be classified to that heading the wheelie bin had to be classified as an "other vehicle".

Customs original decision was that the wheels should be classified under heading 4012.90.00 (applying to certain rubber tyres) as the wheelie bins were not vehicles.

The appeal to the AAT

The importer appealed to the Administrative Appeals Tribunal (AAT) which found that the goods should be classified as vehicle parts. The finding flowed from a decision that the wheelie bins was correctly classified as an "other vehicle". In making this unusual finding the AAT was heavily influenced by the harmonised system notes (HS Notes). The HS Notes made clear that the "other vehicles" heading was intended to cover items that might not ordinarily be considered "vehicles". An example from the notes was a buffet trolley.

The Federal Court appeal

The Federal Court found that the wheels could not be classified as part of a vehicle. In a decision that will shock few laymen, the Court held that a wheelie bin was not a vehicle. The Court held that the AAT had not fully considered alternative headings and sent the matter back to the AAT for further review.

Importance beyond wheelie bin wheels

Most people are not involved in the importation of wheels for wheelie bins, so why does this case matter? The case is important as there were 2 principles applied which should be kept in mind when classifying any product.

Principle 1 – The importance and application of the HS Notes The original AAT decision was almost exclusively based on the HS Notes describing which goods fit within the heading "other vehicles". These notes showed that the word "vehicles" was intended to include goods that are not normally considered vehicles.

In the AAT, Customs argued that the HS Notes should not be treated with much importance in this case. While the Federal Court overturned the finding regarding whether a wheelie bind was a vehicle, the Court did not dismiss the HS Notes. On the contrary, the Federal Court paid very close attention to the HS Notes. The difference in opinion lay in the interpretation of the HS Notes, not the extent to which the HS Notes applied.

All customs brokers and importers need to pay careful to the HS Notes, especially where the wording of the headings is not 100% clear.

Principle 2 – Consider the whole HS Code When considering the scope of the wording in a particular heading, you need to consider the HS Code as a whole, including other headings that were potentially available. In the wheelie bin case, the Court reviewed the HS Notes for a number of alternative headings and considered it important that "dustbins" were specifically mentioned in the HS Notes applying to certain plastics and steel headings. The specific mention of "dustbins" in other headings led to the Court interpreting chapter 87 as not applying to wheelie bins. Effectively, chapter 87 was interpreted not by the wording the chapter 87 HS Notes, but by what the notes to other chapter included.

While customs brokers are expected to consider all potential headings, this case shows a slightly different approach. Under the traditional approach, you consider all applicable heading and then use the interpretation rules to decide which of the competing headings apply. In this case, the Court considered all potential headings and argued that the HS Notes to those headings led to a more restrictive interpretation of chapter 87. Chapter 87 was not excluded under the interpretation rules, but rather because the mentioning of dustbins in other headings meant chapter 87 should be interpreted as not covering wheelie bins.

The decision shows the very real difficulties of classifying goods. Where there is a dispute, this case demonstrates that a very technical approach may be taken to classification. We recommend reducing risk by obtaining binding tariff advices from Customs and/or seeking legal advice. This is of particular importance where the use of a concession is linked to classification of goods.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.