The recent AAT decision in Sawtell makes it clear that
the Customs Tariff Act 1995 (Cth) (Tariff) must be interpreted
according to the rules of statutory interpretation as well as the
rules of interpretation in Schedule 2 of the Tariff.
This requires consideration of the 'text' and
'context' of the provisions of the Tariff. As the decision
shows, failure to consider context can result in errors in tariff
What happened in Sawtell?
In Sawtell Nominees Pty Ltd t/a H & R Schwarz and
Comptroller-General of Customs  AATA 993, the AAT set
aside the decision of Customs and instead substituted its own
The product in question was used to suppress the growth of
bacteria and other pathogens in certain foods – mainly
pre-packaged cold meats.
Sawtell originally classified the product as a lactic acid
before changing that classification to heading 3824, which included
'chemical products or preparations... not elsewhere specified
or included'. Item 3824.90.10 included a description of
Customs classified the product as a disinfectant under heading
3808, both at first instance, and then on review.
Sawtell paid duty under protest and sought a review of the
decision by the AAT.
In reaching its decision, the AAT relied on statements made by
the manufacturer of the product and by microbiologists, food
scientists and biochemists. The AAT did not rely on the opinions of
the sales specialist of the product.
The AAT concluded that Customs' classification of the goods
under heading 3808 was incorrect and classified the goods to item
Why did Customs get it wrong?
The AAT noted that the context in which a word appears
in the Tariff must be considered. The AAT applied the decision of
Young J in Chief Executive Officer of Customs v Biocontrol
Ltd (2006) 150 FCR 64. In Biocontrol, Young J
overturned a decision of the AAT, noting that there was a failure
to take into account particular 'contextual
The AAT in Sawtell held that the product in question
was not a disinfectant. Customs had relied on dictionary
definitions, which resulted in a narrow approach that did not
sufficiently consider the context in which the word was used.
The AAT stated that the alternative heading of 3824, which
applied where a product was 'not elsewhere specified or
included', was relevant context that pointed strongly to
Customs' classification being incorrect.
While the AAT acknowledged that headings must be compared first,
and that it could not rely on descriptions of items under headings
before the headings themselves were compared, the description of
food preservative in item 3824.90.10 was relevant context. This was
particularly the case where the heading was for products 'not
elsewhere specified or included'.
The outcome in Sawtell is consistent with the High
Court case of Alcan (NT) Alumina Pty Ltd v Commissioner of
Territory Revenue  HCA 41, where the High Court stated
that statutory words are to be interpreted having regard to their
There is clearly a place for dictionary definitions to help
identify the ordinary meaning of a word, but care needs to be taken
to consider the text of words as well as their context in the
Cooper Grace Ward is a leading Australian law firm based in
This publication is for information only and is not legal
advice. You should obtain advice that is specific to your
circumstances and not rely on this publication as legal advice. If
there are any issues you would like us to advise you on arising
from this publication, please contact Cooper Grace Ward
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