The Comptroller-General of Customs has forwarded me the following minute for advice:

As will be seen from the minute of the Chief Surveyor dated June 6 herein the Crown Solicitor has been further consulted with regard to the opinions given by him on 30 March 1922 and 3 May 1922, respectively.

2. If the Department must base its action upon those opinions, rather serious conditions will arise on both aspects, details of which are set out herein.
3. After consultation the Crown Solicitor suggested, on account of the serious view taken by the Department, that the file be forwarded to the Solicitor-General for his (the Solicitor-General's) further consideration or, if the Solicitor-General regarded it as desirable, for the opinion of Counsel.
4. The questions are: (a) whether a certain entry presented by James Henty & Co. was 'passed' by the Victorian Collector within the terms of section 39 of the Customs Act, and (b) whether the proper duty was paid on certain timber entered at the rate shown in Tariff Item 291 (I) (1), such payment being made prior to the date of gazettal of a by-law framed on such Item. The Departmental contention is that the item was inoperative until a by-law was made. The circumstances are as follows:
5. On 23 November 1921 James Henty & Co. entered a shipment of 609,361 super feet of timber ex the West Mahwah, the rate of duty paid was Is per 100 super feet and the Tariff Item under which the timber was entered was 291 (I) (1).
6. In accordance with the ordinary and regular practice of the Department the entry was first dealt with by the computer, who checked the computation on the face of the entry, and the amount of the duty with the description of the goods. This officer then signed his name on the entry; vide Exhibit 'G', the officer's name being T.A. Rudd.
7. This officer had no means of access to the goods and no other means of satisfying himself that the entry was a correct statement of the goods. It is clear therefore that this officer could not 'pass' the entry in the sense of giving his approval to the entry as a correct document.
8. The next officer who dealt with the entry was the cashier who merely received from the person presenting the document the amount of money stated on the entry as duty. The cashier signed the entry, such signature being the recognised acknowledgment of receipt of the money. This officer's name is written across the entry. It is A.C. Clarke; vide Exhibit 'G'. The statement in paragraph (7) applies to the cashier also.
9. The entry was then handed to James Henty & Co.'s representative so that he
   might take it to the inspectors and arrange certain securities which the cashier believed
   were necessary in connection with the by-law provisions of the Item.
10. Henty's representative took the document to the inspectors and after some controversy on the matter was informed that the entry was not correct as the Department contended that no entry could be received under the provisions of Item 291 (I) (1) until such time as the by-law was gazetted specifying what timber could be entered thereunder and under what conditions such timber could be entered.
11. The representative of Henty & Co. took the entry away and retained it in his possession for some weeks.
12. The wharf at which this timber was unloaded is not in an enclosed area and consequently the Customs had no physical control of the delivery. There was other timber on the vessel which had been properly entered. Delivery of timber from the ship continued for some time and on or about 3 December 1921 the Customs examining officer on the wharf discovered that James Henty & Co. had taken delivery of nearly the whole of this 609,000 super feet entered under Item 291 (I) (1) for which he had received no entry. Some 6,000 feet not delivered was sent to King's Warehouse. This has since been properly entered and delivered (although if my advice had been sought it would probably have been still detained as wrongly entered on original entry).
13. In the ordinary course of events the examining officer should have had the entry and should have been able to verify the description of the goods on the entry with the timber which was being unloaded. The practice is then for the examining officer, having verified the timber with the entry particulars, to mark the entry 'Delivered' and sign his name.
14. The Departmental contention is that the entry is not 'passed' until the examining officer, who is the officer and the only officer who can really check entry and goods, signs the entry with an authority to deliver.
15. If the entry was not 'passed' James Henty & Co. removed the goods without authority and it is desired to take action against the firm under section 33.
16. The goods, however, have gone into consumption and it is believed have been wholly manufactured into boxes; presumably therefore even if such action were successful the goods could not be confiscated and it is also assumed that the Department could not follow the goods to the present possessor. In any case the Department would scarcely wish to do so.
17. Although it is a very important question whether this entry was 'passed' and was a warrant for the delivery of the goods, the circumstances make the second question of more vital importance to the Department in this individual case. The position as regards the second question is as follows:
18. Tariff Item 291 (I) reads as follows:
    
    291 Timber, viz.:
    
    ********
    
    (I)Timber, undressed, cut to size for making boxes
    
    
    per 100 super feet 5s 5s 5s
    
    And on and after 11 November 1921
    
    (I) (1) Timber, undressed, n.e.i., for the manufacture of boxes, as prescribed by Departmental By-laws per 100 super feet Is Is Is
    
    (2) Timber, undressed, cut to size for making boxes per 100 super feet 5s 5s 5s
19. This minute deals particularly with the wording of (I) (1) above which came into operation on 11 November 1921.
20. A by-law under the Item was subsequently made and operated on and from 16 December 1921. This by-law [No.39] reads:
    
    

    Timber, undressed, for use in the manufacture of boxes may be admitted under Item 291 (I) (1), under security.

    Admission under this item shall be restricted to undressed timber which would, but for this item, be classifiable under Items 291 (C), (F), (G) or (H). No differentiation need be made between timber admitted under this By-law and By-law No. 38 above. (Commonwealth Gazette No. 18, page 326.)

    By-law No. 38 referred to above reads as follows:

    New Zealand white pine, undressed, may be admitted under Tariff Item 291 (E) for use in the manufacture of butter boxes, subject to security. As to the security a general footnote to page 294 of the same Gazette reads:

    Where the words 'under security' or 'subject to security' are used in any By-law, the term shall be taken to mean that the goods referred to in the By-law are to be delivered subject to security being given by the importer that evidence will be produced to and to the satisfaction of the Collector within six months, or such further time as the Collector may in writing allow, that the goods have been used in accordance with the terms of the By-law and entry.

    In all cases where security is required, the import entry shall specify the use to which the goods are restricted in the By-law and, if the information is then available, the place where they are to be used, and the entry and security shall be subject to the approval of the Collector.

    In any instance where the above provisions are obviously inappropriate, the Collector will decide the terms of the security.

21. For the period 11 November to 15 December inclusive no by-law was in operation.
22. The Department contends that Tariff Item 291 (I) (1) was inoperative for the reason that the Item requires that the timber shall be prescribed by Departmental by-laws. As no timber was prescribed no timber could be entered at the rates provided.
23. As James Henty & Co. entered the goods on 23 November 1921, which is within this period, the Department therefore contends that duty was not correctly paid.
24. If there had not been any such Item as 291 (I) (1) or if the Item was inoperative the timber would have been dutiable at higher rates under sub-items (F) (4s per 100 super feet) or (G) (5s 6d or 7s). It is not at present known what would have been the correct classification but it can be positively said that duty would have been higher than the rate of Is provided in 291 (I) (1). (At this stage it is not considered necessary to examine the specifications as to classification.)
25. The Department therefore desires to proceed against James Henty & Co. for recovery of the duty short-paid.
26. It will be seen that the Company in acting as they did apparently took no account whatever of the Departmental authority and in acting in this high-handed manner they have obtained an advantage over other firms whose actions conformed to the Departmental interpretation.
27. The whole of the papers are forwarded herewith. Attention is invited to the Crown Solicitor's opinions of 30 March and 3 May already referred to and to the minute of the Chief Surveyor dated 18 April 1922 which more fully sets out some aspects of the case.
28. It is also desired to draw attention to the fact that in a letter from Moule, Hamilton and Kiddle, Solicitors, representing James Henty & Co. (Exhibit 'F') an opinion of Mr Owen Dixon K.C. is given.
29. The opinion of the Crown Solicitor is understood as indicating as his view