The Comptroller-General of Customs has submitted for advice the question whether there is any constitutional objection to the following By-law made under Tariff item
No. 404:

Sulphur for use in the manufacture of Superphosphates (subject to the condition that the Minister is satisfied in respect of each importation after inquiry and report by the Tariff Board that Sulphuric Acid made in Australia is not obtainable for the manufacture of the Superphosphate in the manufacture of which the particular importation of Sulphur is to be used, and subject further to security being given that the Sulphur will be used in the manufacture of such Superphosphate).

The Tariff Items relating to Sulphur read as follows:

The Comptroller-General of Customs states as follows:

It is a very general practice in making By-laws under concession items of the Tariff to attach a condition to admission under the By-law. For instance, a specified material may be admitted under Tariff Item 404 subject to security that it will be used in the manufacture of a specified article. It is quite possible that the manufacture of the article is only being carried on in one State of the Commonwealth and consequently the actual result of the By-law is to give admission thereunder in the one State whereas importations of the same material in that or other States for purposes other than that specified are liable to duty.

In the same way the By-law under notice lays down a condition which may only apply in certain parts of the Commonwealth. The suggestion is that in other parts of the Commonwealth the manufacturers are not suffering from any disability in obtaining their raw supplies, but in those particular parts where they are materially suffering relief is to be given.

The effect of the condition included in the By-law relating to Sulphur for the manufacture of Superphosphate is to limit importation under the By-law to Sulphur imported into the States of South Australia and Western Australia, as those are the only States where the conditions attached are operative.

It is evident that the terms of the By-law would permit of Sulphur being admitted under Tariff Item 404 into States other than South Australia and Western Australia if the Minister, after inquiry and report by the Tariff Board, were satisfied that the conditions governing admission under the By-law were in existence.

In view of the actual application of the By-law as explained herein I should be glad to have your opinion as to whether any valid objection can be made, from a constitutional point of view, to the manner in which the By-law is being applied.

I am forwarding herewith a statement setting out the position in regard to the availability of supplies of Australian pyrites in the various States.

The By-law does not, on the face of it, disclose any discrimination between States, and it does not seem to be challengeable on that ground.

The condition of the By-law is that sulphuric acid is not obtainable locally for a particular purpose. Action taken under the By-law appears to suggest that the deciding factor in administration is, in some cases, not the fact of sulphuric acid being or not being obtainable, but the question of price, and that action is, in some cases, taken on a recommendation of the Board that sulphur be imported into some State free on the ground of the high cost of transit of Australian sulphuric acid from other States.

A perusal of the file leads to the conclusion that the constitutionality of what has been done is, to say the least, doubtful, and that the individual decisions admitting sulphur free in the above class of cases would be open to attack, with some prospect of success, as being preferential regulations of commerce in violation of section 99 of the Constitution.

[Vol. 20, p. 36]