The Ministerfor Trade and Customs:

The Dunlop Pneumatic Tyre Company of Australia Limited imported from the Dunlop Company in England a patented machine for the manufacture of tyres. It was invoiced at the English Company's cost price of manufacture. By agreement with the English Company, the Australasian Company pays a royalty on each tyre manufactured by the means of the machine.

It appears that the Australasian Company has since been manufacturing some similar machinery, including the patented parts.

The Minister for Trade and Customs has decided to determine the value for duty under section 160⁽¹⁾, and that the royalty has to be considered in fixing the value.

The Minister for Trade and Customs forwards the papers to me with the following minute (dated 18 March 1903):

The Honourable the Attorney-General: In the event of the Company throwing the imported machine out of work, and by some arrangement with or without the patentee's consent doing the work which an imported machine was intended to do on machines constructed here, will the value for duty of the imported machine be necessarily affected? It looks as if something of this sort was to be attempted with a view to getting at the revenue.

Under section 160 the Minister is the judge of whether the conditions exist which entitle him to determine the value, and if he decides that those conditions do exist, he determines the value.

The whole matter is therefore in his discretion. In the exercise of that discretion, which is in the nature of a judicial discretion, he should be guided as far as possible by the principles of valuation laid down in the Act. In the case however of an 'uncertain royalty' such as this it is not possible to formulate any general principle for the guidance of the Minister in assessing the value. The elements of value arising out of the royalty are what the Minister determines them to be.

[Vol. 3, p. 239]

(1) Customs Act 1901.