Key Facts
- •HMRC issued a Post Clearance Demand Note for £121,241.01 (customs duty and import VAT) due to misclassification of imported goods from Innovation Rehab Limited.
- •The goods, various inflatable cushions and overlays used in healthcare, were initially declared under commodity code 9021 10 10 00 (0% duty), but HMRC argued for code 3926 90 97 90 (6.5% pre-Brexit, 6.0% post-Brexit).
- •Innovation Rehab relied on a 2005 phone conversation with an HMRC officer advising on code 9021 10 10 00.
- •Additional Note 2 to CN Chapter 90, published March 29, 2019, significantly altered the definition of 'orthopaedic appliances'.
- •The appeal considered the application of Additional Note 2, the interpretation of 'orthopaedic appliances', and the implications of HMRC's 2005 guidance.
Legal Principles
Tariff classification is determined by objective characteristics and properties, not subjective intentions.
CJEU case law
GIRs (General Interpretative Rules) have the force of law and guide classification.
Council Regulation 2658/87, Customs Tariff (Establishment) (EU Exit) Regulations 2020
HSENs and CNENs (Explanatory Notes) are persuasive aids to interpretation, though not legally binding.
Develop Dr Eisbein GmbH & Co v Hauptzollamt Stuttgart - West (Case C-35/93)
Article 119 of the UCC (Union Customs Code) addresses errors by competent authorities, allowing for duty repayment or remission under specific conditions.
UCC, Article 119
The principle of legitimate expectation may be relevant in challenging HMRC decisions, but its availability is limited by statutory schemes.
KSM Henryk Zeman PP Z.o.o. v HMRC [2021] UKUT 71 (TCC)
Outcomes
Appeal allowed in part.
Products imported before March 29, 2019, were correctly classified under 9021 10 10 00 based on Note 6 and HMRC's 2005 guidance. Post-March 29, 2019, classification depended on Additional Note 2's stricter definition of 'orthopaedic appliances'. Some products met this stricter definition, while others did not.
Post Clearance Demand Note to be amended.
The Tribunal will determine the payable duty if the parties cannot agree within one month.