Key Facts
- •KRF UK Limited imported specialized parts for JCB machinery from a Chinese supplier.
- •The parts are plain bearings and liners used in articulated joints of JCB excavators.
- •HMRC assessed customs duty and VAT based on tariff code 8483 308090 ('Bearing housings, not incorporating ball or roller bearings; plain shaft bearings/Other').
- •KRF argued for tariff code 8431 ('Parts suitable for use solely or principally with the machinery of headings 8425 to 8430'), resulting in a nil duty rate.
- •The dispute centered on whether the parts qualified as 'plain shaft bearings' under heading 8483.
Legal Principles
Tariff classification depends on the objective characteristics and properties of the goods, and their intended use.
Intermodal Transports BV v StaatsSecretaris van Financien [2005] EUECJ C-495/03 at [47], DFDS BV v Inspecteur der Belastingdienst – Douanedistrict Rotterdam [2004] EUECJ C-396/02 at [27]-[29]
Explanatory Notes issued by the World Customs Organisation are an important aid to interpretation but not legally binding.
HSENs (Harmonized System Explanatory Notes)
If goods potentially fall under both heading 8431 and 8483, heading 8483 takes precedence.
Agreement between parties
Parts of machines are classified according to rules in Note 2 to Section XVI of the Tariff.
Note 2 to Section XVI of the Tariff
Outcomes
Appeal allowed.
The Tribunal found that neither the liners nor the bearings were 'plain shaft bearings' because the pivot pins did not meet the definition of 'shaft' or 'axle' and the parts' objective characteristics and properties showed they were designed for use with pivot pins in specialized machinery, not shafts or axles.