Cozy Pet Limited v The Commissioners for HMRC
[2024] UKUT 96 (TCC)
The Commissioners for HMRC v International Plywood (Importers) Limited
17 November 2023
[2023] UKUT 278 (TCC)
Upper Tribunal
A company imported wood panels used as molds for concrete. A lower court said there was no import tax. The higher court disagreed. The law says the molds need to be a complete kit to avoid tax, not just the panels themselves. So the company now owes import taxes.
Key Facts
- •International Plywood (Importers) Limited (IPL) imported wooden panels from Brazil.
- •HMRC classified the panels under commodity code 4412 (plywood, veneered panels, etc.), resulting in a £277,930.83 duty demand.
- •The First-tier Tribunal (FTT) reclassified the panels under code 4418 (builders' joinery), resulting in zero duty.
- •HMRC appealed to the Upper Tribunal (UT) arguing the FTT erred in law.
- •The panels were three-layered cross-laminated timber with a cement-resistant coating (Noxcrete).
Legal Principles
Customs classification is determined by objective characteristics and properties, defined in the Combined Nomenclature (CN) and related notes. Intended use can be a criterion if inherent in the product's objective characteristics.
Union Customs Code (UCC), Regulation 952/2013; General Rules of Interpretation (GIRs); Case C-495/03 Intermodal Transports BV; Case C-309/98 Holz Geenen
Harmonised System Explanatory Notes (HSENs) and Combined Nomenclature Explanatory Notes (CNENs) are persuasive aids to interpretation, but not legally binding. They must be compatible with the CN and should not conflict with it.
Case C-35/93 Develop Dr Eisbein GmbH; Case C-495/03 Intermodal Transports BV
Classification proceeds hierarchically, comparing headings and subheadings at the same level. The most specific description is preferred (GIR 3(a)).
[2022] EWCA Civ 825 Build-A-Bear Workshop v HMRC
The burden of proof in establishing the proper classification lies with HMRC.
Implicit in the legal framework
Outcomes
The UT allowed HMRC's appeal.
The UT found the FTT erred in classifying the panels under 4418 because: 1) the explanatory notes define "shuttering" as an assembled unit, and the panels were imported unassembled; 2) the FTT incorrectly concluded laminboard is not a type of plywood, ignoring the exclusion in the explanatory notes for plywood panels used as shuttering, even if treated; the FTT's findings on the panels' objective characteristics didn't justify 4418.
The panels were reclassified under 4412 94 10.
The UT held that the panels' characteristics, even if laminboard, fell under the definition of plywood as described in the HSENs and therefore the exclusion in 4418 applied. The panels did not meet the requirements to be considered complete "shuttering" assemblies. The UT considered Regulation 309/2010 as relevant precedent.
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