TC09362 - [2024] UKFTT 001071 (TC)

The Appellant (‘O’Neill Wetsuits Limited’) appeals against an Advanced Tariff Ruling (“ATaR”) certificate 600004759 issued by HMRC on 27 October 2022, confirming the proper classification of certain neoprene wetsuits (“the Wetsuits”) imported by the Appellant into the United Kingdom under the Tariff of the United Kingdom (“the UK Tariff”).

An ATaR is legal confirmation of goods classification. Primary legislation for advance tariff classification, and advance origin rulings, is contained in the Taxation (Cross-Border Trade) Act 2018 (“the TCBTA”). The ATaR was made with reference to rule 3(b) of the General Rules for the Interpretation of the Harmonized Commodity Description and Coding System(“the GIRs”). The GIRs are contained in Part 2 of the UK Tariff and are the rules that govern the classification of goods under the Harmonized Commodity Description and Coding System (“the Harmonized System”) developed by the World Customs Organisation (‘WCO’). The Harmonized System classifies goods using six-digit commodity codes. The EU and UK systems add further sub-divisions resulting, in the case of the UK Tariff, in ten-digit commodity codes. A description is associated with each commodity code.

Rule 3(b) of the GIRs provides that mixtures, composite goods consisting of different materials, or made up of different components, and goods put up in sets for retail sale which cannot be classified by reference to rule 3(a), shall be classified as if they consisted of the material or component which gives them their “essential character”, insofar as this criterion is applicable. Rule 3(b) is commonly referred to as “the tie-breaker rule”.

The reason why rule 3(b) was applied to the Wetsuits in this appeal is because they comprise of different materials. Wetsuits are manufactured from cellular neoprene material comprising of single and double-lined panels, with textile to the surface of the neoprene. The Wetsuits with which we are concerned in this appeal are those where the majority of the panels are double-lined (“double-sided”), notwithstanding the fact that some of the panels of the Wetsuits are single-lined panels. For ease of reference, we shall refer to these as “double-sided” or “double-lined” Wetsuits. The major component of the Wetsuits is the neoprene. The Wetsuits are full suits intended to cover the upper and lower torso, and include several shaped panels stitched together.

The commodity code which HMRC contend applies to the Wetsuits is “6113 0010 00”. Heading 6113 of the UK Tariff applies to “garments made up of knitted or crocheted fabrics of Heading 5903, 5906 or 5907”. Commodity code 6113 0010 00 is defined with reference to Heading 5906, which applies to “rubberised textile fabrics other than those of Heading 5902”. The commodity code which the Appellant contends applies to the Wetsuits is “4015 9000 00”. Heading 4015 applies to “articles of apparel and clothing accessories (…), for all purposes, of vulcanised rubber other than hard rubber”. If HMRC’s position is correct, the equivalent duty rate applicable to the Wetsuits would be 8%. If the Appellant’s position is correct, the duty rate applicable to the Wetsuits would be 4%.