TC09362 - [2024] UKFTT 001071 (TC)

As is the case in the appeal before us, the issue in Sola Wetsuitsconcerned whether wetsuits covered on both sides with textile fabric should be classified under Heading 40.15 (as the appellant in that appeal maintained), or Heading 61.13 (as the respondents argued). The wetsuits in Sola Wetsuits were full suits intended to cover the upper and lower torso, made up of several shaped panels stitched together. It was the appellant’s uncontested evidence that wetsuits had to be made of neoprene rubber, and that the suits would not work as wetsuits unless they were made of that substance. The neoprene provides a thermal barrier to heat up the water in the suit. As is the case in the appeal before us, the major component of the wetsuit in Sola Wetsuits was the neoprene. The respondent’s approach in that appeal was to say that if more than 50% of the wetsuit was double-lined, then it should be classified to Heading 61.13; whereas if less than 50% was double-lined, it should be classified to Heading 40.15.

As was HMRC’s approach in the appeal before us, the approach followed by the respondents in Sola Wetsuits was to look at Chapter 40 and, on seeing that the Notes excluded goods of Section XI, conclude that the textile Chapters of Section XI must be considered first and, only when the relevant goods were excluded from Section XI, could Chapter 40 apply. The respondents considered that the knitting of the yarn produced a textile fabric of Chapter 61, which fell within Section XI.

The respondents then considered the make-up of the wetsuits, which were made of several panels each of a combination material of single-lined or double-lined neoprene, and decided that it was necessary to establish where each type of combination material would be classified in order to say whether the goods were of “rubber” or of “textile”. The next step adopted by the respondents was to consider the HSENs, which recognise that “cellular rubber” may be presented with textiles for “reinforcement purposes”.

The review officer in Sola Wetsuits gave her opinion that where the cellular neoprene was covered in textile on both sides, it was excluded from Heading 40.08. Having concluded that the material should be classified under Heading 59.06, the combination material being not of rubber but of textile, the review officer then looked to see where goods made up from that material should properly be classified. She referred to Note 7 to Section XI, where the expression “made up” was defined as covering cut, sewn and assembled articles. She concluded that Heading 61.13 specifically covered garments made up of fabrics of Heading 59.06. It was noted by the review officer that the HSENs to Heading 61.13 gave examples of the type of garments included, and that divers’ suits were mentioned there. In conclusion, the review officer stated that using rule 1 of the GIRs, she was satisfied that the correct Heading for the wetsuits was 61.13.

The main argument on behalf of the appellant in Sola Wetsuits was that the material from which the wetsuits were made was, principally, rubber laminated with a textile, and should not be regarded as, principally, a textile. It was further argued that the wetsuits in question could not be classified in accordance with rule 1 of the GIRs, according to the terms of the Headings and the relative Section or Chapter Notes and, accordingly, it was necessary to look at the provisions of rule 2, and of rule 3 in particular.

The appellant in Sola Wetsuits submitted that Note 2 to Chapter 40, which, as already observed, is headed “rubber and articles thereof”, provides that the Chapter does not cover goods of Section XI (textiles and textile articles). The appellant further submitted that Note 9 provided that in Headings 40.01, 40.02, 40.03, 40.05 and 40.08, “plates, sheetsand strips”applies only to various forms “…not otherwise cut to shape or further worked”. In Heading 40.08, the expression “rodsand profile shapes”applies only to such products, whether or not cut to length or surface-worked, but not otherwise worked.It was submitted that if this limitation applies to those particular Headings, then the Explanatory Notes to the Chapter which relate to the same Heading must carry the same restriction, and that a specific note to a specific Heading should not be taken out of context and applied randomly to other goods in a different classification Heading.

The appellant relied on, inter alia, rule 3(b) of the GIRs. The appellant further submitted that the law as defined in the Chapter Heading Notes made no distinction between single and double-lined neoprene. It was submitted that consistency in the interpretation and classification process should apply. Rule 1 of the GIRs was considered not to be applicable as there was no specific classification available and, therefore, rule 3(b) should apply.

The VDT decided the appeal in favour of the appellant, concluding that the wetsuits in question should be classified under Heading 40.15.