Upper Tribunal Tax and Chancery Chamber

UT/2023/000023 - [2024] UKUT 00096 (TCC)

Fecha: 23-Ene-2024

background law and FTT decision

background law and FTT decision

Goods imported from outside the EU are classified, for customs duty purposes, under the Combined Nomenclature (“CN”) which is set out in Annex 1 to EC Council Regulation 2658/87. The CN uses an eight-digit numerical code to classify products. The first four digits are referred to as headings, eight-digit level numbers are referred to as subheadings. The CN is amended annually and reproduced in the UK Tariff.

The CN does not contain any heading or sub-heading that specifically refers to cat scratchers and cat trees. Cozy Pet’s and HMRC’s respective preferred classifications for the products are set out in the table below (together with the applicable duty rates). In broad summary, Cozy Pet argues for classifications which relate to wooden furniture or other articles of wood or (as regards the cat scratchers which comprise more sisal elements) articles of rope/twine. HMRC’s preferred classification in contrast relates to the textile element of the products’ covering.

Appellant		HMRC
9403 60 90	Wooden furniture (0%)	6307-90-10	Other knitted made-up textile articles (12%)
4420 90 99	Wooden furniture not in Chapter 94 (0%)
4421 99 99	Other articles of wood (0%)
4421 90 97	Other articles of wood (0%)
5609 00 00	Articles of rope (5.8%)

The Annex to EU Regulation 2658/87 contains general rules for the interpretation of the CN known as “GIRs”. These provide, so far as relevant, as follows:

GENERAL RULES FOR THE INTERPRETATION OF THE COMBINED NOMENCLATURE

Classification of goods in the Combined Nomenclature shall be governed by the following principles:

The titles of Sections, Chapters and sub-Chapters are provided for ease of reference only; for legal purposes, classification shall be determined according to the terms of the headings and any relative Section or Chapter Notes and, provided such headings or Notes do not otherwise require, according to the following provisions:

(a) Any reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as presented, the incomplete or unfinished article has the essential character of the complete or finished article. It shall also be taken to include a reference to that article complete or finished (or falling to be classified as complete or finished by virtue of this Rule), presented unassembled or disassembled.

(b)

Any reference in a heading to a material or substance shall be taken to include a reference to mixtures or combinations of that material or substance with other materials or substances. Any reference to goods of a given material or substance shall be taken to include a reference to goods consisting wholly or partly of such material or substance. The classification of goods consisting of more than one material or substance shall be according to the principles of Rule 3.

When by application of Rule 2 (b) or for any other reason, goods are, prima facie, classifiable under two or more headings, classification shall be effected as follows:

(a)

The heading which provides the most specific description shall be preferred to headings providing a more general description. However, when two or more headings each refer to part only of the materials or substances contained in mixed or composite goods or to part only of the items in a set put up for retail sale, those headings are to be regarded as equally specific in relation to those goods, even if one of them gives a more complete or precise description of the goods.

(b)

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 3(a), shall be classified as if they consisted of the material or component which gives them their essential character, in so far as this criterion is applicable;

(c)

when goods cannot be classified by reference to 3(a) or (b), they shall be classified under the heading which occurs last in numerical order among those which equally merit consideration.

10.

The interpretative rules accordingly provide a structured hierarchical approach to determining classification. As described at [62] of PR Pet BV Case C-24/22 (which we refer to in more detail below):

“Paragraphs (a) to (c) …lay down interpretation methods each of which is subsidiary to the previous method, since recourse can be had to one of those methods only if the preceding method in alphanumerical order was unable to determine the tariff classification applicable to the goods concerned.”

11.

The interpretation of tariff headings is assisted by explanatory notes produced by the World Customs Organization (known as HSENs) and by the EU Commission (known as CNENs). We set out the relevant extracts of these when dealing with the relevant playpen products below.