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

As an initial observation, we note the HSEN to 7314 is written in plainly non-exhaustive terms and in a number of respects. It refers to the products being products which are produced “in the main” by a number of methods, such methods “broadly” resembling those in the textile industry. The group “includes” wire grill. Having considered the production methods, the type of products included, and defining what is meant by “wire” it is only then that the HSEN goes on to describe the many uses the product can be put to and does so in a non-exhaustive way (using the term “e.g.”) and explaining the “material of the heading “may”be used for many purposes “e.g. for the washing, drying or filtering of many materials; to make fencing, food protecting covers and insect screening, safety guards for machinery, conveyor belting, shelving, mattresses, upholstery, sieves and riddles, etc.; and for reinforcing concrete, etc.”

The FTT derived two essential propositions from what it considered was a common thread running through the articles mentioned in the HSEN. First, it held that the items within 7314 were to be made into, or incorporated into, a finished product. Second it held that fashioning or incorporation into a finished product involved some form of manufacturing process.In our judgment those were both errors of interpretation.

First, as the FTT itself rightly acknowledged at the outset, the list of purposes was illustrative (the FTT began by saying that “Whilst referring to the “many purposes” to which the relevant article can be put…”). Moreover, when that list refers to the use of being made or incorporated into something else, that use is one of several different uses which include those which do not involve any making or incorporation. The uses of “washing, drying or filtering of many materials” does not for instance imply any making or incorporation into a finished product. In addition, an insistence that the 7314 article must be a component also sits oddly with the HSEN’s mention of the product being able to be used for washing drying and filtering or for reinforcing concrete. It is difficult to see how the 7314 material when used in those ways would not itself be regarded as a finished product.

Second, where articles in which the material is used are specified, no indication is given that a limiting factor is placed around the process by which the article the 7314 material is used in or incorporated into the specified articles. On the face of it, it is true that many of the articles mentioned will involve some kind of manufacture but there is nothing to suggest that would exclude the final product being put together by some form of assembly. The fact the HSEN specifies processes by which products are made in granular detail (as does the HSEN HMRC relied on for 7326 (see above [63]) lends support to the view that if the HSEN considered that the process by which the 7314 goods were used in other products was significant and had wished to drawn a distinction between manufacture and assembly it could easily have said so.

Even more pertinently to this case the HSEN clearly contemplates “fencing” is something which can be made from the underlying 7314 fencing material. There is thus nothing to suggest from the HSEN that the material captured by the sub-heading might not be comprised in a fencing panel, which might then be assembled into fencing (or for that matter that a single such panel might function as fencing).

We therefore agree with Mr Blades that one cannot extract the proposition from the HSEN that it excludes things which are finished products rather than components to a finished product (where finishing means being subject to a manufacturing process and not assembly).

We consider the FTT’s errors in misinterpreting the HSEN were errors of law. They were also errors that were material in that they led to the FTT setting out unjustified restrictions on the scope of the heading and thus ruling a heading out of consideration despite it being prima facie relevant. We therefore set aside the FTT Decision insofar as it relates to both the metal playpens and heavy duty playpens.