[2025] UKUT 00142 (TCC)

Canadian Solar is a company based in Germany: [7] It imports solar energy equipment: [7].

Between 9 November 2017 and 19 December 2017 inclusive, there were 13 importations of solar panels and their parts: [8]. The solar panels contained solar cells: [9]. From 2015, Canadian Solar sourced its solar cells from manufacturers in Taiwan: [9]. The solar cells were manufactured in Taiwan and (after manufacture) were shipped from Taiwan to Vietnam: [9]. In Vietnam, the solar cells were incorporated into solar panels (or modules), in that they were connected to form a frame with a glass protective covering: [9]. These (now) solar panels, containing the solar cells, were then shipped to the United Kingdom: [9].

All 13 importations (each an “Entry” and together the “Entries”) were declared under the following commodity codes:

“8541 40 90 49”, covering solar modules imported from anywhere other than China, Malaysia and Taiwan.

“8541 50 00 00”, covering semi-conductor devices: [10].

Canadian Solar’s use of these codes (which we shall refer to as the “Solar Module Code” and the “Semi-Conductor Code”) resulted in no charge to ADD or CVD being raised since the Customs Handling of Import and Export Freight system (“CHIEF”) does not take account of the Country of Origin declared, because ADD and CVD is not due on goods properly declared to those codes: [11].

There was a dispute before the FTT as to whether the Solar Module Code used by Canadian Solar was in fact the correct code. This is a point of law at issue before us, and we confine ourselves to stating the facts as found by the FTT:

HMRC contended that the correct commodity code for the solar cells imported was not the Solar Module Code but code “8541 40 90 53”, the relevant Entries having been consigned from Taiwan. We shall refer to this code as the “Alternative Solar Module Code” (which we hope is a term appropriately neutral between the contentions of HMRC and Canadian Solar): [12]

Had the Alternative Solar Module Code been used (it was not), Canadian Solar would have been presented with a further option (an “Additional Code”) by CHIEF to select either:

the generic “all other companies” rates for ADD/CVD by inputting additional code “B999”, which would have attracted both ADD at 53.4% and CVD at 11.5%: [13(1)]; or

the specific code for one of the relevant (potentially exempt) producers in Taiwan. Thus, the code of one of the approved Taiwanese manufacturers of solar cells (e.g. “C081” for Gintech Energy Corporation) could have been entered: [13(2)].

The UK Integrated Online Tariff provides the user with the ability to scroll down to the appropriate manufacturer within the applicable country (here, arguendo, Taiwan) and, against its name will be listed the relevant Additional Code together with the applicable conditions set out within a further link: [14]. This further link sets out the requirements that had to be met in order to avoid the incidence of ADD/CVD. Thus, the requirement might be to provide an invoice with a signed declaration, resulting in duty of 0%, whereas without such an invoice ADD of 53.40% and CVD of 11.50% would be chargeable: [14].

It was common ground as between HMRC and Canadian Solar (and the FTT so found) that the solar cells had their origin, for customs purposes, in Taiwan, by virtue of Commission Delegated Regulation 2015/2446, Annex 22-01, HS 2012 Code ex 8541 (a): [15]. The Cell Certificates of Origin contained within the import paperwork for the Entries confirmed this: [15]. This was because the solar cells were manufactured in Taiwan and there was insufficiently substantial processing carried out on the solar cells to change their origin for customs purposes from Taiwan to Vietnam: [15].

In this case, the manufacturers of the solar cells in Taiwan were potentially exempt companies listed as exempt Taiwanese producers for the purpose of Article 1 of both the Commission Implementing Regulation (EU) 2016/185 (ADD) and the Commission Implementing Regulation (EU) 2016/184 (CVD) (collectively, the “2016 Implementing Regulations” and individually the “2016 Implementing Regulations (ADD)” and the “2016 Implementing Regulations” (“CVD”): [16].

On 5 March 2020, HMRC opened a post-clearance audit on Canadian Solar’s imports: [17]. HMRC considered that the Solar Module Code had been wrongly applied with the result that ADD and CVD had not been paid because (on the assumption that the codes used were correct) no charges would have been due: [18]. On 29 September 2020, HMRC wrote to Canadian Solar notifying them of the errors which HMRC said they had discovered, and inviting Canadian Solar to comment and/or provide further information: [19]. It is unnecessary to go into detail as to how the audit progressed, save to note that:

The charges were found to be due by HMRC: [21].

A C18 Post Clearance Demand Note (the “C18”) in these amounts was issued on 12 November 2020: [23].

On 1 February 2021, Canadian Solar sent amended intercompany invoices to HMRC containing the signed declarations that would have been required by the UK Integrated Online Tariff had the Alternative Solar Module Code been applied: [24]. Canadian Solar sought remission of the charges on the basis of these invoices, which was refused by HMRC: [25].

Given the complexity of the law in this area, it is unsurprising that Canadian Solar sought legal advice from their then solicitors, Sidley Austin. This advice is significant because (i) Canadian Solar sought advice on one of the very issues now in dispute before us (namely the interpretation issue), (ii) it did so before the Entries entered into the EU and (iii) it followed that advice in regard to the Entries. It is thus not surprising that the question of legal advice loomed large before us, as it did before the FTT. It is therefore appropriate to set out the FTT’s findings in this regard verbatim:

Although it is straying into law which we will have to consider later in this decision, it is relevant to note that Canadian Solar’s present solicitors – Reed Smith – raised the question on which Ms Pflug had been advised by Sidley Austin with the EU Commission. Mr Elsen of the EU Commission provided the following response on 22 December 2020 ([38]):

I understood that you already had a phone call with Per. I can confirm that your understanding is correct and that the modules made outside Taiwan from cells of a Taiwanese company which benefits from an exemption should not be subject to duties.

As regards the practical issue, in particular the declaration which should accompany the commercial invoice: You can fill in the declaration/certification but you can only provide one additional TARIC code, i.e. the one of the Taiwanese producer of cells which benefits from an exemption. It is important to provide at least this code to customs, as this will allow national customs authorities to determine that the imports should not be made subject to duties. As you rightly point out, the module manufacturer (outside Taiwan) does not have its individual additional TARIC and one cannot be requested to provide something which does not exist. So giving the name of the module manufacturer outside Taiwan + the explanation that it does not have its individual TARIC code is all you can do and should normally be sufficient.

Hope this helps, let me know if you have further questions…

This advice of course came after the event, and because of the HMRC audit. It did not inform Canadian Solar’s conduct prior to the Entries, which was (as we have noted) governed by the advice received from Sidley Austin.

A “TARIC Code” is a “TARif Intégré Communautaire” or an “Integrated Tariff of the European Communities” and it is designed to produce a means of coding particular entries so the correct duties are applied. TARIC Codes will be described in greater detail in this decision. Both the FTT and we were treated to a very helpful exposition of these codes during the course of the hearing, but we will leave the detailed description of the codes, and their importance, to later on in this decision. For present purposes, it is sufficient to note that the Solar Module Code, the Semi-Conductor Code and the Alternative Solar Module Code are all TARIC Codes as we use that term in this decision. (As became clear in the course of argument before us, there can be a degree of ambiguity in the term, which turns on the question of the varying significance of the ten digits that comprise the complete code. We will use the term TARIC Code to refer to all ten digits, and will use different designations when referring to the smaller elements that comprise the overall TARIC Code.)