[2009] UKFTT 362 (TC)

TC00300

                  Appeal number  Lon/08/7086

CUSTOMS DUTY- Rear view mirror reversing system – classification – where falls within tariff duty suspension as “suitable for incorporation into goods or chapters 84-90 and 94”?  No as already in Chapter 70 which is more specific – Appeal dismissed

FIRST-TIER TRIBUNAL

TAX  CHAMBER

	SPOT TECHNOLOGY LTD	Appellant

	- and -

	THE COMMISSIONERS FOR HER MAJESTY’S
	REVENUE AND CUSTOMS (Customs Duty)	Respondents

		TRIBUNAL: TRIBUNAL JUDGE 	ADRIAN SHIPWRIGHT
				TRIBUNAL MEMBER       MARK BUFFERY	

Sitting in public in London on 25 August 2009

Stephen Gaikwad, Customs Consultant, AF Customs Consultancy for the Appellant

Mario Angiolini, Counsel instructed by the General Counsel and Solicitor to HM Revenue and Customs for the Respondents

© CROWN COPYRIGHT 2009

DECISION
Introduction
1.	 This is an appeal by Spot Technology Limited, of the Appellant against a decision of the respondents ("HMRC") concerning the classification of a rear-view mirror screen reversing system (“the Item”).
2.	The decision appealed against is a deemed decision as HMRC did not complete they review within the statutory 45 day time limit.  The decision originally notified was deemed to have been upheld on the 10 April 2008.
3.	HMRC did carry out a reconsideration of the original decision which set out the reasons for upholding the original decision.  These were set out in a letter dated 10 September 2008.

The Issue 
4.	  The issue in this case was whether the item is entitled to a Tariff Duty Suspension under Code 8528 5990 20.
5.	It was common ground that the Item fell within the Combined Nomenclature 8528 5990 at the 8 digit level.
6.	The dispute is at the ten digit level. A Tariff Duty Suspension applies to the ten digit code. It does not apply to the eight digit code.
7.	It was also common ground that the Item is a composite set made up of more than one component as the goods should be “… classified as if they consisted of the material or component which gives them their essential character.”
8.	The parties also agreed that it was the monitor (i.e. the piece attached to the rear view mirror) which gives the Item its essential character.  They disagree as to whether the monitor is suitable for incorporation into a motor vehicle or a rear view mirror.

The Law 
The Legislation
9.	The Law in so far as is relevant is found in the Customs Tariff and the rules for its interpretation. 
10.	The headings referred to in this case were:
(a)	Chapter 87 is headed “vehicles other than railway or tramway rolling stock,   
             and parts and accessories thereof.
(b)	Chapter 94 deals with seats including seats of a kind useful motor vehicles.
(c)	Chapter 70 is headed “glass and glassware”.  Heading 70.09 applies to “glass mirrors, whether or not framed, including rear view mirrors”.
The Authorities
10.	The Respondent provided us with a bundle of authorities.  These included:
(a)	General rules or the Interpretation of the Harmonised System
(b)	Commission Communication concerning autonomous tariff suspensions
(c)	BVBA van Lendghem v Belgium C-486/06 [2007]  ECR 1-10661
(d)	Intermodal Transport C-496/03 [2005] ECR 1-1 851
11.	We were also provided with a number of other BTI. It is understood that at the time of the hearing there was no BTI inconsistent with HMRC’s view extant.

The Evidence
12.	An agreed bundle of documents was produced. No objection was raised to any of them and they were all admitted in evidence.
13.	We heard no oral evidence.

Findings of Fact 
14.	From the evidence we make the following findings of facts:
15.	 The Item is described as the vehicle rear view mirror system.  The appellants in its application for a BTI described it as “any rear view mirror /screen reversing system.  It comprises a rear view mirror was built in 4.5” colour LCD screen, and TV camera.  It is designed for use in motor vehicles with the camera fixed to the rear bumper.  The input voltage is 11 to 13 volts”. We accept this description as accurate
16.	 The item comprises three parts.  These are the monitor, camera and wiring to link the monitor and the camera. The Appellant said “the monitor ... is incorporated into a rear view mirror” (see the reconsideration letter of 10 September 2008 paragraph 7 and the letter from AF Customs Consultancy dated 22 February 2008). We also accept this. We presume this was so the Construction and Use Regulations could be complied with.
17.	The handbook under the heading “Important Safeguard Some Precautions” said “1.  Please call a qualified technician to install the machine”.
18.	The monitor clips on to the original rear view mirror.  It has an input cable which can be detached from the wiring in the car so that the monitor can be removed and taken away for security purposes.
19.	The machine also has input ports for a video signal and a camcorder signal.  The wiring allowed the system to be connected to the reversing lights of the car so that for the reversing system was automatically engaged when the reversing lights came on.
20.	The Appellant said that the item is exclusively designed and intended for installation in motor vehicles falling within chapter 87.  It would not be used as a standalone system outside a motor vehicle.  We accept this.
21.	We consider that when attached to the rear view mirror the Item is incorporated into the mirror as it becomes part of it physically and functionally. We so find.

The Submissions of the Parties

The Appellant’s Submissions in outline
22.	In essence, the Appellant submitted that:
(a)	The Item is exclusively designed for installation into motor vehicles which fall under chapter 87 of the combined nomenclature and so is entitled to duty suspension;
(b)	The Item is not designed for incorporation into a rear-view mirror as it is already incorporated into a mirror when it is imported into the European Union;
(c)	The Item falls within Code 8528 5990 20 as a “Liquid crystal display colour monitor having a DC input voltage of 7 V or more but not exceeding 30 V, with a diagonal measurement of the screen of 33.2 cm or less, suitable for incorporation into the goods of chapters 84 to 90 and 94.
Accordingly, the appeal should be allowed.

HMRC’s Submissions in outline
23.	 In essence, HMRC submitted that:
(a)	Rear view mirrors for vehicles are properly classified under UK Tariff Chapter 70;
(b)	The Item is designed to be attached to the rear view mirror and so is suitable for incorporation into goods in Chapter 70 (which includes rear view mirrors). The Item is not suitable for incorporation into goods in Chapters 84 to 90 or Chapter 94;
(c)	Accordingly,  the Item cannot  be classified under Code 8528 5990 20 it must be classified under Code 8528 5990 90;		
      Accordingly, the appeal should be dismissed.
Discussion
24.	 The starting point for any tariff classification is the Tariff and the General Rules of Interpretation ("GRI").  We set out the GRI in the Appendix.
25.	The GRI requires classification by reference to the chapters headings and nights of the Tariff stop where goods are to be classified under more than one heading the more specific description takes precedent is (rules three a).  By rules three be where the goods involved the composite Cecil combination they are to be classified by their “essential character”.  The parties agreed that the monitor was what gave the Item its essential character.
26.	Rule 3a of the GRI requires  “…the heading which provides the most specific description shall be preferred to headings providing a more general description”.
27.	The more specific heading here is Chapter 70 which includes rear view mirrors.
28.	We consider that in the particular circumstances of this case the way the Item is attached to and becomes incorporated with the rear view mirror means that the Item falls within Chapter 70. To the extent we can we find this as fact. This is essentially because the Item is attached to the original mirror and provides its functionality as well as additional features. 

Conclusion
29.	 We have found that:
(a)	The Item is a composite set. The Parties agree and we accept that this
    requires us to consider its essential character;
(b)	As agreed by the parties we have done this by reference to the monitor;
(c)	On doing so the Item is incorporated into the rear view mirror;
(d)	The more specific description is glassware including rear view mirrors in Chapter 70 and not Chapters 84 to 90 and 94. Applying the GRI the items falls within Chapter 70.
(e)	Accordingly, the Item falls within Code 8528 5990 20.
30.	Consequently, we dismiss the appeal.

ADRIAN SHIPWRIGHT
TRIBUNAL JUDGE
RELEASE DATE: 11 December 2009

APPENDIX
GENERAL RULES

A.	General rules for the interpretation of the Combined Nomenclature

Classification of goods in the Combined Nomenclature shall be governed by the following principles:
1. 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.
2. (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.
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.
4. Goods which cannot be classified in accordance with the above rules shall be classified under the heading appropriate to the goods to which they are most akin.
5. In addition to the foregoing provisions, the following rules shall apply in respect of the goods referred to therein:
(a) camera cases, musical instrument cases, gun cases, drawing-instrument cases, necklace cases and similar containers, specially shaped or fitted to contain a specific article or set of articles, suitable for long-term use and presented with the articles for which they are intended, shall be classified with such articles when of a kind normally sold therewith. This rule does not, however, apply to containers which give the whole its essential character;
(b) subject to the provisions of rule 5(a), packing materials and packing containers (1) presented with the goods therein shall be classified with the goods if they are of a kind normally used for packing such goods. However, this provision is not binding when such packing materials or packing containers are clearly suitable for repetitive use.
6. For legal purposes, the classification of goods in the subheadings of a heading shall be determined according to the terms of those subheadings and any related subheading notes and, mutatis mutandis, to the above rules, on the understanding that only subheadings at the same level are comparable. For the purposes of this rule, the relative section and chapter notes also apply, unless the context requires otherwise.