Strand, London, WC2A 2LL
B e f o r e :
COMMISSIONERS FOR HER MAJESTY'S REVENUE AND CUSTOMS
|- and -
|GE ION TRACK LIMITED
Greencoat House, 183 Clarence Street,
Kingston-upon-Thames, Surrey, KT1 1QT
Tel No: 020 8974 7305 Fax No: 020 8974 7301
Email Address: Tape@wordwave.co.uk
(Official Shorthand Writers to the Court)
Ms Marie Demetriou (instructed by GE ION Ltd) appeared on behalf of the Respondent
Crown Copyright ©
MR JUSTICE BRIGGS:
"2. The products are designed for the detection of explosives and narcotics, for example at airports. Entryscan looks like the type of machine one walks through at airport security. VaporTracer is a hand-held device and Itemiser is a desktop device. All three Products take a sample of air and analyse it using the Appellant's patented Ion Trap Mobility Spectrometer ("ITMS") technology, which is a type of Ion Mobility Spectrometry. These are described in the Appellant's brochure as follows:
'IMS separates ionised molecular compounds on the basis their transit times (sometimes called 'time of flight' or 'drift time') when subjected to an electric field in a tube. This time is then compared to stored transit times of known compounds making it possible to distinguish the target material (explosives or narcotics) from other molecules. ...[G]aseous samples enter an ionisation chamber where an ionisation source emits low-energy beta particles resulting in ion formation in the gaseous phase. A gating mechanism allows the ions of the correct polarity to pass through the shutter grid and enter the ion drift region where an applied electric field mobilises the ions... The rate at which these ions traverse the ion drift region is inversely proportional to the size of the ion. This correlation allows for the identification of the analyte of the interest...'
ITMS is described in the brochure as follows:
'ITMS, like IMS, separates ionised vapours and then measures the mobility of the ions in an electric field. In the typical implementation of ITMS, the gaseous sample passes through a semi-permeable membrane prior to ionisation. Also like IMS, the gaseous samples then enter an ionisation chamber where an ionisation source emits low-energy beta particles resulting in ion formation in the gaseous phase. Unlike IMS, however, the ionisation in ITMS is allowed to reach equilibrium in a field-free region and then pulsed into the drift tube where an electric field accelerates the ions to the collector. Note that in the ITMS detector, the shutter grid does not exist, resulting in a much greater portion of the ions entering the drift tube.'
"3. We heard expert evidence in the form of three reports and oral evidence from Mr Bevan John Clues, Chartered Electrical Engineer and a Member of the Institution of Electrical Engineers, who also commented on the Appellant's expert's report by Mr Ching Wu, who did not give evidence, but there was little disagreement between them. We make the following findings of fact from his evidence:
(1) Spectroscopy is the study of the interaction between electromagnetic radiation and matter. The Products are mass spectrometers. By way of comparison an optical spectrometer resolves a beam of light into components according to their wavelength i.e. colour component, whereas a mass spectrometer resolves a beam of positive ions according to their mass/charge ratio, or, if all have a single elementary charge, according to their masses. There are different types of mass spectrometers; the distinguishing feature between them is in the manner in which separation is achieved. Essentially ions of the material being analysed have to be produced.
(2) An ion is an atom with either extra electrons or missing electrons. Thus an ion can be positively or negatively charged. Methods of producing the ions include sparks, heated filament and acceleration by the use of an electrical potential, electric field at a sharp point or edge, electrospray ionisation, radiation source, e.g. alpha, beta or gamma rays. The Products use beta radiation because it requires zero power consumption, and has long-term stability and universal ionisation ability, which makes it the best choice for portable instruments. The use of beta radiation generally is being replaced by other means, such as electrospray.
(3) The source of beta radiation is an integral and inseparable part of the Products. Beta rays are part of the electromagnetic spectrum, covering radio, infra-red light, visible light, ultra-violet rays, X-rays, gamma rays, beta rays and cosmic rays. Beta rays are streams of very fast electrons with speeds of up to within a few tenths of a per cent of the speed of light.
(4) The use of a drift tube is an established technique for mass spectrometers.
(5) Because the Products are based on an ionisation radiation source and a drift tube and that a beta source has been designed into the Products, in Mr Clues' opinion the Products are "based on" beta radiation.'"
On one view the finding number 5 in paragraph 3 might be said to be a mixed conclusion of fact and law, but in any event it is common ground.
"It is settled case-law that, in the interests of legal certainty and for ease of verification, the decisive criterion for the classification of goods for customs purposes is in general to be sought in their objective characteristics and properties as defined in the wording of the relevant heading of the CN. The explanatory notes drawn up, as regards the CN, by the Commission and, as regards the HS, by the Customs Cooperation Council ('the HSENs'), may be an important aid to the interpretation of the scope of the various tariff headings but do not have legally binding force (see Case C-405/97 Mövenpick Deutschland v. Hauptzollamt Bremen  ECR I-2397, paragraph 18)."
"Apparatus based on the use of X-rays or of alpha, beta or gamma radiations, whether or not for medical, surgical, dental or veterinary uses, including radiography or radiotherapy apparatus, X-ray tubes and other X-ray generators, high tension generators, control panels and desks, screens, examination or treatment tables, chairs and the like."
The second is heading 9027, which provides as follows:
"Instruments and apparatus for physical or chemical analysis (for example, polarimeters, refractometers, spectrometers, gas or smoke analysis apparatus); instruments and apparatus for measuring or checking viscosity, porosity, expansion, surface tension or the like; instruments and apparatus for measuring or checking quantities of heat, sound or light (including exposure meters); mocrotomes."
"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."
It is common ground that there are no section notes or chapter notes, which are relevant for the purposes of assisting in the classification of the products the subject matter of this appeal.
"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."
"X-ray apparatus for industrial use. There are many industrial applications of X-rays. They are used,, for example, in metallurgy to locate blisters or to check the uniformity of alloys; in engineering to check the accuracy of assemblies; in the electrical industry to check heavy cables or frosted glass lamps; in the rubber industry to check the reactions of the inner casings of tyres (e.g., stretching of canvases); in various industries for checking or measuring the thickness of materials. For all these various applications the apparatus generally resembles that used for diagnostic purposes described above, except that it may be equipped with adaptors and ancillary equipment for particular purposes.
The heading also covers:
(1) Special apparatus (X-ray diffraction and X-ray spectrometry equipment) used for the examination of the crystalline structure as well as the chemical composition of materials; the X-rays are diffracted by crystals and then made to fall on a photographic film or an electronic counter."
And then under the heading: "Apparatus Based on the Use of Alpha, Beta or Gamma Radiations":
"Alpha, beta or gamma radiations emanate from a radioactive substance with the property of emitting radiations by spontaneous transformation of its atoms. This radioactive substance is placed in a container, normally of steel coated with lead (bomb), which has an aperture designed to let the radiations pass in one direction only. Gamma radiations can be used for much the same purpose as X-rays.
The following types may be distinguished, according to the radiations employed and the use for which they are designed:
(1) Therapy apparatus, in which the radioactive source is a charge of radium, radio-cobalt or some other radioactive isotope.
(2) Apparatus for radiological examinations, used mainly in industry for checking metal parts, etc., without damaging their structure.
(3) Apparatus having a measuring instrument such as beta and gamma ray thickness gauges for measuring the thickness of materials (sheets, linings and the like), apparatus for monitoring the contents of packages containing any product (pharmaceutical products, foodstuffs, sporting gun cartridges, perfumes, etc.) or ionisation anemometers. In these apparatus, the required information is generally obtained by measuring the change in the amount of radiation applied to the factor under examination.
(4) Fire alarms incorporating smoke detectors containing a radioactive substance.
"The heading does not cover instruments and apparatus which are not designed to incorporate a radioactive source and which merely measure or detect radiation even when such instruments are calibrated in arbitrary terms (heading 90.30)."
"5) Spectrometers. These instruments are used to measure the wave-lengths of emission and absorption spectra. They consist essentially of an adjustable slit collimator (through which the beam of light to be analysed passes), one or more adjustable prisms, a telescope and a prism table. Some spectrometers (particularly those used for infra-red or ultra-violet rays) are fitted with prisms or with diffraction gratings.
This group includes: spectroscopes for the observation of spectra; spectrographs for recording the spectrum on a photographic plate or film (spectrograms); monochromators, instruments for isolating a particular line in a line of spectrum or for isolating certain parts of a continuous spectrum.
But the heading excludes spectroheliographs and spectrohelioscopes, used for solar observation (heading 90.05); spectrum projectors, for examining an enlarged spectrogram projected on to a screen (heading 90.08); micrometric microscopes and spectrocomparators incorporating microscopes (for comparative examination of spectrograms by optical observation) (heading 90.11) and spectrum analysers for measuring or checking electrical quantities (heading 90.30)."
"X-ray, etc., apparatus (heading 9022)."
"The products prima facie fall within heading 9022, since they are, to a sufficient extent based on the use of beta radiation. (2) The products also fell prima facie within the terms of heading 9027 as being instruments for physical or chemical analysis, and as mass spectrometers were expressly included in the heading by reason of the reference in the heading to spectrometers. (3) To the extent that the HSEN for heading 9027 purports to restrict the meaning of spectrometers to optical spectrometers only, it went beyond a mere explanation of the wording. That is the terms of heading 9027. (4) The reference by way of exclusion of x-ray etc, apparatus in HSEN heading 9027 did not exclude any item merely because it had an x-ray, or as here, beta ray element within it. It merely pointed the reader to heading 9022 as a separate and possibly more appropriate classification for such equipment than heading 9027. Alternatively, if that exclusionary sub-paragraph did purport automatically to exclude such apparatus from heading 9027, again, it went impermissibly beyond a mere explanation of the terms of the heading. (5) Therefore, the products fell prima facie within heading 9027 as well as heading 9022. (6) Applying the tie-breaker rule in GIR 3A, heading 9027 was a more specific description of the products as instruments for chemical analysis, since whereas heading 9022 referred only to one aspect of the mechanism of the products, heading 9027 referred to the function of the products as a whole."
(1) The Tribunal was wrong to treat exclusion (e) in the HSEN for heading 9027 as merely a pointer that there was a separate heading for x-ray etc apparatus, which might be more appropriate.
(2) The Tribunal was also wrong to treat the HSEN for heading 9027 as in any way contrary to the wording of the heading, either in limiting the types of spectrometer to which it applied, or in excluding x-ray apparatus properly described as a spectrometer.
(3) Even if both headings 9022 and 9027 were prima facie applicable, the Tribunal ought to have construed heading 9022 as containing the most specific description of the products within the meaning of GIR 3A."
(1) The HSENs are a vital tool for identifying, when applying GIR 1, the single heading applicable to a particular product.
(2) Wherever an HSEN for a particular heading excluded a type of product on the basis that some other heading applied to it, that meant that wherever that other heading prima facie applied, the instant heading is dis-applied, in other words excluded, so that the decision-maker, having regard to the terms of the HSENs, never in those circumstances, has to apply GIR 3, and he submitted that this was so even if, ignoring the exclusion in the HSEN, the application of GIR 3 would, as the Tribunal thought in this case, lead to the opposite conclusion.
(3) He submitted that this was how HSEN exclusions were habitually used, and that the result produced in relative terms simplicity, international uniformity, and predictability, none of which would be realised by a constant need for recourse to the judgments called for in applying GIR 3. The HSENs were, he submitted, there to avoid that."
Mr Thomas gained some assistance in support of his submission from the decision of Lawrence Collins J, in VTech Electronics (UK) Ltd v. Commissioners of Customs and Excise  EWHC Ch 59. That case was about whether a particular product modelled like a computer, but which contained electronic functions designed for use by children was a toy under heading 9503, or a game, under heading 9504. The Tribunal had decided, applying GIR 1, that it was a toy, despite having some characteristics of a game, and was assisted in reaching that conclusion by reference to the relevant HSENs. The passage of the judgment relied upon by Thomas is at paragraphs 105 to 107:
"105. Both the Regulation and the Tribunal (in its primary finding on this aspect) cannot be criticised for stopping at GIR rule 1 (and the corresponding rule 6) and not going on to apply rule 3. I accept the submission for the Commissioners that goods are not considered to be "prima facie classifiable under two or more headings", with the result that rule 3 must be invoked, purely by virtue of the fact that they could technically be brought under two or more headings, and that the purpose of rule 3 is to arbitrate between headings whose application remains finely-balanced.
106. There are several decisions in the European Court where products were capable of being classified under more than one heading, and which were decided without reference to rule 3. Thus in Case C-177/91 Bioforce  ECR I-45 the product (extract of hawthorn with added alcohol, taken as a heart tonic) was capable of being classified both as a medicament and as a spirituous beverage. Both Advocate General Gulmann and the European Court (who came to opposite conclusions) arrived at a classification without reference to rule 3. In Case C-338/95 Wiener SI GmbH v. Hauptzollamt Emmerich  ECR I-6495 the product was capable of being worn both as a " nightdress" and as a "dress", but the classification was resolved without recourse to rule 3, after consideration of the HSENs and on the basis of the objective characteristics of the product as reflected particularly in its intended use.
107. I also accept the Commissioners' contention that these cases confirm that the purpose of examining the "objective characteristics" of a product, and of having regard in doing so to such constructional aids as the HSENs and the intended use of the product, is to find the category in which it should be placed, and not to assemble a list of theoretically possible but increasingly implausible categories between which the provisions of rule 3 must be used to decide."
(1) The purpose and legal effect of HSENs is governed by their third ranking in the hierarchy of applicable legal norms relevant to the classification process.
(2) The terms of the headings themselves, and any relevant section, or chapter notes come first in that hierarchy as required by GIR 1. (3) Unless those terms and relevant section, or chapter notes otherwise require, the other GIRs, General Rules for Interpretation, must also be applied. They also have the force of law. Again, she relied upon the language of GIR 1. That necessarily, she submitted, imports GIR 3, the tie-breaker provisions, in any appropriate case.
(4) That HSENs are not of legal force, and never more than an aid to construction.
(5) There are numerous exclusions to be found expressly stated, both in headings, and in section, or chapter notes."
She referred me in particular to the chapter notes at the beginning of chapter 90 itself, which contained a series of express exclusions of particular types of articles from the whole of chapter 90, including, for example, paragraph 5, which excluded:
"Measuring or checking optical instruments, appliances or machines which, but for this note, could be classified both in heading 9013 and in heading 9031 are to be classified in heading 9031."
She also referred me to a series of express exclusions in headings 9006, 9010, 9013, 9017, 9026, 9029, 9030, 9031, and for convenience, to give examples of the two types of exclusion which appear there, I refer to 9010, which reads as follows:
"Apparatus or equipment for photographic (including cinematographic) laboratories (including apparatus for the projection or drawing of circuit patterns on sensitised semi-conductor materials), not specified or included elsewhere in this chapter; negatascopes; projection screens."
That is an example of a residual heading, which applies only if there is no reference to such equipment elsewhere in chapter 90, and I can refer to heading 9026 to illustrate the other main type of express exclusion. That heading reading as follows:
"Instruments and apparatus for measuring or checking the flow, level, pressure or other variables of liquids or gases (for example, flow meters, level gauges, manometers, heat meters), excluding instruments and apparatus of heading 9014, 9015, 9028 or 9032."
(2) Nothing in the VTech case could or even purports to require a contrary conclusion.
(3) It cannot be right, as the Commissioners seek to do, to treat the exclusionary notes in HSENs as a separate self-standing code for the resolution of apparent ties between headings, independent of and to be used before any reference is made to GIR 3, so that GIR 3 is excluded in any case where an HSEN exclusion breaks the tie.
"When goods cannot be classified by reference to 3A or B, they should be classified under the heading which occurs last in numerical order among those which equally merit consideration."
That rule is truly a last resort.
"In order to resolve the dual headings we apply GIR 3(a) that the "heading which provides the most specific description shall be preferred to heading providing a more general description." It is difficult to weigh up the specificity of two headings which are different in nature: heading 90.22 looks at the means by which the apparatus operates regardless of its use ("based on the use of...beta....radiation, whether or not for medical [etc] use"), and heading 90.27 looks at the function it performs ("for physical or chemical analysis"). The existence of this approach makes it likely that items will fall within two headings. The question is not which heading is wider in general, but which heading is a more specific description of the Products. In our view it is a more specific description to say that the apparatus is an instrument for chemical analysis, than to say that it is based on the use of beta radiation because the latter is merely the means by which one part of it operates. Analysis is a description of what the apparatus does as a whole, whereas being based on the use of beta radiation is a description of how only part of it operates, which is not even the part that carries out the analysis, but a necessary preliminary to the analysis by producing the ions which can be analysed. If the apparatus actually measured the beta radiation the question would have been more finely balanced but here the radiation performs a preliminary (but essential) function only. Mr Clues' description of the apparatus as a mass spectrometer is essentially a description that it performs analysis. Accordingly we conclude that the heading providing the more specific description is 90.27."