Strand, London, WC2A 2LL
B e f o r e :
| THE COMMISSIONERS FOR HER MAJESTY'S REVENUE & CUSTOMS
|- and -
|FLIR SYSTEMS AB
Ms Valentina Sloane (instructed by Forbes Hall) for the Respondent
Hearing date: 26 November 2008
Crown Copyright ©
Mr Justice Henderson :
The Legal Background
(a) the nomenclature of the Harmonised System;
(b) Community sub-divisions to that nomenclature; and
(c) the preliminary provisions, additional section or chapter notes and footnotes relating to CN sub-headings.
"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.
(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.
6. For legal purposes, the classification of goods in the sub-headings 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."
The Competing Classifications
"4. Thermal radiation is energy emitted from the surface of an object which is due to the object's temperature above absolute [zero] which is -273ºC or -460ºF. Hot objects emit more energy than cold objects.
5. Thermography, according to Flir Systems, is the science of acquisition and analysis of thermal information from non-contact thermal imaging devices. The energy from an object is radiated at different levels across the electromagnetic spectrum of which infrared is a part. The infrared region can be sub-divided into two regions (in which Flir manufacture equipment for the thermography market): the mid-band is concerned with infrared spectrums from 3 to 5 microns … while the long wave ranges from 8 to 12 microns … . The majority of Flir cameras fall into the latter part of the infrared spectrum with the cameras that make up this appeal falling into the long wave."
"2.10 … Heat energy from the target is focussed via the lens onto the heat sensitive detector. The field of view enlarges as the distance between the camera and the target increases. Thus the further the distance between the thermometer and the target the larger will be the size of the target. The output of the array is fed into an amplifier system. The output can be used to detect heat, measure temperature, to monitor temperature (over a period of time) or as part of a temperature control system.
2.11 The Flir images are really an extension of this principle with the single detector replaced by a two-dimensional detector array. This allows a thermal "image" to be produced.
2.12 All of the Flir products are infrared imagers which have the ability to display the temperature [with one exception which was not in dispute]. All are based on similar technology.
2.13 All of the imagers work in a non-contact mode. Essentially, the instruments work in a similar manner to a digital camera in the sense that there is a lens system which focuses the image on to an energy sensitive array. However, in a digital camera it is light which is being focused onto a light sensitive array whereas in the Flir cameras it is radiated energy in the form of heat which is being focused onto a heat sensitive array.
2.14 The image produced by a digital camera is an image, which can be in colour or black and white, which represents the view of the subject scene when the photograph was taken. By comparison, the image produced by the Flir imagers is a thermal image of the subject scene. The image has to be generated from the temperature data obtained from the sensor array. [He then explains how a range of colours is used to represent different temperatures]. The end result is usually an image where the colour tones can have some similarities with a light image. For example, the image formed by heat radiated by a person will be in the general form of that person's body and can be recognised as such by a person viewing the thermal image.
2.16 All objects which are at a temperature above absolute zero (-273ºC) radiate energy in the infrared spectrum. The amount of heat radiated will be in proportion to the absolute temperature (-273ºC). There is a small adjustment necessary depending on the material and the colour. A black body will radiate the most heat. The Flir imagers (as do other makes of imaging cameras) have an in-built offset capability to take account of this. This is called the emissivity.
2.17 All of the Flir imagers are powered by battery which is contained in the handgrip. The batteries can be charged in the camera or removed and charged externally.
2.18 Each of the Flir imagers has the ability to store a number of images which have been taken (like a photograph except that it is a thermal image). Each image will have a colour scale representing temperature. The high and low points of each image will depend on the range of temperatures in the image. Thus, when comparing images it is important to remember that a particular colour does not necessarily represent the same temperature.
2.19 Each imager, [with the one exception which was not in dispute], has the capability to make a temperature measurement which is then displayed on the LCD display. The temperature measurement is based on a small area in the centre of the image and is the average temperature of the pixels contained in that area.
2.20 The imager cannot take normal pictures. It can only take infrared pictures."
"(1) [Flir] is a Swedish company which manufactures thermal imaging digital cameras (although the expression camera was objected to by Mr Clues as it did not use visible light).
(2) BTIs were requested for four products ("the Products"), all of which have the following features: a lens that can be focused, a LCD display, a memory storage device, a detector (a microbolometer i.e. an array of pixels made from vanadium oxide), processing electronics, control software. In each case the heated radiations are focused by the lens onto the microbolometer the resistance of which changes with the level of radiation falling on different parts of it. By means of software these are converted into images with different temperatures displayed in colour, from a range of temperatures that can be selected from the maximum range, so that for example if the model measures temperatures between -40º to 120ºC the range can be set to a minimum span of 4ºC, say from 20º to 24ºC. On the right of the image is a vertical scale showing the temperature at the top and the bottom of the chosen range of temperatures and the range of colours going from top to bottom. The image is stored in JPEG format. It is possible to turn off the vertical scale via a menu in which case there is a larger picture. They can take spot readings of the temperature at the cross hair in the display. In order to obtain a more accurate temperature reading it is possible to set the emissivity factor (the amount of radiation from the body in question compared to a blackbody) according to the type of material being measured and its reflectivity. An annual calibration is recommended by [Flir] to ensure accuracy of temperature measurement. They come with a detailed user's manual running to between 90 and 176 pages depending on the model.
(3) The four Products are:
(a) InfraCAM thermal imager (costing £3,000 to £4,000) [technical details are then given.] It is primarily used for preventative maintenance and building construction.
(b) ThermaCAM E45 infrared camera (costing £6,900). [Technical details are then given.] It is used for larger scale preventative maintenance work than the InfraCAM.
(c) ThermaCAM B2 infrared camera (costing £6,900). [Technical details are then given.] It is used mainly in the construction industry.
(d) ThermaCAM P25 infrared camera (costing £17,650). [Technical details are then given.] It is mainly used by certified thermographers in conjunction with analytical software packages such as Reporter (costing £3,000) for surveys for large companies of their plant, the maintenance of a factory, preventative maintenance in the oil and steel industries.
(4) [Flir] makes another product, Thermovision Scout (costing £6,500), which works on the same principle but without the temperature scale on the right of the image and without the ability to measure spot temperatures, and which cannot be calibrated. This fits the description in the CNEN to heading 8525 and is so classified, and this is not in dispute.
(5) 50% of the market is for condition monitoring particularly in factories; 25% in the building industry to detect defective construction or insulation, and leaks; and 25% for automation, scientific and miscellaneous uses."
The decision of the Tribunal
"10. We start by setting out our understanding of the objective characteristics of the Products which is that in part they are akin to digital cameras, and in part to electronic thermometers, both operating by using infra-red radiation. Each [function] exists separately. [Flir's] Thermovision Scout is an example of the former [function] which shows only an image without any temperature and is mainly used by the police for detecting people in the dark. Infra-red spot thermometers also exist as separate instruments costing amounts in the hundreds of pounds as opposed to the Products costing from £3,000 upwards. A user would want to use both characteristics at least sometimes otherwise there would be no point in buying the Products since a cheaper alternative with one function would be available. While there are some uses, such as showing where there is heat loss from a building, where the precise temperature is not required, this may still be required in a report to show the difference in temperature. In other circumstances, such as where one electric cable was hotter than another, the measurement of the temperature of each would be necessary to see which was outside the normal temperature range."
(In the above quotation, I have taken the liberty of inserting a comma after the word "thermometers" in the first sentence, and the word "function" in two places, in order to assist in bringing out the essential point which the Tribunal are in my judgment making. Viewed objectively, each of the products has two functions or capabilities: an imaging function, and the ability to measure temperature. Although users will sometimes require one function rather than the other, they would not buy the product unless there were likely to be times when they would require both functions, because if that were not the case cheaper alternatives would be available.)
"We find the question whether the Products are "instruments and apparatus for measuring or checking quantities of heat" more difficult. This refers to quantities of heat, sound or light. As a scientific matter we would follow Mr Clues' evidence that the "quantity of heat" is a measure of energy and is measured in calories or joules; the Products do not measure this, as a calorimeter does. Measuring a quantity of heat would imply measuring the resulting change in temperature, rather than temperature itself. The quantity of sound could be the frequency (pitch) or the loudness, which corresponds to the brightness of light. The quantity of light is strictly the rate of flow of light from a source but exposure meters are listed in the heading (and photometers and luxmeters are mentioned in the HSEN), which measure the intensity of light, which must therefore qualify as a quantity of light. The actual readings of the values for heat, light and sound are delivered in modern instruments from a measurement of radiation of energy which is converted by the instrument into an absolute value in its read-out in the same way as the Products. We are not therefore convinced that we should follow scientific precision here any more than being concerned whether an instrument recording an infra-red radiation picture is a camera."
[They then referred to an earlier Tribunal decision in which the concept of "measuring and checking" had been elucidated, in relation to measuring and checking electrical quantities in heading 9030, as involving the determination of quantity expressed as a figure (measuring) and something which gives either a yes or no result, such as whether current is passing (checking)].
"The Products express as a figure a quantity of heat in the non-scientifically strict sense of the amount of radiation from the target expressed as a temperature, which is analogous to what an exposure meter does. We also consider that they do check a quantity of heat in the sense of whether heat is being radiated or not, and by setting the span, whether the temperature is above or below a set figure or within a range as small as 4ºC. Accordingly the Products also fall within this heading."
"(h) Hydrometers, thermometers, hygrometers and similar instruments of heading 9025, whether or not for use in laboratories."
There would be no need for this clarification if thermometers were, by their very nature, incapable of falling within heading 9027 as instruments or apparatus for measuring or checking quantities of heat. This exclusion also seems to me to answer Mr Beal's point that the headings should not be interpreted in a way which leads to thermometers coming under both headings. In principle, thermometers could indeed find a home under either heading, but heading 9025 is clearly the more appropriate one, both because it is more specific (it refers to thermometers in terms), and because of the guidance given in the HSEN for heading 9027.
"The electromagnetic spectrum is divided arbitrarily into a number of wavelength regions, called bands, distinguished by the methods used to produce and detect the radiation. There is no fundamental difference between radiation in the different bands of the electromagnetic spectrum. They are all governed by the same laws and the only differences are those due to differences in wavelength."
The spectrum is divided into six main bands, namely (in ascending order of wavelength) x-ray, ultraviolet, visible, infrared, microwaves and radiowaves. Thermography makes use of the infrared spectral band.