[2009] UKFTT 217 (TC)                                                                

TC00167
CUSTOMS DUTY – out of date GSP certificates – appeal dismissed

FIRST-TIER TRIBUNAL

TAX 

	PINCROFT DYEING AND PRINTING LIMITED	Appellants
CARRINGTON CAREER AND WORKWEAR LIMITED

	- and -

	THE COMMISSIONERS FOR HER MAJESTY’S
	REVENUE AND CUSTOMS 	Respondents

TRIBUNAL:		Judge Richard Barlow
			Member Peter Whitehead

Sitting in public in Manchester on 14 May 2009

Mr. Bate for the Appellant

Mr. Shields of counsel instructed by the General Counsel and Solicitor to HM Revenue and Customs for the Respondents

© CROWN COPYRIGHT 2009

DECISION

1.	These two appeals were head together with the agreement of all three parties.  The two Appellants are under the same management and control and were represented by Mr. Bate.  The Respondents were represented by Mr. Shields of counsel.
2.	Both appeals raise the same issue.  Both Appellant imported fabric from Pakistan on a number of occasions in respect of which customs duty was declared at the full rates even though, in principle at least, because the goods originated in Pakistan and because of their classification, they could have been entered at reduced rates under the Generalise System of Preferences (GSP).
3.	The amounts in dispute are £65,271.01 in respect of Pincroft Dyeing and Printing Co. Ltd and approximately £2,547.94 in respect of Carrington Career and Workwear Ltd (neither party was able to tell me what the actual amount is but in light of my decision it is unnecessary to establish the precise figure).  Initially both Appellants stated the amount in dispute to be £65,271.01.
4.	The Appellants’ ground of appeal are identical and read as follows:
“Lack of advice from Customs upon set up of CFSP system and during reviews.  Fine it inequitable that a period of 3 years is given in order for us to pay back any amount but only 10 months in order for us to claim preference.  The amount in dispute has adverse effect on companies profitability.”
5.	The problems in this vase arose from the time when the Appellant began to make their own customs declarations instead of using agents.  They used the Approved Simplified Procedure known as CFSP to make the declarations.  That procedure required the Appellants to set up a computerised system in order to make the declarations on-line.  The companies took some time to set up the procedure and before they began to use it a Customs Officer visited them on 8-9 May 2007, staying about 6 hours on each day, before any of the importations relevant to this appeal.
6.	Mr. Bate told me, and this was not disputed, that the officer was shown entries that had been made previously including some at the full rate (8.3%) and some at the GSP rate (6.4%).  Those entries were for the same types of goods as those relevant to this appeal.  The officer also saw trial declarations on the new computerised system not actual declarations from the system.
7.	Mr. Bate contended that it should then have been obvious to someone from HMRC that those goods should all have been declared at the GSP rate.  However, he also mentioned that the form in which the officer saw the trial entries made no reference to the rates of duty (8.3% or 6.4%) but simply showed the amount of duty in money.  Mr. Bate said that the officer should have realised there was an error by reference to the tariff classification.
8.	Whilst I agree an officer could have worked out that the lower rate was not being claimed on some of the declarations he saw.  To do so he would have had to check the figures to work out the percentage and the tariff to verify the appropriate rate, I consider it to be asking rather a lot of an officer to do that unless the trader had specifically asked a question about that.  Mr. Shields also made the valid point that the officer who carried out that particular visit was there to see if the CFSP system was working, as a system, and not to audit the declarations the Appellants were making.
9.	Article 90(b)(1) of Commissioners Regulation 2454/93 (the Implementing Regulation for the Customs Code) requires an importer to submit a proof of origin to the Customs Authorities within 10 months of its issue by the appropriate authorities in the exporting country.  Article 90(b)(2) allows the 10 month period to be extended where the “failure to submit [the proof of origin] by the final date set is due to exceptional circumstances”.
10.	Mr. Bate put the Appellants’ case principally on the basis that it was inequitable that HMRC can claim underpaid duty for up to three years after the importation whereas the Appellants only had 10 months to claim back the overpaid duty.
11.	That is not in fact correct.  Article 236 of Council Regulation 2913/92 (the Customs Code) does allow the importer to claim repayment for up to three years.  The Appellants’ problem is that by the time they made that claim the certificates of origin were out of date and they did not obtain retrospective proof that the goods had been eligible at the time of importation under article 890 of the Implementing Regulation.
12.	Mr. Shields drew to my attention the case of Anglia Cargo International Ltd (C000212) and Chief Logistics Ltd (LON/05/7033) in both of which it was held that “exceptional circumstances” means situations that are outside the trader’s control and cause professional or commercial risks.  Even if the scope of “exceptional circumstances” is not limited in that way nothing emerged in these appeals to suggest that any circumstances, other than the Appellant’s lack of knowledge of what was required, gave rise to the overpayment and in my view that is not something that can be described as exceptional.  The Appellants are, I should add, large companies and very frequent importers.
13.	In those circumstances I dismiss the appeals.  Mr. Shields did not seek an award of costs and I make no order as to costs.

MAN/2007/7051 & MAN/2007/7053

RICHARD BARLOW

TRIBUNAL JUDGE
RELEASE DATE: 24 August 2009