First-tier Tribunal (Tax)

[2010] UKFTT 343 (TC)

TC00625

Appeal number: TC/2009/12258

Customs duty – classification – procedure – withdrawal of disputed decision – appeal allowed – jurisdiction of tribunal – s 16 FA 1994 – effect of appeal being allowed at invitation of Respondents

FIRST-TIER TRIBUNAL

TAX

                                       GE INTERNATIONAL INC                      Appellant

                                                                      - and -

                                 THE COMMISSIONERS FOR HER MAJESTY’S

                                                   REVENUE AND CUSTOMS               Respondents

                        TRIBUNAL: JUDGE ROGER BERNER                                                                                                 

Sitting in chambers at 45 Bedford Square, London WC1 on 21 July 2010

© CROWN COPYRIGHT 2010

DECISION

1.       The Appellant, GE International Inc, has applied for full written findings and reasons for the direction I made on 13 July 2010 (released on 15 July 2010) allowing the appeal.

2.       I allowed the appeal at the invitation of the Respondents, by letter to the Tribunal dated 17 June 2010, which had notified the Tribunal that the Respondents were withdrawing the disputed decision in this appeal and their statement of case.

3.       It may be somewhat prosaic, but I can effectively do no more than say that the reason I allowed the appeal was because I was invited to do so by the Respondents on the basis that the decision against which the appeal had been made was being withdrawn.  The Respondents had not filed a notice of withdrawal (nor had the Appellant), and so I considered that the most appropriate way of determining the proceedings was to allow the appeal.

4.       When I did so my attention had not been drawn to a letter sent by the Appellant to the Tribunal on 28 June 2010 (for some reason it had not reached the Tribunal file).  In that letter the Appellant pointed out that it had not received notice of any withdrawal of the disputed decision (apart from having received a copy of the Respondents’ letter to the Tribunal) and that the disputed Binding Tariff Information (“BTI”) remained at that time on the EU’s BTI database.

5.       The Appellant’s letter went on to say that, even if the disputed decision had been withdrawn, the Appellant wished the Tribunal to hear the matter.  This was in order that the Tribunal could provide an authoritative decision on the correct Customs classification of the product in question.  It made the point that, at that time, by withdrawing the disputed decision the Respondents had left nothing in place and were merely inviting the Appellant to restart the BTI process, with no indication of what the outcome might be.  The Appellant raised the concern as to the delay that might ensue if a further appeal was required.

6.       In its application for full written reasons the Appellant submitted that since, at the time in question, the Respondents had not replaced their withdrawn decision with any other, withdrawal had left the Appellant in limbo, with no guarantee that any effort to re-engage the Respondents in the process would lead to a satisfactory outcome.  Subsequently, as the Appellant fairly points out in its application, the Respondents have now issued a satisfactory replacement BTI.

7.       The Appellant referred to my decision in Rasam Gayatri Silks Limited v Revenue and Customs Commissioners [2010] UKFTT 50 (TC), where I had declined an application by HMRC to strike out the appellant’s appeal where a disputed decision had been withdrawn.  Instead I allowed the appeal.  The Appellant argues that Rasam Gayatri Silks was different from this case as it concerned a warning letter, which the Appellant described as a binary decision (it was either appropriate to issue the warning letter or it was not).  It argues that a classification case is different, as it is not just a question of right or wrong, and that in cases where the Appellant wishes the Tribunal to determine the correct Customs classification of imported goods, the matter should be heard so that the Tribunal can make the decision upon consideration of the facts.

8.       This turns upon the scope of the Tribunal’s jurisdiction.  Put shortly, the Tribunal has no jurisdiction on a mere reference.  It is not open to a taxpayer or any other person, or to HMRC, simply to refer to the Tribunal a question of doubtful customs classification.  Appeals to the Tribunal lie only with respect to decisions of HMRC in a review under section 15 of the Finance Act 1994 (“FA 1994”) of a decision under section 14 of that Act, and can only be entertained if the appellant is the person who required the review in question (see section 16).  Absent a decision, and a review, there is no right of appeal.  In the same way, once the disputed decision has been withdrawn, there is no jurisdiction for the Tribunal to consider the classification decision in vacuo.  In the absence of a withdrawal by either party, the Tribunal must simply determine the appeal.  The proper course, in my view, in these circumstances is for the appeal to be allowed.

9.       In this case the Appellant asks what is connoted by the simple determination “The appeal is allowed”.  The Appellant is correct that a decision on a review is different in nature from a decision such as was in issue in Rasam Gayatri Silks.  Section 16(5) FA 1994 provides that, in relation to decisions of the nature in this case (not a decision or review of an ancillary matter), the powers of the Tribunal also include power to quash or vary any decision and power to substitute its own decision for any decision quashed on appeal.  In this context, therefore, what is meant by the Tribunal allowing the appeal depends on the nature of the appeal itself, and the circumstances in which the appeal has been allowed.

10.    In this case the disputed decision was to classify the relevant product in BTI reference BTI GB 500575086.  This was upheld on a review notified to the Appellant on 3 July 2009.  The Appellant appealed on 16 July 2009.  Its grounds of appeal are stated thus:

“As regards the first of the two BTI dealt with in the review letter (GB500575086, dealing with a pump) the reviewing officer has applied an incorrect criterion when asserting that the addition of a heating element to facilitate the pumping of liquids means the pump cannot be classified as such.  Further, the reviewing officer incorrectly states that if classification in one heading of the nomenclature is possible, this automatically means that classification in a later heading is impossible.”

In the section of the Notice of Appeal form headed “Result.  Please say below what you think the decision(s) should have been if you do not already make that clear in box 6 [the Grounds for appeal section]” the Appellant wrote:

“The product should be classified as a pump of CN code 8413810090”

11.    In the context of the Tribunal’s powers under section 16(5) FA 1994, the appeal was seeking the exercise by the Tribunal of its powers to quash the decision of HMRC appealed against and to substitute the Appellant’s preferred decision.

12.    By withdrawing its decision and inviting the Tribunal to allow the Appellant’s appeal, the Respondents are to be taken as having accepted the appeal, both as regards the quashing of the original decision, but also the Appellant’s submission made on the face of the Notice of Appeal that the product in question be classified in the way put forward by the Appellant.  By allowing the appeal, the classification proposed by the Appellant in its appeal has been substituted for the original decision that has been quashed.

13.    The Notice of Appeal must be viewed as a whole, including both the grounds for disputing the decision of HMRC (and thereby seeking to have that decision quashed) and the submission of an alternative decision to be substituted for the original decision.  In circumstances where the Tribunal is invited or requested by the Respondents to allow the appeal, without reservation as to the issues on which the appeal is to be allowed, the effect of the appeal being allowed as a whole is to determine all issues, including both the quashing of the original decision and the substitution of an alternative classification, in favour of the Appellant.

This document contains full findings of fact and reasons for the decision. Any party dissatisfied with this decision has a right to apply for permission to appeal against it pursuant to Rule 39 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009.   The application must be received by this Tribunal not later than 56 days after this decision is sent to that party.  The parties are referred to “Guidance to accompany a Decision from the First-tier Tribunal (Tax Chamber)” which accompanies and forms part of this decision notice.

ROGER BERNER

TRIBUNAL JUDGE

RELEASE DATE: 23 July 2010