Sprint C P A Ltd v Revenue & Customs [2011] UKFTT 733 (TC) (14 November 2011)
[2011] UKFTT 733 (TC)
TC01570
Appeal number: TC/2011/00568
Anti-Dumping
Duty – Customs classification – top tube child seat – was the product imported
a saddle – no – appeal allowed
FIRST-TIER TRIBUNAL
TAX
SPRINT
C.P.A. LTD Appellant
-
and -
THE
COMMISSIONERS FOR HER MAJESTY’S
REVENUE
AND CUSTOMS Respondents
TRIBUNAL:
LADY MITTING (TRIBUNAL JUDGE) ALBAN
HOLDEN (MEMBER)
Sitting in public Birmingham on 18 October 2011
Mr J Lambdon appeared for the
Appellant
Simon Charles, instructed by
the General Counsel and Solicitor to HM Revenue and Customs, for the
Respondents
© CROWN COPYRIGHT
2011
DECISION
1. This
appeal concerns the correct customs classification of Top Tube Child Seats (“the
product”) imported into the UK by the Appellant from China. The Respondents
contend that the product is “a saddle” and if this classification is correct
the import attracts Anti Dumping Duty (“ADD”) for which a C18 Post Clearance
Demand Note has been issued for £10,880.26 ADD and £1,785.24 additional VAT.
2. We heard
submissions from Mr Simon Charles of counsel for the Respondents and Mr J
Lambdon, former Co Director and owner of the Appellant Company. We were
greatly assisted by Mr Lambdon’s production for our inspection of a bicycle
with the product attached; the boxed product as would be purchased over the
counter; a variety of saddles and a couple of bicycle child seats of a
different design.
The Legal Principles
3. Article
1 of Council Regulation (EC) Number 691/2007 imposes a definitive anti-dumping
duty on the import of ‘saddles and essential parts thereof i.e., bases,
cushions and covers, of bicycles…, falling within CN code 8714 95 00… and
originating in the ‘People’s Republic of China’. The rate of duty depends on
the factory of origin and it was common ground in this case that the
originating company falls within the category of ‘all other companies and the
rate to be applied is 29.6%.’
4. The
Combined Nomenclature Regulations (Reg EEC Number 2658/87) provides the legal
basis for the Community’s Tariff and the issue for determination by the
tribunal is the correct classification code or CN code for the product. It was
common ground that the product fell within the code 8714, parts and accessories
of a bicycle. The conflicting contentions thereafter were that of the
Respondents that the correct code was 8714950000 ‘Saddles’ and that of the
Appellant that it should be 871499 90 89, ‘Other’. Mr Charles accepted that if
the tribunal were to find the product was not a saddle, then the Appellant’s
classification of ‘Other’ would be the correct one. It was one or the other.
5. In
classifying the product, the Tribunal applies the General Interpretive Rules
(GIRs) set out in Annex 1 of Council Regulation (EEC) Number 2658/87. The rules
relevant to the issue before us are Rules 1, 2(a), 3(a) and 6 which read as
follows:
“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, providing 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.
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.
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
the rule the relative section and chapter notes also apply, unless the context
otherwise requires.”
6. Further
guidance on construction is given in the Harmonized System Explanatory Notes
(HSENs) although these Notes are exactly what they say they are, explanatory
rather than legally binding. HSEN8714 includes under the sub heading ‘Parts
and accessories of this heading include:’ at number 11 ‘Saddles (seats) and
saddle pillars (seat posts); saddle-covers.
7. We
will also set out here as we were referred to it by Mr Charles paragraph 15 of
the pre-amble to Commission Regulation (EC) Number 1999/2006 which preceded
Council Regulation 691/2007.
‘(15) A saddle is typically
made up of three parts: a base or support on which the saddle is built, is
generally produced through a plastic injection moulding process; the cushion
which is applied to the base to make the saddle comfortable which can be made from different types of synthetic
foam or other materials; the cover, made from synthetic material or natural
leather which covers the cushion and the edges of the base giving the saddle
its feeling and aesthetical properties. As well as the above three components
a saddle normally incorporates an attaching mechanism made from metal such as a
fork, or clamp and may also include a spring or elastomer shock-absorbing
mechanism. ‘
8. The
preamble to the Council Regulation 691/2007 to which we were referred to Mr Lambdon
reads at paragraphs 4 and 5 as follows:
‘(4) One importer argued
against the inclusion into the scope of the investigation of essential parts of
saddles (bases, cushions and covers) on the grounds that the inclusion of the
latter was not justified by any evidence of dumping from either the complaint
or the investigation. This importer claimed also that it is not sufficient to
consider saddles and saddle parts as one single product on the basis that both
were used for the same end product (i.e. bicycles and similar). The same
importer further alleged that certain saddle parts were included in the product
definition to prevent circumvention in case anti-dumping duties were imposed.
On this basis, it was argued that importers in the Community should be allowed
to request exemptions from the anti-dumping duty within the meaning of Article
13(4) of the basic Regulation.
(5) It should be noted,
first of all, that the complaint mentions saddles and essential parts thereof.
It is considered, however, that the prima facie evidence of dumping necessary for
initiating an investigation does not need to cover all product types included
in the scope of the investigation. As long as the parts of a saddle have the
same basic technical, physical and chemical characteristics and cannot have
another end-use than being incorporated in the whole (i.e. into saddles) and,
as such, they are not a distinct product, they are defined as part of the
product concerned and should form part of the investigation. Furthermore, the
fact that essential parts were not exported as such to the Community by the
cooperating exporting producers during the IP does not preclude that this could
have happened for the exporters which have not cooperated. It is recalled that
the latter exporters represent over 75% of the exports of the product concerned
to the Community.’
9. In
the recent joined cases of British Sky Broadcasting Group Plc and Pace Plc v
HMRC (C288/09 and C289/09) the ECJ confirmed that classification of goods is
‘to be determined first according to the terms of the headings and section or
chapter notes, and that titles to sections, chapters and sub-headings are
provided for ease of reference only’ (para 59). The Court went on to hold
(para 60) that:
“In that regard, it should be borne in mind that,
according to settled case law, 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 by the wording of the relevant heading of the CN and
the notes to the sections or chapters…..”
The Top Tube Child Seat
10. The Top Tube
Child Seat is designed to carry children aged approximately 2-4 years old and
up to 40lbs in weight. It comes boxed in kit form and is then assembled and
attached to the bicycle. It consists of a small seat which can only be
described as similar in shape and appearance to a saddle. It is of a plastic
mould, covered by cushioning. Integrated into the moulding is a unique fitment
mechanism by which it is clamped to the down tube of a ladies bicycle or the
top tube of a gentleman’s. It is supplied with footrests and straps to
accommodate and restrain the child’s feet, a safety belt and a metal backrest
which is secured into the flanges of the seat moulding. The child will thus be
seated in front of the cyclist, further restrained by the cyclist’s
outstretched arms as he holds the handlebars.
The Appellant’s Contentions
11. The definition
of a saddle adopted by Mr Lambdon is from Wikipedia and is in the following
terms.
“Often called a seat, is one
of 3 contact points on an upright bicycle, the other being the pedals and the
handlebars.
It performs a similar role as
that of a horse’s saddle by not bearing all of the weight of the rider as the
other contact points also take some of the load.
A bicycle saddle is commonly
attached to the seat post and the height of the saddle can usually be adjusted
by the seat telescoping in and out of the seat tube.
A bicycle saddle is
constructed with double rails for forward/backward linear and tilt adjustment.”
12. Mr Lambdon’s
primary contention was that the product is not a saddle as it cannot under any
circumstances be used as a replacement for a normal saddle because it lacks the
conventional fitments which, in his estimate, some 99 % of saddles have. The
product is of a specific design which means it can only be used with the metal
parts supplied with it and its sole purpose is that of a child’s seat. It also
differs from a conventional saddle in that it is incapable of adjustment such
as forward/backward tilt or height.
13. Mr Lambdon
stressed that the product as sold on the market is described as a child seat
and is but one of a number of differing designs of such seats. We were shown
two very much more substantial plastic bucket seats but as Mr Lambdon pointed
out even on the bucket seats, the seat part is cushioned and ridged to fit the
child’s contours. In his submission, bucket seats and the product all serve
exactly the same function – to transport a child passively and yet the bucket
seats could not be remotely described as saddles. Similarly, the product is
not a conventional saddle but is a child seat.
14. Mr Lambdon
pointed out that within his definition of the word “saddle”, the saddle does
not bear all the weight of the rider as the other contact points also take some
of the load (i.e. the handle bars and the pedals). By contrast the product
will carry the child’s entire weight. The child also, argued Mr Lambdon, is
not a rider. A rider, he submitted, was the person controlling or propelling
the cycle unlike a passenger who would be passive and merely carried.
15. Mr Lambdon also
drew our attention, as cited above, to the preamble of Council Regulation
691/2007 of paragraph 5. His argument here was that the product cannot be
incorporated into a saddle in the whole and as such is a distinct product.
The Respondents’ Contentions
16. The definitions
of a saddle drawn upon by Mr Charles were from the Collins English Dictionary
(2003 Reprint)
“1. a seat for a rider, usually
made of leather, placed on a horse’s back and secured with a girth under the
belly.
2. a similar seat on a
bicycle, tractor etc.
3. a backpack forming part of
the harness of a packhorse.
4. anything that resembles a
saddle in shape, position or function.”
and from the Oxford Dictionary of English
“a seat fastened on the back
of a horse or other animal for riding, typically made of leather and raised at
the front and rear. A seat on a bicycle or motorcycle”
17. The product, in
Mr Charles’s submission fell within both of the above definitions in that it
provided a ‘seat’ for a ‘rider’ on a ‘bicycle’. It was his view that in the
light of the HSEN referring to a ‘saddle (seat)’, no distinction for the
purposes of classification could be drawn between a saddle and a seat.
18. We were also
referred by Mr Charles to the Fitting Instructions which accompanied the
product, step one of which reads “Insert the back support flange fixing into
the under saddle moulding…”.
Conclusions
19. ADD is levied
under Code 8714 95 00 on the importation of saddles from China. We therefore address first what has actually been imported. The product, as
imported, comes in kit form, unassembled. It is a composite, the constituent
parts being a seat, a backrest, a seatbelt, straps and footrests. Once
assembled the totality is used as a child seat.
20. We have no
doubt, and so we find, that the seat component of the product is a saddle.
Examining the objective characteristics and properties of the seat, in shape
and design it is virtually identical to that of a saddle. It is triangular in
shape, made of a plastic moulding and covered in a cushioning material. Its
process of manufacture will be the same as for any other saddle. This saddle
comes with its own unique fitment by which it clamps to one of the bicycle
tubes. We accept that this fitment is not one that would be compatible with a
conventional saddle but, in our view, this matters not. The nature of the
fitment cannot detract from the essential properties of the seat itself. Equally,
the fact that the saddle is static rather than adjustable is, to us,
immaterial. The purpose for which this saddle is used does not require it to
be adjustable but again this cannot prevent it from being seen as a saddle. We
reject Mr Lambdon’s distinction between a rider and a passenger. Whether the
person sitting on this saddle is merely being carried or is actively propelling
the cycle does not alter the properties or characteristics of what he is
sitting on and it is these properties and characteristics which define the
thing and which determines whether or not it is a saddle. Looking at the
objective characteristics and properties, above all the appearance and shape,
of the seat, it can only be defined for these purposes as a saddle.
21. However, although,
in our finding, the seat is a saddle, the saddle is not imported as a single
discreet item. It is but one part of a larger composite whole. The totality
of what is imported is a child seat, one of the components of which is a
saddle. The saddle is not manufactured to or imported to, and in terms of its
practical use could never, stand alone. We therefore find that although the
product includes, as one of its component parts, a saddle, the product itself
is not a saddle and it is not a saddle that is imported. The correct
classification is therefore ‘other’ – 8714 99 90 89. The appeal is therefore
allowed.
22. 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.
TRIBUNAL JUDGE
RELEASE DATE: 14 November 2011
