United Kingdom VAT & Duties Tribunals (Customs) Decisions

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Cite as: [2005] UKVAT(Customs) C00195, [2005] UKVAT(Customs) C195

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Pooler-LMT Ltd v Customs & Excise [2005] UKVAT(Customs) C00195 (01 June 2005)

Pooler-LMT Ltd v Customs & Excise [2005] UKVAT(Customs) C00195 (22 June 2005)

C00195

CUSTOMS DUTIES — BTI — lifting device mounted on chassis — whether lifting device amounting to a crane — CN heading 8426 — whether instead no more than a lifting device — CN heading 8427 — GIRs 1, 3 — HSEN considered — correct heading 8427 — BTI correct — appeal dismissed

MANCHESTER TRIBUNAL CENTRE

POOLER-LMT LIMITED Appellant

- and -

HER MAJESTY'S REVENUE AND CUSTOMS Respondents

Tribunal: Colin Bishopp (Chairman)

John M Lapthorne

Sitting in public in Birmingham on 24 May 2005

Peter Oriani, customs duties consultant, for the Appellant

Ben Collins, counsel, instructed by the Acting Solicitor for HM Revenue and Customs for the Respondents

DECISION

In this appeal Porter LMT Limited, an importer of lifting devices, challenges a Binding Tariff Information ("BTI") ruling issued by the Respondents on 28 May 2004, and upheld on statutory review in October 20044. The BTI applies to a "Versa-Lift 40/60" machine, to which it gives the tariff code 84272019. The Appellant contends that the correct code is 84264100. The former classification carries duty at 4.5 per cent; on the latter it is nil.

The machine is described in the BTI as:

"An extendible frame self-propelled lifttruck, with hydraulically operated lifting frame, with a 60,000lbs lifting capacity. Lifting height of 1 metre or more. Powered by a 3 litre 4 cylinder engine (choice of fuels including LPG [Liquid Propane Gas], petrol and diesel). With 4 removable counterweights, each weighing 3,950lbs. Runs on solid tyres. Not considered suitable for rough terrain or for use as a stacking truck."

We were provided with photographs and drawings of it, and of some similar devices. At first sight, it resembles a fork lift truck, and it can indeed be used as one, but it has other features not commonly found in fork lift trucks. These include a mast which can be tilted up to 12 degrees forward and 7 degrees backwards from the vertical (though not from side to side); a single boom attached to the mast, which can be raised and lowered by hydraulic means; and an extendible counterweight at the rear, activated by hydraulically extending the chassis, the rear-most section of which contains the counterweight. The boom cannot be extended and retracted hydraulically but must be adjusted manually when it is not under load. The purchaser may buy, as optional extras, a pair of forks, enabling the mechanic to be used as a fork lift truck, a hook, which is designed to be attached to the boom, and a winch, also designed to be attached to the boom, enabling a load to be raised and lowered while the boom remains stationery. The machine is steered by its rear wheels, and can turn in very tight confines. It is used, we were told, mainly within factories and similar premises, for the installation of machine tools. Its particular advantage is its ability to lift and manoeuvre such loads in restricted spaces. The machines are manufactured in the USA.

The Appellant's case is that the machine falls properly within heading 8426, "Ships' derricks; cranes, including cable cranes; mobile lifting frames, straddle carriers and works trucks fitted with a crane" and that it answers to the last of these descriptions in that it is a works truck fitted with a crane. More specifically, it is "other machinery, self-propelled, on tyres" (other, that is, than mobile lifting frames on tyres, straddle carriers, tower cranes, portal or pedestal job cranes), giving the full eight-digit code 84264100. The Respondents contend that the appropriate heading is 8427, "fork-lift trucks; other works trucks fitted with lifting or handling equipment". They rely on the latter part of that description. To arrive at the eight digit code of 84272019 they say the machine comes within the description "other [than electrically propelled] self-propelled trucks, with a lifting height of 1m or more, other" [than rough-terrain and other stacking trucks].

The focus of the debate at the hearing, in which the Appellant was represented by a customs duty consultant, Peter Oriani, and the Respondents by Ben Collins of counsel, was the meaning of the word "crane", on which we hear evidence from two consultant mechanical engineers, Andrew Wyon, for the Appellant and Richard Barker for the Respondents, each of whom had also produced a report.

It was common ground that the machine with which we are concerned (at least, if fitted with a hook or wind) possesses some of the essential features of a crane: it lifts from above (that is, it is designed to raise a suspended load); has an arm, or boom, which allows it to lift a load located away from itself; and has a counterweight system. The difference between the parties centres on the machine's ability, or lack of ability to move its load horizontally. Mr Barker's view was that this must be accomplished by the lifting device itself if it is to be classed as a crane. Here, he said, the available horizontal movement was minimal, achieved by tilting the mast forward or back, and that movement was in a single plane. A much greater range of movement, and usually though not necessarily in more than one plane, would be expected of a crane. Mr Wyon's argument was that the machine, assessed as a whole, accomplished all that was required of a crane. It was inherent in its design, and its intended purpose, that horizontal movement was achieved by moving the chassis. By this means, the load could be moved forwards and backwards and from one side to another, and the machine was capable of swivelling. In other words, it lacked none of the features normally to be found on a crane.

It is well established that in determining the correct tariff classification of goods it is necessary to look first at the tariff itself (the Conbined Nomenclature, or CN, contained in Annex 1 to Council Regulation (EEC) 2658/87 as it was current at the material time) and to interpret it by applying the general interpretative rules ("GIRs") which, as they are laid down in the Regulations and contained in the Annex, are binding and in the light of any explanatory notes ("CNENs") (of which there are none here). It is appropriate also to consider the Harmonised System Explanatory Notes ("HSENs"); although these are not binding they are of considerable persuasive weight.

Rule 1 of the GIRs is as follows:

"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."

In this case, the terms of the two possible headings, 8426 and 8427, are of limited help. There is no dispute between the parties that the machine is a "works truck"; the question is whether it is fitted with a crane, in which case 8426 is appropriate, or with lifting or handling equipment falling short of a crane, in which case it comes within 8427. Rule 1 gives no guidance, however, on the classification which should be preferred, when the article in question can come into either. We must therefore move on to GIR 3(a) – rule 2 being immaterial here – which, so far as relevant reads:

"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."

Here, we can derive some assistance from the HSENs to heading 8426, which state that:

"The heading covers lifting or handling machines usually based on pulleys, winch or jacking systems …

The heading covers …

(11) Works trucks fitted with a crane, which are designed for moving loads over short distances in factories, warehouses, dock areas or airports by means of a light crane mounted on a chassis of the works truck type, usually in the form of a box frame, with a long wheel-base and a wide track to avoid overbalancing."

The Respondents' case, as it was put by Mr Collins, is that this description indicates that, in order to qualify, the machine must have a crane properly so-called fitted onto a chassis; it is not sufficient that there is a crane only if the whole machine is considered. In addition this machine (as the Appellant accepts) does not have a wide track. Mr Collins reminded us too of rules 3(b) and 3(c), the former requiring us to consider the essential characteristics of the machine (which, he said, meant that we must consider whether it was "fitted with a crane", so reinforcing the HSEN) and the latter indicating that, in case of doubt, the classification higher in numerical order – here 8427 – is to be preferred.

Mr Oriani's principal point was that the lifting apparatus fitted to the chassis did indeed constitute a crane, but he argued also that the Respondents' interpretation was too narrow, requiring one to disregard the purpose for which the machine was designed – that is, to lift loads and move them "over short distances in factories" and he urged us to adopt a more purposive approach. The machine was designed as a crane, and used for that purpose, and should be classified accordingly.

Unfortunately for the Appellant, we have concluded that there is no escape from the clear requirement in heading 8426 that, if a machine of this kind is to qualify for inclusion, it must consist of a works truck "fitted with a crane". We cannot read that to mean, as the Appellant's argument requires us to do, a "works truck which, together with the lifting apparatus mounted on it, has the function of a crane". We are, therefore, satisfied that the Respondents' interpretation of the HSEN is correct and that the HSEN itself correctly reflects the wording of the heading. Moreover, we are not persuaded that the lifting apparatus can properly be regarded as a crane. It can lift a suspended load – although, even then, the fixed hook and the winch are supplied as optional extras – but, without the use of the truck's ability to move itself, it cannot displace the load laterally save to a very limited extent. We agree with Mr Barker that, were the lifting apparatus to be considered alone, it would more appropriately be described as a hoist rather than a crane.

We have some sympathy with the Appellant, since we agree that the device, as a whole, has the function of a crane, but we must apply the tariff as it is, and not as the Appellant would like it to be. The appeal must therefore be dismissed. Mr Collins did not seek a direction in respect of costs.

COLIN BISHOPP

CHAIRMAN
Release Date: 22 June 2005

MAN/04/7041