United Kingdom VAT & Duties Tribunals (Customs) Decisions

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Cite as: [2006] UKVAT(Customs) CO215, [2006] UKVAT(Customs) CO0215

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Beamfeature Ltd v Revenue & Customs [2006] UKSPC (03 May 2006)

CO0215

CUSTOMS DUTIES — bed covering in form of patch work quilt — upper layer of cotton, lower layer of cotton-polyester with thin polyester wadding between — whether bedspread within CN heading 6304 or article "stuffed or internally fitted" with material and within heading 9404 — appeal against BTI in former heading — item found to be bedspread within heading 6304 — GIRs 1, 3(a), 4 — BTI correct — appeal dismissed

MANCHESTER TRIBUNAL CENTRE

BEAMFEATURE LIMITED

Appellant

- and -

THE COMMISSIONERS FOR HER MAJESTY'S REVENUE AND CUSTOMS

Respondents

Tribunal: Colin Bishopp (Chairman)

Susan Stott FCA

Sitting in public in Manchester on 17 February 2006

Darren Banham, sales manager, for the Appellant

Andrew O'Connor, counsel, instructed by the Acting Solicitor for HM Revenue and Customs, for the Respondents

© CROWN COPYRIGHT 2006

DECISION

The Appellant, Beamfeature Limited, is an importer and distributor of household goods. The particular product with which we are concerned in this appeal is described in Beamfeature's sales literature as a patch work quilt. In February 2001 a similar, if not identical, product was granted a binding tariff information ("BTI"), at Beamfeature's request, in the tariff code 9404 90 90 00. In July 2005, following the implementation of Commission Regulation (EC) No 1020/03, the Respondents wrote to Beamfeature, inviting it to provide a sample of the product in order that the BTI could be reconsidered. Beamfeature duly supplied a sample, and at the same time submitted a further application for a BTI in the tariff code 9404 90 90 00. On 29 July 2005 a new BTI was given, but in the code 6304 19 10 90. That BTI effectively revoked the BTI issued in 2001. The new BTI was upheld, following the obligatory review, by letter of 5 September 2005, and Beamfeature now appeals against the review decision. The significance of the dispute lies in the fact that articles within heading 6304 attract duty of 12 per cent, while the duty on goods within 9404 is charged at 3.7 per cent.

Beamfeature was represented before us by its sales manager, Darren Banham, and the Respondents by Andrew O'Connor of counsel. We heard no formal evidence, since there was no difference between the parties about the description and characteristics of the product, but we were provided with a sample and with a bundle of relevant documents.

The description of the article with which we are concerned, as it was set out in the BTI, is:

"Woven bedspread of quilted fabric. Top layer is 100% cotton, backing 80% polyester 20% cotton, filling 100% polyester. Patchwork design. Packaged in a clear plastic bag for retail sale. Approx measurements 240 cms x 260 cms."

We need only add that the filling consists of a layer, a few millimetres thick, of polyester wadding, held in place by stitching. Although the product appears to have some heat-retaining properties (and Mr Banham assured us that it could be used in place of a blanket or duvet in the summer), it is clear (as the sales literature shows) that its primary purpose is decorative rather than utilitarian.

The Combined Nomenclature, or CN (that is, Annex 1 to Council Regulation (EEC) No 2658/87, the "Tariff Regulation") contains an organised list of commodities. A cardinal principle is that every commodity has a place, but only one place, within the CN. The General Rules for the Interpretation of the Combined Nomenclature (the "GIRs") provide legally binding guidance for the application of the CN to any commodity. For the purposes of this decision we will need mention three of the rules and start with rule 1, which provides that "… for legal purposes, classification shall be determined according to the terms of the headings and any relative section or chapter notes …". There are other forms of guidance, persuasive rather than mandatory.

The CN is divided into sections, chapters and headings, and most headings have further divisions. Section XI, entitled "Textiles and textile articles", proceeds, chapter by chapter, to list various types of textile products, arriving finally at chapter 63 whose title is "Other made-up textile articles; sets; worn clothing and worn textile articles; rags". As that title suggests, chapter 63 captures textile articles which have not found a place within the preceding chapters of the section.

Note 1 to section XI provides that "This section does not cover" various commodities, among which, at paragraph (s), appear "articles of Chapter 94 (for example, furniture, bedding, lamps and lighting fittings)". That exclusion is reinforced, though with more particularity, by the description of the goods which fall within the Commissioners' preferred heading, 6304: "Other furnishing articles, excluding those of heading 9404". If, therefore, it is clear that the product must come within heading 9404, as Beamfeature contends, classification within 6304 is impossible. Accordingly we consider first the terms of heading 9404.

Chapter 94 is within section XX, whose title is "Miscellaneous manufactured articles"; and chapter 94 itself includes a surprising assortment: "Furniture; bedding, mattresses, mattress supports, cushions and similar stuffed furnishings; lamps and lighting fittings, not elsewhere specified or included; illuminated signs, illuminated name-plates and the like; prefabricated buildings." Heading 9404 is rather more selective:

"Mattress supports; articles of bedding and similar furnishing (for example, mattresses, quilts, eiderdowns, cushions, pouffes and pillows) fitted with springs or stuffed or internally fitted with any material or of cellular rubber or plastics, whether or not covered."

The heading has sub-headings which cover successively mattress supports, mattresses and sleeping bags; it concludes with Beamfeature's proposed full tariff code 9404 90 90 00, with the description "other".

It seems to us clear—indeed it was agreed—that the product is an "article of bedding", being designed to cover a bed. The Commissioners' argument, and the reason why they refused to issue a BTI in heading 9404, is that it does not satisfy the second part of the description, since it is not "stuffed or internally fitted with any material". (There was no dispute that it has no springs and is not made of cellular rubber or plastics). The letter accompanying the new BTI stated that heading 9404 was not available for that reason, but did not offer any explanation of the classification within heading 6304, save that the product was considered to be "a quilted fabric bedspread". The letter written to Beamfeature following the review did, however, expand somewhat, and showed that its author had considered various headings before concluding, by process of elimination, that 6304 was appropriate.

The Commissioners' argument is that "stuffed" implies that the outer casing is completely filled with material and that "internally fitted" implies that something has been placed within a space designed to accommodate it. The former might be achieved using feathers or polyester fibre; the latter with material such as shaped foam. That view stems largely from the reasons given for the making of Commission Regulation (EC) No 1020/03, following a ruling of the World Customs Organisation ("WCO"). That ruling related to a quilted pillowcase—apparently known in the trade as a pillow "sham"—which contained a middle layer of wadding. The reasoning of the WCO was that the wadding was relatively thin, and that in consequence the sham was neither stuffed nor internally fitted with any material. The point was also made that the sham could not be used on its own as an article of bedding. We mention in passing (since the Commissioners did not rely on it) that the latter point seems to us irrelevant since pillows, provided they are stuffed or internally fitted, are within heading 9404, yet would not normally be regarded as adequate to constitute a bed. The Commissioners do say, however, that although the pillow sham is not identical to the product with which we are concerned the similarities are sufficient to show that the two must be treated in the same way for classification purposes.

Mr Banham disagreed: the pillow sham, he said, is a quite different type of product, being designed to have the pillow itself inserted in it.. Thus the Commissioners had based their decision on a false comparison. Moreover, their rejection of heading 9404 disregarded the use in the title of chapter 94 of the words "articles of bedding" and "quilts", both of which plainly included this article. Their preference for heading 6304 was unreasonable because they were treating "stuffed" and "internally fitted" as if they were synonymous, or nearly so. He accepted that this article is not stuffed but it is, he said, internally fitted because the wadding is placed between the two outer layers and held in place by the stitching.

It seems to us that there is a possible ambiguity in the phrase "stuffed or internally fitted" in that it is not entirely clear, either from the wording of the heading itself or from the reasons given by the WCO, whether the two conditions are, as the Commissioners argue, both designed to convey fullness achieved by different means (that is, essentially the same concept), or instead carry different meanings—and if the latter, there is no clarity about the meaning of "internally fitted". We are not, however, persuaded that the ambiguity is real; there is, we think, little room for doubt that the WCO proceeded from the position that the two expressions have a similar meaning. Since Beamfeature's product is by no means "full" of the wadding, which here as in the case of the pillow sham is thin, we incline to the view that the Commissioners were right to exclude it from heading 9404, provided there is another, more suitable, heading.

That proviso is derived from the relevant parts of GIRs 3 and 4, which are as follows:

"3 When … 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 …

(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."

Before examining chapter 63 we should mention briefly chapter 58, and particularly heading 5811, "Quilted textile products in the piece, composed of one or more layers of textile materials assembled with padding by stitching or otherwise, other than embroidery of heading 5810". At first sight, that description is apt to include the patch work quilt with which we are concerned. However, classification within heading 5811 was rejected in the review letter because it applies to products "in the piece", meaning that they are only part-way through the manufacturing process—in other words, goods produced for making up into finished articles. This article was made from a product within heading 5811, but was not itself within it. Mr Banham agreed with that interpretation and accepted that heading 5811 was not relevant, and we do not need to deal with it further.

It was also agreed that if neither heading 9404 nor heading 5811 is appropriate, the only remaining part of the CN into which the article might fall is Chapter 63. It contains ten headings, but only two might be of relevance in this case. Heading 6302 includes "Bed linen, table linen, toilet linen and kitchen linen". The review officer excluded this heading because she took the view that Beamfeature's product is designed to be laid over bed linen, rather than to be used as bed linen in the conventional sense. Mr Banham did not disagree with that approach and we too think it is correct.

Heading 6304 reads "Other furnishing articles, excluding those of heading 9404". It includes bedspreads, and at the code specified by the disputed BTI (6304 19 90), specifically bedspreads made, otherwise than by knitting or crocheting, of textile materials other than cotton, flax or ramie. As this product is neither knitted nor crocheted and is made of mixed fibres it is necessarily included in that code if it falls within heading 6304 at all.

In essence, the dispute between the parties can be reduced to the question whether the product is more properly regarded as a bedspread (heading 6304) or a stuffed or internally fitted quilt (9404). As we indicated above, we are satisfied that heading 9404 is excluded if there is a more appropriate classification: that is the effect of GIRs 3(a) and 4. There does not seem to us to be much room for doubt that heading 6304 is more appropriate. The most obvious description of the product is a bedspread (and Beamfeature's own sales literature shows it in use as a bedspread); by contrast we doubt if the term "quilt", if that implies a measure of fullness, would readily come to the mind of an informed layman. As the Commissioners accept, the opinion of the WCO about a similar article is not decisive; it is of the persuasive character we have mentioned. But in this case we are satisfied that it is guidance we should respect. If so, the conclusion that heading 9404 is not available and that heading 6304 is appropriate is inescapable. GIR 3(c) does not assist the Appellant as it comes into the picture only if one is required to choose between two apparently equally appropriate classifications, which is not the position in this case.

We therefore conclude that the classification given by the disputed BTI was correct and that the appeal must be dismissed. We make no direction in respect of costs.

COLIN BISHOPP

CHAIRMAN

Release date: 3 May 2006

MAN/04/7046