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Cite as: [2006] UKVAT(Customs) C00224, [2006] UKVAT(Customs) C224

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Paul West v Revenue & Customs [2006] UKVAT(Customs) C00224 (12 September 2006

C00224

CUSTOMS DUTIES – Ford Zephyr Mark 1 Convertible motor car manufactured in 1955 – whether within CN heading 87.03 or CN heading 97.05 as a collector's piece – only point in issue on the application of the CNEN was whether the motor car was "of high value"or "may fetch a high price" – Erika Daiber v Hauptzollamt Reutlingen (Case 200/84) considered – earlier Tribunal Decisions in Stephen Bernard Saunders, Barnfinds Limited, Andrew Burford, and Julian Sibree Paul considered – held the Commissioners' policy to interpret the requirement that a motor vehicle "may fetch a high price" in order to qualify for classification as a collector's piece, as a requirement that its value must be at least £20,000 is unreasonable, arbitrary, and not supported by Daiber – the correct comparison is between the motor car's customs value and the value of its constituent materials – if a motor car is classifiable as a collector's piece its customs value must be out of all proportion with the value of its constituent materials – Direction for the appeal to be relisted for further evidence as to the value of the motor car's constituent materials

LONDON TRIBUNAL CENTRE

PAUL WEST Appellant

- and -

THE COMMISSIONERS FOR HER MAJESTY'S

REVENUE AND CUSTOMS Respondents

Tribunal: JOHN WALTERS QC (Chairman)

TYM MARSH

Sitting in public in London on 16 June 2006

The Appellant appeared in person

James Maxwell-Scott, of Counsel, instructed by the Acting Solicitor for HM Revenue and Customs, for the Respondents

© CROWN COPYRIGHT 2006

DECISION

Mr. West ("the Appellant") appeals against the decision of Mrs. Hazel Watts, a Reviewing Officer of the Commissioners, communicated to his agent, Mr. Michael Worthington-Williams of the Society of Automotive Historians in Britain, by a letter dated 9 August 2005. The decision was to uphold the decision previously notified to the Appellant on Binding Tariff Information ("BTI") reference GB114245996, to the effect that the 1955 Ford Zephyr Mark 1 Convertible motor car ("the Motor Car") imported by the Appellant from New Zealand into the United Kingdom was classified for customs duty purposes under Commodity Code heading 87.03 ("Motor cars and other motor vehicles principally designed for the transport of persons …") in the Combined Nomenclature ("CN"). The Appellant contends that the Motor Car ought properly to be classified under heading 97.05 ("Collections and collector's pieces of … historical … interest"). Goods falling within heading 87.03 attract customs duty at 10 per cent., while goods falling within heading 97.05 may be imported free of customs duty.

Mr. Maxwell-Scott, for the Commissioners, in opening the case, by agreement with Mr. West and with the Tribunal's permission, submitted that case law in the Court of Justice had established that, in order to be properly classified under CN heading 97.05, an article must satisfy both the following criteria, that is, it must be (a) a collector's piece; and (b) of historical or ethnographic interest.

Mr. Maxwell-Scott informed the Tribunal that the Commissioners were no longer resisting the Appellant's claim that the Motor Car satisfied the second criterion, that is, that it was of historical or ethnographic interest. So far as the first criterion was concerned, that an article within CN heading 97.05 must be a collector's piece, Mr. Maxwell-Scott submitted that the Court of Justice in the case of Erika Daiber v Hauptzollamt Reutlingen (Case 200/84) had laid down four conditions, each of which must be satisfied. They were:

• that the article must be "relatively rare";

• that the article is "not traded on the ordinary market" and/or that it is "handled by a specialized trade";

• that the article "may fetch a high price";

• that the article is "not normally used for [its] original purpose, although it cannot be ruled out that [its] functional capacity may remain intact"

Mr. Maxwell-Scott further informed the Tribunal that the Commissioners were no longer resisting the Appellant's claim that the Motor Car satisfied the first, second and fourth of these conditions. The only point remaining in issue was that the Commissioners contended that the Motor Car did not satisfy the condition laid down in Daiber that it "may fetch a high price". The Appellant, of course, asserted that it did.

The evidence relevant to this issue was as follows. The Motor Car was purchased by the Appellant from an unconnected vendor in New Zealand for a purchase price of 22,000 New Zealand dollars, which translated into an amount of approximately £9,000 (nine thousand pounds sterling). He said that the Motor Car needed some restoration to bring it up to A1 condition. The Appellant produced an unsigned statement apparently from a Mr. David Barry (described as a lifelong owner, restorer and part supplier of Ford Consul and Zephyr cars and founder-member of the Ford Consul & Zephyr Mark 1 Owners Club). In it is said that a Ford Zephyr saloon in mint condition might fetch £4,000 to £5,000, but a "mint" Ford Zephyr Mark 1 Convertible (such as the Motor Car) would command £15,000 to £20,000. There was also in evidence a signed letter dated 21 July 2005 from a Mr. Malcolm Barber, Group Managing Director of Bonhams, the well-known auctioneers, sent to the Commissioners' Tariff & Statistical Office, in support of the Appellant's case. In it, Mr. Barber said:

"I have recently been informed of a very rare 1955 For Zephyr MK convertible which is about to be imported, or has recently been imported into the UK from New Zealand. This is a very desirable collector's classic car, one of only 12 known survivors, and would be of great interest to collectors in the UK. We at Bonhams are the largest classic vehicle auctioneers in the UK, London being the headquarters of our international group, with salaams ["salerooms" is presumably meant] in New York, San Francisco, Los Angeles, Sydney, etc. Although not of high value this is quite definitely a collector's piece of historic interest returning to the UK. A Ford will not equal a Mercedes or Ferrari relative values for rare models, however 22,000 NZ$ does constitute a high value for a 50-year old Ford Zephyr."

There was also in evidence a signed letter dated 27 June to the Appellant from a Mr. Mike Chapman, the Club Membership Secretary of the Ford MK1 Consul, Zephyr and Zodiac Owners Club. In it Mr. Chapman relevantly said that:

"We, the club, confirm that 22,000 NZ Dollars is the price at the top end of the spectrum for this type of classic …"

The Appellant told the Tribunal that the original price of the Motor Car, when new, in the 1950s was £1,000. This compared with £600 to £800 which was the range of the original prices of the saloon models. He imported the Motor Car in September 2005 and he had insured it for £25,000. When imported, the Motor Car was drivable, but not in a condition in which it could legally be driven on the road. He had spent 300 hours already in restoring the Motor Car. Over and above the purchase price and the duty and VAT paid, he had spent £1,600 in freight costs on bringing the Motor Car from New Zealand to the UK.

Mr. Maxwell-Scott did not cross-examine the Appellant. He made the point that the Commissioners do not accept that there are only 12 Ford Zephyr Mark 1 Convertible vehicles surviving, but they do accept that there are only 12 such vehicles in the books of the Ford MK1 Consul, Zephyr and Zodiac Owners Club.

From this evidence, the Tribunal finds that the Motor Car has a value in the UK of at least £9,000, to which should (as the Commissioners agree) be added VAT at 17.5 per cent. (£1,575), but its value on importation was less than £20,000, that figure being relevant in relation to the Commissioners' policy.

The Commissioners' policy, as Mr. Maxwell-Scott explained, is to interpret the requirement that a motor vehicle "may fetch a high price" in order to qualify for classification as a collector's piece, as a requirement that its value must be at least £20,000. This figure is arrived at by an interpretation of a test attributed to the Advocate-General in Daiber, that a motor car which is a collector's piece "is bought at several times the price of a new car" ([1985] ECR at page 3371). The Commissioners' thought process is that £7,000 is the price of a very modest new car; "several times" suggests a factor of at least 3; multiplying £7,000 by 3 gives £21,000, which they round down to £20,000. Thus, in the Commissioners' submission, no motor car with a value of less than £20,000 can qualify as a collector's piece within CN heading 97.05.

Mr. Maxwell-Scott's submission is that taking the price paid by the Appellant for the Motor Car as £9,000 and adding thereto VAT at 17.5 per cent. (£1,575), the resultant figure is less than the Commissioners' guideline figure of £20,000, which is "broadly appropriate" to interpret and apply the Court of Justice's condition that a motor vehicle must be "of high value" in order to qualify as a collector's piece (see: the judgment in Daiber, paragraph 25), and that therefore the Motor Car cannot be classified under CN heading 97.05, and must be classified under heading 87.03, as notified in the BTI, and the appeal should accordingly be dismissed.

The Appellant's case on this issue is that the Commissioners' guideline figure of £20,000 is arbitrary and that the evidence shows that the Motor Car is "of high value" relative to comparable motor cars of the same age, and that therefore the appeal should be allowed.

Against this background, we turn to consider the applicable law.

The CN Explanatory Note ("CNEN") for CN heading 97.05 in terms refers to the Daiber case and is relevantly as follows:

"This heading includes motor vehicles as collectors' pieces of historical interest if they meet the criteria set out in the judgment of the Court of Justice of the European Communities in Case No. C 200/84 [Daiber], and therefore:

– possess a certain scarcity value,

– are not normally used for their original purposes,

– are the subject of special transactions outside the normal trade in similar utility articles,

– are of high value, and

– illustrate a significant step in the evolution of human achievements or a period of that evolution.

In view of the fact that a motor vehicle is basically a utility article with a relatively short life, and subject to constant technical development, then the foregoing preconditions underlying the above judgments [sic], in so far as they are not obviously contradicted by the facts, can be taken to apply in respect of:

– vehicles in their original state, without substantial changes to the chassis, steering or braking system, engine, etc., at least 30 years old and of a model or type which is no longer in production,

– all vehicles manufactured before 1950, even if not in running order."

The relevant part of the Opinion of the Advocate-General (Lenz) in Daiber is as follows:

"A decisive feature in classifying an article as a collector's piece seems to me, however, to be the fact that it is not a common article of trade but an article confined to the specialist trade. It is not commonly available in trade, but comes on the market occasionally. The limited availability of such articles and the demand for them in excess of their availability explains their frequently high value or price, which bears no relationship to their intrinsic value. That is borne out by the price paid for the motor car imported in Case 200/84. Normally second-hand cars fetch a lower price than new cars; the price for a 30-year old second-hand car ought to be considerably lower than that of a new car. If, however, such an article is bought at several times the price of a new car, that is an indication that the value thereof is not based on its original intended use but on other criteria. Those other criteria must normally be the interests of collectors.

…

I do not think that usability of the article necessarily excludes it from [the heading for collectors' pieces]. Even a very old and rare collectors' piece may be in such a condition that it could be put to its original use. The decisive question is how, having regard to the value generally attributed to the article, the average person, looking at it objectively, would use it. I do not wish to rely on subjective intentions, which I have already rejected as an invalid criterion, but the normal use which an objective average person would consider proper for the article. Without wishing to anticipate the specific judgment of the national; court, I cannot imagine that an average owner would use for daily purposes, as a motor car, a 30-year old vehicle which no longer meets the technical standards of today, but is nevertheless very expensive and relatively rare. …"

([1985] ECR 3370-3372)

It is relevant to note that Daiber concerned the importation in 1980 of a second-hand Daimler-Benz 300 SL Coupé passenger motor car, year of manufacture 1955, from the United States of America into the Federal Republic of Germany, at a customs value of DM 65,000 (then equivalent to something more than £50,000).

The Court of Justice dealt with the point in its judgment as follows:

"13. As the Court has repeatedly held, the decisive criterion for the customs classification of goods must be sought generally in their objective characteristics and qualities, as defined in the relevant heading of the Common Customs Tariff and in the Notes to the Sections or Chapters.

Moreover, for the purpose of interpreting the Common Customs Tariff, the Court has consistently held that both the Notes which head the Chapters of the Common Customs Tariff and the Explanatory Notes to the Nomenclature of the Customs Cooperation Council are important means for ensuring the uniform application of the Tariff and as such may be regarded as useful aids to its interpretation. For the purpose of interpreting the above-mentioned Tariff headings, it is therefore necessary to take account not only of the wording and system of the Common Customs Tariff but also of the Explanatory Notes.

In addition, since it is a question of interpreting a heading allowing duty-free importation, it is necessary to take account of the purpose of the exemption. The exemptions in [the heading for collectors' pieces] are intended to facilitate international trade in objects of cultural and educational value and that aim is decisive for the interpretation of the heading in question.

It is apparent from consideration of the first sentence of the text of [the heading for collectors' pieces], having regard to the various language versions of the Common Customs Tariff, that an item comes under that heading if it is suitable in itself for inclusion on a collection. The Danish, Dutch, English, French, German, Greek and Italian versions ('samlerobjekter', 'voorwerpen voor verzamelingen', 'collectors' pieces', 'objets pour collections', 'Sammlungstuecke', 'eidh syllogyn' and 'ogetti di collezione') all contain a word meaning "collector" or "collection". That concept must be interpreted, in particular, in accordance with the principle that tariff classification must take place on the basis of the objective characteristics and properties of the goods in question.

It must be noted in the first place that the Customs Cooperation Council's Explanatory Notes to [the Chapter dealing with works of art, collectors' pieces and antiques] read "most articles falling in the present Chapter are either unique or at least exist in such very small numbers that they may not be freely available for purchase". Moreover, although prima facie [the first and third headings of the Chapter] may be regarded as being concerned with unique items, the same is not true of the remaining headings of the Chapter, which cover, for example, original engravings and lithographs, antiques and postage stamps not in current issue, which may not be unique.

It follows that in order to be suitable for inclusion in a collection, within the meaning of [the heading dealing with collectors' pieces], an article must be relatively rare. Consequently, articles which have previously been mass-produced but which currently exist only in a limited number, so that they cannot be easily obtained, satisfy that requirement.

The aforesaid Explanatory Notes go on to state that articles coming under [the Chapter concerned] "as a rule … are not dealt with in ordinary commercial transactions; some are, however, handled by a specialized trade (postage stamps, antiques, etc.). They are often of great value, out of all proportion to the value of their constituent materials".

It follows that a further characteristic of the articles in question, linked to the previous one, is that they are not traded on the ordinary market and may fetch a high price.

Finally, it must be observed that collectors' pieces are not normally used for their original purpose, although it cannot be ruled out that their functional capacity may remain intact.

…

Accordingly, the preliminary questions must be answered as follows:

Collectors' pieces within the meaning of [the relevant CN heading] are articles which possess the requisite characteristics for inclusion in a collection, that is to say, articles which are relatively rare, are not normally used for their original purpose, are the subject of special transactions outside the normal trade in similar utility articles and are of high value."

Mr. Maxwell-Scott also cited Uwe Clees v Hauptzollamt Wuppertal [1998] ECR I-8127 for the proposition that all the criteria set out in Daiber, cumulatively, must be met before an article can qualify as a collector's piece. This proposition is, in the Tribunal's judgment, obviously correct.

Mr. Maxwell-Scott also cited four relatively recent Tribunal Decisions on the same general point, whether an imported motor car qualified for classification as a collectors' piece. They are: Stephen Bernard Saunders (Chairman: Colin Bishopp, release date 24 May 2005); Barnfinds Limited (Chairman: Dr. Avery Jones, release date: 13 July 2005); Andrew Burford (Chairman: Michael Johnson, release date: 2 November 2005; and Julian Sibree Paul (Chairman: Colin Bishopp, release date: 23 February 2006).

Taking these Decisions in chronological order, in Saunders, a DeLorean motor car was imported from the United States. Mr. Saunders paid US$6,900 (approximately £3,800) for the car (before duty and VAT). The car was not in running order and required complete restoration. Mr. Bishopp dealt with the value issue (at paragraph 11) as follows:

"Moreover, although the car may be worth more than a "run of the mill" second-hand car of its age, that is not sufficient (as the Court determined in Daiber) to satisfy the requirement that it is of high value: the comparison must be with the cost of a new car (see the Advocate-General's opinion in Daiber).

Barnfinds concerned the importation of three motor cars, a 1956 Jaguar XK140 open two-seater model at a cost converted into sterling of £10,857, a 1954 Jaguar XK 120 open-top sports car at a cost converted into sterling of £11,042, and a 1960 Jaguar XK 150 drop-head coupé at a cost converted into sterling of £15,969. Dr. Avery Jones, having referred Daiber (both the Advocate-General's opinion and the Judgment of the Court), Uwe Clees and Saunders, dealt with the value issue (at paragraph 9) as follows:

"The "high value" condition for being collectors' pieces is in issue for all three cars. We take the value of a new ordinary car at the time of import at say £7,000 to £8,000. The cost of these cars, and we assume import values, with the addition of VAT which Mr. Maxwell-Scott [who also represented the Commissioners in that case] agrees should be added, are £12,757, £12,974 and £18,763 respectively. We consider that the relevant value should be the value for customs duty rather than the price which the Appellant might expect to sell (and in one case did sell) the car, on the basis that we are dealing with customs duty and the value for customs purposes is used in determining the duty. On this basis, while the cars are of greater value than an ordinary new car, and are of greater value than more recent similar cars, we find that they do not meet the requirements laid down by the European Court."

In Burford, the appellant imported a 1959 model Ford Fairlane 500 Galaxie Skyline Retractable automobile from the United States, having paid US$22,000 as purchase price (exclusive of customs duty and VAT). Mr. Johnson dealt with the value issue (at paragraphs 72 to 74) as follows:

"72. But we are also unpersuaded that Mr. Burford's vehicle is of high value. It may be the case, as Mr. Burford says, that he paid over six times for the vehicle compared with what it cost when new, but the decline in the value of the dollar invalidates that comparison. A better comparison, in our view, is with the value of other vehicles which have survived from the 1950s.

Because 1959 Skyliner Galaxie retractables are rare and a pleasure to own, it is unsurprising for Mr. Burford to have had to pay US$22,000 to acquire a good one. But this must, we feel, be because the value of these vehicles reflects not their historic interest but rather their rarity. We agree with Advocate-General Lenz that one would expect a truly collectable vehicle to command a price much greater than this – indeed, several times the price of a new car, as he indicated in his Opinion in Daiber.

What we needed to see in this case in order that the appeal might be allowed was evidence that Mr. Burford's vehicle had an additional value over and above its undoubted value as a rare and highly desirable classic car. We have not been presented with such evidence, and so, notwithstanding the skill and enthusiasm demonstrated by Mr. Burford in conducting his appeal, we are constrained to uphold Mrs. Chandler's review as correct. The appeal must be dismissed."

Finally, in Paul, a 1964 Bentley S3 Continental Flying Spur was in issue. It had been imported from the United States, having been acquired for a purchase price of US$76,538 inclusive of shipping (a price negotiated down from an asking price of US$125,000). Mr. Bishopp dealt with the value issue (at paragraph 13) as follows:

"Quite what is meant by "high value" is not entirely clear. The phrase comes from the opinion of the Advocate-General in Daiber, who used it more as an illustration of the consequence of rarity than as a criterion in its own right, although it has in fact become a discrete consideration because of its adoption by the Court in Daiber, without elaboration, and by the CNEN. The phrase might mean, as Mr. Paul argued, no more than that the present day value of the article in question is significantly greater than its original cost. If that is right, the car clearly satisfies the requirement as its present value of £39,000 is several times its original price of £7,681 but, as Mr. O'Connor [Counsel for the Commissioners] stressed, that comparison takes no account of the change in the value of money. If the original price of the car were adjusted for inflation, it would now amount to £105,000, considerably more than its actual value and, perhaps but not necessarily coincidentally, the cost of a new car of similar quality today. In our view it is impossible, when assessing the relevance of the current value of a vehicle or other article, to disregard changes in the value of money since one is otherwise not comparing values but monetary amounts. It is only by disregarding changes in the value of money, or by comparing it with a run-of-the-mill car 40 years old, that one can conclude that this car has a high value; but those are false comparisons. We are satisfied that changes in the value of money must be taken into account and that Mr. Paul's car does not meet the test."

In this appeal, Mr. Maxwell-Scott's submission was that in order for a motor car to qualify for classification as a collector's piece, it must be more than a "classic car" which people who have enthusiasm for classic cars might choose to collect. He argued that Daiber showed that the motor car must have an extra interest. We interpret this submission as echoing the comment of Mr. Johnson in Burford, which we have quoted above, that a motor car, in order to qualify as a collector's piece, must have an additional value over and above its undoubted value as a rare and highly desirable classic car.

The question of law arising in this appeal, as we see it, is whether there is to be found in Daiber justification (a) for this proposition and (b) for the similar proposition requiring comparison with the current cost of a new car, which is also advanced by Mr. Maxwell-Scott in this case and which found favour with the tribunals in Saunders, Barnfinds and, by inference, in Paul – compare the reference in that case by Mr. Bishopp to a "run of the mill" car of the age of the motor car in issue to his similar reference in Saunders.

We therefore return to Daiber. The Court's Judgment makes it clear that an article must be "of high value" to qualify as a collector's piece. This is also clearly set out in the CNEN. However the Court's reasoning which leads to this conclusion starts with the requirement that the classification must be interpreted having particular regard to its aim in facilitating international trade in objects of cultural and educational value, and that it focuses on objects suitable for inclusion in a collection, that is to say, objects which are relatively rare, including mass-produced articles which currently exist only in a limited number, so that they cannot be easily obtained.

The Court went on to say that a characteristic of relatively rare objects which are suitable for inclusion in a collection is that "as a rule … [they] are not dealt with in ordinary commercial transactions; [though] some are, however, handled by a specialized trade (postage stamps, antiques, etc.)." The Court concluded this part of its reasoning (paragraph 19) by saying that such articles "are often of great value, out of all proportion to the value of their constituent materials".

It was from this reasoning that the Court concluded (in paragraph 20) "that a further characteristic of the articles in question, linked to the previous one, is that they are not traded on the ordinary market and may fetch a high price".

As we see it, there is nothing in this reasoning which (at any rate expressly) requires any comparison with the cost of a new car, let alone the cost of a new ordinary car, in order to determine whether a particular article in issue is "of high value".

On the contrary, we consider that the comparison inherently intended by the use of the expression "of high value" is a comparison with the value of the article's constituent materials. An article, to qualify as a collector's piece, must (in relation to the value condition) be of high (great) value, out of all proportion to the value of its constituent materials – see: paragraph 19 of the Judgment.

The authority for the necessary comparison with the cost of a new car is said to be contained in the Advocate-General's opinion in Daiber, in particular the passage where he says: "The limited availability of such articles and the demand for them in excess of their availability explains their frequently high value or price, which bears no relationship to their intrinsic value. That is borne out by the price paid for the motor car imported in Case 200/84. Normally second-hand cars fetch a lower price than new cars; the price for a 30-year old second-hand car ought to be considerably lower than that of a new car. If, however, such an article is bought at several times the price of a new car, that is an indication that the value thereof is not based on its original intended use but on other criteria. Those other criteria must normally be the interests of collectors."

However, in our view, the comparison inherent in the concluding words of the passage quoted is a direct comment on the facts of the case actually under consideration, where Ms. Daiber imported a second-hand 1955 Daimler-Benz 300 SL Coupé passenger motor car at a customs value of DM 65,000 (then – in 1980 – equivalent to something more than £50,000). We do not consider that Advocate-General Lenz, by these words, was intending to lay down a general requirement for a comparison of this kind with the cost of a new article. On the contrary, we consider that the necessary comparison he had in mind was between the price paid for the article (indicative of its value) and its "intrinsic value". This, we consider, is the approach which the Court endorsed by its reference to the value of such articles being "often of great value, out of all proportion to the value of their constituent materials".

It follows that we consider that the Commissioners' policy to interpret the requirement that a motor vehicle "may fetch a high price" in order to qualify for classification as a collector's piece, as a requirement that its value must be at least £20,000 is unreasonable, arbitrary, and not supported by Daiber. We do not consider that a motor car, in order to qualify as a collector's piece, must have an additional value over and above its undoubted value as a rare and highly desirable classic car – that is, its value to a collector.

The right comparison to determine whether a motor vehicle is "of high value", we consider, is between the customs value of the motor car (£9,000), together with the addition of VAT, on the one hand, and the value of its constituent materials (the motor car's "intrinsic value", which may be its scrap value or its value as a source of components of interest to classic car enthusiasts) on the other hand. This comparison will indicate (in the words of the Advocate General in Daiber) how, having regard to the value generally attributed to the motor vehicle, the average person, looking at it objectively, would consider a proper use of it – whether as a motor car, or as a collector's piece.

We have heard no evidence on the value of the Appellant's Motor Car's constituent materials. To qualify as a collector's piece, the customs value of the Motor Car together with VAT would have to be "out of all proportion" to the value of its constituent materials. On the basis of the uncontested evidence that 22,000 New Zealand Dollars is "the price at the top end of the spectrum for this type of classic" it may be expected that the condition is satisfied.

However, this is to make an assumption which may not be justified, and we will direct that the appeal shall be relisted so that we can hear evidence on the value of the Motor Car's constituent materials and argument as to how we should approach the question of proportion. (Of course a further hearing will not be necessary if the parties can agree the resolution of the appeal on the basis of this Decision.)

We are aware that by this Decision we have not endorsed the Commissioners' policy on this point, which has been applied in many cases, and had received these tribunals' previous endorsement in the Decisions we have referred to. In these circumstances, and because the point raises a question of interpretation of heading 97.05 of the CN, when the appeal comes on for further argument as indicated in the previous paragraph, we will also be ready to consider any submissions that the Commissioners (or the Appellant) desire to make as to whether we should make a reference to the Court of Justice in this case and the terms of any such reference.

We direct accordingly, and give liberty to apply in relation to costs and generally.

JOHN WALTERS QC

CHAIRMAN

RELEASE DATE: 12 September 2006

LON/2005/7071