United Kingdom VAT & Duties Tribunals (Customs) Decisions

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Cite as: [2007] UKVAT(Customs) C00234, [2007] UKVAT(Customs) C234

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Net Europe Ltd v Revenue & Customs [2007] UKVAT(Customs) C00234 (19 January 2007)

CO0234

CUSTOMS DUTY – previous claims dealt with outside the three-year time limit – whether time limit waived for further claim – no – appeal dismissed

LONDON TRIBUNAL CENTRE

NET EUROPE LIMITED Appellant

- and -

THE COMMISSIONERS FOR HER MAJESTY'S

REVENUE AND CUSTOMS Respondents

Tribunal: DR JOHN F AVERY JONES CBE (Chairman)

PRAFUL DAVDA FCA

Sitting in public in London on 15 January 2006

John Shelley CTA (Fellow), Shelley & Co, for the Appellant

Mario Angiolini, counsel, instructed by the Acting Solicitor for HM Revenue and Customs, for the Respondents

© CROWN COPYRIGHT 2006

DECISION

At a preliminary hearing on 21 April 2006 the Tribunal ordered as a preliminary issue:

"The appeal shall be set down for hearing (time estimate: one day) at which the issue raised by the Respondents' submission that the disputed claims fail for non-compliance with the three year time limit in Article 236 of the Community Customs Code will be tried."

This is the decision on that preliminary issue. The Appellant was represented by Mr John Shelley and Customs by Mr Mario Angiolini.

Mr Shelley contended that we had no jurisdiction to decide the preliminary issue since it did not form the subject matter of the review decision. We found against him on this point without calling on Customs. Our reasons are essentially that that is what the Tribunal had directed and the Appellant had not challenged that direction. Since time limits are part of the law which must be satisfied for a claim to be paid it was open to Customs to raise time limits at any time. We drew the parties' attention to the recent decision of Warren J in HMRC v Oriel Support Ltd [2006] EWHC 3217 (Ch) in the direct tax context.

We did not hear any evidence but from the documents find the following facts.

(1) By letter of 22 March 2005 the Appellant through Duty Plus submitted import duty repayment claims "which we have not submitted until now" for 1997 to 1999.

(2) By letter of 27 June 2005 Customs refused these claims on the basis that the Appellant had not provided complete documentation. No reference was made to time limits. The Appellant requested a review of that decision on 3 August 2005 and the review of 14 September 2005 confirmed the decision.

(3) Customs raised the question of time limits at the preliminary hearing on 21 April 2006 resulting in the Tribunal directing this to be determined as a preliminary issue.

(4) Since the Appellant relies on the procedure adopted in relation to previous claims we set out the history of these.

(5) On 5 March 1998 the Appellant lodged a protective claim "as part of an appeal group headed up by KPMG for the classification of LAN/WAN products and our move to have them re-classified from tariff heading 8517 to 8471." The claim was for the period 1 February 1995 to 31 January 1998.

(6) On 7 July 2000 the Appellant stated that it wished to keep open this protective claim and they understood that a case would be heard that summer in the ECJ. Customs understood that to be a reference to Cabletron Systems Ltd Case C-463/98, the hearing of which was on 30 November 2000 and the final decision on 10 May 2001. That decision was that the classification in two Commission Regulations was wrong and that:

"Items of computer network equipment which are connectable to the central processing unit either directly or through one or more other units, which are specifically designed as part of a data-processing system, which are able to accept or deliver data in a form which can be used by the system and which have no function that they would be capable of performing without the assistance of an automatic data-processing machine must be classified under heading No 8471 of the Combined Nomenclature both before and after 1 January 1996."

(7) Customs issued guidance following the decision in the form of a standard letter stating that they will accept claims within the three-year time limit in art 236 of the Community Customs Code and also claim where the taxpayer challenged the classification at an earlier date, in which case the three years ran from the challenge. Mr Shelley suggested that the case was Peacock AG Case C-339/98 decided on 19 October 2000 (to the effect that network cards were classified under heading 8471) although the hearing was on 16 September 1999. We find that the reference was more likely to be to Cabletron.

(8) A letter of 14 February 2003 from the Appellant referred to claims for overpaid customs duty "as a consequence of the Cabletron ruling."

(9) The Appellant made claims relating to July to September 1998 on 19 May 2003.

(10) On 4 June 2003 Duty Plus on behalf of the Appellant asked approval to submit a claim starting with the starting date of the protective claim lodged by KPMG and to finish at the end of December 1999. A letter of 11 June 2003 referred to a telephone conversation, of which neither side could give us information, and confirmed that the additional schedules will include entries between February 1998 and 31 December 1999. Mr Angiolini denied the existence of any agreement to extend time but agreed that the tribunal could "proceed on the assumption that an officer of HMRC erroneously purported to agree that the March 1998 claim, relating to re-classification to 8471, could cover later periods, insofar as reclassification to 8471 was concerned."

(11) Following this a number of claims were made relating to such re-classification, and also claims that did not relate to such re-classification, which were paid. A letter of 4 August 2003 from Customs dealt with (a) items considered to be classified within 8471, (b) non-Cabletron items and classified elsewhere than 8517, 8471 or 8473, and (c) items considered to be LAN/WAN or WAN and which were rejected. The letter concluded by looking forward to receiving revised schedules covering accepted items, rejected items and non-Cabletron items. A letter of 9 December 2003 from Customs dealt with classification matters and ended with a similar request for revised schedules. Further claims made in 2004 and relating to 1999 were paid.

Art 236(2) of the Customs Code provides:

"Import duties or export duties shall be repaid or remitted upon submission of an application to the appropriate customs office within a period of three years from the date on which the amount of those duties was communicated to the debtor.

That period shall be extended if the person concerned provides evidence that he was prevented from submitting his application within the said period as a result of unforeseeable circumstances or force majeure…".

Mr Shelley contends that Customs made an agreement in June 2003 to extend time limits which permit the claim under appeal.

Mr Angiolini contends that even on the assumption set out in paragraph 3(10), art 236 contains no power to extend the three-year time limit (apart from unforeseeable circumstances or force majeure, neither of which is applicable here) and therefore no extension is legally possible or effective. He points out that claims relating to 1999 were already out of time when assumed to have been extended in June 2003 and they cannot have been revived. He also points out that almost all the claims under appeal are not LAN products and are unaffected by Cabletron.

We have some sympathy for the Appellant. Customs certainly acted during 2003 and 2004 as if they had extended time limits and such extension was not limited to re-classification from heading 8517 to 8471 as a result of Cabletron. But the only way in which the Appellant can succeed in this tribunal in relation to its claim made in 2005 is that first, there was an agreement to extend time that is applicable to such claim, and secondly, that such agreement is legally effective. It is clear from art 236 that there is no power to extend time and so an agreement by Customs to do so cannot be legally effective. It is not necessary for us to consider whether there was an agreement which was wider than the assumption that Mr Angiolini has made in paragraph 3(10) because even if it were it could not be legally effective. No doubt because he appreciated that we had no power to give a judicial review-type remedy, Mr Shelley expressly disclaimed any such claim, but it seems to us that such a remedy would be the only possible way in which the Appellant could succeed.

Accordingly we answer the preliminary issue that the claim made on 22 March 2005 is out of time and the preliminary issue therefore results in the appeal being dismissed. Mr Angiolini asked for costs from 21 April 2006, having informed the Appellant that they would make this application. We award Customs the costs of and incidental and consequent upon the appeal from that date to be determined in default of agreement by a Taxing Master of the Supreme Court.

JOHN F AVERY JONES

CHAIRMAN

RELEASE DATE: 19 January 2007

LON/05/7076