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First-tier Tribunal (Tax Chamber)
Judgment, 29 January 2013 (released 3 May 2013)
Valentina Sloane for the Appellant, Honda
Philip Moser QC, instructed by the General Counsel and Solicitor to HM Revenue and Customs, for the Respondents, HMRC
This appeal concerned the correct customs classification of all terrain vehicles (“ATVs”) which are designed and used as tractors. It was agreed that the product was a small “tractor” and could be so classified under CN 8701, subheading 8701 90 (“Other” tractors). The question was whether they were “Agricultural and forestry tractors” (subheadings 8701 90 11 to 8701 9050), which are free of duty) or “Other other” tractors, (subheading 8701 90 90), which are subject to customs duty at 7%.
The Tribunal found that the ATVs were subject to customs duty at 7%.
The Tribunal found that the “intended use” of a product is determined by the designer, the factory and its intended use when constructed; i.e those specially designed, constructed or reinforced features which form an integral part of the product which perform a function such as lifting, excavating, etc. Features that would allow agricultural tractors to be distinguished from other tractors would be inherent in the product. The ATVs may have some use which is agricultural in nature, but in this case there were no inherent attributes which allowed this sort of activity to take place and hence nothing inherently agricultural about the product.
The Tribunal found that the relevant CNENs had to be read consistently with the CN and the relevant EU Regulation (Commission Regulation EC No 1051/2009 ) to ensure the uniform application of customs law in the EU. The word “generally” in the CNENs laid down certain design features which were expected to be found in agricultural tractors, but the ATVs in this appeal did not possess those features. It was possible that not all of the characteristics stated in the Regulation were met but the wording in the Regulation (“approximately”) was only directory in nature. In the Tribunal’s view, the ATVs were to be classified under the sub heading 8701 90 90 pursuant to the characteristics identified in the Regulation.
The ECJ’s Case C-15/05 Kawasaki decision did not decide the point at issue before this Tribunal: it left open the question of the categorisation of ATVs for the purposes of CN 8701 90 90 and was concerned largely with engine power and not with any other distinguishing features. Any doubt created by the Kawasaki decision has been clarified by the Regulation. No reference to the ECJ was required in this case.
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