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Court of Appeal on Tariff Classification

Court of Appeal on Tariff Classification

Import News from the Importers Institute 27 December 2001 - Court of Appeal on Tariff Classification

Customs took a tariff classification dispute to the Court of Appeal and won. The Court confirmed the way in which some basic rules of classification are applied.

Rakaia Engineering imported unassembled grain storage bins and silos from Canada. The issue was whether they are classified as "agricultural machinery" in heading 8436 or "prefabricated buildings" in heading 9406. The Customs Appeal Authority ruled that they were agricultural machinery. That ruling was later confirmed, on appeal, by Doogue J in the High Court. The Court of Appeal has now overturned that decision and classified the goods as "prefabricated buildings," as contended by Customs.

Doogue J committed a cardinal sin of classification, known in the trade as "reading down the page." There is a statistical code within the classification for agricultural machinery that reads "Grain storage bins and silos." The Judge was obviously swayed by this and went on to rely on a rarely-used interpretative rule (number 4) which enables the classification of goods in a heading appropriate to other goods to which they are most akin.

The Court of Appeal considered that this approach amounted to an error of law. General Interpretative Rule number 1 says that goods must be classified first by reference to the headings, and not by reference to any lower level statistical codes. The Court relied on a decision issued by the Customs Cooperation Council (now called the World Customs Organization) in 1962. It also took regard of the French text of the international agreement, when considering the meaning of the words "prefabricated buildings" (constructions prefabriquées)

Importers Institute members can download this judgment from www.silva.co.nz/cases.

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