Denwire Ltd v The Commissioners for Revenue & Customs [2009] UKFTT 343 (TC)

FTT-Tax

Denwire Ltd v The Commissioners for Revenue & Customs

[2009] UKFTT 343 (TC) · 2009-12-03

[1]This is an appeal by Denwire Limited (the Appellant). The Appellant claims that it should be entitled to the benefit of a waiver of post clearance recovery of anti-dumping duty pursuant to Article 220(2)(b) of the Community Customs Code (Council Regulation 2913/92/EEC). Anti-dumping duty was payable on the import into the European Union of certain goods from the Peoples Republic of China (“China”). In the present case the Appellant between June 2003 and July 2005 imported into the United Kingdom quantities of steel wire rope from China on which anti-dumping duty at the rate of 60.4% should have been paid. It is now clear that the steel wire rope in question had been misclassified on importation under the Combined Nomenclature established by Council regulation 2658/87/EEC. Having discovered that there had been a misclassification, the Respondents on 6 October 2005 issued a Post Clearance Demand Note in Form C18 for the recovery of the unpaid duty and VAT. The Appellant sought a Departmental Review of this decision pursuant to s.14 of the Finance Act 1994. By a letter dated 29 November 2005 the Post Clearance demand note was upheld. The amount of duty involved is £514,478.24 plus VAT of £90,033.68 giving a total payable of £604,511.92. Under s.16 (5) of the Finance Act 1994 the Tribunal has power to quash or vary the decision made on the Departmental Review. Under Finance Act 1994 s.16(5) it is for the Appellant to establish that it is entitled to a waiver of duty under Article 220(2)(b) of the Community Customs Code. Article 220(2)(b) of the Community Customs Code.

[2]Article 220(2) of the Community Customs Code provides that there is not to be an adjustment made in the accounts in respect of the amount of underpaid duty on the importation of goods where: “(b) the amount of duty legally owed was not entered in the accounts as a result of an error on the part of the customs authorities which could not reasonably have been detected by the person liable for payment, the latter having for his part having acted in good faith and complied with all the provisions laid down by the legislation in force as regards the customs declaration”.

[3]Although it is for the customs authorities to enter the amount of the duty payable in the relevant account, it is for the importer or his agent to present the goods to customs on importation and to make a summary declaration with sufficient particulars to identify the goods being imported. In the ordinary way, any duty payable will be assessed on the basis of the particulars supplied by the importer or his agent and the goods will be released on payment of any duty so assessed but the customs authorities have power to require verification of the declaration. If after release of the goods, it is found that too little duty has been paid, Article 220 empowers the customs authorities, subject to the exceptions there set out, to require payment of the correct amount of duty. The only exception which is of relevance in the present case is that provided by Article 220(2)(b) set out above.

[4]Under Article 220(2)(b) 4 conditions or requirements must be established before an importer may claim the benefit of the exception. The first is that there must have been a mistake on the part of the customs authorities. The second is that the mistake could not reasonably have been detected by the importer. The third is that the importer must have acted in good faith. The fourth is that the importer should have otherwise complied with the law relating to the making of the customs declarations. The first three of the above conditions are in dispute in this appeal. There is no issue that the fourth condition has been satisfied if the first three of the conditions are also satisfied. The Combined Nomenclature.

[5]Under the Combined Nomenclature, which is updated annually, the imports of the steel wire rope in question should have been declared (depending upon the thickness of the diameter of the ropes) as falling under the Community Codes 73121082 10 or 73121084 10 or 73121086 10 during the period between 3 June 2003 and 31 July 2003 and under the Community Codes 73121082 19, 73121084 19, or 73121086 19 for the remainder of the period. The first 2 figures 73 refer to Chapter 73 of the Combined Nomenclature which applies to articles of steel or iron. The second 2 digits 12 relate to the sub-heading of “stranded wire, wire ropes, cables, plaited bands, slings and the like of iron and steel, not electrically insulated”. The third 2 digits 10 relate to the further sub-heading of “stranded wire, ropes and cables. The fourth set of 2 digits 82 or 84 or 86 each relate to the further sub-heading of “ropes and cables (including locked coil ropes)”. The digits 82, 84, and 86 relate to items falling within the sub-heading of ropes and cables including locked coil ropes which are “not coated or only plated or coated with zinc with a cross-sectional dimension exceeding 3mm but not exceeding 12mm (82), exceeding 12mm but not exceeding 24mm (84) and exceeding 24mm but not exceeding 48mm (86). Each of these last 3 categories 82, 84, and 86 was further subdivided in the Combined Nomenclature in force up to 31 July 2003 into 2 further categories namely “steel” and “other” to which the final 2 digits of 10 and 90 have been respectively allocated. In the Combined Nomenclature in force from 31 July 2003 the categories 82, 84 and 86 have been sub-divided (depending upon their dimensions) into the categories “Of steel” which has itself been further subdivided into “Consigned from Moldova” to which the final 2 digits of 11 have been allocated and “Other” to which the final 2 digits of 19 have been allocated. The sub-headings “Of steel”, “Consigned from Moldova” and “Other” have each been underlined in this edition of the Combined Nomenclature. There also follows however under each of the sub-headings to which the digits 82, 84, and 86 apply the further sub-heading of “Other” to which the final 2 digits 90 have been allocated. To anyone reading the Combined Nomenclature in force after 31 July 2003 it might appear somewhat odd that the 8 figure codes ending in 82, 84, and 86 have been sub-divided into “ Other” and “Other” but it is clear that 2 different categories of goods must be being referred to. It is now accepted by the Appellant as the Respondents have contended that the first reference to “Other” is a reference to steel wire ropes other than those consigned from Moldova and that the second reference to “Other” is to ropes and cables other than of steel. Accordingly it is not now disputed that the steel wire ropes imported by the Appellant during the relevant periods should have been declared under the 10 digit codes ending in 10 or 19 respectively.

[6]The imports up to and including 2 August 2004 which are subject to the post clearance demand under appeal were declared under the code 7312107500 which is the code applicable to stranded wire not exceeding 3 mm. in diameter. Stranded wire whether or not coated with zinc or brass or uncoated and whether or not exceeding 3mm. in diameter is not subject to anti-dumping duty. In relation to the remaining imports between 28 September 2004 and 20 July 2005, they were generally declared under the codes 7312108290, 7312108490 or 7312108690 which again were not subject to anti-dumping duty. On looking at the copies in Bundle 4 of the Entry Acceptance Advices and/or the MSS Trader System records for the imports declared under the final 2 digits 90, it can be seen that in a number of cases the goods imported are referred to as being steel wire rope. See for example the documents under entries 12 and 13 in Bundle 3 imported on 28 September 2004. Samples at Felixstowe.

[7]On arrival at Felixstowe on 28 September 2004 of entry No. 071043710K samples were taken by the Respondents from 5 containers and these were sent to the Respondent’s Tariff Classification Service at Southend for what is described as a “Non Live-Liability Ruling” in relation to the correct classification of the samples. There were 18 samples in total. Of these, 14 were classified as falling within 7312108219 as steel wire rope which would attract anti-dumping duty on import from China. The other 4 samples were considered to have been correctly classified as stranded wire within 7312105900. See the documents in Bundle 3/46. In relation to the stranded wire which had been incorrectly allocated to 7312108290 the reason given for the misallocation to 7312108290 was that that code applied to articles made of iron and not to articles made of steel. The rulings were sent back to the Respondents’ officer at Felixstowe who was requested to advise the trader of the ruling and to explain the reason for the ruling. No action however was taken by the Respondents’ officer to inform the trader. It was not until visits by the Respondents to the Appellant on 12 July 2005 and on 5 August 2005 that the Appellant was informed that the steel wire rope it was importing should have been classified under the ten digit codes ending in 19 and not 90. The Appellant company (Denwire Limited).

[8]The Appellant is a family company. It is controlled by 3 members of the Tromholt family. They are: Mr. Erik Tromholt who appears to have been its chairman in 2005 and who in his witness statement dated 19 July 2008 states that he is still Manager of the Appellant, his son Mr Steven Tromholt and his daughter Mrs Iben Basford. Mr. Steven Tromholt and Mrs Iben Basford state that they are shareholders in the Appellant. Mr. Erik Tromholt has said that he was a shareholder in the Appellant until 31 March 2006. Mr. Erik Tromholt has given evidence that he does not participate in the day to day running of the Appellant and did not do so in the years 2003 to 2006. I am satisfied and find that the day to day running of the Appellant has since at least the end of 2002 been in the hands of Mr. Steven Tromholt and Mrs. Iben Basford. Although Mr. Erik Tromholt has stated that he is still manager of the Appellant, I accept his evidence that he does not take part in the day to day running of the Appellant. However having seen and heard him give evidence, I am also satisfied that he still plays a significant non-executive role in the management of the Appellant and that he is still involved in important decisions made by the Appellant. The Danish company(Denwire A/S)

[9]There is also an associated company in Denmark, Denwire A/S (“the Danish company”) which is based in Copenhagen. On the Appellant’s website it is stated that “Denwire Ropes was established in the early 1980’s and is now recognised as one of the leading suppliers of steel wire ropes in Europe. ...At present we consist of two companies, DenwireA/S based in Copenhagen (DK) and Denwire Limited based in Birmingham (UK). Denwire A/S mainly supplies Scandanavia and Continental Europe whilst Denwire Limited concentrates on supplying the UK and Eire customers outside Europe. Both companies operate a quality management system which has been assessed to the quality system standard EN ISO 9002 and all ropes are supplied with test certificates according to DIN ISO or British Standards. We carry a range of bright, galvanised and stainless steelwire ropes and we currently hold stocks of around 2000 tonnes, ranging from 1mm to 64mm diameter. We also manufacture wire ropes slings and assemblies to specific requirements and supply all types of wire rope fittings and terminals”. It is clear from these entries that the Appellant and the Danish company are closely associated commercial entities and there is also evidence that some of the steel wire ropes ordered by the Appellant were for use by the Danish company and were cleared through the Danish customs authorities . The evidence also shows that although the shares in the Danish company are held by another company, Stetco Ltd, that company is controlled by Mr. Steven Tromholt. Mr. Steven Tromholt is a director of the Danish company and I am satisfied that he has taken an active part in the management of the Danish company, although his brother is understood to be the managing director. So far as Mrs. Iben Basford is concerned, her relationship with the Danish company is less clear. Although she was present with her brother at the meeting at the Danish company’s premises with Mr. Torben Jensen from the Danish customs on 15 September 2004, she has given evidence that she was only present as a matter of interest as she was in Denmark on holiday at the time. It was Mr. Torben Jensen’s evidence that he was told at the meeting that Mrs. Iben Basford was head of the administration at the Danish company and also that she had just started at the Danish company. There is no clear evidence to show that Mrs. Basford did subsequently to this visit on 15 September 2004 take any part in the management of the Danish company and while it may be that it had been proposed that Mrs. Iben Basford should start as head of administration of the Danish company, there is no satisfactory evidence that she did so.

[10]On 15 September 2004 the Danish customs visited the Danish company to carry out an audit. Present at that meeting were Mr. Steven Tromholt and Mrs Iben Basford and from the Danish customs Mr. Torben Jensen. Both Mr. Steven Tromholt and Mr. Jensen have given evidence which is not in dispute that at that audit it became apparent that the Danish company had been importing steel wire rope from China upon which anti-dumping duty should have been paid but which had not been paid because the imports had been misdescribed as stainless steel and tin plate, neither of which attracted anti-dumping duty. This subsequently in January 2006 gave rise to a post entry demand by the Danish customs on the Danish company for unpaid anti-dumping duty and tax in respect of imports during the period from 1 January 2002 to 30 June 2005. On appeal by the Danish company, the Danish Landskatteretten on 23 July 2009 upheld its appeal in part in relation to imports made before 31 January 2003 on the basis that the Danish customs were bound by the 3 year limitation period laid down by Article 221 (3) of the Community Customs Code and that it had not been established that the limitation period should be extended under Article 220(4) on the basis that the imports prior to 31 January 2003 were liable to give rise to criminal court proceedings. The Danish court appears to have accepted the Danish company’s contentions that any errors in the documentation were made by the Danish company’s import agents and had not involved dishonesty on the part of the Danish company, or at any rate that the Danish customs had not established any dishonesty. See Bundle 8/4/48. The result of the Danish court’s decision was that the assessment of DKK 8,652,845 was reduced by DKK 686,433 to DKK 7,966,412.

[11]Although Mr. Steven Tromholt in his witness statement has said that the Danish customs did not at the audit visit on 15 September 2004 say what were the correct codes which should have been used for the Danish company’s imports of steel wire, ropes, the unchallenged evidence of Mr. Torben Jensen was that following this visit on 15 September 2004 the Danish company used the correct codes. I accept that evidence and find that the Danish Company from September 2004 onwards used the correct codes ending in 19 for imports of steel wire rope from China and that anti-dumping duty became payable . The Danish company after September 2004 attempted to mitigate the effects of the anti-dumping duty upon its imports of steel wire rope from China by engaging in value shifting between different items in its orders, increasing the price paid for goods not subject to anti-dumping duty and reducing the prices paid for the steel wire rope which attracted anti-dumping duty. This practice was challenged by the Danish customs and their challenge was upheld by the Danish Landskatteretten in confirming the assessment at DKK 7,966,412. Allegation of error on the part of the customs authorities.

[12]The Appellant’s case on the issue of error by the Respondents is that the Appellant was misled by the Respondents as to what were the correct codes to use in relation to its imports of steel wire rope from China. The Appellant relies upon what occurred during 5 visits which took place on respectively 19 March 2004, (“the first visit”), 16 April 2004 (“the second visit”), 25 August 2004 (“the third visit”), 12 July 2005 (“the fourth visit”) and 5 August 2005 (“the fifth visit”). Present at the first visit were Mr. Steven Tromholt and Mrs.Iben Basford on behalf of the Appellant and Mr. J. R. Williams (“Mr. Williams”) from the Respondents. The same persons were present at the second and third visits. At the fourth visit only Mrs. Iben Basford was present on behalf of the Appellant. The evidence is that Mr. Steven Tromholt was away in Denmark. The Respondents were represented by Mr. Williams, Ms. Caroline Mellors, his line manager, Mr. S. Francis from the tariff classification section at Southend and Ms. Vicky Jones also from the tariff classification section at Southend. At the fifth meeting Mr. Steven Tromholt and Mrs. Iben Basford represented the Appellant and the Respondents were represented by Mr. Williams and Ms.Caroline Mellors. The imports.

[13]Since the first 6 entries the subject of the C 18 notification by the Respondents occurred before the first visit, the Appellant accepts that no error on the part of the Respondents can be shown to have caused or misled the Appellant into using the wrong codes on the importation of steel wire ropes prior to 19 March 2004 and the application must be dismissed in relation to these items. These items are the first 6 listed on the schedule at Bundle 3 Tab 10. All of these items were imported under code 7312107500 which is the code for stranded wire. The available documents in relation to these imports may be found in Bundle 4 Tabs 1 to 6 inclusive. It is perfectly clear from the commercial invoices and packing lists in relation to the first five imports that the goods were misdescribed in the invoices and packing lists as being of stranded wire. No commercial invoice has been produced by the Appellant in respect of the 6 th import on 30 October 2003 but the packing list clearly shows that steel wire ropes were being imported from China. No explanation has been forthcoming from the Appellant as to how these 6 imports came to be imported under the 10 digit code for stranded wire. The commercial invoices and packing lists all purport to be from Dragon Steel Cable Products Co. Ltd) (”Dragon”) at Jiangyin in China. Copies of the Appellant’s purchase orders for the first and second imports (entries 003024E and 022201D) were at a late stage in the hearing produced by the Appellant. These clearly show that what was ordered was steel wire rope although it was not specifically described as such on the orders. There can be no doubt in my view that these 2 imports were deliberately misdescribed by Dragon in its commercial invoices and I am satisfied and hold that it is proper to infer that the commercial invoices and packing invoices in the other 4 cases were also deliberately misdescribed as being of stranded wire. There is no dispute that the imports were of steel wire rope and not of stranded wire. Stranded wire and steel wire rope.

[14]It has been suggested by Mr.Steven Tromholt in evidence that in the steel wire business the terms stranded wire and steel wire rope are interchangeable terms. It is clear however that for the purposes of the Combined Nomenclature a distinction is drawn between stranded wire and steel wire rope. Mr. Stephen Whitehouse in the course of his evidence produced a sample of stranded wire and a sample of steel wire rope. That the samples produced were samples of stranded wire and steel wire rope was not disputed. The only point which was taken by the Appellant through Mr. Steven Tromholt was that the sample of steel wire rope was not rigid as Mr. Whitehouse had said. Mr. Whitehouse had been the general manager of the Appellant since about 1986 until he had been made redundant in about 2001 following the introduction into the Appellant of Mr. Steven Tromholt and Mrs. Iben Basford. In effect Mr. Whitehouse’s services were no longer required because Mr. Steven Tromholt had by 2001 taken over his duties as manager of the Appellant. It was quite clear that Mr. Whitehouse was not well disposed towards the Appellant but I have no doubt that he is highly experienced in the steel wire trade and that he had no difficulty in distinguishing between stranded wire and steel wire rope. The 2 samples which he produced are obviously different, even to a lay person such as myself. The stranded wire he produced, as its name suggests, consists of a number of strands of a fairly fine steel wire which have been twisted together to form a thicker strand. In the sample produced, these thicker strands have then been twisted together apparently around a common axis so as to produce a thicker flexible twisted wire. The sample of steel wire rope produced consisted of a number of thicker strands of steel wire which have been twisted together around a common core so as to produce a much more rigid product. I am satisfied that a businessman engaged in the trade would not consider that the 2 products were the same. Their characteristics are quite different and they have differing strengths. Insofar as the two products may be described under the same generic description in the trade, the generic description is not that of stranded wire but rather of wire rope as appears from the Appellant’s website. See the extract quoted above. The same also appears from Dragon’s website where under the heading of “What is a wire rope”, stranded wire is there included within the description of wire rope. See Bundle 7 Tab 9 p.1406. The illustration in the middle of p. 1406 at the top corresponds with the sample of stranded wire produced by Mr. Whitehouse. The position thus I am satisfied and find is that whereas stranded wire may commercially be included within the general description of “wire rope” the converse is not correct. I accept Mr. Whitehouse’s evidence that the 2 products are different commercially.

[15]The Appellant has drawn attention to the apparent difficulty experienced by experts instructed by the Respondents to advise on how certain samples taken from the Appellant in 2005 should be categorised under the Combined Nomenclature. The experts have not been called to give evidence but their written reports are included in Bundle 3 Tabs 32 and 36 and in bundle 5 Tab 15. At Tab 32 in Bundle 3, 3 of the 4 samples there referred to were categorised by CCFRA Technology Ltd as steel wire rope under 73121082 notwithstanding that 2 of the samples had also been described as consisting of stranded wire. On this being queried by the Respondents, the description of the 2 samples as stranded wire was re-affirmed but the categorisation was amended to 73121075. In an email dated 26 August 2005 (Tab 36) Mr. Edwards of CCFRA after observing that the definitions given in the Tariff, Explanatory notes and CNENs were not “particularly clear” went on to say that as “we understand it, a wire strand is made up simply of a number of wires twisted together. A rope or cable is a compound structure made by twisting a number of these strands together”. If that were correct both the samples produced by Mr. Whitehouse would be properly be categorised as ropes. The distinction drawn by Mr.Edwards however appears to depend upon the fact that in his view the inner core of the 2 stranded wires consisted of 5 inner strands which had been fused together (See the description of samples 25 and 26 at p. 30 in tab 32) thus producing a single inner core around which the outer unfused stranded wires had been twisted. In 2007 the Respondents sought a further opinion from Professor Chaplin of Reading Rope Consultants at Reading University on the differences between stranded wire, wire rope and cable. After observing that the terms were ill defined in colloquial English, Professor Chaplin went on to state that a strand was a helical assembly of wires about a common axis and that this fell within the description of stranded wire in the Combined Nomenclature. A rope on the other hand, he said, was a more complex structure. He then went on to state:

“the group of products for which this term is generally accepted with minimal qualification has two levels of helical complexity as compared with a strand with its single level of helical complexity. Thus a rope consists of a number of strands twisted together around a core. There may be a single layer of strands or there may be more than one layer (termed a multi-strand rope). The strands are most commonly round (a round-strand rope) or may be shaped ... Various types of core are employed which might be a fibre core or a wire strand core or an independent wire rope core ...”

See bundle 5 Tab 14 p. 63. The distinction which is drawn by Professor Chaplin between a strand and a rope depends essentially upon the presence or absence of a core around which wires or strands have been twisted. That also appears to be consistent with what Mr. Edwards said about a fused core. In substance this is also consistent with the distinction between the 2 samples produced by Mr. Whitehouse. The sample of wire rope produced by him clearly has a central core around which wires have been twisted whereas the sample of stranded wire has no central core and consists only of strands which have been twisted together helically and which themselves have been further twisted together. Mr. Whitehouse’s commercial understanding of the differences between stranded wire and wire rope is not in my view different from those of Professor Chaplin. Allegation of error as to codes on the next 5 entries.

[16]The Appellant has submitted that the Respondents through Mr. Williams made an error in the course of the first and second visits in not informing the Appellant that the use of the code 7312107500 which is the code for stranded wire was incorrect and that as a result of this failure 5 consignments of steel wire rope were imported between 19 May and 2 August 2004 under the wrong codes and that this has resulted in a post clearance demand for anti-dumping duty and VAT. It was submitted that Mr. Williams prior to the first visit knew that there had been 6 imports under the code for stranded wire and also that he knew from information supplied by Mr. Whitehouse and also by another trader, Mr. Yarnald, that the Appellant was using the code for stranded wire to avoid paying anti-dumping duty on the steel wire ropes it was importing from China. See para.3.1 of the outline closing submissions of the Appellant. This submission in my view cannot be sustained either on the facts or in law.

[17]It is correct that both Mr. Whitehouse and Mr. Yarnald had complained to the Respondents that the Appellant was avoiding payment of anti-dumping duty by importing steel wire rope under the code for stranded wire. However it is not correct to say that either Mr. Williams or the Respondents prior to the first visit knew that the Appellant was either misdescribing steel wire rope as stranded wire or importing it under the code for stranded wire. The highest the matter can be put is that allegations had been made about the Appellant’s conduct and these allegations had aroused suspicions on the part of the Respondents that the Appellant might be evading anti-dumping duty. Suspicions and allegations however are not to be equated with knowledge. It is clear from the decision of the Fifth Chamber of the European Court in De Haan Beheer BV v Inspecteur der Invoerrechten en Accijnzen te Rotterdam

Case C-61/98

[1999] ECR 1-05003 that there is under European law no obligation upon the customs authorities to warn an innocent person that a possible fraud was being committed even if the failure to warn could result in an innocent person incurring liability for duty which would not have been incurred if a warning had been given. In that case an innocent import agent had completed 7 declarations enabling consignments of cigarettes to be removed from a customs warehouse in the Netherlands to Antwerp for export outside the EU. The cigarettes never reached Antwerp but were fraudulently diverted by the agent’s client on to the Dutch market. The question referred by the national court was whether the customs authorities were under community law under an obligation to warn an innocent declarant against a possible fraud. The European Court ruled at para 36 of its judgment:

“ the answer must be that Community law does not impose on customs authorities which have been informed of a possible fraud in connection with external transit arrangements any obligation to warn a principal that he could incur liability for customs duty as a result of the fraud, even where he has acted in good faith”

. The justification for this approach is that “the demands of an investigation aimed at identifying and apprehending the persons who have carried out or are planning a fraud or the accomplices of those persons may justify a deliberate omission to inform the principal about the investigation fully or at all even when the principal is in no way implicated in the perpetration of the fraud”. See para. 32 of the Judgment. That principle must also apply where it is the principal who is suspected of having committed a fraud.

[18]Furthermore however it is not correct as a matter of fact to say that the Respondents kept entirely quiet and did not indicate to the Appellant that the Appellant’s use of the codes might be incorrect. Mrs. Iben Basford in her witness statement (Bundle 2/Tab 10p.53) clearly says that Mr. Williams said that entries of stranded rope from Dragon in China “were wrongly entered but was not specific”. That evidence related to the second visit. Mr. Steven Tromholt gave evidence to the same effect. It is thus apparent that the Appellant had been warned at the second visit that there were questions about the codes used on the importation of stranded ropes from China and there is in my view no basis for saying that the Respondents misled the Appellant by keeping quiet about their suspicions that incorrect codes had been used.

[19]There is however also a further difficulty with the submission that the Appellant was misled by reason of any failure by Mr. Williams to warn that the code for stranded wire might be incorrect with the consequence that the Appellant continued until September 2004 to import steel wire rope exceeding 3mm in diameter under the wrong codes. That difficulty is that the steel wire rope was misdescribed on the commercial invoices as stranded wire and it is that misdescription which is the effective cause of the goods being entered under the codes for stranded wire. Those misdescriptions on the invoices were not caused by any act or omission on the part of Mr. Williams. Accordingly I dismiss the claim under Article 220(2)(b) in respect of the 5 entries 07102540F, 071042776X, 071008815L, 071020791V and 071002415L. Allegation of error in relation to the codes ending in 90.

[20]The remaining entries the subject of this appeal are those listed on the schedule to the C18 notice commencing with the entry on 28 September 2004 and continuing until 20 July 2005. All these entries were made under the 10 digit codes73121082 (or 84 or 86) 90. The substance of the Appellant’s case is that the Respondents through Mr. Williams on the third visit told them to use codes ending in 90 for imports from China of steel wire rope over 3mm in diameter and that this error was compounded by the failure of the Respondents to notify the Appellant of the results of the examination of the samples taken at Felixstowe from the entry made on 28 September 2004, thereby causing, it is alleged, the Appellant to continue to believe that the codes ending in 90 were correct and to continue using them until told on the fourth visit that they were incorrect and that the codes should have ended in 19.

[21]Mr.Williams has not been called as a witness. I was told that he had retired in about 2007 or 2008 from the Respondents but there is no suggestion that he was not available or could not have been called as a witness. The fact is that neither party has called him to give evidence. There are however before the tribunal copies of the written reports which Mr.Williams made following each of his visits as well as copies of the handwritten notes which he made in his notebook in relation to the visits. Subject to one matter, no objection has been taken by the Appellant to the admission of or to the contents of Mr. Williams’ reports or notebook entries. The principal evidence as to what occurred or was said by Mr. Williams at the first second or third meetings is thus to be found in the evidence of Mr. Steven Tromholt, Mrs. Iben Basford and in Mr. Williams’ reports and notebook.

[22]In relation to the first visit, the background, as I have already stated, was that the Respondents had received complaints from Mr. Whitehouse and Mr.Yarnald that the Appellant was importing steel wire rope from China without paying anti-dumping duty upon it. Mr Whitehouse and Mr. Yarnald were trading competitors of the Appellant and were suspicious as to how the Appellant was able to undercut their prices for steel wire rope by some 20% or thereabouts. Their conclusion was that the Appellant must be evading anti-dumping duty on imports from China. They found support for that view in a series of emails which had been received in 2003 and up to March 2004 from Mr. Michael Chen (“Mr. Chen”) of Dragon Steel Cable Products Co. Ltd (“Dragon”) and Jiangyin Hengfeng Steel Rope Products C. Ltd (“Jiangyin”). Dragon and Jiangyin appear to be parts of the same commercial enterprise in China and the Appellant dealt with Mr. Chen. Copies of these emails may be found in Bundle 7 pp 1248 to 1261. In substance what Mr. Chen said in these emails was that zinc coated steel wire rope in excess of 3 mm in diameter was listed on all their official documents as being stranded wire coated with zinc but that the correct invoice, packing list and test documents were emailed to the Appellant once the bill of lading had been received.

[23]Copies of the manuscript entries in Mr. Williams’ notebook may be found in Bundle 5 Tab 7 pp. 307 to 318. Copies of Mr. Williams’ typed reports on his first 5 visits may be found in Bundle 7 Tab 3 pp. 1190 to 1211.Mr. Williams’ notes and report indicate that on the first visit the commercial invoices and bills of lading for a number of imports from China, Korea and Turkey were examined against the declarations. He notes that he paid particular attention to the descriptions on the invoices and that “all appeared correct” and that Mr. Steven Tromholt had produced samples of wire on demand which corresponded with the stated descriptions. None of these imports however had been declared under 7312107500 and the use of that code does not appear from the notes or report to have been mentioned.

[24]Mr. Steven Tromholt and Mrs. Iben Basford each said that they thought Mr.Williams had raised the question of the import of steel rachets on the first visit but Mr. Williams’ notes and report indicate that this occurred on the second visit. In cross-examination it was accepted that this could be correct and I accept that this is correct. It is also not in dispute that during the second visit Mr. Williams was provided by Mr. Steven Tromholt with a list of the commodity codes used by the Appellant. This was a list of 8 digit codes. This list included the code ending in 75 for stranded wire. What Mr. Williams did during the second visit was to check the documentation for several other imports. His notes indicate that one of the imports he looked at was 7312107900 (the code for ungalvanised stranded wire) but which should have been 731075 (the 8 digit code for galvanised stranded wire). However there were no revenue implications because the customs duty was the same. This is also the case with 3 other imports where he found incorrect codes had been used. Mr. Williams’ note and report of this meeting are consistent with Mrs. Iben Basford’s evidence that at the meeting Mr. Williams had said that entries of stranded rope from China had been wrongly entered but that he had not been specific. In the case of 2 items it appears from his notes and report that Mr. Williams found that duty had been underpaid on 1 item, but overpaid on another. There is no dispute that Mr. Williams made a telephone call to check under which code rachets with attached straps should be categorised and that he told the Appellant that it should make a post entry amendment which the Appellant duly did subsequently. I am satisfied that Mr. Williams’ note and report of this second meeting is a correct record of what occurred at this meeting. I thus accept that Mr. Williams did not specifically raise the question of the importation of steel wire rope from China under an incorrect code for stranded wire. It also follows that the question of anti-dumping duty was not raised on either the first or second visits. The position, I am satisfied was that Mr. Williams was on these 2 visits only making a general check on the Appellant’s records and that he did not specifically target the use of the code for stranded wire for imports of steel wire rope. Mr. Williams did however ascertain that the Appellant had imported stranded wire and that it had stocks of stranded wire. One of the allegations which had been made against the Appellant had been that it did not stock stranded wire.

[25]It was not until the third visit that the question of the use of the codes for stranded wire was specifically raised with the Appellant. The Respondents have denied that Mr. Williams did tell the Appellant to use the code 7312108290 (or the other codes for thicker steel wire rope). There has been no suggestion from either party that Mr. Willliams may have said that the goods were to be classified under 7312108219 but that the final 2 digits had been misheard or misunderstood. That possibility has been disavowed by the parties.

[26]The issue of what Mr. Williams said during the third meeting about the codes to use for steel wire rope turns essentially upon the credibility of the evidence given by Mr. Steven Tromholt and his sister. There is no direct evidence from the Respondents to contradict what Mr. Steven Tromholt and his sister have said took place. Instead, the Respondents seek to rely upon the probabilities of the matter, contradictions in the evidence, the general credibility (or as the Respondents put it, lack of credibility) of Mr. Steven Tromholt, Mrs. Iben Basford and of Mr. ErikTromholt. Reliance is also placed on the circumstance that the allegation that Mr.Williams told the Appellant to use the codes ending in 90 emerged clearly only in 2008 and not in 2005 when the Appellant was told those codes were wrong. Consideration of the evidence.

[27]So far as the general credibility of Mr. Steven Tromholt and of Mrs. Iben Basford is concerned, I am bound to say that they were not in my view satisfactory witnesses. The general impression which they gave in the course of their evidence was that they really did not know very much about what were the correct community codes to use and they were each in my view seeking to distance themselves from any responsibility for ascertaining and using the correct community codes. Mr. Steven Tromholt sought to give the impression that although he was responsible for the ordering and sale of goods, he was essentially in charge of the Appellant’s warehouse and did not concern himself with the import invoices or what were the correct codes to use for steel wire rope. He said that it was his sister who dealt with the paperwork. In her evidence, she said that so far as codes were concerned she simply went by the descriptions of the goods on the invoices and that she had not really paid a great deal of attention to what Mr. Williams had said at the third meeting but had simply used the codes he had said should be used.

[28]In cross-examination Mr. Steven Tromholt said that he did not know until told by the Respondents at the fourth meeting that anti-dumping duty was payable upon imports of steel wire rope from China although he accepted that China was one of the Appellant’s principal suppliers of steel wire rope. His denial, in my view, is simply incredible and I do not believe him. China was one the Appellant’s principal sources of steel wire rope and he accepted that its prices were cheaper than other suppliers such as Korea. The Appellant was a member of the European Wire Rope Importers Association (“EWRIA”) which must have been concerned about the imposition of anti-dumping duty in 1999 on imports of steel wire rope and it was involved in the extension of such duties for a further 5 years in 2004, having made submissions to the reviewing panel. His father, Mr. Erik Tromholt, was between 2004 and 2006 the Vice-President of EWRIA. Mr. Steven Tromholt denied that his father would have mentioned to him that imports of steel wire from China were subject to anti-dumping duty yet his father in his evidence in chief when asked if he had ever talked to his son about anti-dumping duty and community codes acknowledged that he “might” have done so. I have no doubt that he did so. As Mr. Erik Tromholt accepted in cross-examination, the question of the imposition of anti-dumping duty was a big issue for the Appellant’s business. There was a large difference in prices between imports on which anti-dumping duty of 60.4% was payable and those on which anti-dumping duty was not payable, the price of the supplies subject to the duty being much lower. Mr. Erik Tromholt sought to suggest that prices from suppliers in China were inclusive of anti-dumping duty but that in my view was also incredible and I have no hesitation in rejecting that suggestion as an invention on his part. I am satisfied and find that at all material times both Mr. Erik Tromholt and Mr. Steven Tromholt knew that anti-dumping duty was payable on imports into the EU of steel wire rope from China.

[29]A particularly unsatisfactory aspect of the evidence of Mr. Steven Tromholt is in relation to the orders placed by the Appellant for steel wire rope from China. There is no dispute but that Mr. Steven Tromholt was responsible for and placed the orders with the Chinese suppliers yet there was a remarkable lack of documentary evidence recording those orders. When this was put to him in cross-examination, he said that he had dealt with the purchase orders by fax etc. and that he did not print out purchase orders. The impression which he gave was that the contents of the orders were listed on the Appellant’s computer system so that there would be a record of what had been ordered, but that there were not any actual purchase orders as such. This appeared to be a remarkable situation since the commercial invoices from the suppliers all bore purchase order numbers apparently being the numbers of the Appellant’s orders. Ms. Caroline Mellors had actually been shown by Mrs. Iben Basford on the third visit purchase orders from the Appellant’s files. The matter was raised again by counsel for the Respondents with Mrs. Iben Basford who immediately accepted that there were indeed purchase orders and she said that that she would produce some. It was only at a late stage however that a clip of purchase orders was produced. Not all of these orders can easily be allocated to the relevant imports but where they can, it is clear that all the purchase orders identify the items ordered by reference to specific trade references and dimensions and not specifically as stranded wire or as steel wire rope. The available commercial invoices however in relation to the first 11 entries listed on the schedule to the C18 Demand Note (Bundle 3 Tab 11) and which are now accepted to have been wrongly entered as galvanised stranded wire exceeding 3mm in diameter all describe the goods as being stranded wire. The discrepancy between the descriptions of the goods orders from that in the commercial invoices I have no doubt was something which Mr. Steven Tromholt did not wish to be apparent. The commercial invoice and the packing list for Entry No.12 on 28 September 2004 still incorrectly describe the items over 3mm. in diameter as stranded wire but they have on arrival been entered under the code 73121082 (or 84 or 86) 90. It is clear that up until the end of September 2004 the commercial invoices wrongly described what was in fact steel wire rope as stranded wire and that this had the effect of avoiding the payment on entry of anti-dumping duty. After the end of September the commercial invoices correctly described the goods in accordance with the orders (so far as the available orders can be linked to particular imports) but the goods were entered under the code ending in 90 thereby again avoiding the payment of anti-dumping duty. In my view it was not a co-incidence that the goods were no longer misdescribed as stranded wire on the invoices and someone has told the sellers no longer to describe steel wire rope exceeding 3mm.in diameter as stranded wire. I do not accept the suggestion that Mr. Williams told the Appellant to change the invoice description.

[30]Mr. Steven Tromholt was asked in cross-examination how it had come about that steel wire rope had been misdescribed in the commercial invoices and packing lists as stranded wire but was unable to give any satisfactory answer. He accepted that the description of stranded wire on the invoice 105377B at Bundle 4 p. 59 (Entry No. 10) was incorrect and that the items referred to were in fact steel wire rope. The warehouse list in respect of goods received (Bundle 4 p. 66) did not describe the goods as stranded wire but followed the description in the order (Bundle 8 p.176). When it was put to him that the warehouse must have known that the goods were steel wire rope, his response was simply that the warehouse knew what had been got in. It was put to him that he knew that steel wire rope was being purchased and he accepted that he knew what had been purchased and what had been received. He denied however any knowledge of the descriptions of the goods in the commercial invoice or packing list. He also denied having liaised with the import agents over the codes to be used on importing goods. That was, he said, within his sister’s responsibility.

[31]Having seen and heard Mr. Steven Tromholt give his evidence I do not accept that he did not know that the goods were being imported under a false description as stranded wire. As he said, he knew what had been ordered and he knew what had been received. I am also satisfied that he knew that steel wire rope in excess of 3mm diameter imported from China attracted anti-dumping duty. He was the person responsible for selling the goods once imported and he must have known the prices which had been paid and that anti-dumping duty at the rate of 60.4% had not been paid by the Appellant on the steel wire rope in excess of 3mm in diameter it was importing from China. I have no doubt that what was occurring was that the seller was deliberately providing false invoices misdescribing the steel wire rope as stranded wire in order to evade the payment of anti-dumping duty. I do not regard this as an initiative devised by the seller in order to retain the Appellant’s custom as Mr. Steven Tromholt suggested when the emails from Mr. Chen were put to him in cross-examination. I have no doubt that the invoices were in the form they were because someone from the Appellant had asked Mr.Chen to use the incorrect description. That someone was, I find, most likely to have been Mr. Steven Tromholt. He was the person who in 2003, 2004 and 2005 was in charge of the day to day operations of the Appellant, as he had confirmed and he knew that anti-dumping duty was payable on imports of steel wire rope from China.

[32]Mrs. Iben Basford has given evidence that prior to the third visit Mr. Williams called her to request that she fax through to him 6 commercial invoices relating to entries from Dragon on 12 August 2004. That this is correct is confirmed by the entries in Mr. Williams’ notebook and report. (B5/310 and B7/1206). As appears from the notebook and report, the invoices related to the first 6 entries in the schedule attached to the C18 Demand. All the entries had been declared under the code 7312107500 which is the code for stranded wire plated or coated with zinc and exceeding 3mm. in diameter. According to his notebook Mr. Williams checked all 6 entries and he “identified to invoice description”. This is then followed by an entry: “Blamed agent”. That is obviously a reference to either Mr. Steven Tromholt or Mrs. Iben Basford blaming the importing agent for any error in the use of the codes. There is a fuller entry in Mr. Williams’ report which states that the 6 entries “were examined and compared to the MSS print with agreement. However the description of the goods on the invoice indicated incorrect classification on the entries for five of the six invoices. However based on the invoice description only one entry entails a possible underdeclaration of duty. On entry 071002794F – 02/10/2003 has all goods declared to Com code7312107500 with a Duty rate of 0.6%. none of the goods should have been declared under this Com. code.” The report then continues: “With the help of Mr. S. Tromholt it was established that following the invoice descriptions goods should have been declared to Com. Code 7312103000 (Duty rate 0.6%, Com.code 7312105900 (Duty rate0.6%), Com. Code7312108211 (Duty rate 0.6% + 60.4%ADD) and Com.code7312108411 (Duty rate 0.6% + 60.4% ADD)”. Code 7312103000 relates to stainless steel, code 7312105900 relates to stranded wire not exceeding 3mm in diameter and codes 7312108211 and 7312108411 relate to steel wire rope, the last 2 digits, 11, however relate to steel wire rope imported from Moldova and not to imports from China the last 2 digits for which should have been 19. Imports from Moldova however are also subject to anti-dumping duty. Mr. Williams’ report then records him making a calculation of the amount of underpaid duty which he worked out at £1907.72 based on 15.17% of the invoice value. No copy of the commercial invoice is with the papers before the Tribunal but there is a copy of the packing list which shows the goods as consisting of stainless steel rope, one item of stranded wire not exceeding 3mm. in diameter and the remainder as steel wire rope.

[33]It is clear from Mrs. Iben Basford’s witness statement that Mr. Williams did say that the code used of 7312107500 was incorrect and that the entries would need to be corrected. It is also clear that she understood from what Mr.Williams had said during the third visit that there had been an underpayment of duty by the Appellant since, as she expressed it in her witness statement, “I asked when we could expect the bill so we could include it in our current financial year. He said he would try to have it ready by then”. Mrs. Iben Basford in evidence said that their year ended on 31 December. Mr. Steven Tromholt in his witness statement also confirmed his sister’s evidence . This is also confirmed by Mr. Williams’report. At the foot of Mr. Williams’ report (B7/1206)it is recorded:

“It has now been established that Com. Code has been misused on one entry for goods which should have entailed anti-dumping duty. Trader is aware that more Duty may be due but I have not pushed the matter at present”

. I am satisfied and find that Mr. Williams did on the third visit tell Mr. Steven Tromholt and Mrs. Iben Basford that the code 7312107500 had been incorrectly used on imports of steel wire rope and that duty would be likely to be payable.

[34]The clear impression which is given by Mr. Williams’ note and report on the third visit is that what was being considered was whether the Appellant had used the correct codes on the 6 imports being considered and that the discussion of what codes should be used was directed to those particular imports rather than to what codes the Appellant should use in relation to future imports. The evidence of Mrs. Iben Basford and that of her brother who confirmed what she said however is that Mr. Williams was advising what codes the Appellant should use in the future for steel wire rope. Thus in her witness statement Mrs. Iben Basford said:

“Mr. Williams finally said that 73121075 was not correct and we should use the following codes: 7312105900, 7312108290, 7312108490, 7312108690 instead depending upon the diameter of the rope. There was no suggestion that the last 2 digits should be 19 for anti-dumping duty”

. In her oral evidence she also said that the final 2 digits 11 had not been mentioned. Conclusions from the evidence.

[35]Having seen and listened to Mr. Steven Tromholt and Mrs. Iben Basford give their evidence and be cross-examined, I am wholly unpersuaded that Mr. Williams did in the course of the third visit tell Mrs. Iben Basford and Mr. Steven Tromholt that they should use codes ending in 90 for imports of steel wire rope from China. It is in my view very improbable that Mr. Williams having identified that steel wire rope which attracted anti-dumping duty at the rate of 60.4% had been incorrectly declared under the code 7312107500 should say that in future it should be declared under the appropriate code for steel wire rope but then go on to select as the final 2 digits 90 which would mean that no anti-dumping duty would be payable. That clearly could not have been said in relation to his examination of the documents relating to the entry 071002794F dated 2 October 2003 because he informed both Mrs Iben Basford and Mr. Steven Tromholt that further duty was payable on that import although it is apparent that he did not go into detail as to the amount involved. If he had said that the correct final digits to use were 90 as claimed by the Appellant, no additional duty would have been payable on that entry either.

[36]It is also striking in my view that although it is the Appellant’s case that Mr. Williams had on the third visit told the Appellant to use the codes ending in 90, nevertheless when on the fourth visit Mrs. Iben Basford was told that the correct code should have ended in 19 and that anti-dumping duty was payable, she did not at once protest that the reason why the codes ending in 90 had been used was because Mr. Williams had told her that this was the code to use. Mrs.Iben Basford sought to explain this by saying that she had found Ms Caroline Mellors intimidating and that she had felt intimidated at that visit. Even if that were to be accepted (which I do not) as an explanation for her lack of any protest, that does not explain why no protest was raised by either or both Mr. Steven Tromholt and Mrs. Iben Basford during the fifth visit. If Mr. Williams had really said during the third visit to use the code ending in 90, I have no doubt that Mr. Steven Tromholt and Mrs. Iben Basford would have immediately protested that they had been misled by Mr. Williams and that the Appellant should not have to pay the anti-dumping duty on their imports which had been wrongly declared following the third visit and before the fourth visit. The fact that Mr. Williams was also present at the fourth and fifth visits makes it all the more remarkable that no mention was made of what he is supposed to have said during the third visit. It is also striking that in his report of the fifth visit (B7/1199) Mr. Williams has recorded that after saying that all the goods should have been imported under codes ending in 19 and not 90 and that this would result in a substantial under declaration, Mrs. Iben Basford “said the company would pay any outstanding amounts and claimed lack of knowledge as the reason for the misdeclaration”. I am satisfied that Mrs. Iben Basford did say what Mr. Williams has there recorded. As appears from the letter dated 28 September 2005 (B3 tab 12) the Appellant has indeed made a partial payment. Although that letter was marked without prejudice, any privilege which may have attached to that letter has been waived. The reason she gave is also consistent with her professed lack of knowledge of the correct codes and lack of technical knowledge.

[37]I also find it strange that when the Danish Customs told Mr. Steven Tromholt and Mrs. Iben Basford on 15 September 2004 that the Danish company had been using the wrong codes when declaring its imports of steel wire rope and that the correct codes for steel wire rope imported from China ended in 19, nevertheless the Appellant did not immediately take up the specific point with the Respondents. What in fact occurred was that Mrs.Iben Basford on 21 September 2004 wrote to Mr. Williams. The terms of the letter are guarded to say the least and are quite unspecific. The letter reads:

“I have just received paperwork to send to our agent for incoming containers but I am confused as to what codes to use. During my stay in Denmark the Danish Customs & Excise came for their yearly visit and to my unpleasant surprise they seem to be of a different opinion as to which CN codes to use for the same goods we import over here. We would very much like clarification of which opinion is the right one. Until I hear otherwise, I will be using the codes we agreed at your last visit”

. What is surprising about this letter is that it is wholly unspecific as to which codes the Appellant thought Mr. Williams had said should be used and it is equally unspecific about which codes the Danish Customs were saying should be used. If Mr. Williams had actually said that steel wire rope imported from China should be declared under codes 73121082 (or 84 or 86) but with the ending of 90, I should have expected Mrs. Iben Basford to have said so specifically and also to make clear that the Danish customs were saying that the ending should be 19. As phrased, the letter to Mr. Williams is not susceptible to any clear reply because it does not say what were the codes he had said should be used or for what products. It is also odd in my view that Mrs. Iben Basford should write that she was “confused” as to which codes to use if Mr. Williams had on the third visit told her brother and herself what codes should be used for the imports of steel wire rope from China. Rather I would have expected Mrs. Iben Basford as a sensible business person to say that she had received conflicting advice from Mr. Williams and from the Danish Customs and that the Appellant did not know which was correct. To say that one is “confused” suggests rather that the writer is not sure what has been said rather than that 2 differing sets of advice have been received from 2 different sources. The whole letter suggests to me that it was written with a view to being able to raise an argument, if it should turn out that what the Danish Customs had said was correct, that the Appellant had used a code which did not entail the payment of anti-dumping duty in good faith because it had raised the issue with the Respondents. The paperwork referred to was the first to use the codes ending in 90 in place of the codes for stranded wire. Mr. Williams acknowledged receipt of this letter on 1 October 2004 and wrote that he would provide a reply as soon as possible. No reply was forthcoming however. The reason no reply was sent appears to have been that a decision was taken by his superiors to suspend his audit pending the outcome of enquiries carried out by the Respondents at Felixstowe but it was not until July 2005 that it was decided to resume the audit of the Appellant’s imports.

[38]In evaluating the reliability of the evidence given by Mrs. Iben Basford I have taken into account the evidence she gave in relation to her knowledge (or more accurately her lack of knowledge) of the Community codes applicable to the Appellant’s imports. Her evidence was that she was aware of a list of 8 digit codes and that in about March 2004 she had sent such a list to the import agents. That list, on the evidence, was similar to the one which is to be found at Bundle 3 Tab 1 save that the first list did not mention the final item of rachets with webbing straps. That item was added to the list of codes following the second visit (on 16 April 2004) when Mr. Williams had noticed that such rachets had been incorrectly coded. This second list is dated 3 June 2004 and was sent by her to the agents. It is not in dispute that the written descriptions of the listed products correspond to the correct 8 digit codes on the list, but those codes are incomplete because 10 digit codes are required if the goods being imported into the EU are to be correctly declared. It was also Mrs. Iben Basford’s evidence that it was during the second visit that she had been told by Mr. Williams to write the appropriate codes on the commercial invoices which she sent to the import agents. This, she said, was to make sure that if the agents used the incorrect codes in the declarations, she would be able to show that it had been the agents who were at fault and not the Appellant. Her evidence was that she had written the appropriate codes on the commercial invoices and that in doing so she had followed the descriptions of the goods on the commercial invoices. She denied having any technical knowledge of the products themselves or of checking what had been received. That she said was her brother’s responsibility.

[39]Although she had been told by Mr. Williams on the second visit to write the codes on the invoices she sent to the agents, Mrs. Iben Basford does not appear from the copies of the invoices which are available to have begun to do so until June 2004. The first invoice is dated 19 May 2004. It is an invoice from Dragon and the goods entered at Felixstowe on 28 June 2004. The invoice has written alongside the descriptions of the goods the 8 digit codes for galvanised stranded wire not exceeding 3mm (73121059) and exceeding 3mm (73121075). See B3/46, which relates to entry 071042776X. It is now accepted that the descriptions of stranded wire on the invoice are incorrect. By the beginning of August 2004 however Mrs. Basford was able to write the 10 digit code for stranded wire over 3mm in diameter on the invoice dated 27 June 2004 in respect of goods which entered on 4 August 2004. See B4/73. I am satisfied that by then she knew that 10 digit codes were required and also that she must have had access to 10 digit codes. When she was asked in cross-examination where she had got the 10 digit code from, she was unable to give any explanation, saying that she had “no idea” and that she “couldn’t recall”. I do not find this believable.

[40]The whole thrust of Mrs. Iben Basford’s evidence in relation to the codes was that she did not herself ascertain what were the appropriate codes and that was not part of her responsibility. That she said had been done by Mr. Whitehouse when he had been the manager of the Appellant and the 2 lists sent to the agents in 2004 were based on a list which had been prepared by him. Mr. Steven Tromholt gave evidence to the same effect nor did he become involved with ascertaining the correct codes. The addition of the rachets with webbing to the second list was a consequence of what had been said by Mr. Williams on the second visit. The impression which Mrs. Iben Basford gave was that it was not until the third visit that she had known that 10 digit codes were required and that after the third visit she had merely entered the codes which Mr. Williams had given on the third visit. I have no doubt that in giving her evidence, Mrs. Iben Basford was trying to distance herself as far as possible from any knowledge of or responsibility for ascertaining what were the correct codes. However, I am also satisfied and find that she knew much more about the codes than she was prepared to admit. I am satisfied and find that prior to the third visit she had access to a list or lists of 10 digit codes and that she used this list when putting the code 7312107500 on the invoice dated 27 June 2004, probably about the beginning of August 2004.

[41]Further doubt on the accuracy of the evidence given by Mrs. Iben Basford and by Mr. Steven Tromholt about Mr. Williams having on the third visit said that codes ending in 90 should be used on imports of steel wire rope from China is also cast in my view by the available documentation from the Appellant following the fourth and fifth visits. On 18 August 2005 Mr. Williams had written confirming what had been said on the fourth and fifth visits, namely that the wrong codes had been used, that codes ending in 19 should have been used and that the codes ending in 90 which had been used “relate to ropes and cables other than steel”. He then wrote that a demand for payment of £693,121.34 in respect of anti-dumping duty and VAT would be issued by the Respondents in due course. The response from Mrs. Iben Basford in a letter dated 1 September 2005 to Mr. Williams was not to complain that the Appellant had been misled by him into using the wrong codes but rather to query the amounts of anti-dumping duty and VAT on 5 of the imports listed in the schedule which Mr. Williams had attached. She provided supporting invoices and bills of lading. She also subsequently provided evidence that one of the listed entries was for goods which had come from Korea and not China. Goods from Korea did not attract anti-dumping duty. Mr. Williams reconsidered his calculations of the anti-dumping duty and VAT and in a letter dated 6 October 2005 reduced the amount claimed to a total of £604,511.92 and said that a demand for payment would be issued. In the meantime, not having received a response to her letter dated 1 September, on 28 September 2005 she wrote a further letter referring to Mr. Williams’ letter dated 19 August. In this letter there is again no suggestion that the Appellant had been misled by Mr. Williams. Instead what she says is:

“We cannot agree to the schedule listing our imports declared to four incorrect commodity codes as this is incorrect. We have already written to HMRC Wolverhampton att. Mr. Williams enclosing copies of invoices, packing lists etc. But to date have not received an amended schedule. In addition we dispute the classification. We therefore request a Departmental Review. Without prejudice we have already made payments totalling £250,000”

. It is perfectly clear from this correspondence that the only substantial complaints which are made at this stage are that Mr. Williams’ figures are wrong and that the classification to codes ending in 19 is incorrect. This correspondence also confirms in my view the accuracy of the note made by Mr. Williams at B/1199 of what Mrs.Iben Basford had said at the fifth meeting when told that there had been misdeclarations in using the codes ending in 90.

[42]The first suggestion that Mr.Williams misled the Appellant appears in a letter dated 26 October 2005 from Mr. Erik Tromholt to Ms. Diane Evans who was the Respondents’ reviewing officer. Mr. Erik Tromholt was not present at any of the visits from Mr. Williams and Mrs. Iben Basford denied having spoken to her father about what had been said by Mr. Williams on the third visit and if that is correct, it must follow that what Mr. Erik Tromholt says about this meeting must have been derived from what Mr. Steven Tromholt told him. What he writes is:

“When Mr. Williams visited us on 25/08/04 he had some doubts about code 7312107500 but did not say anything about misclassification by using that code. After some discussion between Steven Tromholt and Mr. Williams, he suggested that we classify under the codes 7312108200, 7312108400 and 7312108600. This turned out to be incorrect and the codes had to be amended to end in 90. Further Mr. Williams asked us to change the text of the invoices from our Suppliers, which we did. From Mr. Williams letter of 19/08/05 we now understand that code 90 related to ropes and cables other than steel. Did Mr. Williams not know this at our meeting on 25/08/04? Why did he not suggest what we now know to be the correct code of 19 at our meeting. Were we not misguided into a very costly error?”

[43]What is surprising about this letter is the absence of a clear allegation that Mr. Williams told the Appellant at the third meeting to use codes ending in 90. The allegation which is made appears to be that Mr. Williams had said to use codes ending in 00 but that these turned out to be incorrect and had to be amended to 90. It does not actually say who amended the codes to 90 or how the codes ending in 00 came to be amended. It was suggested on behalf of the Appellant that English was not Mr. Erik Tromholt’s first language and that this was the reason why he had expressed himself as he had in the letter but I do not accept that suggestion. Mr. Erik Tromholt had, it seemed to me, an excellent command of English but in any event the information in that letter as to what had been said or had taken place at the third meeting could only have come from his son if what Mrs. Iben Basford said is correct.

[44]Mr. Steven Tromholt in his evidence said that the figures 90 had emerged at the third meeting after about 20 minutes discussion with Mr. Williams as to the correct codes to use. Mrs. Iben Basford’s evidence was that her brother and Mr. Williams had managed to confuse each other. Her brother, she said, was using the Intrastat list of codes and Mr. Williams was referring to the book he had with him. The Intrastat list relates to inter EU imports and does not give 10 digit codes. The book which Mr. Williams had must have given the full 10 digit codes and so perhaps it is not surprising that her brother and Mr. Williams managed to confuse each other if they were using different books and codes. However the issue is whether Mr. Williams did at the third meeting actually say that the codes ending in 90 were to be used. As I have already stated, I do not believe that he did. For the reasons stated above, the probabilities are against Mr. Williams having said that codes entailing no anti-dumping duty should be used when he had already found that anti-dumping duty was chargeable on one of the entries which he examined on the third visit and when he had told the Appellant that there would be a sum to pay. Neither Mr. Steven Tromholt nor Mr. Erik Tromholt was in my view a reliable witness. The failure until 2008 of Mrs. Iben Basford or her father or her brother to make any clear allegation that Mr. Williams in terms said to use the codes ending in 90 is significant.

[45]In reaching the conclusion that Mr. Williams on the balance of probabilities did not tell the Appellant to use the codes ending in 90, I have taken into account the fact that Mr. Williams has not been called by the Respondents to give evidence and also that his report of the third visit incorrectly refers to the code ending in 11 and not to the correct final digits of 19. Mr. Williams’ note of the third visit in his notebook (B5/310) does contain a reference at the end of the note to codes ending in 90. The entry reads:

“73121082, 73121084 and 73121086 codes cannot end in 90 as cables are of steel. Advised some Duty due [illegible] on all goods entered to 7312107500”

. It was submitted by Mr. Gibbon on behalf of the Appellant that this part of the note was not a contemporaneous entry but had been added by Mr. Williams subsequently. Mr. Gibbon submitted that the entry was out of place in that it came after the entry about the import from Turkey. In his report (B7/1206) the import from Turkey is dealt with after the record of the discussion with Mr. Steven Tromholt about the correct codes for the entry 071002794F. In the absence of direct evidence from Mr. Williams it is difficult to be wholly certain, but the circumstance that this reference is in the note in a different position from that in the report does not lead me to think that the entry on the note should be regarded as an afterthought made subsequently. The note at B5/310 does actually refer to having advised that some duty was due and that is consistent with the comment just before the bottom of the report at B7/1206 that the trader is aware that more duty may be due but that he has not pushed the matter. That Mr. Williams did say that more duty might be due is not disputed, nor is it disputed that he was not specific. The note at the foot of B5/310 however does not say that Mr. Williams told the Appellant that code 90 was incorrect but the reference to 90 could be consistent with Mr. Steven Tromholt and Mr. Williams looking at the codes in Mr. Williams’ book and with Mr. Williams rejecting that as a possible code before settling on a code which entailed anti-dumping duty. On the balance of probabilities, I find that Mr. Williams did make the entry in his notebook at or shortly following the third visit but that that code was not actually discussed with Mr. Steven Tromholt. No note or record of what occurred or was said during the third visit was made by Mrs. Iben Basford or her brother. The only contemporaneous records are Mr. Williams’ notebook entries and report. These are in my view reliable and accord with the probabilities and the failure until 2008 to make a clear allegation that Mr. Williams had said to use the codes ending in 90.

[46]As I have already indicated, it is apparent that by early August 2004 the Appellant had access to a list of 10 digit codes and the likelihood in my view is that either or both of Mr. Steven Tromholt and his sister after the third visit looked at a list of 10 digit codes and fastened upon the code ending in 90 which would enable imports of steel wire rope form China to be brought in without attracting anti-dumping duty. It was in my view clear following the third visit in which Mr. Williams had ascertained that the code for stranded wire had been improperly used on imports of steel wire rope that the Appellant could no longer continue to use the code 7312107500 on its imports of steel wire rope exceeding 3mm in diameter from China and also that the misdescriptions in the invoices of steel wire rope as stranded wire could no longer be used as a means of evading anti-dumping duty. I am satisfied and infer that the Appellant has since the third visit used the codes ending in 90 in place of the codes for stranded wire in an attempt to continue to evade anti-dumping duty on imports of steel wire ropes from China. I do not regard the evidence given by Mr. Steven Tromholt and Mrs. Iben Basford as credible and I reject it in so far as it claims that Mr. Williams told them to use the codes ending in 90 or that they were unaware after the third visit of the correct codes to use. Result of the appeal.

[47]In view of my conclusions on the issue of the credibility of the evidence called by the Appellant, the claim to rely on Article 220(2)(b) of the Community Customs Code must fail. There was no relevant error on the part of the Respondents which caused the Appellant to incur a customs debt or which gave rise to a reasonable expectation that the codes ending in 90 could continue to be used.

[48]It is also clear from my conclusions that I cannot accept that the Appellant has acted in good faith. On the issue of good faith, the Respondents referred to the evidence in relation to the Danish company. I have not found that evidence of much assistance since it is clear that the Danish Tribunal was not satisfied on the evidence before it that any criminal offence had been committed by the Danish company or its directors or managers and it would not be right for this Tribunal to seek to re-open that issue. The Danish Tribunal was in a much better position than this Tribunal is to consider and evaluate the relevant evidence in relation to the Danish company and I make no findings in relation to the Danish company.

[49]The Respondents have submitted that the Appellant has engaged in a system of double invoicing as part of a dishonest scheme to evade anti-dumping duty. The submission is that the Appellant has used purchase orders with non linear numbers (a suffix B or a hyphen 1 or 2). In so far as the documents relate to the Danish company that, as I have indicated, was properly a matter for consideration by the Danish tribunal and it was not satisfied that fraud had been established. So far as the Appellant is concerned there are before this Tribunal orders with the same number but distinguished with the addition of the letter B. For example, there is an order no. 105377 dated 23/03/2004 and an order no. 105377B dated 2/04/2004. See the slip of purchase orders pp.177 and 176 respectively. These are clearly different purchase orders and they gave rise to 2 different imports which have been separately declared. See Bundle B tabs 11 and 10 respectively. These documents on their face are genuine separate orders. The Respondents have failed to establish any dishonest double invoicing.

[50]I am also satisfied that it was at all material times from the third visit open to the Appellant to ascertain what was the correct code to use on imports of steel wire rope from China by consulting a copy of Chapter 73 of the Complete Tariff for the relevant years. A reasonably careful reading of the tariff, in my view, would lead a reasonable businessman experienced in the trade to the conclusion that the correct codes for steel wire ropes exceeding 3mm in diameter imported from China ended in 19 and not in 90. It is also apparent from the evidence that Mr. Steven Tromholt and Mrs. Iben Basford knew from the middle of September 2004 that the Danish Customs had told the Danish company to use codes ending in 19 and that the Danish company had done so. It is unfortunate that the Respondents failed to respond substantively to Mrs. Iben Basford’s letter dated 21 September 2004 or to inform the Appellant of the view of the classification unit at Southend that the samples taken from the entry on 28 September 2004 should be classified under codes ending in 19. However I do not accept that these omissions misled the Appellant or amounted to an error within Article 220(2)(b). As I have already stated I have no doubt that the Appellant was not acting in good faith in using the codes ending in 90 and that it was aware through Mr. Steven Tromholt and by then probably also through Mrs. Iben Basford that the correct codes for steel wire ropes exceeding 3mm in diameter imported from China ended in 19.

[51]The appeal is dismissed. The Respondents have sought costs and I direct that the Appellant must pay the Respondents’ costs of defending the appeal, to be assessed by a Tribunal Judge sitting alone if not agreed.

[52]The Appellant has a right to apply for permission to appeal against this decision pursuant to Rule 39 of the Rules. The parties are referred to “Guidance to accompany a Decision from the First-tier Tribunal (Tax Chamber)” which accompanies and forms part of this decision notice. TRIBUNAL JUDGE RELEASE DATE: 3 December 2009