Amoena (UK) Ltd v Revenue & Customs (CUSTOMS DUTY : Application for reference to CJEU) [2018] UKFTT 505 (TC)
FTT-Tax
Amoena (UK) Ltd v Revenue & Customs (CUSTOMS DUTY : Application for reference to CJEU)
[2018] UKFTT 505 (TC) · 2018-06-13
[4]“The underlying question therefore is the validity or otherwise of the Roaming Regulation. There is no doubt that it has a significant direct and indirect affect on the business activities of the claimants. If satisfied that the challenge to its validity is reasonably arguable or, put negatively, not unfounded , I should refer the issue to the European Court and grant permission for the domestic challenge to the UK regulations. ” [Mr Scorey’s underlining] 20. The appellant has two challenges to the validity of the CIR which it says are reasonably arguable and well founded (or not unfounded):(1) The CIR is manifestly wrong in its classification of the MBs under Chapter 62 of the CN, and is ultra vires the Commission’s powers.(2) The decision to issue the CIR was reached in breach of the principle of sincere cooperation as set out in art 4(3) TFEU. 21. “Manifest error” is the test applied by the CJEU in determining the validity of a regulation interpreting the CN (C-463/98 Cabletron Systems Ltd (“ Cabletron ”) [2001] ECR I-3495 and VTech Electronics (UK) plc v Commissioners of Customs and Excise (“ VTech ”) [2003] EWHC 59 (Ch) ). That test has also been expressed as whether it is reasonable for the Commission to consider particular goods fall within certain headings in the CN (Case C-401-93 Goldstar Europe GmbH v Hauptzollamt Ludwigshafen (“ Goldstar ”) [1994] ECR I-5587 at [28]. 22. The appellant submits that the CIR is manifestly wrong in purporting to classify the MBs under Chapter 62. The appellant adopts the decision of the Supreme Court as its case on this. The Customs Code Committee (“CCC”), the body made up of national experts, which assists the Commission gave reasoning for the CIR which does not even engage with the analysis of the Supreme Court or the relevant case law. The appellant then sets out four problems it finds with the CCC’s reasoning. 23. In relation to the vires for the CIR the appellant submits that the CCC’s discretion is not unfettered and does not extend to purporting to alter the chapter in the CN to which goods belong (as this is a matter of international law, not EU, law), but merely to altering the 8 digit subheading which is a matter of EU law (citing A-G Jacobs in Cabletron at [84] of his opinion). 24. The CIR is ultra vires the Commission’s powers as it illegitimately narrows the scope of sub-heading 9021 in the CN (see Case C-267-94 France v Commission [1995] I-4845) (“ France ”). 25. As to the principle of sincere co-operation, this places a duty on, among others, the European Commission to co-operate with domestic courts, a duty of “particular importance” (see re Zwartveld (C-2/88 Imm) [1990] ECR I-3365 ]. The Commission must not undermine the decisions of national courts (see R (oao Newby Foods) v Food Standards Agency No. 7 [2014] EWHC 1340 (Admin) at [57]. 26. The appellant submits that the Commission failed to accord full and proper respect to the Supreme Court’s judgment, and indeed sought to undermine it. HMRC’s submissions 27. For the Commissioners, Mr Singh argued that the bar was not as low as the appellant suggested. It was only in cases where it was not reasonably open to, or was clearly wrong for, the Commission to do what it did in the CIR that a referral must be made. In other cases there was a broader discretion given to the national court. 28. There was no manifest error in the classification made by the CIR. The CCC discussed fully the issue of the correct classification, the UK arguing for 9021 in reliance on the Supreme Court decision. But the UK lost the argument by 27 to 1. The CCC’s classification was a reasonable one for the reasons given in the Annex. 29. In response to Mr Scorey’s submission that the CCC’s reasoning does not engage with the analysis and the case law, the Respondents say that the minutes of the CCC’s meetings are summaries and would not be expected to record full details of the discussion or recite legal authorities. There is nothing legally offensive in the CCC declining to follow the classification adopted by the Supreme Court. The CCC is not bound by a decision of the national court, but has a “broad discretion” ( VTech at [20)]. A mere disagreement with the CCC, which is what the appellant's arguments come to, is not sufficient to establish invalidity. 30. There is nothing in the appellant’s ultra vires arguments and it adds nothing to the argument about “manifest error”. 31. Nor does the “sincere co-operation” point have any merit. The Commission had no obligation to agree with national courts. Its task is to promote the uniform application of the CN and therefore has to consult the CCC where a ruling of a national court, as in the decision of the Supreme Court, leads to divergent practice among the member states, as it did in this case. The CCC gave due respect to the decision of the Supreme Court. Conclusions 32. There is, I agree with the appellant, a low threshold to surmount to show that an argument is well founded. This follows from Telefonica . In my judgment the appellant’s argument on manifest error is well founded and surmounts that threshold. In particular Goldstar and France , cases on the CN and CIRs, are powerful support for the view that it is clearly arguable that the Commission, in adopting the opinion of the CCC, or the CCC itself went beyond the limits of their role in interpreting the CN. It is certainly also arguable that they didn’t, as the Respondents have demonstrated. But it is not my task to decide who is right. 33. I also agree, but with somewhat less conviction, that the appellant’s point on sincere co-operation is arguable. If left to decide this issue on its merits I would be inclined to prefer HMRC’s arguments, but that is by no means to say that the appellant’s point is fanciful, and of course there would be much fuller argument in that event. Decision 34. Under art 267, second paragraph, I consider that it is necessary that the CJEU gives a ruling on the question whether the CIR is a valid act of the Commission. 35. I therefore direct that these proceedings are stayed until after that ruling has been given. 36. In Mr Scorey’s skeleton argument it is stated that the appellant will seek to agree with HMRC the wording of a reference (obviously that is only necessary if the outcome of this application is in its favour). As the outcome is in the appellant’s favour I have made separate directions on this point. RICHARD THOMAS TRIBUNAL JUDGE RELEASE DATE: 07 SEPTEMBER 2018