Regulation (EEC) No 2658/87 and its Application within United Kingdom and Ireland Customs Law

Regulation (EEC) No 2658/87 and its Contemporary Significance in United Kingdom and Ireland Customs Jurisprudence

Introduction

Regulation (EEC) No 2658/87 of 23 July 1987 on the tariff and statistical nomenclature and on the Common Customs Tariff (hereafter “the Tariff Regulation”) established the Combined Nomenclature (“CN”) as a uniform classification scheme for goods entering the European Community. Although promulgated under European Community competence, the Regulation has remained foundational to customs practice in both the United Kingdom and Ireland. In the United Kingdom, its provisions survive as “retained EU law” pursuant to the European Union (Withdrawal) Act 2018, while in Ireland they continue to apply as a matter of directly effective Union law. This article critically analyses the Tariff Regulation’s legislative architecture, interpretative rules, and judicial elaboration, drawing extensively on United Kingdom and Irish case-law.

Historical and Legislative Context

The CN superseded earlier tariff schedules by integrating the Harmonised Commodity Description and Coding System (“HS”) into Community law. Article 1 of the Tariff Regulation created the CN, comprising: (a) the HS nomenclature; (b) Community subdivisions (eight-digit CN codes); and (c) preliminary provisions and notes.[1] Article 9 empowered the Commission, acting through the Customs Code Committee, to adopt implementing regulations on classification, thereby ensuring uniformity across Member States.[2]

Subsequent Union instruments—including the Community Customs Code (Council Regulation 2913/92) and, later, the Union Customs Code (Regulation (EU) 952/2013)—operate in tandem with the Tariff Regulation. Within the United Kingdom, the Finance Act 1994 furnishes domestic procedural machinery for appeals before the First-tier Tribunal (“FTT”) and Upper Tribunal.

Regulatory Framework and Interpretative Methodology

General Rules for Interpretation (“GRI”)

Annex I, Section I of the Tariff Regulation sets out six GRIs, which govern classification by reference to the objective characteristics of goods. GRI 1 prioritises the terms of headings and relevant Section or Chapter Notes, while GRI 3 resolves classification where goods are prima facie classifiable under multiple headings.[3]

Role of the Customs Code Committee

Article 7 establishes the Customs Code Committee, comprised of Member State representatives and chaired by the Commission, which vets proposed classification regulations. United Kingdom courts have emphasised that the Committee’s deliberations underpin the legality of subsequent implementing measures (e.g., Sony Computer Entertainment Europe Ltd v Customs and Excise).[4]

Binding Tariff Information (“BTI”)

BTIs, issued under Article 12 of the Community Customs Code (now Article 33 et seq. UCC), bind customs authorities but may be revoked or modified to align with new classification regulations adopted under Article 9 of the Tariff Regulation. Tribunals have frequently grappled with the continuing effect of non-conforming BTIs in light of implementing measures providing for transitional “sun-set” periods (e.g., Amoena (UK) Ltd v Revenue & Customs).[5]

Judicial Elaboration in the United Kingdom and Ireland

Technological Goods and the “Principal Function” Doctrine

Electronic devices pose acute classification challenges. In RMS Communications Ltd v Revenue & Customs, the FTT considered whether the third-generation iPod Nano possessed a “principal function” for the purpose of Note 3 to Section XVI.[6] Holding that the device performed dual audio-video functions but without a predominant feature, the Tribunal applied GRI 3(c) to classify under heading 8521 (video apparatus) rather than 8519 (sound apparatus), attracting a higher duty rate. Comparable reasoning is evident in Sonance Ltd, where the classification of the “Dsign Lightbox” turned on its essential characteristics as video reproducing apparatus.[7]

Data-Networking Equipment

Axial Systems Ltd v Revenue & Customs concerned a network analyser. Applying the Regulation’s GRIs and relying on an annexed Commission Regulation adopted under Article 9, the Tribunal confirmed classification under the CN code designated in the implementing measure.[8] The decision underscores the binding nature of Article 9 regulations and the limited scope for national authorities to depart therefrom.

Information Technology Interfaces

In Azlan Group plc v Revenue & Customs, the VAT & Duties Tribunal referred questions to the Court of Justice concerning the classification of communication equipment. The referral illuminated gaps in existing jurisprudence and affirmed the Tribunal’s willingness to utilise the Article 267 TFEU mechanism where the Tariff Regulation’s interpretative rules proved indeterminate.[9]

Miscellaneous Edible Preparations

Food supplements encapsulated in soft-gel capsules were litigated in Savant Distribution Ltd v Revenue & Customs. The Tribunal invoked GRI 3(a) to favour heading 2106 over headings 1515/1517, aligning with the Court of Justice’s ruling in Swiss Caps.[10]

Anti-Dumping and Misclassification

Misclassification can attract significant fiscal consequences. In Denwire Ltd v Revenue & Customs, failure to classify steel wire rope correctly under the CN triggered liability for anti-dumping duty. The Tribunal dismissed the appellant’s plea for waiver under Article 220(2)(b) of the Customs Code, emphasising the trader’s responsibility to ensure accurate classification.[11]

Procedural Mechanisms and Domestic Remedies

United Kingdom traders may challenge classification decisions via statutory review and appeal under sections 14–16 Finance Act 1994. The FTT applies the civil standard of proof, but may refer questions of EU law to the Court of Justice where necessary (JCM Europe (UK) Ltd).[12] Appeals to the Upper Tribunal and Court of Appeal further delineate the operative principles, as seen in Build-A-Bear Workshop UK Holdings Ltd v HMRC, which reiterated the hierarchy of interpretative materials—HSENs, CNENs, and judicial precedent.[13]

Post-Brexit Landscape

Since 31 December 2020 the United Kingdom applies the UK Global Tariff; however, Regulation (EEC) No 2658/87 endures as retained EU law for classification decisions relating to periods before exit day and, under the Northern Ireland Protocol/Windsor Framework, for goods entering Northern Ireland. The Taxation (Cross-border Trade) Act 2018 authorises the Secretary of State to amend retained tariff provisions, yet HS-based classification rules remain materially unchanged. In Ireland, the Tariff Regulation continues to apply in full, subject to annual amendments.

Conclusion

Regulation (EEC) No 2658/87 remains the cornerstone of customs classification in both the United Kingdom and Ireland. Judicial treatment demonstrates a consistent methodology: primacy of the Regulation’s GRIs, deference to Article 9 implementing measures, and careful attention to the objective characteristics of goods. While Brexit has altered the institutional context for the United Kingdom, the substantive interpretative framework persists. Practitioners must therefore maintain familiarity with both the Regulation and its extensive body of case-law to navigate the complex terrain of tariff classification effectively.

References

  1. Regulation (EEC) No 2658/87, Art. 1.
  2. Regulation (EEC) No 2658/87, Arts 7–9; Sony Computer Entertainment Europe Ltd v Customs and Excise [2005] EWHC (Ch).
  3. Regulation (EEC) No 2658/87, Annex I, Section I; Savant Distribution Ltd v Revenue & Customs [2016] UKFTT 533 (TC).
  4. Sony Computer Entertainment Europe Ltd v Customs and Excise [2005] EWHC (Ch).
  5. Amoena (UK) Ltd v Revenue & Customs [2018] UKFTT 505 (TC); Commission Implementing Regulation (EU) 2017/1167.
  6. RMS Communications Ltd v Revenue & Customs [2010] UKFTT 411 (TC).
  7. Sonance Ltd v Revenue & Customs [2007] UKVAT (Customs) C00240.
  8. Axial Systems Ltd v Revenue & Customs [2013] UKFTT (Tax).
  9. Azlan Group plc v Revenue & Customs [2007] UKVAT (Customs) C00240.
  10. Savant Distribution Ltd v Revenue & Customs [2016] UKFTT 533 (TC).
  11. Denwire Ltd v Revenue & Customs [2009] UKFTT 343 (TC).
  12. JCM Europe (UK) Ltd v Revenue & Customs [2019] UKFTT (Tax).
  13. Build-A-Bear Workshop UK Holdings Ltd v HMRC [2022] EWCA Civ 742.