C0238
CUSTOMS DUTY - binding tariff information - classification of Boo Boo Buddy Cold Pack for Soothing Aches and Bumps - whether bandage under heading 3005 or chemical product under heading 3824 - held chemical- Appeal Dismissed
LONDON TRIBUNAL CENTRE
BRUNEL HEALTHCARE LTD Appellant
(DR ELIZABETH MORGAN)
- and -
HER MAJESTY'S REVENUE and CUSTOMS Respondents
Tribunal: MICHAEL TILDESLEY OBE (Chairman)
CHRIS PERRY (Member)
Sitting in public in Bristol on 30 March 2007
Ronald James Stagg, Managing Director, for the Appellant
Owain Thomas counsel instructed by the Acting Solicitor for HM Revenue & Customs, for the Respondents
© CROWN COPYRIGHT 2007
DECISION
The Appeal
- The Appellant was appealing against the Respondents' decision on review dated 31 August 2006 concerning the tariff classification of Boo Boo Buddy Cold Pack for Soothing Aches and Bumps. The Respondents classified the product under commodity code 3824 90 99 99.
- The Tribunal amended the name of the Appellant to Brunel Healthcare Limited instead of Dr Elizabeth Morgan.
The Dispute
- The dispute concerned the correct tariff classification for the product.
- The Appellant contended that the product should be classified under the Combined Nomenclature Heading of 3005, which provides that
"Wadding, gauze, bandages and similar articles ( for example, dressings, adhesive plasters, poultice), impregnated or coated with pharmaceutical substances or put in forms or packings for retail sale for medical, surgical, dental or veterinary purposes".
- The Respondents contended that the product should be properly classified under CN Code 3824 90 99 99 which provides that
"Prepared binders for foundry moulds or cores; chemical products and preparations of the chemical or allied industries (including those consisting of mixtures of natural products), not elsewhere specified or included: - other"
The Evidence
- We heard evidence from Mr Stagg, the managing director of the company. Samples of the product and an agreed bundle of documents were supplied to the Tribunal.
The Product
- The trade name for the product was Boo Boo Buddy.
- The product was packaged gel material in a plastic sleeve. The design of the product was bright and colourful with a range of shapes including squares and animals. The plastic sleeve was smooth, soft and lightweight which enabled it to be flexible at all temperatures. The sleeve was sized to allow comfort and ease. The penguin sample measured approximately 10 mm by 10 mm. The sleeve was sealed to prevent leakage of its contents. The sleeve was described as hypo-allergenic, non toxic, hygienic and tested for safety.
- The gel comprised water, carboxymethyl cellulose, propylene glycol and antiseptic. The carboxymethyl cellulose enabled the gel to remain flexible. The propylene glycol was more commonly known as anti-freeze. The anti-septic acted as a preservative. Water was the principal ingredient.
- The packaging for the product was clear plastic with a patterned cardboard insert. On the plastic package the product was described as a Cold Pack for soothing aches and bumps. On the reverse of the plastic package the following statements were made:
" Boo Boo Buddy Cold Pack is ideal for: bumps bruises scrapes fevers headaches insect bites inoculations"
"Boo Boo Buddy: numbs pain quickly and safely. Remains flexible at cold temperatures. Hypoallergenic and non toxic. May be warmed in hot water (not boiling) to desired temperature – DO NOT MICROWAVE"
"To use: keep in the freezer between uses. For grazes wash area with soap and water. Apply Boo Boo Buddy to affected area. To clean: wash in mild soap and water if necessary. Caution: for external use only. Always test the temperature before applying to the child's skin. Do not puncture. If coolant touches the skin, wash area with soap and water. Seek medical help if contents of the gel pack are accidentally swallowed. Consult your doctor if swelling or pain persists. For use under adult supervision. Please retain packaging for future reference".
- The product was developed by doctors in the USA. It was manufactured in South Korea. The cost price for each pack was £1.05. The packs were likely to come on click strips.
- The product was described as a modern version of a pack of frozen peas wrapped in a towel.
- The Appellant registered the product with the Medicines and Healthcare Products Regulatory Agency as a Class 1 Device: Warming and Cooling Pads and Blankets (Non Active and Non-Chemical. The Regulatory Agency stated that
"In accepting your registration, I should make clear that the Competent Authority does not examine each individual notification, and therefore cannot and does not necessarily endorse these determinations. Neither does this letter represent any form of accreditation or approval by the UK Competent Authority".
The Chapter Notes
- The chapter notes for the relevant tariff classifications provided no assistance to the dispute.
Explanatory Notes (HSENS)
- The HSEN for the tariff classification 3005 stated that
"This heading covers articles such as wadding, gauze, bandages, and the like of textile, paper, plastic etc., impregnated or coated with pharmaceutical substances (counter-irritant, antiseptic, etc) for medical, surgical, dental or veterinary purposes.
These articles include wadding impregnated with iodine or methyl salicylate etc., various prepared dressings, prepared poultices ( eg linseed or mustard poultices), medicated adhesive plasters etc. They may be in the piece, in discs or in any other form.
Wadding and gauze for dressings (usually of absorbent cotton) and bandages, etc. not impregnated or coated with pharmaceutical substances, are also classified in this heading, provided they are exclusively intended (eg because of labels affixed or special folding) for sale directly without re-packaging, to users (private persons, hospitals, etc.) for use for medical, surgical, dental or veterinary purposes).
The heading excludes bandages, adhesive plasters etc, containing zinc oxide, and plaster coated fracture bandages not put up in forms or packages for retail for medical, surgical, dental or veterinary purposes".
- There were no relevant explanatory notes for tariff classification 3824 90 99 99.
Other Evidence
- The Respondents relied on a Binding Tariff Information issued by German Customs on 25 August 2005. The BTI reference DEHH/1157/05/01 categorised a compress for use as a replacement for ice packs and hot water bottles as 3824 90 99.
- The Commission of the European Communities issued a draft Regulation which has been agreed by the Customs Code Committee concerning the classification of a spectacle-shaped supple plastic article containing a liquid solution of water (40 per cent), and propylene glycol and colorant (60 per cent). The product was designed to relieve headaches when applied to the face having first been cooled in a refrigerator. The solution contained in the plastic envelope was used as a coolant and gave the product its essential character of a preparation of heading 3824. The draft Regulation proposed the classification of 3824 90 99 for the product.
- The Oxford English Dictionary attributed the following meaning to poultice:
"A soft mass of bread, meal, bran, linseed etc usually made with boiling water, and spread upon muslin, linen, etc applied to the skin as an emollient for a sore or inflamed part, or as a counter irritant".
Our Reasons
- The European Court of Justice has laid down settled legal principles for determining the tariff classification of goods. In Bioforce GmbH v Oberfinanzdirektion München (Case 177/91) [1993] ECR 45, the Court ruled:
"... the decisive criterion for the tariff classification of goods for customs purposes is to be sought, regard being had to the requirements of legal certainty, in their objective characteristics and properties, as defined by the wording of the headings of the Common Customs Tariff."
- In the case of Kaffee-Contor Bremen GmbH & Co KG v Hauptzollamt Bremen-Nord (Case 192/82) (1983) ECR 1769 the Court stated:
"... the decisive criteria for making a classification are not only the materials used, but both the external appearance of the article in question and the use to which they are normally put ...".
- Advocate General Jacobs in the case of Wiener SI GmbH v Hauptzollamt Emmerich (Case 338/95) [1997] ECR 6495 explained the principles underpinning intended use:
"…. and the principle that the intended use of a product may constitute an objective criterion for classification if it is inherent in the product and if the inherent character can be assessed on the basis of the product objective characteristics."
- Commission Regulation (EC) 2261/98 sets out the general rules for the interpretation of the combined nomenclature. GRI Rule 1 provides
"The titles of sections, chapters and sub-chapters are provided for ease of reference only; for legal purposes, classification shall be determined according to the terms of the heading and any relative sections or chapter notes and, provided such headings or notes do not otherwise require, according to the following provisions. "
- Although the parties relied on only GRI Rule 1, Rule 3 may be appropriate if it is possible to classify the product under two or more headings:
"3. When by application of rule 2(b) or for any other reason, goods are prima facie classifiable under two or more headings, classification shall be effected as follows:
(a) the heading which provides most specific description shall be preferred to headings providing a more general description. However, when two or more headings each refer to part only of the materials or substances contained in mixed or composite goods or to part only of the items in a set put up for retail sale, those headings are to be regarded as equally specific in relation to those goods, even if one of them gives a more complete or precise description of the goods;
(b) mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets for retail sale, which cannot be classified by reference to 3(a), shall be classified as if they consisted of the material or component which gives them their essential character in so far as this criterion is applicable;
(c) when goods cannot be classified by reference to 3(a) or 3(b), they shall be classified under the heading which occurs last in numerical order among those which equally merit consideration".
- Thus the criterion for the tariff classification of Boo Boo Buddy is to be made on the ascertainment of its objective characteristics and properties, as defined in the headings of the Common Customs Tariff, and that these characteristics are not only the materials used but also the external appearance of the articles and the use to which they are put. The requirement of legal certainty obliges the Tribunal to consider other relevant decisions which include BTI reference DEHH/1157/05/01 and the draft Regulation so that the object of uniformity can be reached. The Tribunal may have regard to the HSEN in interpreting the scope of the headings of the Common Customs Tariff but on the understanding that the HSEN is not legally binding.
- The Appellant contended that Boo Boo Buddy was a similar product to wadding, gauze or bandage. The Appellant likened the product to a modern form of a poultice, performing the role of relieving pain and inflammation. The product was impregnated with antiseptic. Further the Appellant submitted that even if the product was not similar to wadding gauze and bandage it met the description of put up in forms or packings for retail sale for medical, surgical, dental or veterinary purposes. The Appellant submitted that the use of the product for medical purposes was obvious from its objective characteristics and the description on the packaging. The product was intended to be sold in retail chemists next to children's medicines.
- The Appellant considered the product described in the draft Regulation as fundamentally different from Boo Boo Buddy. It was essentially a cosmetic product sold in the High Street to deal with puffy eyes. The composition of water and alcohol was not the same as that for Boo Boo Buddy which included antiseptic.
- The Respondents stated that Boo Boo Buddy was evidently not wadding, gauze or bandage. Equally it was not a similar article to those products. The characteristics of Boo Boo Buddy did not correspond with those of dressings, adhesive plasters and poultices, which were given as examples of similar products in heading 3005. The Respondents contended that the product could not be described as a poultice, which required the application of a moist mass to the skin and the use of active therapeutic ingredients. Boo Boo Buddy was inactive with its impermeable plastic sleeve keeping the gel inside it from any direct contact with the skin
- The Respondents placed weight on the contents of the draft Regulation. They considered that the product described in the Regulation was very similar to Boo Boo Buddy, and that by analogy it supported the Respondents' classification under 3824 90 99.
- The real issue in this case is whether Boo Boo Buddy was wadding, gauze, bandage or something similar. The test which we must apply is to look at the objective characteristics and properties as defined in heading 3005: is the Product objectively wadding, gauze, bandage or something similar for retail sale for medical use?
- The essential characteristic of wadding, gauze, bandage and similar products is that they dress a wound or cut by providing a surgical cover. A poultice provides a moist dressing for the treatment of inflamed areas. Boo Boo Buddy is not a dressing. Essentially it acts in the same way as an ice pack by causing the blood vessels to contract, reducing blood flow, and thereby relieving pain. The plastic sleeve of Boo Boo Buddy is not designed to cover the skin but to protect the skin from the contents of Boo Boo Buddy.
- The question of medical use cannot be examined on its own as suggested by the Appellant. The use of the product under heading 3005 is subsidiary to the description of the product as wadding, gauze, bandages and similar articles. The use criterion restricts which bandages and similar products are categorised under 3005. The HSEN for 3005 stated that the heading excluded bandages, adhesive plasters etc, containing zinc oxide, and plaster coated fracture bandages not put up in forms or packages for retail for medical, surgical, dental or veterinary purposes.
- We find that Boo Boo Buddy does not have the objective characteristics of wadding, gauze, bandage and similar products. Thus the tariff categorisation of 3005 is not appropriate.
- Boo Boo Buddy is essentially a mixture of chemicals which provides the medium for the heat source or heat sink to the skin. Thus Boo Boo Buddy acts as a heat reservoir to relieve pain and inflammation. Its plastic sleeve seals the gel so as ensure that the skin is not exposed to adverse reaction to the chemical constituents of the gel.
- We find that the gel contained in the plastic sleeve gives Boo Boo Buddy its essential character of a mixture of chemicals which meets the description of chemical products in heading 3824. BTI reference DEHH/1157/05/01 and the contents of the draft regulation provide added support to our finding.
Decision
- We decide that the correct classification for Boo Boo Buddy is 3824 90 90 99. We, therefore, dismiss the Appeal. We make no order for costs.
MICHAEL TILDESLEY OBE
CHAIRMAN
RELEASE DATE: 1 June 2007
LON/06/7079
