Importer saddled with duty and tax

Posted: 15th May 2013

SaddleIn a cautionary tale for international traders, an importer of child bicycle seats from China has been held liable for thousands of pounds in additional import duty and VAT after the Upper Tribunal (UT) ruled that, notwithstanding that the product consisted of various components, its ‘essential character’ was that of a saddle.

The ruling means that the importer must pay £1,785 in extra VAT on the goods as well as £10,880 in ‘anti-dumping duty’ - a charge levied on top of normal customs duty and which is designed to discourage import into the European Union of goods that are sold for less than the price that ‘like goods’ would fetch in the exporter’s home market.

The importer had argued that the product, which was designed to be fixed to adult bicycles to transport young children, included various component parts, including a backrest, a seatbelt, straps and footrests, as well as a padded seat. At first instance, the First-Tier Tribunal accepted that the seat was only one part of a larger composite whole and that the product did not fall into the ‘saddles’ category which was subject to anti-dumping duty at the relevant time.

In upholding an appeal by Her Majesty’s Revenue and Customs (HMRC), the UT ruled that, on a proper interpretation of the combined nomenclature provisions of council regulation (EEC) No: 2658/87, the padded seat gave the product its essential character and that it should therefore be classified as a saddle for customs duty purposes.