(Deliberately) offering goods in an unassembled state no longer results in a tariff advantage in certain cases. Indeed, the European Court of Justice has ruled that different parts of a satellite receiver set (0%), as two separate shipments imported by different legal entities within the same group, had to be considered as 'presented at the same time'. Thus, the goods fall under one and the same tariff heading, namely as a satellite receiver set in assembled condition at an import duty of 14%.
The ruling provides highly relevant guidance on the interpretation of Classification Rule 2a and may have much impact on the classification of unassembled goods in the future. This blog therefore discusses the content of the judgment.
Facts and circumstances
A Dutch enterprise imported several satellite receiver components between 2006 and 2007. This taxpayer did this each time by filing two separate returns on one day: one return for the purchases of part A from a German group and one return for the purchases of part B from the same German group. It is relevant here that the two declarations each contained all parts of the same models in corresponding quantities, that all the goods came from the same supplier in China, and that all the goods were transported by the same ship and in the same container. After the goods were released for free circulation, the German group assembled them into satellite receivers in Germany.
In 2009, the inspector - after an examination of the books - argued that the interested party had not released components for satellite receivers into free circulation at a 0% import duty, but - on the basis of classification rule 2a- satellite receivers in unassembled condition at a 14% import duty.
The Customs Chamber of the Amsterdam Court of Appeal had doubts about the interpretation of General Classification Rule 2a, more specifically about the answer to the question of whether, in the circumstances of the present cases, the satellite receiver components declared for free circulation in two separate declarations should be classified as satellite receivers in unassembled condition. In particular, the Court's doubts concerned the answer to the question of how to interpret the criterion ''simultaneously presented for customs clearance'' formulated by the ECJ. In fact, the text of General Classification Rule 2a does not give a definite answer as to how to present goods in an unassembled state. According to the Amsterdam Court of Appeal, the question is whether it is sufficient for the qualification of ''simultaneous presentation'' that (1) the goods belong to different legal entities within one group, (2) they are intended - once released for free circulation - to be assembled into one finished product, (3) are transported in one container and (4) are declared for release for free circulation by the same declarant in his own name and for his own account at the same customs post on the same day in two separate declarations, or that ''simultaneous presentation'' only exists if the goods are declared for release for free circulation in one declaration.
The opinion of the CJEU
The CJEU ("ECJ") argues that the component parts of the goods in question were presented for customs clearance at the same time. In order for these components to be considered as goods presented in a disassembled or unassembled state within the meaning of Classification Rule 2a, it is not necessary for them to have been included in a single declaration when presented to customs.
According to the ECJ, any other interpretation of the concept would in practice allow importers to ensure, by means of a relatively simple operation - such as declaring goods in separate declarations - that the goods in question are classified as a single whole or, on the contrary, separately, whichever is more advantageous to them.
Consequently, according to the ECJ, General Classification Rule 2a must be interpreted as meaning that parts of a satellite receiver, intended to be assembled into a complete device after being released for free circulation, transported in a single container and declared by the same declarant, in his own name and for his own account, on the same day at the same customs office for release for free circulation by means of two separate declarations for release for free circulation and which at the time of release for free circulation are owned by two related companies, are to be considered as a satellite receiver apparatus presented in a disassembled or unassembled state within the meaning of the aforementioned rule, and therefore covered by one and the same tariff heading, provided that objective factors show that these parts form a whole and comprise all the components of that apparatus.
Conclusion
When a good is offered in an unassembled state, there is ''simultaneous offering'' within the meaning of Classification Rule 2a when:
· the goods belong to different legal entities within the same group;
· are intended, once in free circulation, to be assembled into a single finished product; and
· are transported in one container, and;
· are declared for free circulation by the same declarant in his own name and on his own account at the same customs post on the same day in two separate declarations.
Thus, in the case of the satellite receivers, all goods are subject to the 14% import duty.
The ruling provides important guidance on the interpretation of Classification Rule 2a in similar cases and is likely to have major implications for the classification of unassembled goods in the future.
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