C00194

CUSTOMS DUTIES — De Lorean car manufactured in 1981 — whether motor car within heading 8703 or collective item within heading 9705 — car not of relative vanity, high value, over 30 years old or ?? — BTI correctly given within heading 8703 — appeal dismissed.

MANCHESTER TRIBUNAL CENTRE

STEPHEN BERNARD SAUDNERSAppellant

- and -

HER MAJESTYS REVENUE AND CUSTOMSRespondents

Tribunal: Colin Bishopp (Chairman)

Brian Strangward

Sitting in public in Birmingham on 10 May 2005

The Appellant in person

J Maxwell-Scott of counsel instructed by the Solicitors office of HM Customs and Excisefor the Respondents

© CROWN COPYRIGHT 2005

DECISION

  1. The Appellant, Stephen Saunders, challenges in this appeal the decision of the Respondents, then the Commissioners of Customs and Excise, that the correct tariff classification for customs duties purposes of a motor car intended to be imported by him from the United States is within heading 87.03 and not, as Mr Saunders contends, 97.05. That decision was made following Mr Saunders’ request for a binding tariff information (“BTI”) ruling, and was upheld on review; it is against that review, the outcome of which is set out in a letter dated 1 December 2004, that Mr Saunders now appeals.
  2. Mr Saunders represented himself at the hearing, while the Respondents were represented by J Maxwell-Scot of counsel. We heard no formal evidence – there was no significant difference between the parties about the facts – but we had helpful bundles of documents from each side.
  3. The car – which Mr Saunders has imported despite his dissatisfaction with the Respondents ‘ decision – is a De Lorean DMC-12, manufactured in 1981. Mr Saunders told us – and the Respondents accept – that about 6000 examples of the care are in existence worldwide, although only about 100 are to be found in the UK. Its value, new, had been US$26000. The value of an example now varied considerably, depending on condition, although even a model in very poor condition had some value as it could be broken up for spare parts – a factor which, if itself, was reducing the overall number of cars remaining in existence. Mr Saunders had paid UK$6900 (approximately £3800) for his car, which was not in running order and required complete restoration. The documents produced by Mr Saunders indicated that a car in fairly good condition might be bought in the US for $14000, approximately £8000.
  4. Mr Saunders is a member of a DeLorean owner’s club. It was through that club and its publication that he learnt that other members had imported cars from the US within heading 9705, carrying a duty rate of 5 per cent, and was understandably disappointed that he was given a BTI within heading 8703, carrying duty at 10 per cent. It emerged that some other importers had been given BTI’s within heading 9705, but the Respondents had since taken steps to revoke them, and to re-classify the cars within heading 8703. It is not open to us to determine Mr Saunders’ appeal by reference to what the Respondents had done in other cases; the only matter before us is the correct tariff classification of Mr Saunders’ car. We have a full jurisdiction – that is to say, we may determine for ourselves what the correct classification is, and are not limited to considering whether or not the Respondents’ view is reasonable – but in this case, as the parties accepted, we need do no more than decide which of the possibilities advanced by the parties is appropriate.
  5. The Respondents’ preferred classification is under heading 8703 which reads as follows:

“87.03 – Motor cars and other motor vehicles principally designed for the transport of persons (other than those of Heading 8702), including station wagon and racing cars”

  1. Mr Saunders advances heading 9705, which includes:

“97.05 – Collections and collectors’ pieces of zoological, botanical, mineralogical, anatomical, historical, archaeological, palaeontological, ethnographic or numismatic interest”

  1. Mr Saunders recognised that if the car did not satisfy the criteria for inclusion within heading 9705 it must necessarily come within 8703. In support of his argument that 9705 is correct, he pointed to the comparatively small number of examples worldwide, and the much smaller number within the UK and emphasised that he had no intention of using the car as a normal, everyday means of transport. Once he had restored it, he said he would insure it as a collector’s car or historical vehicle, allowing him to drive it for only a limited distance each year, and he would in fact drive it only to rallies organised by the owners’ club [and similar “classic car” events]. We accept that those are his intentions (Mr Maxwell-Scott did not suggest otherwise) and that the car is regarded by those who own, or would like to own, an example as a “classic” car, with some scarcity value – indeed, the price paid by Mr Saunders for his car is self-evidently much greater than the price one would pay for a “run of the mill” car over 20 years old.
  2. Mr Maxwell-Scott, however argued that the criteria for inclusion of a car within heading 9705 were much stricter than Mr Saunders had suggested. He relied, first, on the judgment of the Court of Justice in Erika Daiber v Hauptzollamt Reutlingen (Case 200/84) [1985] ECR. The Court was requested to consider whether a Daimler-Benz car should be classified within heading 9705 (then 9905). The Court set out a number of tests, summarised in its answer to the reference, at paragraph 25 of the judgment. The heading is appropriate for:

“Collectors’ pieces within the meaning of heading no 97.05 of the common customs tariff are articles which possess the requisite characteristics for inclusion in a collection, that is to say, articles which are relatively rate, are not normally used for their original purpose, are the subject of special transactions outside the normal trade in similar utility articles and are of high value”

  1. In Uwe Clees v Hauptzollamt Wuppertal (Case C-259/97) [1998] ECR I –08127 the Court added, at paragraph 25:

“…heading 9705 of the CN must be interpreted as meaning that motor vehicles which are:

-in their original state, without substantial changes to the chassis, steering or braking system, engine, etc,;

-at least 30 years old; and

-of a model or type which is no longer in production

are presumed to be of a historical or ethnographic interest.

However, motor vehicles which satisfy those conditions are not of historical or ethnographic interest where the competent authority establishes that they are not liable to evidence a significant step in the evolution of human achievements or illustrate a period of that evolution.

In addition, the criteria laid down by the case-law of the Court concerning the characteristics required in order for a vehicle to be included in a collection must be met.”

  1. The remarks of the Court in Daiber have been incorporated in an Explanatory Note to the Combined Nomenclature. Although there are some minor differences of wording, the CNEN (which was referred to and approved in Uwe Clees) adds nothing of substance to the judgments and we do not need to set it out.
  2. The Respondents’ case is that Mr Saunders’ car does not meet the criteria established by the Court of Justice. A worldwide population of 6000, they say, cannot be regarded as sufficiently small to be described as “relatively rate”. It is not appropriate, they maintain, to consider only those vehicles within the UK; the customs tariff relates to international trade and the total number of surviving examples must be considered. The car is less than 30 years old. It was mass-produced and although some features of its design are unusual, none is innovative in any meaningful sense, and the car does not illustrate any significant step in human achievement. Moreover, although the car may be worth more than a “run of the mill” second-hand car of its age, that is not sufficient (as the Court determined in Daiber) to satisfy the requirement that it is of high value: the comparison must be with the cost of a new car (see the Advocate-General’s opinion in Daiber).
  3. Mr Maxwell-Scott acknowledged that neither the judgments nor the CNEN demanded that a car meet all of those requirements in every case; they were no more than tests against which a claim for classification must be judged. Here, however, he said, none of those tests was satisfied. Sympathetic though we are to Mr Saunders, who confidently expected to receive a BTI within heading 9705 as others had done, we agree with Mr Maxwell-Scott. Mr Saunders’ car is a collector’s item only in the sense that it is an item which may be collected. It does not display any of the more stringent characteristics identified by the Court of Justice, of varity, high value, age or innovation. We are satisfied that classification within heading 8703 is correct.
  4. The appeal is, therefore, dismissed. Mr Maxwell-Scott did not seek a direction in respect of costs

Colin Bishopp

CHAIRMAN

Release Date: 24 May 2005