C00205

CUSTOMS DUTY — classification — nomenclature — Ford Fairlane 500 Galaxie Skyliner Retractable imported from the USA — whether vehicle a collector’s piece of historical interest classifiable under CN heading 97.05 — no — vehicle found to be correctly classified as a motor car under heading 87.03 — review decision approved by tribunal — appeal dismissed

MANCHESTER TRIBUNAL CENTRE

ANDREW BURFORDAppellant

- and -

THE COMMISSIONERS FOR

HER MAJESTY’S REVENUE AND CUSTOMSRespondents

Tribunal:Michael Johnson (Chairman)

Mohammed Farooq

Sitting in public in Birmingham on 30 June and 7 September 2005

The Appellant appeared in person

Andrew O’Connor, counsel, instructed by the Acting Solicitor for HM Revenue and Customs for the Respondents

© CROWN COPYRIGHT 2005

DECISION

  1. The Appellant Mr Burford, who lives in Birstall, Leicester, is the owner of a 1959-model Ford Fairlane 500 Galaxie Skyliner Retractable automobile manufactured in the USA. He purchased the vehicle in America for U$S22,000 in January 2005, having negotiated to buy it in September 2004. He had the vehicle shipped to the UK and he now drives and enjoys it here.
  1. Mr Burford had to pay customs duty when he imported the vehicle. He has appealed against the tariff classification for the vehicle decided and applied by her Majesty’s Revenue and Customs (“Customs”). Customs say that the vehicle is correctly classified under Combined Nomenclature (“CN”) heading 87.03 of the Commodity Code (“Motor cars and other motor vehicles principally designed for the transport of persons … ”). Mr Burford disagrees. He says that the vehicle ought to be classified under CN heading 97.05 (“Collections and collectors’ pieces of zoological, botanical, mineralogical, anatomical, historical, archaeological, palaeontological, ethnographic or numismatic interest”). If Mr Burford is correct, he stands to save a considerable amount of duty.
  1. On 18 September 2004 Mr Burford applied to Customs for a binding tariff information (“BTI”) in respect of his vehicle. BTIs are documents whereby Customs certify how particular goods fall to be classified for purposes of liability to customs duty.
  1. In Mr Burford’s application he described his vehicle as follows:

“It is a classic car, 1959 Ford Fairlane 500 Galaxie Skyliner (retractable top). I have enclosed [details of] another I found (sold) which shows the car and also details the production quantities. I have also consulted the American Ford-related website [details enclosed] who also confirm that production was limited to 12,915 and it is estimated that only about 10 per cent (1,200) survive. There is also a UK American Car Club who if I join can supply and confirm production numbers. They know of two for sale in the UK and I guess there is probably only 20 or so in the UK. This obviously makes it quite a rare car and hopefully you [will] agree to the low rating for tax.

“I have enclosed a copy of [details of] the actual car proposed along with commission plate to confirm details of the car.”

  1. Mr Burford then gave particulars of the VIN (vehicle identification number), body, trim, date and colour of the vehicle and its value, specified as U$S22,000.
  1. On 29 September 2004 Customs provided a BTI to Mr Burford stating that the vehicle was classified under CN heading 87.03, indicating in the covering letter that the vehicle was excluded from heading 97.05 “on the grounds that there are too many surviving examples”. The BTI described the goods as follows:

“1959 Ford Fairlane 500 Galaxie Skyliner Retractable VIN no [which was then set out]. Equipped with big block 352 cubic-inch motor with 300 hp. Left-hand drive. The roof retracts into the large trunk area of the car. Missile-shaped rear fenders hide the moving metal work.”

  1. Mr Burford requested a departmental review of this decision. The review took place and the result was provided to Mr Burford in the shape of a letter dated 23 November 2004. It is against the outcome of that review that Mr Burford is now appealing.
  1. The review took into account additional information provided to Customs by Mr Burford. This included a letter dated 5 October 2004 sent to Mr Burford by American Auto Club International in which the President of that Club wrote as follows –

“[Your vehicle] is representative of a very rare ‘Top-of-the-line’ Skyliner Retractable & is unique in that the ‘Retractable Roof’ was specifically designed for just this one Ford product fitted with the 323 cubic-inch V8 engine & was built at the Ford Mahwah assembly plant.

“The fourth digit of the VIN (W) signifies it to be the Special Code of a fully retractable ‘hard top’ specially engineered to allow the complete Metal Roof section to retract, an innovation never to be repeated by any other manufacturer due to the complexity & cost of design.

“Overall production total for this specific model was a mere 14,713 units, information received through my research throughout the USA & The Ford Motor Company confirms that fewer than 1,000 ’59 Skyliner Retractables have survived to this present day with most on display at museums or in private collections.

“I know of only four other examples to be registered in the United Kingdom.

“The 1959 Skyliner 500 is indeed a very rare vehicle & certainly of historical value in the motoring world.”

  1. The officer of Customs who conducted the review was Mrs Linda Chandler. She decided that the vehicle was correctly classified under heading 87.03. She took into account the above information.
  1. In her review letter, Mrs Chandler first drew attention to the CN, which forms the basis of the UK Customs Duty Tariff by virtue of the annual amendments to EEC Regulation 2658/87 of 23 July 1987. She explained how the General Interpretative Rules (“GIR”) for the interpretation of the tariff stated, in their pertinent part, that classification is to be determined according to the terms of the headings and any relevant Section or Chapter Notes. She further explained how there are also Explanatory Notes to the CN (“CNENs”) which, she stated, are considered to be an authoritative source for the interpretation of the CN.
  1. She applied the following process for determining classification. Following the GIR, she first looked at the CN chapter headings. These are as mentioned in paragraph 2 above. Then, she looked at the CNEN dealing with EC policy for the classification of cars within heading 97.05.
  1. She referred to the decision of the European Court of Justice in Erika Daiber v Hauptzollamt Reutlingen Case 200/84 (Judgment 10 October 1985) (“Daiber”). The relevant CNEN is (as we find) based upon certain criteria established in Daiber for including motor vehicles within 97.05 as “collectors’ pieces of historical interest”. According to paragraph 1 of the CNEN, motor vehicles can be included under that heading if they:
  • possess a certain scarcity value;
  • are not normally used for their original purpose;
  • are the subject of special transactions outside the normal trade in similar utility articles;
  • are of high value; and
  • illustrate a significant step in the evolution of human achievements or a period of that evolution.
  1. Paragraph 1 of the CNEN goes on to state that, unless obviously contradicted by the facts, these criteria can be taken to apply to:
  • vehicles 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;
  • all vehicles manufactured before 1950, even if not in running order.
  1. Paragraph 2 of the CNEN states that “collector’s pieces of historical interest” also includes vehicles, regardless of age, that can be proved to have been used in the course of an historic event, or which have been designed, built and used solely for competition and have scored significant sporting successes at prestigious national or international events. Proof of such matters can be supplied by appropriate documentation, for example, reference books or specialised literature, or by opinions from recognized experts.
  1. Mrs Chandler observed that the CNEN is in two parts. Paragraph 1 of the CNEN lists criteria which are applicable to motor vehicles generally. Paragraph 2 is more specific.
  1. Looking at paragraph 1 of the CNEN, and comparing it with Daiber, Mrs Chandler considered Mr Burford’s vehicle against the listed criteria.
  1. She stated that there was evidence that 1,000 Ford Fairlane 500 Galaxie Skyliners remained worldwide, and that only four or five remain in the UK. We find that here she had regard to the contents of the letter to Mr Burford from the American Auto Club International from which we have quoted above.
  1. She stated that there was no evidence that the vehicle would be used for any other purpose than driving and carrying persons.
  1. She stated that there was no evidence that the vehicle was the subject of a special transaction outside the normal trade.
  1. She stated that, having regard to the Opinion of the Advocate-General in Daiber, the price of U$S22,000 paid for the vehicle did not indicate that it was collectable. In her view, that was a fairly high price, but the vehicle was not a high value vehicle.
  1. She stated that there was no evidence that the vehicle illustrated a significant step in the evolution of human achievements or a period of evolution for the year 1956 (sic). We think that here she had in mind the year when the Skyliner’s retractable roof was developed by the Ford Motor Company.
  1. In relation to paragraph 2 of the CNEN, she stated that there was no evidence that the vehicle was used in an historic event, nor was there evidence of a motor-racing history for the vehicle.
  1. She concluded that the vehicle was not a “collector’s piece of historical interest” and was excluded from CN heading 97.05. She upheld the decision given in the BTI that the vehicle was properly classified under heading 87.03 (full code 870324 90 00).
  1. Mr Burford opened his appeal to this tribunal by showing us a promotional film of the Ford Galaxie Skyliner Retractable model, made at the time when these vehicles were being sold as new. The film demonstrated the powerful retractable roof in operation, and stressed the engineering sophistication of this feature and the huge amount of time and money that had been poured into its development.
  1. With the retractable roof erect, the Skyliner Retractable has the appearance of a normal sedan. However, on command, the trunk of the vehicle opens, hinged at the rear so as to rise backwards, and the entire roof including the rear window lifts up automatically, moves backwards on cleverly-designed “arms”, and disappears into the trunk. The lid of the trunk then closes over the retracted roof, leaving a roadster-type open vehicle with no sign of a hood.
  1. The process is impressive, even by today’s standards. We feel that the retractable roof must have represented an automotive achievement at least on a par with any other of the late 1950s.
  1. Mr Burford showed us photographs of his own vehicle, and a model of the Skyliner Retractable. He provided us with copies of descriptive “literature” and extracts from books containing details of the history of the Skyliner over the three years for which it was produced (1957 to 1959), particulars of the differing specifications of the Skyliner over those years, pictures of variants of the vehicle, and various price guides.
  1. The following extract from one of the books cited by Mr Burford indicates what lay behind the development of the retractable roof:

“Of all the weird and wonderful devices which the American auto industry spawned in the flamboyant 1950s, the 1957 Ford Fairlane 500 Skyliner, the first and last mass-produced retractable hardtop[1], was surely the weirdest. The paying public loved convertibles, but they didn’t like the difficulties associated with a soft top; they liked a steel roof, but they also loved the sun in their faces and the wind in their hair. The Ford Motor Company lived as far as possible by the adage ‘give the people what they want’ – and if what the people wanted was a hardtop that hid in the trunk, then that was what they would have.”

  1. Mr Burford also provided us with extracts from Ford Motor Company sales brochures, a copy of an article in “Life” magazine describing the presence of 1959 Fords at the Brussels World Fair, and a quantity of information about specific examples of these cars offered for sale in 2004/05, which Mr Burford had downloaded from the internet.
  1. This last-mentioned information appears to us to show that 1959 Skyliner Retractables are collectable, but that they are not so prized as to command a true collector’s price, even the very best (so-called “mint”) examples being available for under U$S50,000. Typically, U$S30,000 – 35,000 appears to be the current price of a good condition 1959 Ford Galaxie Skyliner Retractable in the USA. However there appear to be a number of these cars available in poor condition for U$S10,000 or less. We would question whether these cars are worth having.
  1. Mr Burford has received an e-mail from the Ford Motor Company stating that, according to the company’s resources, 12,915 1959 Skyliners were produced. However, whilst the Standard Catalogue of American Cars 1946-75, edited by Ron Kowalke, confirms a production number of 12,915 Skyliners in 1959 (14,713 Skyliners having been produced in 1958, and 20,766 in 1957), we find that the 1959 production figure included those cars badged as Fairlane 500s released in late 1958, prior to this convertible model being absorbed into the new mid-year Galaxie series. The Galaxie series lasted only some six months.
  1. The Ford Galaxie Club of America have written to Mr Burford to say that they believe that there are only approximately 42 1959 Ford Galaxie Skyliners that have survived the ravages of time. The letter states that the air-conditioned models are even rarer, with only six of the 42 surviving vehicles sporting that option. Skyliner Retractable hardtops are said to be very rare. But we think that this letter must be regarded with caution, because the sources of the information it contains are unclear, and it may well reflect only such examples of the model as are known to the club.
  1. Mr Burford was the only witness to give oral evidence in support of his appeal. He told us that he bought his car whilst on holiday in the USA. He is a UK classic car enthusiast, but fancied owning something different. He told us that when he filled in his application for a BTI, he was unsure what to include in the form. He was informed by shippers that cars like his were often imported to the UK as historical vehicles.
  1. He told us that he did not dispute Daiber. He described his own vehicle as unrestored and original, exceptional and “breaking all records”. He submitted that his vehicle was so distinctive that it satisfied the Daiber criteria.
  1. Mr Burford said that the Skyliner Retractable model was an example of a vehicle which possessed historical significance owing to its characteristic retractable hardtop, being an engineering achievement of the period, on the strength of which it was exhibited in Brussels and elsewhere and became famous. His own vehicle, simply by having been promenaded by way of exhibition and having shown off its retractable roof mechanism, which had happened both in the USA and the UK, should, Mr Burford submitted, be treated as having been used in the course of an historic event for the purposes of paragraph 2 of the CNEN.
  1. As to the rarity of the vehicle, Mr Burford disputed that the relevant factor was its worldwide scarcity. He submitted that its evident extreme rarity in the UK was what should count. The evidence showed, he submitted, that there are very few Galaxie Skyliners left in America – perhaps as few as 42 – and only a handful in the UK. Mr Burford said that his car was one of the rarest, a 3-speed “Cruisematic”, possessing air conditioning, then extremely rare, and nearly “fully loaded”, with a range of options fitted (power steering, power brakes, V8 engine, etc).
  1. From what we were told by Mr Burford about his Galaxie, whose description we have no hesitation in accepting, it must indeed be a rare car to that specification. We do not need persuading that it may well be the only Skyliner Retractable in the UK with the particular features described.
  1. It is however significant, we feel, that such a distinctive example was procured for U$S 22,000. Mr Burford told us that he paid something of a keen price, and we think that this may be correct. As we indicate above, he might well have paid U$S30,000 or even more. He has an agreed insurance valuation for his vehicle of £21,500. Mr Burford is in the fortunate position of owning an unusual and very desirable classic car which he got for the “right” price. That is scarcely in dispute. What is principally in dispute, however, is whether the car is truly a collector’s item.
  1. Mr O’Connor, appearing for Customs, called as his only witness Mr John Mitchell, who is employed as a Customs Officer in the Southend Tariff Classification Centre of Customs (“the Centre”). Mr Mitchell belongs to a team of officers – currently about 10 strong, but numbering 13 or 14 in Summer 2004 – who consider issues of tariff classification at the Centre. Mr Mitchell produced an unsworn one page typewritten statement as an aide-memoire, as to the contents of which he spoke when giving oral evidence.
  1. Mr Mitchell told us that quite a large part of the Centre’s work consists of dealing with enquiries for the classification of classic cars under Chapter 97 (about 95 per cent of all enquiries the Centre receives for classification under that particular chapter). Until August 2004, the Centre frequently issued BTIs classifying cars under heading 97.05 purely on the strength of the often rough-and-ready descriptions of the vehicles of their classic cars given to the Centre by applicants. For reasons that are unclear to the tribunal, the Centre did not attempt to apply the Daiber criteria.
  1. However the high number of applications for such classification led in due course to the Centre scrutinizing some applications with rather more care. The first vehicles to receive this scrutiny were old VW camper vans. (Apparently there is a steady demand for the importation of such vans.) The Centre moved on to consider applications for less utilitarian classic vehicles, such as Porsches and Jaguars. Finally, from late August 2004 onwards, the Centre tightened its procedures in respect of all importations of old vehicles. Thenceforth, emphasis was placed by the Centre on the Daiber criteria.
  1. Mr Burford was affected by this change of policy when he applied for his BTI. In cross-examining Mr Mitchell, Mr Burford drew Mr Mitchell’s attention to certain older BTIs said to conflict with the new policy, or with the BTI provided in Mr Burford’s case. Mr Mitchell was able to explain the rationale of some, but not all, of these other BTIs. We are, of course, not surprised that Mr Mitchell could not fully deal with particular BTIs with whose details he was unfamiliar.
  1. In respect of those BTIs that are clearly wrong, having regard to the new policy, Customs have embarked on a process of revocation, which is their right. Mr Mitchell told the tribunal: “The important point is to try to create a level playing-field”. By this he meant across the board and throughout the EU Customs area. Customs have with “hindsight” (Mr Mitchell’s word) published a recent Tariff Notice dealing with the new approach to classification in the case of second-hand cars.
  1. Mr Mitchell explained the Centre’s approach to value and rarity respectively having regard to Daiber. The Opinion of Advocate-General Lenz in Daiber (followed in this instance by the full Court and therefore providing a useful guide) states –

“Normally second-hand cars fetch a lower price than new cars; the price for a 30 year-old second-hand car ought to be considerably lower than that of a new car. If, however, such an article is bought at several times the price of a new car, that is an indication that the value thereof is not based on its original intended use but on other criteria. Those other criteria must normally be the interests of collectors.”