13 July, 2020
On 10 July the Department of Administrative Cases of the Supreme Court (Senate) annulled the judgment of the Regional Administrative Court, which satisfied the application of SIA “Hydro Energo” and annulled the decision of the State Revenue Service regarding the tax debt calculated for the applicant for imported goods – brass rods. Evaluating the answers provided by the Court of Justice of the European Union to the question referred by the Senate, the Senate acknowledged that the Regional Court, in determining the classification of the product, had misinterpreted the provision of substantive law. The Senate referred the case for re-examination before the Regional Administrative Court.
The Court of Justice of the European Union, in response to a question referred by the Senate in this case, stated that the requirement for a continuous cross-section applies to the shape and cross-sections of the product in question, as a result, ingots having a rectangular shape and identical cross-sectional dimensions along their entire length meet this requirement. The requirement of full cross-section must be understood as excluding only hollow-core products (pipes and tubes). Although the ingots at issue in the main proceedings have irregular pores, voids and cracks, such internal defects do not, however, make them hollow-core products, so that it cannot be excluded that hot-rolled ingots are rods within the meaning of Chapter 74 of the Combined Nomenclature and therefore falls within heading 7407 of the Combined Nomenclature, which covers copper rods and profiles.
The circumstances of the case are as follows:
The applicant SIA Hydro Energo applied for release of goods for free circulation that are declared under subheading 7403 21 00 of the Combined Nomenclature (refined copper and copper alloys, unwrought copper and zinc alloys (brass). The basic rate of import duty for this item is set at 0%. They have been classified by the National Revenue Service as brass rods under heading 7407 21 10 of the Combined Nomenclature, stating that, according to the Harmonized Commodity Description and Coding System, heading 7403 (unwrought copper and its alloys) does not cover rolled products. Whereas, the applicant contends that those products do not fall within the definition of rods within the meaning of the Combined Nomenclature because they do not have a full, continuous cross-section, namely, there are giant pores, voids and cracks visible in the plane of the plate. As an additional observation, the applicant stated that the rectangular rolling was carried out solely for the convenience of transport and that the products could not be used for purposes other than remelting. In the applicant's view, when classifying products under heading 7403 or 7407 of the Combined Nomenclature, important is not only the shape and pre-treatment of the products but also their degree of treatment and their possible use.
Case No SKA-220/2019; A420380214
Information prepared by Baiba Kataja, the Press Secretary of the Supreme Court
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