The ECJ was recently called upon to rule in a Latvian classification dispute concerning active matrix liquid crystal devices (LCD’s) (Case C-16/08 Schenker SIA v Valsts ieņēmumu dienests).
Schenker imported a number of articles namely LCD active matrix devices and declared the goods under Commodity Code 9013 80 20 of the Combined Nomenclature and thus applying a nil rate of duty to the imports:
“…Liquid crystal devices not constituting articles provided for more specifically in other headings; lasers, other than laser diodes; other optical appliances and instruments, not specified or included elsewhere in this chapter: Other devices, appliances and instruments: Active matrix liquid crystal devices…”
However, the Latvian Customs Authorities doubted this classification and obtained samples from Schenker to examine. They decided that the correct classification was (at that time) actually CN 8528 21 90 which attracted a duty rate of 14%:
“…Monitors and projectors, not incorporating television reception apparatus; reception apparatus; reception apparatus for television, whether or not incorporating radio-broadcast receivers or sound or video recording or reproducing apparatus: Video Monitors: Colour: Other…”
The Latvian authorities imposed a fine on Schenker which the District Administrative Court subsequently upheld. Schenker launched an appeal with the Administrative Court of Appeal which referred the issue to the ECJ.
Schenker argued that the devices in question were not intended for a single, specific use and could be used to manufacture numerous articles such as computers, video monitors, televisions, electronic signs or game machines. For that reason, they argued that the product could not fall within CN 8528 21 90 which covers video monitors and finished articles.
The Latvian Authorities
The Latvian authorities argued that the product could not be classified under CN 9013 80 20 as they included additional parts not listed in the subheading. They argued that the devices in question are able to receive and display video images and so technically can perform the principal function of a video monitor and using General Rule of Interpretation Rule 2(a) they argued that the product could be regarded as unfinished or incomplete articles equivalent to finished/complete articles and therefore able to fall under CN 8528 21 90.
The European Commission
The European Commission argued that the goods should actually be classed under CN 8529:
“…Parts suitable for use solely or principally with the apparatus of headings nos. 85.25 to 85.28…”
And more specifically under CN 8529 90 81:
“…Parts suitable for use solely or principally with the apparatus of headings 8525 to 8528: Others: For television cameras of subheading 8525 30 and apparatus of headings 8527 and 8528…”
The Judgement of the Court
The ECJ held that CN 9013 80 20 did not apply as the goods in question were equipped with parts that were not listed in that heading. The devices may have number of intended uses but different vital components needed to be added to them in order for those parts to acquire the basic characteristics of a complete article. The court also dismissed the argument that the goods should be classified under CN 8528 21 90 as the end use of the product in question depends on the additional parts added to them during the next stage of manufacture.
The Court agreed with the Commission that the product should be classed under CN 8529 and more specifically under CN 8529 90 81. The Court did state however that it was for the national court to decide whether the LCD devices at issue in the main proceedings have the objective characteristics and properties necessary to be regarded as parts suitable for use solely or principally with the apparatus of headings 8525 to 8528 of the CN.
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