Classification of False Nails Sets

29 July 2011

The European Court of Justice has ruled on the classification of moulded false nail sets (C215/10). The sets consisted of a variety of sizes of nails made of moulded plastic, a small tube of glue, a nail file, a manicure stick and decorating stickers for the nails.

The competing classifications were:

• 3304.30.00- “…manicure or pedicure preparations”= 0% duty
• 3926.90.97 “…other articles of plastic”-=6.5% duty

• 8214.20.00 “… manicure and pedicure sets and instruments (including nail files)”=2%The EU Commission had published a Regulation (no 1417/2007) classifying a set for nail decorating, put up for retail sale as an item of plastic, subject to 6.5% duty. The Annexe to the Regulation states that the set in question, consisting of different articles, is to be classified under one commodity code as it is considered as a retail set. It considers the nails as giving the set its essential character. The Annexe makes reference to the HS Explanatory Notes and states that such a ‘set does not consist of manicure products of subheading 3304 30 00 as it includes the addition of false nails stuck over the fingernail and does not include manicure preparations which simply care for and beautify the hand and the natural nails.

The appellants were seeking clarification of whether the Regulation was valid. They previously taken this classification matter to independent tax tribunal in the UK who had ruled the sets were within commodity code 3304.30.90. HMRC then took the matter to the EU Classification Committee (made up of customs colleagues from other member states to draft Regulation 1417/2007.

The ECJ ruled that the Regulation was valid and correct to classify the false nails to commodity code 3926.90.97 and that the nails were the essential article in the set.

Tax payers should note that Customs Authorities can take a classification case to a Committee of its EU peers, frame the arguments for a given classification without any input from the tax payer and vote on the classification of an item in secret to give rise to a directly applicable EU Regulation reversing an independent court’s decision. The only avenue then open to you is to challenge the validity of the Regulation at the European Court of Justice (at considerable expense and delay). This is a significant commercial risk and sometimes, as in this case, it does not pay off.

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