Sony Computer Entertainment Europe Ltd v Revenue and Customs

Binding tariff information may be revoked under article 9(1) of the Community Customs Code after a reappraisal shows that its classification was legally wrong, even where a later regulation also causes it to cease to be valid. The mechanisms are not mutually exclusive. A revocation letter is construed in its factual and legal context. Notice of revocation and an appeal right may establish a separate revocation decision. Annulment of a regulation for defective reasoning does not automatically revive a separately revoked BTI. The decision must state grounds sufficient to explain why it was made and whether to appeal, but need not contain a detailed statement. The appeal was dismissed.

Sony appealed from the dismissal of its appeal against a decision revoking binding tariff information for PlayStation2 consoles. The BTI classified the consoles under CN sub-heading 8471. Commission Regulation 1400/2001 later classified them under sub-heading 9504, and Customs and Excise notified Sony that the BTI would be revoked when the regulation entered into force.

The VAT and Duties Tribunal dismissed Sony’s appeal: [2004] UKVAT (Customs) C00190. The High Court dismissed Sony’s appeal under section 11 of the Tribunals and Inquiries Act 1992: [2005] EWHC 1644 (Ch). The Court of First Instance subsequently annulled Regulation 1400/2001 for defective reasoning, but did not decide that sub-heading 8471 was correct. The central issue was whether the BTI revived on annulment because the July 2001 letter had not effected a separate revocation.

Appeal dismissed unanimously. Chadwick LJ gave the leading judgment. Sedley LJ agreed with it, and Arden LJ also agreed. The application for a preliminary reference was refused.

1. The publication of Regulation 1400/2001 did not make the BTI invalid before the regulation entered into force. Article 3 postponed that event until 31 July 2001. It was therefore open to Customs and Excise to revoke the BTI on 25 July under article 9(1) of the Council Regulation (EEC) No 2913/92. The possible interaction between the different cessation-of-validity provisions in article 12.5(a) did not require a definitive determination of which provision operated on 31 July.
2. Whether the letter of 25 July constituted a separate revocation depended on its ordinary meaning in its factual and legal context. The letter referred to a decision to revoke, notified Sony of an appeal right, and deferred the effective date to coincide with the regulation’s entry into force. Those features showed a separate article 9(1) revocation, rather than merely notification that the BTI would automatically cease to be valid.
3. Article 6(3) of the Code required sufficient grounds to enable Sony to understand why the decision was made and whether to appeal. It did not require a detailed statement. The July letter, read with the June letter, made the underlying reason clear: classification under sub-heading 8471 was considered legally incorrect. Sony had a full opportunity to challenge that issue before the tribunal.
4. The annulment of Regulation 1400/2001 for defective reasoning did not establish that sub-heading 8471 was correct. Nor did it invalidate the separate national revocation. The tribunal was entitled to uphold the revocation after determining that the correct classification under the CN and GIRs was sub-heading 9504. Sony had not appealed that classification finding and could not reopen the fact-based issue after declining to argue it before the tribunal.
5. A preliminary reference was unnecessary. The interpretation of the revocation letter was a matter of domestic law, and the existing authority established that BTI could be revoked after a national reappraisal of classification.

• Court of Appeal (Civil Division): dismissed Sony’s appeal and refused a reference to the Court of Justice: [2006] EWCA Civ 772.
• High Court, Chancery Division: dismissed Sony’s appeal under section 11 of the Tribunals and Inquiries Act 1992: [2005] EWHC 1644 (Ch).
• VAT and Duties Tribunal: dismissed Sony’s appeal against the review decision upholding revocation of the BTI: [2004] UKVAT (Customs) C00190.