Revenue & Customs v Epson Telford Ltd

On a permission application, the court should avoid allowing its decision on permission to prejudge whether a reference to the European Court of Justice is necessary or whether the issue is acte clair. This is particularly important where the court’s status as a court of last instance may differ between the permission stage and a substantive appeal. The appropriate course may be to adjourn the application to a full court, on notice and with full argument, with the appeal to follow immediately if permission is granted. The court may recognise force in arguments based on disagreement below, divergent treatment of similar products and technological differences from earlier decisions without finally determining the tariff classification.

The VAT and Duties Tribunal classified second- and third-generation Epson inkjet printer cartridges as parts suitable for use with printers, so that no customs duty was payable. On appeal, Henderson J classified them as ink, attracting duty at 6.5 per cent. Epson applied to the Court of Appeal for permission to appeal. HM Revenue and Customs had notice but did not attend or make submissions. The application raised the possible need for a reference under the third paragraph of Article 234 of the Treaty and the significance of the Court of Appeal’s status at the permission stage. The central procedural issue was how permission should be determined without prejudging any reference question.

Disposition. Lord Justice Lloyd gave the judgment, with Lord Justice Mummery agreeing. The application was adjourned to a full court of three members, on notice to the Commissioners, with the substantive appeal to follow immediately if permission was granted.

1. The court recognised that its position under the third paragraph of Article 234 of the Treaty could technically differ between stages. When deciding permission, it could be a court of last instance. If permission were granted, a substantive decision could still be challenged in the House of Lords.
2. Granting permission on the basis that the appeal had a reasonable prospect of success might create an argument that the issue was not acte clair, and therefore that a reference was unnecessary. The court considered it unsatisfactory to prejudge that question in a short permission hearing.
3. There was force in Epson’s arguments. The tribunal and Henderson J had reached different conclusions, similar products were treated differently in some member states, and the technical differences between the relevant cartridges and those considered in Turbon 1 ([Case C-276/00]) and Turbon 2 ([Case C-250/05]) might be material. The court did not determine the classification issue.
4. A full hearing with argument from both sides would allow the court to decide permission and, if necessary, the merits and any reference question in the proper procedural setting. The application was therefore adjourned.

• Court of Appeal (Civil Division) The permission application was adjourned to a full court of three members, with the appeal to follow immediately if permission was granted.
• High Court of Justice, Chancery Division Henderson J, on appeal from the tribunal, classified the cartridges as ink and therefore subject to customs duty.
• VAT and Duties Tribunal Classified the cartridges as parts suitable for use with printers, so that no customs duty was payable.