Asda Stores Ltd v The Commissioners for Her Majesty's Revenue And Customs

Customs valuation under the Community Customs Code is based first on transaction value: the total payment made to or for the benefit of the seller in the relevant import sale. A rebate paid by a separate supplier to the importer cannot be deducted merely because it reduces the importer’s net cash outflow. A purposive construction cannot override clear statutory language, and the provisions specifying permitted additions and deductions exclude other adjustments. The rule concerning damaged goods in Hauptzollamt Itzehoe v HJ Repenning GmbH, [1986] ECR 1873, was confined to changes in the goods themselves before release. Alternative valuation methods arise only where value cannot be determined under the transaction-value method.

Asda imported clothing with clothes hangers. The clothing suppliers bought the hangers from suppliers nominated by Asda, sold the clothing and hangers to Asda, and the hanger suppliers later rebated part of their price directly to Asda.

The First-tier Tribunal accepted that the rebate reduced the customs value. The Upper Tribunal overturned that conclusion and held that the relevant value was the full amount paid by Asda to the clothing supplier. The appeal concerned the proper construction of the customs valuation provisions, the application of the Repenning decision, the identity of the seller of the hangers, and whether alternative valuation methods were available.

The appeal was dismissed unanimously. Vos LJ gave the leading judgment, with Gloster LJ and Moore-Bick LJ agreeing.

1. Purposive construction. A purposive construction of the Community Customs Code is appropriate, but clear statutory words cannot be ignored. The references in the GATT materials to avoiding arbitrary or fictitious customs values did not justify treating the actual payment to the clothing supplier as fictitious merely because Asda later received a rebate.
2. Repenning. Hauptzollamt Itzehoe v HJ Repenning GmbH, [1986] ECR 1873, concerned goods damaged before release for free circulation and required the value to be reduced in proportion to the damage. That reasoning addressed changes in the goods themselves and did not govern a commercial rebate which left the goods and their quantity unchanged. The decision was therefore distinguishable and could not justify a deduction contrary to article 29(3)(a).
3. Transaction value and permitted adjustments. Article 29 provides the primary valuation method. Article 29(3)(a) refers to the total payment made to or for the benefit of the seller for the imported goods. Articles 32 and 33 specify the permitted additions and deductions. Their specificity excludes an unlisted deduction for the rebate.
4. Relevant seller. The clothing supplier sold the clothing and hangers to Asda. The hanger suppliers’ sale to the clothing supplier and their separate rebate agreement with Asda were distinct transactions. The term seller could not be divided between the suppliers to produce a lower customs value.
5. Alternative methods. Articles 30 and 31 could be considered only if the customs value could not be determined under articles 29, 32 and 33. Those provisions produced a clear result, so the alternative methods were unavailable.

• Court of Appeal (Civil Division): dismissed the appeal from the Upper Tribunal; [2014] EWCA Civ 317.
• Upper Tribunal (Tax and Chancery Chamber): on 8 May 2013, overturned the First-tier Tribunal’s conclusion and held that the customs value was the full transaction value paid to the clothing supplier.
• First-tier Tribunal: accepted that the rebate represented a reduction in the customs value.