Build-a-Bear Workshop UK Holdings Limited v The Commissioners for HMRC

For customs classification under the Combined Nomenclature, Note 3 to Chapter 95 operates at two levels. At heading level it provisionally brings in parts and accessories suitable principally for use with the general class of articles covered by the heading; it need not identify a single article. At subheading level, GIR 6 applies Note 3 unless context requires otherwise. The unqualified reference to parts and accessories in the dolls subheading creates that tension, so Note 3 is disapplied there. It remains applicable to the toys subheading. Accessories principally suitable for stuffed animal toys are therefore classified with those toys. GIR 3 is not engaged because the goods are not prima facie classifiable under more than one subheading. Footwear follows the same analysis.

The appellant imported clothes, wigs and footwear for use with stuffed animal toys and human dolls. HMRC assessed customs duty on the basis that the items were accessories of stuffed toys. The First-tier Tribunal dismissed the appeal in relation to those items in [2019] UKFTT 707 (TC). The Upper Tribunal upheld that result in [2021] UKUT 0067 (TCC), although it differed from the First-tier Tribunal on the scope of Note 3 to Chapter 95. Permission to appeal to the Court of Appeal was limited principally to the interpretation and application of Note 3, with a further issue concerning footwear. The central question was how Note 3 was to be reconciled with the dolls subheading.

Lady Justice Whipple gave the leading judgment. Lady Justice Asplin and Lord Justice Newey agreed.

1. Classification framework. Classification under the Combined Nomenclature is determined by the objective characteristics and properties of the goods and the wording of the relevant headings and notes. Intended use may be considered where it is inherent in the goods and assessable by objective characteristics. The General Rules of Interpretation have legal force. HSENs and CNENs assist interpretation but cannot alter the meaning of the CN, as illustrated by Vtech Electronics (UK) plc v Commissioners for Customs and Excise [2003] EWHC Ch 59 and Invamed Group Ltd v Revenue and Customs Commissioners [2020] EWCA Civ 243.
2. Heading level. Note 3 applies at heading level, but operates generically. It provisionally brings into heading 9503 parts and accessories suitable solely or principally for use with the general class of articles covered by that heading. It need not identify one single article at that stage. Classification must then proceed hierarchically to the relevant subheading.
3. Subheading level. GIR 6 applies Note 3 unless the context requires otherwise. The unqualified words parts and accessories in the dolls subheading create a tension with Note 3, so the note is disapplied there. The toys subheading contains no such tension, and Note 3 remains applicable to it. The two subheadings, construed in that way, do not conflict.
4. Application. The First-tier Tribunal’s unchallenged finding was that the clothes, wigs and shoes were principally suitable for use with the stuffed bears. They were therefore classified under the toys subheading. GIR 3 was not engaged because the items were not prima facie classifiable under two or more subheadings. The conclusion was consistent with the approach in Amoena (UK) Ltd v Revenue and Customs Commissioners [2016] UKSC 41, Proxxon GmbH v Oberfinanzdirection Köln (Case C-500/04), and GD European Land Systems-Steyr GmbH v Zollamt Eisenstadt Flughafen Wien (Case C-265/15).
5. Footwear and disposition. Footwear raised no distinct point of principle. The First-tier Tribunal was entitled to make its finding on the evidence, and no Edwards v Bairstow challenge was advanced. Permission on the footwear ground was refused and the appeal was dismissed.

• Court of Appeal (Civil Division): in [2022] EWCA Civ 825, dismissed the appeal and refused permission on the footwear ground.
• Upper Tribunal (Tax and Chancery Chamber): in [2021] UKUT 0067 (TCC), upheld the classification of the clothes, wigs and footwear as accessories of stuffed toys.
• First-tier Tribunal (Tax Chamber): in [2019] UKFTT 707 (TC), dismissed the appeal concerning the items.