BELKIN LIMITED v THE COMMISSIONERS FOR HER MAJESTY’S REVENUE AND CUSTOMS

Under GRI 3(b), the essential character of composite goods must be assessed holistically. The tribunal must step back from a detailed description of individual components and evaluate the product’s overall character in light of its objective characteristics, use and factual context. The removal test is an important method of assessment, but it does not require the product’s character to be defined by every function performed by its components. Where GRI 3(b) does not determine classification, GRI 3(c) applies. Classification regulations may be used by analogy only with care, particularly where the products differ in their design and intended use. The phrase “of a kind used for telecommunications” requires the goods themselves to be used for telecommunications, rather than merely supplying power or audio to telecommunications equipment.

Belkin appealed against the First-tier Tribunal’s decision of 6 July 2021, which upheld HMRC’s classifications of two imported products under the Combined Nomenclature. The first was a wireless charging pad supplied with an AC adapter. The second was a cable adapter enabling an iPhone or iPad to charge while audio was used.

The charging pad was classified under 8504 40 90, while the cable adapter was classified under 8544 42 90. Belkin argued that the charging pad should be classified under 8504 40 30 and that the cable adapter should be classified under 8544 42 10. The central issues were the application of GRI 3(b), the assessment of essential character, the relevance by analogy of Commission Implementing Regulation 2017/1465, and the meaning of “of a kind used for telecommunications”.

1. Charging pad and AC adapter. The appeal was allowed in relation to this product. The FTT had erred in treating the agreed description of the product’s conversion functions as definitive of its essential character. That was an evaluative legal question which remained open for determination ([2022] UKUT 244 (TCC) [35]–[46]).
2. The essential character test under GRI 3(b) requires a broad and holistic evaluation. The authorities showed that essential character may be expressed by reference to the product’s overall purpose or characteristic, rather than a list of the functions of its constituent parts. The product’s essential character was the wireless charging of mobile phones. Applying the removal test, that character was lost if the charging pad was removed but remained if the AC adapter was removed. Classification under GRI 3(b) was therefore 8504 40 30 ([2022] UKUT 244 (TCC) [37]–[46], [63]).
3. The removal test was not confined to composite goods made from materials or components and could also be relevant to goods put up in retail sets. GRI 3(c) remained available where GRI 3(b) did not yield an answer ([2022] UKUT 244 (TCC) [48]–[50]).
4. Commission Implementing Regulation 2017/1465 was not applicable by analogy. Although the products appeared superficially similar, the Belkin adapter was specifically designed for use with its charging pad, whereas the adapter in the Regulation could be used with a variety of apparatus. The caution required in reasoning by analogy made it unsafe to rely on the Regulation ([2022] UKUT 244 (TCC) [52]–[63]).
5. Cable adapter. The appeal was dismissed in relation to this product. The FTT’s interpretation of “of a kind used for telecommunications” disclosed no error of law. The expression requires the cable itself to be used as part of telecommunications, and does not include a cable which merely supplies power or audio to a telecommunications device. The classification under 8544 42 90 was upheld ([2022] UKUT 244 (TCC) [68]–[76]).
6. Belkin’s new arguments concerning the product being an inductor and the admission of further evidence were refused or rejected because they were raised too late and did not satisfy the applicable requirements ([2022] UKUT 244 (TCC) [64], [71]–[76]). The FTT decision was set aside and remade only in relation to the charging pad and AC adapter.

• Upper Tribunal (Tax and Chancery Chamber) The appeal against the FTT decision of 6 July 2021 was allowed in relation to the wireless charging pad with AC adapter and dismissed in relation to the cable adapter. The FTT decision was set aside and remade for the charging pad product.