The Commissioners for HMRC v Canadian Solar EMEA GmbH

For customs classification, the tariff code must reflect the goods and the applicable consignment rules. Where cells originating in one country are incorporated into modules in another, processing that does not change origin may require classification by reference to the cells’ indirect consignment. A genuinely difficult classification question, addressed responsibly through competent legal advice, does not ordinarily amount to obvious negligence. The discretion to remit duty for special circumstances under Union Customs Code art 120 is wider than the deemed case in art 120(2). A customs declaration cannot be amended after the authorities have established that its particulars are incorrect.

Canadian Solar imported solar panels assembled in Vietnam from cells manufactured and originating in Taiwan. It declared the imports under codes for modules consigned from countries other than Taiwan. HMRC later determined that anti-dumping duty, countervailing duty and import VAT were due.

The First-tier Tribunal held that the correct classification was by reference to cells consigned from Taiwan, that the declaration could not be corrected after HMRC had established the error, but that the charges should be remitted under art 120 of the Union Customs Code. HMRC appealed on remission and Canadian Solar cross-appealed on classification and correction.

1. Appeal and cross-appeal dismissed. The FTT’s decision was upheld.
2. The correct tariff classification was code 8541 40 90 73, for solar cells consigned from Taiwan. The tariff rules distinguish between cells and modules, while the rules of origin, as explained in Renesola UK Ltd v The Commissioners of Her Majesty’s Revenue and Customs Case C-209/20, treat origin as remaining that of the cells where processing in the intermediate country is insufficiently substantial. The FTT’s construction of “consigned from” as including indirect consignment was correct.
3. The later invoices and declarations did not correct the error. The error was selection of the wrong tariff code, not merely omission of compliant declarations. Under art 173(2)(b) of the Union Customs Code, amendment was unavailable once HMRC had established that the particulars were incorrect.
4. Article 120 of the Union Customs Code creates a broad equitable discretion. Article 120(2) identifies a case in which special circumstances are deemed to exist, but does not exhaust the circumstances in which they may exist.
5. There was no deception or obvious negligence. The classification issue was extraordinarily difficult; Canadian Solar had obtained and followed competent legal advice; and the advice, although wrong, was not negligent. The trader was not required to approach HMRC for clarification as a counsel of perfection.
6. Special circumstances existed. The complexity and lack of clear guidance, the responsible conduct of the importer, the plausible interpretation adopted and the serious commercial loss justified remission. The FTT’s reasons were sufficiently clear.

• Upper Tribunal (Tax and Chancery Chamber): HMRC’s appeal and Canadian Solar’s cross-appeal against the FTT decision dated 22 January 2024 were dismissed. The FTT’s decision was upheld.