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	First-tier Tribunal (Tax)
You are here: BAILII >> Databases >> First-tier Tribunal (Tax) >> Alfred Lamb International Ltd v Revenue & Customs [2009] UKFTT 220 (TC) (25 August 2009) URL: http://www.bailii.org/uk/cases/UKFTT/TC/2009/TC00170.html Cite as: [2009] UKFTT 220 (TC), [2010] SFTD 46

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[2009] UKFTT 220 (TC)

TC00170

Appeal number: EDN/08/7007

Binding Origin Information; Council Regulation (EC) No 1528/2007 (Market Access Regulation); Article 12; direct transport rule; Lamb's Navy Rum.

FIRST-TIER TRIBUNAL

TAX

ALFRED LAMB INTERNATIONAL LIMITED Appellant

- and -

THE COMMISSIONERS FOR HER MAJESTY'S

REVENUE AND CUSTOMS (VAT) Respondents

TRIBUNAL JUDGE: J Gordon Reid, QC., F.C.I.Arb.,

(Members): Mr K Pritchard, OBE., BL., WS

R L H Crawford, BA., CA., CTA

Sitting in public at Edinburgh on Thursday 2 July 2009

Amanda Brown, KPMG for the Appellant

Andrew Scott, Shepherd + Wedderburn, LLP instructed by the General Counsel and Solicitor to HM Revenue and Customs for the Respondents

© CROWN COPYRIGHT 2009


 


DECISION

Introduction

1. This is an application for a Binding Origin Information Ruling ("BOI"). The application concerns pre-blended rum originating in Guyana, Barbados, Trinidad and Jamaica which is now imported into Canada for maturing, blending and bottling before being exported into the European Community. The intention is to ensure that the change in the supply chain is structured in such a way that the rum continues to obtain a preferential origin status on import into the European Union (with a consequent nil rate of import duty). The rum in question is Lamb's Navy Rum. Hitherto, the spirit has been imported in bulk directly into the EU where it was matured, blended and bottled. The change means inter alia that the rum is imported into the EU in its finished, bottled state.
2. The application was made for the purpose of qualifying for a preferential rate of duty under Council Regulation 1528/2007, referred to as the Market Access Regulation or MAR. That Regulation introduced or continued preferential rates of duty for products originating in certain African, Caribbean and Pacific ("ACP") States. Since 2002 the Community has been negotiating Economic Partnership Agreements with the ACP States. MAR is an interim or transitional arrangement until these Partnership Agreements are put in place and effective. The amount potentially at stake is unknown. An Economic Partnership Agreement was entered into in 2008 with the CARIFORUM States (see OJ 30/10/08 L 289/1/3) but the text of that Agreement is not relevant to this appeal.
3. The Appellants were represented by Amanda Brown of KPMG, Manchester. She led the evidence of David James Doyle, the director of Research & Development for Pernod Ricard Americas. He spoke to a written statement previously produced. A written statement by Howard Charles Kirke was also produced. Its contents were not in dispute. Mr Kirke is Vice President for international Markets for Corby Distilleries Limited and is based in Toronto. The Respondents ("HMRC") were represented by Andrew Scott of Shepherd & Wedderburn. He led no evidence. A Statement of Agreed Facts and two Inventories of Productions were produced. There was no dispute as to the authenticity, and where appropriate, the transmission and receipt of these documents. Amanda Brown produced a comprehensive and elegantly framed Skeleton Argument to which she spoke in her closing submissions.

A Preliminary Matter

4. During the period of statutory internal review by HMRC which Alfred Lamb International Limited had requested, the proposed supply chain for importation of the rum altered. Originally, Alfred Lamb International Limited was the intended importer. The original application for a BOI was made by Alfred Lamb International Limited. On its refusal they sought a statutory review. During the period of review the proposed supply chain changed. The intention now is that the rum will be shipped by Corby Distilleries Limited (of which Alfred Lamb International Limited is a 100% subsidiary). Nothing now turns on this although HMRC did contend, at one stage, that the Appellants had no appealable matter before the Tribunal. The proposed holder of the BOI is still Alfred Lamb International Limited. It is a matter of agreement between the parties that Alfred Lamb International Limited is the proper Appellant.

Legal Framework

5. Article 131 of the EC Treaty provides that the common commercial policy is to take into account the favourable effect which the abolition of customs duties between member states may have on the increase in competitive strength of undertakings in member states. The aim is to contribute to the harmonious development of world trade and the lowering of customs barriers. Article 133 provides that the common commercial policy is to be based on uniform principles, particularly in regard to changes in tariff rates, and the conclusion of tariff and trade agreement. Reference is also there made to the making of agreements with one or more states and the need for compatibility with internal Community policies and rules.
6. The Community Customs Code (Council Regulation 2913/92) sets out the basis on which inter alia import or export duties on goods are to be applied. Article 20.3(d) of the Code provides that the Customs tariff of the European Communities is to comprise inter alia the preferential tariff measures contained in agreements which the Community has concluded with certain countries or groups of countries and which provide for the granting of preferential tariff treatment. Articles 23 to 26 define the non-preferential origin of goods for the purposes of applying the Customs Tariff with the exception of inter alia the measures referred to in Article 20.3(d) (see Article 22). Article 23.2 defines goods originating in a country as those wholly obtained or produced in that country. That phrase is, in turn, defined as meaning inter alia vegetable products harvested therein ...Article 23.2(b)). Where the production of goods involves more than one country, Article 24 provides, that the goods are deemed to originate in the country where they underwent their last, substantial, economically justified processing or working in an undertaking equipped for that purpose and resulting in the manufacture of a new product or representing an important stage of manufacture.
7. Article 27 provides that the rules on preferential origin are to lay down the conditions governing acquisition of origin which goods must fulfil in order to benefit from the preferential tariff measures referred to in Article 20.3(d) referred to above. In the case of goods covered by Article 20.3(d) agreements, the rules are to be determined by those agreements. Thus, for present purposes, these rules are to be found in the Market Access Regulation referred to above.
8. Article 58 of the Code (and other provisions in section C) set out various matters relating to the storage of goods in customs warehouses. A customs warehouse means any place approved by and under the supervision of the customs authorities where goods may be stored under the conditions laid down (Article 98.2).
9. For many years there have been trade agreements between the EEC and the ACP group of states which now consist of six regions comprising the Caribbean, Central Africa, Eastern and Southern Africa, the Pacific Island States, the South African Development Community and West Africa. These arrangements support the gradual integration of the ACP economies into the rules-based world trading system, thereby fostering their sustainable development and contributing to the overall effort to eradicate poverty and to enhance living conditions in the ACP countries. The aim is to provide duty free access and no tariff rate quotas for all products with the exception of arms.
10. Formal trade agreements between the EEC and the ACP States date back to 1970 when the first Lome Convention was signed. The Lome Conventions passed through four editions and remained in force until 1 August 2000. On 23 June 2000 a new agreement was signed in Cotonou between the EC and the ACP States. Whilst Cotonou did not come into force until 1 April 2003, by virtue of Decision 1/2000 the ACP-EC Council Ministers decided that with effect from 2 August 2000 certain provisions of the Cotonou Agreement were to be put into early application.
11. On 27 September 2002, negotiations were commenced for new partnership agreements. They intended to promote, inter alia, regional integration and economic development as well as to operate as trade agreements. It came into force with effect from 1 January 2008.
12. The fundamental aim of the Cotonou Agreement is set out in article 1 of that agreement:

"In order to promote and expedite the economic, cultural and social development of the ACP States, with a view to contributing to peace and security and to promoting a stable and democratic political environment.

The partnership shall be centred on the objective of reducing and eventually eradicating poverty consistent with the objectives of sustainable development and the gradual integration of the ACT countries into the world economy".

13. The Cotonou Agreement is built on five linked pillars. The first is political, with emphasis on political dialogue, peace building policies, human rights and democracy and good governance. The second is called the 'participatory approach', which is intended to promote the wider involvement in matters relating to the ACT/EC partnership. The third is the creation of development strategies, with poverty reduction as its central objective. The forth consists of the establishment of new trading arrangements. The fifth is reformed financial cooperation which is concerned with cooperation in relation to development finance.
14. The Cotonou Agreement also provides at Article 37 for a series of individual Partnership Agreements between individual ACP States and the EU. In the original Economic Partnership Agreement between the EU and the Caribbean States the rules of origin were contained in Annex V which expired on 31 December 2007 and were replaced by Annex II Regulation 1528/2007.
15. Annex V Article 1 of the Cotonou Agreement provides that products originating in the ACP States are to be imported into the Community free of customs duties and charges having equivalent effect. This position is restated in Article 3(1) Regulation 1528/2007.
16. The preamble to Council Regulation 1528/2007 (the Market Access Regulation) records inter alia that:-

"(8) The rules of origin applicable to imports made under this Regulation should for a transitional period be those laid down in Annex II to this Regulation. Those rules of origin should be superseded by those annexed to any agreement with the regions or states listed in Annex 1 when that agreement is either provisionally applied, or enters into force, whichever is the earliest."

[Annex 1 lists numerous African and Caribbean States]

17. The following provisions of the Market Access Regulation, were referred to in the course of the hearing:-

Article 4

Rules of Origin

1. The rules of origin set out in Annex II shall apply in order to determine whether products originate in the regions or states listed in Annex I.

2. The rules of origin set out in Annex II shall be superseded by those annexed to any agreement with the regions or states listed in Annex I when that agreement is either provisionally applied, or enters into force, whichever is the earlier.

ANNEX II Rules of origin CONCERNING THE DEFINITION OF THE CONCEPT OF 'ORIGINATING PRODUCTS' AND METHODS OF

ADMINISTRATIVE COOPERATION

................

Article 1 Definitions For the purposes of this Annex:

(a) 'manufacture' shall mean any kind of working or processing including assembly or specific operations;

(b) 'material' shall mean any ingredient, raw material, component or part, etc., used in the manufacture of the product;

(c) 'product' shall mean the product being manufactured, even if it is intended for later use in another manufacturing operation;

(d) 'goods' shall mean both materials and products;

(e) 'customs value' shall mean the value as determined

(f) 'ex-works price' shall mean the price paid for the product ex works to the manufacturer in whose undertaking the last working or processing is carried out, provided the price includes the value of all the materials used, minus any internal taxes which are, or may be, repaid when the product obtained is exported

Further definitions contained in this Article are set forth in the Appendix to this Decision.

TITLE II

DEFINITION OF THE CONCEPT OF 'ORIGINATING PRODUCTS'

Article 2

General requirements

1. For the purpose of the application of the provisions of this Regulation, the following products shall be considered as originating in the ACP States of Annex I, hereafter, for the purpose of this Annex, referred to as 'ACP States':

(a) products wholly obtained in the ACP States within the meaning of Article 3 of this Annex;

(b) products obtained in the ACP States incorporating materials which have not been wholly obtained there, provided that such materials have undergone sufficient working or processing in the ACP States within the meaning of Article 4 of this Annex.

2. For the purpose of the implementation of paragraph 1, the territories of the ACP States shall be considered as being one territory.

Originating products made up of materials wholly obtained or sufficiently worked or processed in two or more ACP States shall be considered as products originating in the ACP State where the last working or processing took place, provided the working or processing carried out there goes beyond that referred to in Article 5 of this Annex.

Article 4

Sufficiently worked or processed products

1. For the purposes of this Annex, products which are not wholly obtained shall be considered to be sufficiently worked or processed in the ACP States or in the Community, when the conditions set out in the list in Appendix 2 or, alternatively, in Appendix 2A are fulfilled. The conditions referred to above indicate, for all products covered by this Regulation, the working or processing which must be carried out on non-originating materials used in manufacturing and apply only in relation to such materials. Accordingly, it follows that if a product, which has acquired originating status by fulfilling the conditions set out in the list is used in the manufacture of another product, the conditions applicable to the product in which it is incorporated do not apply to it, and no account shall be taken of the non-originating materials which may have been used in its manufacture.

2. Notwithstanding paragraph 1, non-originating materials which, according to the conditions set out in the list, should not be used in the manufacture of a given product may nevertheless be used, provided that:

(a) their total value does not exceed 15 per cent of the ex-works price of the product;

(b) none of the percentages given in the list for the maximum value of non-originating materials are exceeded through the application of this paragraph.

This paragraph shall not apply to products falling within chapters 50 to 63 of the Harmonised System

..................................................................

Article 5

Insufficient working or processing operations

1. Without prejudice to paragraph 2, the following operations shall be considered as insufficient working or processing to confer the status of originating products, whether or not the requirements of Article 4 are satisfied:

(a) operations to ensure the preservation of products in good condition during transport and storage (ventilation, spreading out, drying, chilling, placing in salt, sulphur dioxide or other aqueous solutions, removal of damaged parts, and like operations;

(b) simple operations consisting of the removal of dust, sifting or screening, sorting, classifying, matching (including the making-up of sets of articles), washing, painting, cutting up;

(c) (i) changes of packaging and breaking up and assembly of packages;

(ii) simple placing in bottles, flasks, bags, cases, boxes, fixing on cards or boards, etc., and all other simple packaging operations;

(d) affixing marks, labels and other like distinguishing signs on products or their packaging;

(e) simple mixing of products, whether or not of different kinds; mixing of sugar with any other material;

(f) simple assembly of parts to constitute a complete product;

(g) a combination of two or more of the operations specified in points (a) to (f);

(h) slaughter of animals;

(i) husking, partial or total bleaching, polishing and glazing of cereals and rice;

(j) operations to colour sugar or form sugar lumps; partial or total milling of sugar;

(k) peeling, stoning and shelling of fruits, nuts and vegetables.

2. All the operations carried out in either the ACP States or the Community on a given product shall be considered together when determining whether the working or processing undergone by that product is to be regarded as insufficient within the meaning of paragraph 1.

Article 12

Direct transport

1. The preferential treatment provided for in this Regulation shall apply only to products that satisfy the requirements of this Annex and are transported directly between the territory of the ACP States, of the Community, of the OCT or of South Africa for the purposes of Article 6 without entering any other territory. However, products constituting one single consignment may be transported through other territories with, should the occasion arise, transhipment or temporary warehousing in such territories, provided that they remain under the surveillance of the customs authorities in the country of transit or warehousing and do not undergo operations other than unloading, reloading or any operation designed to preserve them in good condition. Originating products may be transported by pipeline across territory other than that of an ACP State or of the Community.

2. Evidence that the conditions set out in paragraph 1 have been fulfilled shall be supplied to the customs authorities of the importing country by the production of:

(a) a single transport document covering the passage from the exporting country through the country of transit; or

(b) a certificate issued by the customs authorities of the country of transit:

(i) giving an exact description of the products;

(ii) stating the dates of unloading and reloading of the products and, where applicable, the names of the ships or the other means of transport used; and

(iii) certifying the conditions under which the products remained in the transit country; or

(c) failing those, any substantiating documents.

TITLE IV

PROOF OF ORIGIN

Article 14

General requirements

1. Products originating in the ACP States shall, on importation into the Community, benefit from the provisions of this Regulation upon submission of either:

(a) a movement certificate EUR.1, a specimen of which is given in Appendix 3; or

(b) in the cases specified in Article 19(1), a declaration, the text of which appears in Appendix 4, given by the exporter on an invoice, a delivery note or any other commercial document which describes the products concerned in sufficient detail to enable them to be identified (hereinafter referred to as the 'invoice declaration').

2. Notwithstanding paragraph 1, originating products within the meaning of this Annex shall, in the cases specified in

18. Article 25, benefit from the provisions of this Regulation without its being necessary to submit any of the documents referred to above.

Article 15

Procedure for the issue of a movement certificate EUR.1

1. A movement certificate EUR.1 shall be issued by the customs authorities of the exporting country on application having been made in writing by the exporter or, under the exporter's responsibility, by his authorised representative.

2. For that purpose, the exporter or his authorised representative shall fill out both the movement certificate EUR.1 and the application form, specimens of which are given in Appendix 3. Those forms shall be completed in accordance with the provisions of this Annex. If they are handwritten, they shall be completed in ink in printed characters. The description of the products shall be given in the box reserved for that purpose without leaving any blank lines. Where the box is not completely filled, a horizontal line shall be drawn below the last line of the description, the empty space being crossed through.

3.The exporter applying for the issue of a movement certificate EUR.1 shall at any time, at the request of the customs authorities of the exporting ACP State where the movement certificate EUR.1 is issued, produce all appropriate documents

19. proving the originating status of the products concerned as well as fulfilment of the other requirements of this Annex.4. A movement certificate EUR.1 shall be issued by the customs authorities of the exporting ACP State if the products concerned can be considered as products originating in the ACP States or in one of the other countries referred to in Article 6 and fulfil the other requirements of this Annex.

5 The issuing customs authorities shall take any steps necessary to verify the originating status of the products and the

20. fulfilment of the other requirements of this Annex. For that purpose they shall have the right to call for any evidence and to carry out any inspection of the exporter's accounts or any other check considered appropriate. The issuing customs authorities shall also ensure that the forms referred to in paragraph 2 are duly completed. In particular, they shall check whether the space reserved for the description of the products has been completed in such a manner as to exclude all possibility of fraudulent additions.

6. The date of issue of the movement certificate EUR.1 shall be indicated in Box 11 of the certificate.

7. A movement certificate EUR.1 shall be issued by the customs authorities and made available to the exporter as soon as actual exportation has been effected or ensured.

Article 16

Movement certificates EUR.1 issued retrospectively

21. 1. Notwithstanding Article 15(7), a movement certificate EUR.1 may exceptionally be issued after exportation of the products to which it relates if:

(a) it was not issued at the time of exportation because of errors or involuntary omissions or special circumstances; or

(b) it is demonstrated to the satisfaction of the customs authorities that a movement certificate EUR.1 was issued but was not accepted at importation for technical reasons.

2. For purposes the implementation of paragraph 1, the exporter shall indicate in his application the place and date of exportation of the products to which the movement certificate EUR.1 relates, and state the reasons for his request.

3. The customs authorities may issue a movement certificate EUR.1 retrospectively only after verifying that the information supplied in the exporter's application agrees with that in the corresponding file.

4. Movement certificates EUR.1 issued retrospectively shall be endorsed with the following phrase:

'ISSUED RETROSPECTIVELY'

5. The endorsement referred to in paragraph 4 shall be inserted in the 'Remarks' box of the movement certificate EUR.1.

Article 21

Validity of proof of origin

22. 1. A proof of origin shall be valid for ten months from the date of issue in the exporting country, and must be submitted within that period to the customs authorities of the importing country.

2. Proofs of origin which are submitted to the customs authorities of the importing country after the final date for presentation specified in paragraph 1 may be accepted for the purpose of applying preferential treatment where the failure to submit these documents by the final date set is due to exceptional circumstances.

3. In other cases of late presentation, the customs authorities of the importing country may accept the proofs of origin where the products have been submitted before the final date.

18. The provisions of Regulation 1528/2007 have been superseded for signatories of the CARIFORUM-EC (including Guyana, Barbados and Trinidad) by Annex 1 of the Economic Partnership Agreement 289/I/3 effective from 29/12/08. It may also be noted that the 1992 Community Customs Code has been replaced by the Modernised Community Customs Code by Council Regulation (EC) No 450/2008 which was adopted on 23^rd April and came into force in June 2008. This regulation consolidates and amends all previous primary Community Customs legislation and brings it up to date.
19. Additional legislative provisions referred to in the course of the Appeal are reproduced in the Appendix hereto.

The Issue

20. The broad issue is whether the rejection by HMRC of the application for BOI, confirmed on internal departmental review is sound. The specific issues raised are whether, having regard to the altered supply chain (i) the direct transport rule Article 12 is satisfied, and in particular, (ii) the processing of the rums in Canada falls within or outwith Article 12 of the Market Access Regulation, and (iii) movement certificates EUR.1s would be valid.

Facts

21. The following is the text of the parties' Statement of Agreed Facts:-

1. The Appellant is Alfred Lamb International Limited, a company incorporated under the Companies Act 1985 and whose registered office is at 5 Old Bailey, Second Floor, London, EC4M 7BA.

2. Corby Distillers Ltd (hereinafter "Corby") is a limited liability company established in Toronto, Canada. The Appellant is a wholly owned subsidiary of Corby. Corby itself is a subsidiary of Hiram Walker and Sons Limited which itself is a part of the Pernod Richard Corporate Group. Corby is a manufacturer and distributor of distilled spirits and owns the global rights to market and sell Lamb's Rum.

3. In September 2006, Corby granted the Appellant a sub license to exploit the brand of Lamb's Rum outside of Canada.

4. Prior to September 2008, the Appellant imported pre-blended rums from various Caribbean producers into the United Kingdom. The pre-blended rums had been distilled in the Caribbean but were shipped directly to the UK for maturation, blending and bottling for the UK and international markets. The process of maturation, blending and bottling was carried out in Scotland at the Chivas Brothers facility in Dumbarton.

5. On 3 April 2008, the Appellant applied to the Respondents for a Binding Origin Information ("BOI") ruling regarding an alteration it was proposing to the supply chain described in paragraph 4 above. (Respondents' Bundle ("RB") Item 1)

6. The Appellant proposed that once distilled, the bulk rums would be aged in their countries of origin and then shipped to Canada for blending and bottling by Corby on behalf of the Appellant for the EU Market. The finished rum would then be imported into the UK from Canada. The Appellant also proposed to apply to the Customs authorities of the exporting states for retrospective EUR 1 certificates on the basis that the period of storage for maturation required was in excess of 10 months.

7. On 17 April 2008, the Respondents refused the application for a BOI ruling on the basis that the rum would not meet the direct transport rule. The Respondent noted that blending and bottling was more than unloading, reloading or any operation designed to preserve the rum in good condition. The Respondent also noted there would be a problem of relying on retrospective EUR 1 certificates, which may only be issued exceptionally. (RB, Item 2)

8. On 28 May 2008, the Appellant requested a formal departmental review of the decision contained in the Respondents' letter of 17 April 2008. (RB, Item 3)

9. On 18 June 2008, the Respondents completed the formal departmental review and upheld the decision to reject the application for a BOI ruling. (RB, Item 4)

10. On 17 July 2008, the Appellant wrote to the Respondents stating that the circumstances behind the request for a BOI ruling had changed and that a different group company would be responsible for the supply of Canadian sourced rums into the UK. The Appellant proposed to supply further information to enable the Respondents to carry out a further review. (RB, Item 5)

11. On 23 July 2008, the Respondents acknowledged receipt of the request for a formal departmental review and noted that this would be allocated to Officer Woodley. (RB, Item 6)

12. On 24 July 2008, the Appellant wrote to the Respondents with details of the amendment to the supply chain referred to in the fax of 17 July. The product was now to be marketed and supplied by Corby. The proposal was that Corby would acquire the pre-blended rums direct from the Caribbean producers. The pre-blended rums would still be distilled in the Caribbean but thereafter shipped directly to Canada for maturation, blending and bottling before shipping the finished product to the UK where it would be sold and imported by a third party UK distributor. (RB, Item 7)

13. On 9 September 2008, the Respondents wrote to the Appellant to advise that they had been unable to complete the departmental review within the 45 day statutory time limit. Therefore, the original decision was upheld. (RB, Item 8)

14. On 17 September 2008, the Appellant wrote to the Respondent confirming that a formal appeal had been lodged with the Tribunal but that the Appellant was supportive of the Officer Woodley completing his review. (RB, Item 9)

15. On 9 October 2008, Officer Woodley completed the formal departmental review and upheld the original decision. (RB, Item 11)

16. Lamb's Rum is a blend of rums distilled in Guyana, Barbados and Trinidad. Lamb's Rum is a blend of a base rum produced in either Barbados or Trinidad together with 3 Guyanain rums. Guyana, Barbados and Trinidad are part of the ACP Group of States as defined in Council Regulation 1528/2007. In addition to the Caribbean rums, caramel colouring and demineralised water are added together with a small amount (1%) of Canadian distilled rum.

17. All copy documents produced to the Tribunal are the equivalent of principals.

22. In the light of the evidence and the documents produced, we make the following additional findings of fact:-

History and Production of Rum

18. Rum is made by distilling fermented sugar and water. The process starts with the sugar cane, grown for the production of sugar. The cane is harvested and transported to a mill where it is chopped, crushed and milled to extract the juice. The sugar juice is boiled into a syrup. Sugar crystals grow and are removed by centrifuge. The process is repeated until all the sugar has been crystallised and extracted. The residue is a thick, sticky viscous liquid known as molasses. This forms the basis of the rum distillate. Rum distilleries purchase molasses from a variety of sources. It contains about 46% fermentable sugar. Yeast is added. The yeast consumes the sugar into alcohol, carbon dioxide and heat. The strain of yeast used affects the flavour as does the nature and length of the fermentation process which may be as short as 22-26 hours or as long as 12 days. Once the fermentation process is complete the wash is distilled to extract the alcohol. The pot used in this process is important as it too affects the flavour of the rum

19. The first record of the production of rum dates from 1647 in the West Indies when a fermented liquid known as Kill Devil was produced from cane sugar. In 1650, a distilled product known as Rumbullion was produced in Barbados. This became known as rum. Following the opening of trade routes between Europe and the West Indies from the 1660s, rum began to grow in popularity. In 1665, the Royal Navy began issuing tots of rum sweetened with limes aboard all vessels. The rum ration to the Navy did not cease until 1970.

20. Alfred Lamb opened a wine and spirit business at the age of 22. He established Lamb's Rum in 1849 in London, where he matured, blended and bottled a unique mix of Caribbean rums in cool cellars on the shores of the Thames. Lamb's Navy Rum was developed soon thereafter to satisfy the Royal Navy's requirement for rum rations throughout the British Empire. The largest market for Lamb's Rum is Canada where over 500,000 cases are sold annually. The United Kingdom is the second largest market with around 110,000 cases sold there each year. There are some smaller overseas export markets.

21. The molasses used in the constituent rums for Lamb's Navy Rum comes from a variety of sources. Thus West Indies Distillery Limited uses molasses from Brazil while Demerara use molasses from the Guayana Sugar Company (a government agency). Lamb's rum is a blend of rums distilled in a number of different stills or pots. It is a blend of base rum produced in either Barbados or Trinidad together with three Guyanan rums known as D, M and ICBU.

22. Base rum is produced using what is known as the column distillation method. These columns are made of copper. The Demerara Rum Company produces a wide variety of rums. This is achieved by using a number of different and unique types of distillation. The column distillation unit is made from wood while the pot stills are made from wood and copper. The Demerara rums purchased for Lamb's rum is itself a blend of both column and still pot distillations. It is these rums that deliver the particular taste of Lamb's Rum.

23. These various pre-matured rums are transported separately by tanker ship. They are shipped first to Florida and then by rail to Walkerville, Ontario. Once in Canada, the Demerera D, M and ICBU are unloaded from the containers and loaded into oak barrels, previously used in the Bourbon industry. This adds to the colour and flavour of the rum. They are matured for about a year. The base Barbados and Trinidad rums are unloaded into a tank. They are not matured.

24. Blending is then carried out. The four constituent rums are mixed to achieve consistency in quality and flavour of the final product. Caramel colouring and demineralised water are added to achieve the proper look and strength (37.5% by volume). The blending process is undertaken or supervised by a master blender. The product is then transported to Corby's premises at Montreal where it is bottled. Montreal is about a day's drive from Walkerville. The bottles are labelled and put into cases for shipping to the UK or elsewhere as appropriate. The various processes are carried out using modern sophisticated, computerised equipment. These operations and processes are not simple. In the course of the process, the product is barrelled; water added form time to time; the barrels are drained; the blend is tested and adjusted as required to achieve what appears to be a delicate balance to achieve the consistent flavour recognised as Lamb's Rum ,which is a unique blend.

25. In summary, the rum which arrives in Canada, is essentially, raw spirit, which is not mature. It gives off what were described as chemical smells and would therefore be, we infer, unpalatable to the consumer, and essentially undrinkable. The product ultimately exported from Canada is a carefully blended and mature rum to which colouring in the form of caramel and a very small quantity of Canadian Rum has been added; it is then bottled and packaged for the wholesale and retail market. The operations carried out in Canada are carried out in accordance with the requirements of the Canadian customs authorities and Canadian law.

Documentation

26. All aspects of the production processes are documented. The audit trail is maintained by tracing the Lot number of the rums using a BPCS computer system. Illustrative documents were produced recording the process between shipment from the West Indies direct to Canada. More recently as noted above, the spirit is shipped to Florida and then overland to Canada as noted above.

Binding Origin Information (BOI) Application, and Decisions

27. A Supply Chain Report was enclosed with the Application dated 3/4/08. That Report, presumably prepared by the Appellant's or Corby's advisers, noted that Alfred lamb wished to structure its supply chain in such a way that the rum is able to obtain preferential origin status on import into the EU; and that the objective was to obtain a BOI ruling to confirm the eligibility of the rum under the proposed supply chain. It asserted that the blending of the four rums involved (from Barbados, Trinidad, Jamaica and Guyana) was a relatively simple process which was not a skilled or complex procedure. The Report noted that the addition of caramel fell within the 15% rule in Article 4.2; and that the commodity code of the finished rum both before and after blending was 2208. The Report accepted that the direct transport rules applied and that a movement certificate EUR1 or equivalent was required. The report suggested that the 10 month provision contained in Article 21 of Annex II of the MAR Rules could be elided by holding that the market conditions in the Caribbean in relation to rum production might be considered to be special circumstances.

28. The Report also stated that documentation could trace the goods back to the original importation of the spirit and the Canadian authorities were satisfied with the procedures and would be able to supply certificates of non-manipulation.

29. Document 10/179 is a Certificate of Age and/or origin dated 5^th December 2008 and signed by an Excise Duty Officer of the Canadian Revenue Agency, Montreal Region. It relates to 2,200 cases of Lamb's Navy Rum and states that they were bottled under Canadian excise supervision and shipped from Canada. The certificate also states that "The product is of Caribbean origin and was manufactured in accordance with the requirements of Canada's Food and Drug Act and it's regulations. The information contained hereon is subject to audit by an official of the Canadian Government."

30. Document 10/139 is an example of the declaration specified in Article 14.1(b) of Annex II to the Market Access Regulation. This serves the same purpose as a movement certificate EUR.1

31. The basis of the decision referred to in paragraph 9 of the Statement of Agreed Facts (18/6/08 letter) was that (i) the goods were being shipped to a Canadian Warehouse for the operation of blending and bottling. This is classed as undergoing an operation and therefore cannot be accepted as being compliant with the Direct Transport Rule (ii) the fact that the applicants had concerns about the ability of any individual third party produce in an ACP state to carry out the final process and this would create a major risk of Alfred Lamb giving away a significant and valuable Intellectual Property, this cannot be classed as a special circumstance for the retrospective Issue of an EUR1.

32. The basis of the decision contained in the HMRC letter dated 9/10/08 (Statement of Agreed Facts, paragraph 15) was that as the decision dated 18/6/08 (see paragraph 9 of the Statement of Agreed Facts above) to reject the application was not as a result of Alfred Lamb International Limited being the owner of the goods when they were sent to Canada for processing, the change in the supply chain described in the letter dated 24/7/008 (see paragraph 12 of the Statement of Agreed Facts) did not address the reasons for rejecting the application. Accordingly, the original decision, according to the HMRC letter, could not be overturned.

Submissions

23. As noted above, Amanda Brown for the Appellant produced a detailed skeleton argument, parts of which, are not in dispute. In summary, the essentials, of her argument were (i) a purposive interpretation should be given to European legislation (Srl CILFIT and Lanifico di Garado v Ministry of Health 1982 ECR 3415 at paragraphs 18-20; Agrover Srl v Agenzia Dogane Circoscrizione Doganale di Genova 18/10/07, Case C-173/06 paragraph 17), (ii) the purpose of the preferential origin provisions are very wide and seek to support the social and economic development of the ACP states, (iii) the operations undertaken in Canada do not confer Canadian origin on the rum; they amount to no more than unloading and reloading and therefore the origin of the product remains the ACP states (iv) the provisions of Article 4.1 of MAR are not met, thus the mixing bottling and labelling of rum does not confer non-preferential Canadian origin on the rum, (v) the addition of Canadian rum, a requirement of Canadian Law, does not impose non-preferential origin on the rum, (vi) Article 12 of MAR must be interpreted in the light of the object of the provision, MAR's objective being to facilitate trade between the ACP States and the EU with all the social, political and economic implications that free trade will bring, (vii) HMRC's analysis infringes the principles of proportionality (Militzer and Munch GmbH C-230/06; paragraph 47, Swedish Match 2004 ECR 1-11839 paragraph 47, Laserdisken 2006 ECR I-8089 paragraph 53), (viii) alternatively, the operations are irrelevant for determining whether there is an entitlement to claim preference. This arises because of the provisions Articles 58(1), and 98-113 of the Community Customs Code relating to Customs warehouse procedures, and Title III of the Implementing Regulations 2454/93, Articles 524-535, and in particular Article 531 and Annex 72 which lists the usual form of handling; here the nature of the goods has not changed.
24. In relation to the EUR 1 movement certificate, the argument was that the 12 month maturation period made the product an exceptional one within the meaning of Article 16 and 21 of Annex II, construed by reference to the objective to be achieved (promotion and expedition of the economic, cultural and social development of the ACP states, through the facilitation of trade and economic development) and the principles of proportionality and effectiveness. The production and maturation of the product were the special circumstances under Article 16 which required the movement certificate EUR.1 to be issued retrospectively.
25. Andrew Scott, for HMRC, submitted that (i) the issue was whether the imported product fulfilled the Market Access Regulations and as a result benefitted from the preferential tariff; thus, the interpretation of Article 12 is the key issue, (ii) the issue was not to determine whether what was done in Canada was sufficient to confer non-preferential status, by for example the operation of Article 24 of the CCC, (iii) the rules of preferential origin are to be determined by the preferential tariff measures contained in the agreements which the Community has concluded with ACP States-here the Market Access Regulations (CCC Articles 27(a) and 20.3(d)); thus Article 531 and Annex 72 of the Implementing Regulations are not relevant, (iv) Article 12 contains a rule and an exception; the exception should be construed narrowly, (v) the phrase one single consignment has to have effect; should the occasion arise suggests that the occasion is not to be the norm, (vi) Article 12 was designed to ensure the objectives of the Community provisions were met; it is of the nature of an anti-avoidance provision, (vii) as long as the Appellants carry out the processes of maturation blending, bottling and labelling, the requirements of Article 12 will never be met; after these processes have been carried out there is a different product; the nature of the goods has become different. Articles 4 and 5 of Annex II relate to what is done to the goods in the ACP state and not what is done in Canada.
26. As for the movement certificate Eur.1, Mr Scott acknowledged that HMRC may accept late movement certificates, but submitted that they were not obliged to do so; the issue of retrospective certificates was for the exporting country (Market Access Regulations Annex II Article 15.7). Article 16 was dealing with one-off events.

Decision

Jurisdiction

27. The parties appeared to agree that the Tribunal has full appellate jurisdiction. The decision to refuse the BOI was made under Section 14 of the Finance Act 1994, as applied by Regulation 3 of the Customs Reviews and Appeals (Tariffs and Origin) Regulations 1997 SI No 534/1997. We are concerned with Regulation 3(1)(b) namely a decision as to whether or not binding tariff information or binding origin information is to be supplied. Regulation 4 provides that section 16(4) of the Finance Act 1994 (review jurisdiction) is to have effect as if inter alia Regulation 3(1)(b) were of a description specified in paragraph 1 of Schedule 5, that is to say an ancillary matter by virtue of section 16(8) of the 1994 Act. The decision we have to make is deemed to be of a description specified in Schedule 5 to the 1994 Act. And, it is not comprised in a decision falling within section 13(2A)(a) to (h) of that Act. It is only a decision under Regulation 3(1)(a) of the 1997 Regulations which is deemed to be within section 13A(2)(a) to (h) of the 1994 Act. If that is so, then contrary to the parties' apparent agreement our powers would be restricted to those specified in section 16(4) of the 1994 Act. Given the decision we have ultimately reached, it does not make any difference to the outcome.

Approach to Interpretation

28. In Cilfit, the European Court of Justice gave the following guidance (at paragraphs 18-20:-

"18 To begin with, it must be borne in mind that Community legislation is drafted in several languages and that the different language versions are all equally authentic. An interpretation of a provision of Community law thus involves a comparison of the different language versions.

19 It must also be borne in mind, even where the different language versions are entirely in accord with one another, that Community Law uses terminology that is peculiar to it. Furthermore, it must be emphasised that legal concepts do not necessarily have the same meaning in Community Law and in the law of the various member states.

20 Finally, every provision of Community Law must be placed in its context and interpreted in the light of the provisions of Community Law as a whole, regard being had to the objectives thereof and to its state of evolution at the date on which the provision in question is to be applied."

29. In Cilift the court was concerned with the proper interpretation of the phrase where any such question is raised in Article 177 (now article 234) of the Treaty. In Agrover, the issue concerned the recovery of or exemption from duties relating to the importation of rice and the interpretation of Article 216 of the CCC. In the course of its judgment, the Court observed that:-

"17 According to the Court's settled case-law, in interpreting a provision of Community law, it is necessary to consider not only its wording but also the context in which it occurs and the objects of the rules of which it is part (Case 292/82 Merck 1983 ECR 3781, paragraph 12, and Joined Cases C-554/03 and C-545/03 Mobistar and Beglacom Mobile 2005 ECR 1-7723, paragraph 39) and also the provisions of Community law as a whole (Case 283/81 Cilift and others 1982 ECR 3415, paragraph 20). Moreover, the primacy of international agreements concluded by the Community over secondary Community legislation requires that the latter, in so far as possible, be interpreted in conformity with those agreements (Case C-311/04 Algemene Scheeps Agentuur Dordrecht 2006 ECR 1-609), paragraph 25 and the case-law cited)."

30. In Firma E Merck v hauptzollant Hamburg-Jonas 1982 ECR 3781, the issue related to the interpretation of provisions concerning the correct rate of export refunds to be granted to a company which exported sugar in the form of mannitol and sorbitol. The Court observed that:-

"12 .....As the Court has emphasised in previous decisions, in interpreting a provision of Community law it is necessary to consider not only its wording but also the context in which it occurs and the objects of the rules of which it is part."

31. In Merck the court was able to identify the purpose of the refunds on exports to non-member countries of goods made from agricultural products was to offset the production costs of the Community processing industry insofar as these were caused by agricultural prices being higher in the Community than on the world market.; the refund was to ensure that the Community industry and the industries of non-member countries competed under equal conditions (paragraph 13). The court interpreted the provisions in question in a way which gave them practical effect (paragraph 16).
32. What emerges from these cases is (i) legal concepts may have a different meaning in Community law, (ii) a Community law provision must be interpreted by considering its wording in context having regard to the provision's objectives and purpose, and in the light of Community law as a whole, and (iii) secondary Community legislation should so far as possible be interpreted in accordance with international agreements concluded by the Community and in a way which gives practical effect to those provisions. These themes are not novel and have at least their broad counterpart in the law of contract. A provision of say a commercial contract falls to be construed in the light of the relevant surrounding circumstances known to both parties at the time the contract was entered into having regard to their objectively ascertained object or purpose in entering the contract.
33. In accordance with this guidance, the starting point must be the words of the relevant Community law provision. This is in accordance with the part of the Preamble to the Market Access Regulation quoted above and with Article 27 of the CCC, also referred to above. Here we consider that, as Mr Scott submitted, the key provision is Article 12 of Annex II to the Market Access Regulations. We have not identified any legal concepts which might have a different meaning from those applying to the law of Scotland and none were alluded to in the course of the appeal. We turn, therefore, to the words of Article 12.

Article 12

34. Article 12 expressly states that the preferential treatment is to apply to products that satisfy the requirements of the Annex and are transported directly. Here, directly means directly to the European Community. That is the general principle or rule, but it is subject to exceptions. That seems clear from the first word of the second sentence (However) and the phrase should the occasion arise, which appears in the same sentence. Normally, exceptions or derogations from a principle are construed narrowly otherwise the principle or general rule would or at least might be unduly eroded. There are several aspects to the exception.
35. The first is that the products in question must constitute one single consignment. We heard little argument on this point. In the light of the evidence, it seems to us to be difficult to classify the arrangements made under the changed supply chain as a single consignment when different shipments of unblended rum from different sources arrive in Canada at different times rather than simultaneously. The products are not covered by a single transport document or a single invoice. (See definition of consignment in Article 1(l) of Annex II.
36. The second aspect, which is the principal issue in the appeal, is that to fall within the exception, the products must not undergo operations other than (i) unloading, (ii) reloading, or (iii) any operation designed to preserve the products in good condition. It is not disputed that products were unloaded in Canada; nor is it in dispute that products were loaded although a key question whether it is the same product and whether it is correct to describe the shipment from Canada to the EU as beginning with re-loading. Finally, there is no issue about preservation. The issue is whether the products on arrival in Canada underwent operations outwith the exception.

Articles 4 and 5 of Annex II

37. The opening sentence of Article 4.1 makes it clear that these Articles are concerned with products which are worked or processed in the ACP States or in the Community. We are concerned with operations which took place in Canada. These Articles cannot be relevant to the issues we have to determine.
38. If we are wrong about that, it is necessary to consider Article 4.2(a) which permits the use of non-originating materials in the manufacture of a given product provided their total value does not exceed 15 per cent of the ex works price of the product. The non-originating materials are the caramel and the 1% Canadian rum. The Canadian rum is added to comply with Canadian legislation. We were referred to the Canadian statutory provisions but it is unnecessary to discuss them as there was no dispute about their effect.
39. We doubt whether these items are materials within the definition of that word in Article 1 of Annex II. Rather, they are products. If we are wrong about that, then the next hurdle is that there was no evidence of the ex-works price of Lamb's Canadian rum and no evidence of the total value of the caramel and the Canadian rum. However, given the small quantities of caramel and Canadian rum involved, we would have been prepared to infer that it is most unlikely that these two items in total would have exceeded 15 per cent of the ex works price of the Lamb's Navy Rum, whatever that price might be.
40. On the face of matters, it seems plain that the processes described in our findings of fact constitute a range of operations outwith the exceptions of unloading, reloading and preservation. If we need look no further, that is the end of the appeal because Article 12 states that there are to be no operations except unloading, preservation and reloading.

The Wider Context

41. The argument we have to consider is whether viewing operations in Article 12 in a wider Community law context enables us to conclude that operations means operations which so affect the goods as to change their nature and/or change their origin. It appears to be accepted that the operations undertaken in Canada are insufficient to give the rum Canadian origin.

(a) The Market Regulation

42. Operations is not expressly defined. However, for the purposes of Annex II any kind of working or processing constitutes manufacture (Article 1(a)). Product means the product being manufactured even if it is intended for later use in another manufacturing process. The activities of maturing, blending, diluting, adding caramel and Canadian rum as we have describe them amounts to working or processing and thus the operation of manufacture. On this basis alone, the products do not satisfy the exception to Article 12. Article 5 of Annex II, insofar as relevant does not assist the Appellant as the operations including the blending or mixing cannot be described as simple.
43. (b) The Community Customs Code and related Legislative Provisions
44. Article 20.3(d) and Article 27 read together require the questions of preferential tariff measures and preferential origin in relation to ACP States and other countries to be determined by the rules contained in the Market Access Regulation. It is difficult to see how specific provisions of the CCC can assist the Appellant. Moreover, it is also quite difficult to resist the view that while in Canada, the rum underwent its last substantial economically justified processing or working, which resulted in a new product, namely Lamb's Navy Rum (see Article 24).

(c) Customs Warehouse

45. The essential function of a customs warehouse under the 1992 Customs Community Code is the storage of goods (see Articles 98.1, 98.2, 101(b)). Nevertheless it is clear that imported goods may undergo the usual forms of handling intended to preserve them, improve their appearance or marketable quality or prepare them for distribution or resale (Article 109.1). These are identified in Annex 72 to Commission Regulation 2454/93/EEC (the implementing Regulation- see Article 531). These include the addition of goods so long as the addition is relatively limited and does not change the nature or improve the performance of the original goods (paragraph 12) dilution, (paragraph 13), mixing without changing the nature of the goods (paragraph 14), packing and decanting into simple containers (paragraph 16), and any other forms of handling to improve the appearance or marketable quality of the imported goods or to prepare them for distribution or resale (paragraph 19).
46. The processes carried out in Canada by the Appellant or Corby which includes mixing, changes the nature of the original goods from essentially raw spirit to palatable alcoholic drink. Whether one can properly describe a bottling plant where the matured and blended rum is bottled, labelled and placed in cases as packing and decanting into simple containers must be debatable. In short, we do not consider that resort to Annex 72 and an examination of what operations may legitimately be performed to or on products or goods, without loss of preferential origin and preferential tariff treatment, assists the Appellant.

(d) Policy Objectives

47. The European Community has been negotiating Economic Partnership Agreements with the ACP Group of States since 2002. Although not directly relevant to this appeal, an Economic Partnership Agreement has been entered into with the CARIFORUM States. As can be seen from the Market Access Regulation and the 2008 Economic Partnership Agreement, the broad policy objectives underlying these arrangements are to promote the gradual integration of the ACP economies into the world trading system so as to foster development and thus to contribute to the eradication of poverty and the enhancement of living conditions within these economies. The basis of the arrangements is the direct trading relationship between these states and the European Community. This explains the direct transport rule in Article 12 of Annex 2 to the Market Access Regulation which is also to be found in Article 14 of Annex II to the 2008 Economic Partnership Agreement. This rule is of the nature of an anti-avoidance provision. It discourages indirect transportation of products from the ACP States to the EU and requires direct shipment subject to limited exceptions.
48. A decision that the changed supply chain infringes Article 12 has no effect on the underlying policy objectives of the Market Access Regulation or the Economic Partnership Agreements. We do not consider that the plea to re-write these provisions on the grounds of proportionality or effectiveness works. These provisions are there for a reason and flexibility is provided by limited exceptions. They are not to be construed in a way which deprives them of all content simply to suit the revised commercial policy of a Canadian company. The original policy of trading with the ACP States and shipping the product direct to the European Community in a manner which promoted the objectives of putting funds into the ACP economies which would contribute to the eradication of poverty plainly complied with Article 12. As long as trade exists and the distilled rum in its raw state is exported, it does not seem to us have any obvious effect on the ACP States and the eradication of poverty whether the product is exported directly to the EU or indirectly via Canada. There was no evidence or discussion on the economics of the matter. The Appellants promote their product on the basis that it is Caribbean rum. If they wish to continue to produce Caribbean rum they will have to continue to trade with the relevant ACP states. The consequence of their policy decision not to ship direct to the EU but via Canada is one they have to live with. One could equally argue that all these provisions should be construed bearing in mind that if the Appellant's arguments are correct there will be an adverse effect on the EU economy as work and possibly jobs would be lost in Scotland or some other member of the EU where the maturing, blending, bottling and packaging, and in relation to other products a whole range of activities, would have been carried out.
49. Militzer, referred to in the Appellant's skeleton argument records that the principle of proportionality, one of the general principles of Community law, requires that measures implemented through Community provisions be appropriate for attaining the objective pursued and must not go beyond what is necessary to achieve it (paragraph 47). Swedish Match, to which we were also referred, was cited in support of that proposition. Militzer concerned the recovery of a customs debt. Apart from the statement of principle, we did not find the case to be of assistance. Swedish Match concerned the validity of a Directive prohibiting the marketing of tobacco products for oral use. The Court stated the principle of proportionality in the same terms as Militzer. The Court noted that in areas which involved political, economic and social choices and where the Community legislature was called on to undertake complex assessments, only a measure which was manifestly inappropriate in relation to the objective which the competent institutions were seeking to pursue, would or might be unlawful (paragraph 48). The same principle was stated in Laserdisken ...paragraph 53). The case concerned the validity of a provision in a Directive on the harmonisation of copyright and related rights.
50. We, of course, accept the principle of proportionality stated in these cases. However, we have difficulty in seeing how its application has any significant bearing on the interpretation of Article 12. The suggestion was that HMRC were applying too restrictive an interpretation. If the operations carried out have not altered the nature of the goods, so the argument ran, then the conditions of Article 12 should be seen to have been met. We do not agree. For the reasons we have endeavoured to explain, Article 12 requires that no operations be carried out other than unloading and reloading or preservation. We cannot construe the evidence of what is done to the products in Canada (maturing, blending, adding caramel and Canadian rum, bottling, labelling and packaging) as amounting to no operations or no significant operations, however broadly we interpret the Article; these activities cannot be classified as unloading and reloading. To say that the principle of proportionality requires us to do so, seems to us to be a misuse of that principle, and would create a serious lacuna in the direct transport rule.

Movement Certificate EUR.1

51. While this issue may not be strictly necessary to decide, we are of the view that the Appellant's argument is unsound. Article 16 lays down the conditions which enable a movement certificate EUR.1 to be issued after exportation of the product in question. The word exceptionally is present to demonstrate that the circumstances must be out of the ordinary or the norm. The word does not relate to the nature of the product. To describe the product as exceptional is therefore not the point. The additional argument that there are special circumstances within Article 16.1(a) is also, in our view, unsound. The circumstances we were asked to contemplate would be the norm. On every occasion a certificate would not be issued at the time of export otherwise the certificate would be out of date and invalid by the time the product (matured, blended, bottled and packaged) reached the EU, by reason of the ten month time limit specified in Article 21.1. The Appellants indicated that they may consider reducing the maturation period to nine and a half months.
52. Alternatively, it was suggested that the reference to exceptional circumstances in Article 21.2 should be deployed to validate the movement certificate EUR.1. However, much the same difficulty arises with that argument. The circumstances contemplated would not be exceptional; they would be the norm. Moreover, it seems reasonably plain that the Article is contemplating an unintended failure to submit the document by the final date rather than as part of an intended or planned trading strategy.

Economic Partnership Agreement

53. Mr Scott accepted that the terms of the 2008 Economic Partnership Agreement would not lead to a different result. We therefore make no further comment on these provisions.

Result

54. We are satisfied that HMRC did not fall into error when they refused the requested BOI. Whatever the nature of our jurisdiction (full appellate, or supervisory) the Appeal must be dismissed. It was agreed that, in those circumstances, no expenses should be found due to or by either party, and we so find.
J GORDON REID, QC., F.C.I.ARB., TRIBUNAL JUDGE RELEASE DATE: 25 AUGUST 2009
APPENDIX

Consolidated Version of the Treaty Establishing the European Community ...24.12.2002 EN Official Journal of the European Communities C 325/33)

TITLE IX

COMMON COMMERCIAL POLICY

Article 131

By establishing a customs union between themselves Member States aim to contribute, in the common interest, to the harmonious development of world trade, the progressive abolition of restrictions on international trade and the lowering of customs barriers.

The common commercial policy shall take into account the favourable effect which the abolition of customs duties between Member States may have on the increase in the competitive strength of undertakings in those States.

Article 132

1. Without prejudice to obligations undertaken by them within the framework of other international organisations, Member States shall progressively harmonise the systems whereby they grant aid for exports to third countries, to the extent necessary to ensure that competition between undertakings of the Community is not distorted. On a proposal from the Commission, the Council shall, acting by a qualified majority, issue any directives needed for this purpose.

2. The preceding provisions shall not apply to such a drawback of customs duties or charges having equivalent effect nor to such a repayment of indirect taxation including turnover taxes, excise duties and other indirect taxes as is allowed when goods are exported from a Member State to a third country, in so far as such a drawback or repayment does not exceed the amount imposed, directly or indirectly, on the products exported.

Article 133 (*)

1. The common commercial policy shall be based on uniform principles, particularly in regard to changes in tariff rates, the conclusion of tariff and trade agreements, the achievement of uniformity in measures of liberalisation, export policy and measures to protect trade such as those to be taken in the event of dumping or subsidies.

2. The Commission shall submit proposals to the Council for implementing the common commercial policy.

3. Where agreements with one or more States or international organisations need to be negotiated, the Commission shall make recommendations to the Council, which shall authorise the Commission to open the necessary negotiations. The Council and the Commission shall be responsible for ensuring that the agreements negotiated are compatible with internal Community policies and rules. The Commission shall conduct these negotiations in consultation with a special committee appointed by the Council to assist the Commission in this task and within the framework of such directives as the Council may issue to it. The Commission shall report regularly to the special committee on the progress of negotiations. The relevant provisions of Article 300 shall apply.

(*) Article amended by the Treaty of Nice.

4. In exercising the powers conferred upon it by this Article, the Council shall act by a qualified majority.

5. Paragraphs 1 to 4 shall also apply to the negotiation and conclusion of agreements in the fields of trade in services and the commercial aspects of intellectual property, in so far as those agreements are not covered by the said paragraphs and without prejudice to paragraph 6. By way of derogation from paragraph 4, the Council shall act unanimously when negotiating and concluding an agreement in one of the fields referred to in the first subparagraph, where that agreement includes provisions for which unanimity is required for the adoption of internal rules or where it relates to a field in which the Community has not yet exercised the powers conferred upon it by this Treaty by adopting internal rules. The Council shall act unanimously with respect to the negotiation and conclusion of a horizontal agreement insofar as it also concerns the preceding subparagraph or the second subparagraph of paragraph 6. This paragraph shall not affect the right of the Member States to maintain and conclude agreements with third countries or international organisations in so far as such agreements comply with Community law and other relevant international agreements.

6. An agreement may not be concluded by the Council if it includes provisions which would go beyond the Community's internal powers, in particular by leading to harmonisation of the laws or regulations of the Member States in an area for which this Treaty rules out such harmonisation. In this regard, by way of derogation from the first subparagraph of paragraph 5, agreements relating to trade in cultural and audiovisual services, educational services, and social and human health services, shall fall within the shared competence of the Community and its Member States. Consequently, in addition to a Community decision taken in accordance with the relevant provisions of Article 300, the negotiation of such agreements shall require the common accord of the Member States. Agreements thus negotiated shall be concluded jointly by the Community and the Member States. The negotiation and conclusion of international agreements in the field of transport shall continue to be governed by the provisions of Title V and Article 300.

7. Without prejudice to the first subparagraph of paragraph 6, the Council, acting unanimously on a proposal from the Commission and after consulting the European Parliament, may extend the application of paragraphs 1 to 4 to international negotiations and agreements on intellectual property in so far as they are not covered by paragraph 5.

Article 134

In order to ensure that the execution of measures of commercial policy taken in accordance with this Treaty by any Member State is not obstructed by deflection of trade, or where differences between such measures lead to economic difficulties in one or more Member States, the Commission shall recommend the methods for the requisite cooperation between Member States. Failing this, the Commission may authorise Member States to take the necessary protective measures, the conditions and details of which it shall determine. In case of urgency, Member States shall request authorisation to take the necessary measures themselves from the Commission, which shall take a decision as soon as possible; the Member States concerned shall then notify the measures to the other Member States. The Commission may decide at any time that the Member States concerned shall amend or abolish the measures in question. In the selection of such measures, priority shall be given to those which cause the least disturbance of the functioning of the common market.

..............................

Article 300 (*)

1. Where this Treaty provides for the conclusion of agreements between the Community and one or more States or international organisations, the Commission shall make recommendations to the Council, which shall authorise the Commission to open the necessary negotiations. The Commission shall conduct these negotiations in consultation with special committees appointed by the Council to assist it in this task and within the framework of such directives as the Council may issue to it. In exercising the powers conferred upon it by this paragraph, the Council shall act by a qualified majority, except in the cases where the first subparagraph of paragraph 2 provides that the Council shall act unanimously.

(*)Article amended by the Treaty of Nice.

2. Subject to the powers vested in the Commission in this field, the signing, which may be accompanied by a decision on provisional application before entry into force, and the conclusion of the agreements shall be decided on by the Council, acting by a qualified majority on a proposal from the Commission. The Council shall act unanimously when the agreement covers a field for which unanimity is required for the adoption of internal rules and for the agreements referred to in Article 310. By way of derogation from the rules laid down in paragraph 3, the same procedures shall apply for a decision to suspend the application of an agreement, and for the purpose of establishing the positions to be adopted on behalf of the Community in a body set up by an agreement, when that body is called upon to adopt decisions having legal effects, with the exception of decisions supplementing or amending the institutional framework of the agreement. The European Parliament shall be immediately and fully informed of any decision under this paragraph concerning the provisional application or the suspension of agreements, or the establishment of the Community position in a body set up by an agreement.

3. The Council shall conclude agreements after consulting the European Parliament, except for the agreements referred to in Article 133(3), including cases where the agreement covers a field for which the procedure referred to in Article 251 or that referred to in Article 252 is required for the adoption of internal rules. The European Parliament shall deliver its opinion within a time limit which the Council may lay down according to the urgency of the matter. In the absence of an opinion within that time limit, the Council may act. By way of derogation from the previous subparagraph, agreements referred to in Article 310, other agreements establishing a specific institutional framework by organising cooperation procedures, agreements having important budgetary implications for the Community and agreements entailing amendment of an act adopted under the procedure referred to in Article 251 shall be concluded after the assent of the European Parliament has been obtained. The Council and the European Parliament may, in an urgent situation, agree upon a time limit for the assent.

4. When concluding an agreement, the Council may, by way of derogation from paragraph 2, authorise the Commission to approve modifications on behalf of the Community where the agreement provides for them to be adopted by a simplified procedure or by a body set up by the agreement; it may attach specific conditions to such authorisation.

5. When the Council envisages concluding an agreement which calls for amendments to this Treaty, the amendments must first be adopted in accordance with the procedure laid down in Article 48 of the Treaty on European Union.

6. The European Parliament, the Council, the Commission or a Member State may obtain the opinion of the Court of Justice as to whether an agreement envisaged is compatible with the provisions of this Treaty. Where the opinion of the Court of Justice is adverse, the agreement may enter into force only in accordance with Article 48 of the Treaty on European Union.

7. Agreements concluded under the conditions set out in this Article shall be binding on the institutions of the Community and on Member States.

.....................................................

Council Regulation 2913/92/EEC (Community Customs Code)

Article 20

1. Duties legally owed where a customs debt is incurred shall be based on the Customs Tariff of the European Communities.

2. The other measures prescribed by Community provisions governing specific fields relating to trade in goods shall, where appropriate, be applied according to the tariff classification of those goods.

3. The Customs Tariff of the European Communities shall comprise:

(a) the combined nomenclature of goods;

(b) any other nomenclature which is wholly or partly based on the combined nomenclature or which adds any subdivisions to it, and which is established by Community provisions governing specific fields with a view to the application of tariff measures relating to trade in goods;

(c) the rates and other items of charge normally applicable to goods covered by the combined nomenclature as regards:

- customs duties; and,

- agricultural levies and other import charges laid down under the common agricultural policy or under the specific arrangements applicable to certain goods resulting from the processing of agricultural products;

(d) the preferential tariff measures contained in agreements which the Community has concluded with certain countries or groups of countries and which provide for the granting of preferential tariff treatment;

(e) preferential tariff measures adopted unilaterally by the Community in respect of certain countries, groups of countries or territories;

(f) autonomous suspensive measures providing for a reduction in or relief from import duties chargeable on certain goods;

(g) other tariff measures provided for by other Community legislation.

4. Without prejudice to the rules on flat-rate charges, the measures referred to in paragraph 3 (d), (e) and (f) shall apply at the declarant's request instead of those provided for in subparagraph (c) where the goods concerned fulfil the conditions laid down by those first-mentioned measures. An application may be made after the event provided that the relevant conditions are fulfilled.

5. Where application of the measures referred to in paragraph 3 (d), (e) and (f) is restricted to a certain volume of imports, it shall cease:

(a) in the case of tariff quotas, as soon as the stipulated limit on the volume of imports is reached;

(b) in the case of tariff ceilings, by ruling of the Commission.

6. The tariff classification of goods shall be the determination, according to the rules in force, of:

(a) the subheading of the combined nomenclature or the subheading of any other nomenclature referred to in paragraph 3 (b); or

(b) the subheading of any other nomenclature which is wholly or partly based on the combined nomenclature or which adds any subdivisions to it, and which is established by Community provisions governing specific fields with a view to the application of measures other than tariff measures relating to trade in goods, under which the aforesaid goods are to be classified.

Article 21

1. The favourable tariff treatment from which certain goods may benefit by reason of their nature or end-use shall be subject to conditions laid down in accordance with the Committee procedure. Where an authorization is required Articles 86 and 87 shall apply.

2. For the purposes of paragraph 1, the expression 'favourable tariff treatment' means a reduction in or suspension of an import duty as referred to in Article 4 (10), even within the framework of a tariff quota.

Article 22

Articles 23 to 26 define the non-preferential origin of goods for the purposes of:

(a) applying the Customs Tariff of the European Communities with the exception of the measures referred to in Article 20 (3) (d) and (e);

(b) applying measures other than tariff measures established by Community provisions governing specific fields relating to trade in goods;

(c) the preparation and issue of certificates of origin.

Article 23

1. Goods originating in a country shall be those wholly obtained or produced in that country.

2. The expression 'goods wholly obtained in a country' means:

(a) mineral products extracted within that country;

(b) vegetable products harvested therein;

(c) live animals born and raised therein;

(d) products derived from live animals raised therein;

(e) products of hunting or fishing carried on therein;

(f) products of sea-fishing and other products taken from the sea outside a country's territorial sea by vessels registered or recorded in the country concerned and flying the flag of that country;

(g) goods obtained or produced on board factory ships from the products referred to in subparagraph (f) originating in that country, provided that such factory ships are registered or recorded in that country and fly its flag;

(h) products taken from the seabed or subsoil beneath the seabed outside the territorial sea provided that that country has exclusive rights to exploit that seabed or subsoil;

(i) waste and scrap products derived from manufacturing operations and used articles, if they were collected therein and are fit only for the recovery of raw materials;

(j) goods which are produced therein exclusively from goods referred to in sub-paragraphs (a) to (i) or from their derivatives, at any stage of production.

3. For the purposes of paragraph 2 the expression 'country' covers that country's territorial sea.

Article 24

Goods whose production involved more than one country shall be deemed to originate in the country where they underwent their last, substantial, economically justified processing or working in an undertaking equipped for that purpose and resulting in the manufacture of a new product or representing an important stage of manufacture.

Article 25

Any processing or working in respect of which it is established, or in respect of which the facts as ascertained justify the presumption, that its sole object was to circumvent the provisions applicable in the Community to goods from specific countries shall under no circumstances be deemed to confer on the goods thus produced the origin of the country where it is carried out within the meaning of Article 24.

Article 26

1. Customs legislation or other Community legislation governing specific fields may provide that a document must be produced as proof of the origin of goods.

2. Notwithstanding the production of that document, the customs authorities may, in the event of serious doubts, require any additional proof to ensure that the indication of origin does comply with the rules laid down by the relevant Community legislation.

Section 2

Preferential origin of goods

Article 27

The rules on preferential origin shall lay down the conditions governing acquisition of origin which goods must fulfil in order to benefit from the measures referred to in Article 20 (3) (d) or (e).

Those rules shall:

(a) in the case of goods covered by the agreements referred to in Article 20 (3) (d), be determined in those agreements;

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TITLE IV CUSTOMS-APPROVED TREATMENT OR USE CHAPTER 1 GENERAL Article 58

1. Save as otherwise provided, goods may at any time, under the conditions laid down, be assigned any customs-approved treatment or use irrespective of their nature or quantity, or their country of origin, consignment or destination.

2. Paragraph 1 shall not preclude the imposition of prohibitions or restrictions justified on grounds of public morality, public policy or public security, the protection of health and life of humans, animals or plants, the protection of national treasures possessing artistic, historic or archaeological value or the protection of industrial and commercial property.

C. Customs warehouses

Article 98

1. The customs warehousing procedure shall allow the storage in a customs warehouse of:

(a) non-Community goods, without such goods being subject to import duties or commercial policy measures;

(b) Community goods, where Community legislation governing specific fields provides that their being placed in a customs warehouse shall attract the application of measures normally attaching to the export of such goods.

2. Customs warehouse means any place approved by and under the supervision of the customs authorities where goods may be stored under the conditions laid down.

3. Cases in which the goods referred to in paragraph 1 may be placed under the customs warehousing procedure without being stored in a customs warehouse shall be determined in accordance with the committee procedure.

Article 99

A customs warehouse may be either a public warehouse or a private warehouse.

'Public warehouse' means a customs warehouse available for use by any person for the warehousing of goods;

'private warehouse' means a customs warehouse reserved for the warehousing of goods by the warehousekeeper.

The warehousekeeper is the person authorized to operate the customs warehouse.

The depositer shall be the person bound by the declaration placing the goods under the customs warehousing procedure or to whom the rights and obligations of such a person have been transferred.

Article 100

1. Operation of a customs warehouse shall be subject to the issue of an authorization by the customs authorities, unless the said authorities operate the customs warehouse themselves.

2. Any person wishing to operate a customs warehouse must make a request in writing containing the information required for granting the authorization, in particular demonstrating that an economic need for warehousing exists. The authorization shall lay down the conditions for operating the customs warehouse.

3. The authorization shall be issued only to persons established in the Community.

Article 101

The warehousekeeper shall be responsible for:

(a) ensuring that while the goods are in the customs warehouse they are not removed from customs supervision;

(b) fulfilling the obligations that arise from the storage of goods covered by the customs warehousing procedure; and

(c) complying with the particular conditions specified in the authorization.

Article 102

1. By way of derogation from Article 101, where the authorization concerns a public warehouse, it may provide that the responsibilities referred to in Article 101 (a) and/or (b) devolve exclusively upon the depositor.

2. The depositor shall at all times be responsible for fulfilling the obligations arising from the placing of goods under the customs warehousing procedure.

Article 103

The rights and obligations of a warehousekeeper may, with the agreement of the customs authorities, be transferred to another person.

Article 104

Without prejudice to Article 88, the customs authorities may demand that the warehousekeeper provide a guarantee in connection with the responsibilities specified in Article 101.

Article 105

The person designated by the customs authorities shall keep stock records of all the goods placed under the customs warehousing procedure in a form approved by those authorities. Stock records are not necessary where a public warehouse is operated by the customs authorities. Subject to the application of Article 86 the customs authorities may dispense with stock records where the responsibilities referred to in Article 101 (a) and/or (b) lie exclusively with the depositor and the goods are placed under that procedure on the basis of a written declaration forming part of the normal procedure or an administrative document in accordance with Article 76 (1) (b).

Article 106

1. Where an economic need exists and customs supervision is not adversely affected thereby, the customs authorities may allow:

(a) Community goods other than those referred to in Article 98 (1) (b) to be stored on the premises of a customs warehouse;

(b) non-Community goods to be processed on the premises of a customs warehouse under the inward processing procedure, subject to the conditions provided for by that procedure. The formalities which may be dispensed with in a customs warehouse shall be determined in accordance with the committee procedure;

(c) non-Community goods to be processed on the premises of a customs warehouse under the procedure for processing under customs control, subject to the conditions provided for by that procedure. The formalities which may be dispensed with in a customs warehouse shall be determined in accordance with the committee procedure.

2. In the cases referred to in paragraph 1, the goods shall not be subject to the customs warehousing procedure.

3. The customs authorities may require the goods referred to in paragraph 1 to be entered in the stock records provided for in Article 105.

Article 107

Goods placed under the customs warehousing procedure shall be entered in the stock records provided for in Article 105 as soon as they are brought into the customs warehouse.

Article 108

1. There shall be no limit to the length of time goods may remain under the customs warehousing procedure.

However, in exceptional cases, the customs authorities may set a time limit by which the depositor must assign the goods a new customs-approved treatment or use.

2. Specific time limits for certain goods referred to in Article 98 (1) (b) covered by the common agricultural policy may be laid down in accordance with the committee procedure.

Article 109

1. Import goods may undergo the usual forms of handling intended to preserve them, improve their appearance or marketable quality or prepare them for distribution or resale.

A list of cases in which those forms of handling shall be prohibited for goods covered by the common agricultural policy may be drawn up if this is necessary to ensure the smooth operation of the common organization of markets.

2. Community goods referred to in Article 98 (1) (b) which are placed under the customs warehousing procedure and are covered by the common agricultural policy may undergo only the forms of handling expressly stipulated for such goods.

3. The forms of handling provided for in the first subparagraph of paragraph 1 and in paragraph 2 must be authorized in advance by the customs authorities, which shall lay down the conditions under which they may take place.

4. The lists of the forms of handling referred to in paragraphs 1 and 2 shall be established in accordance with the committee procedure.

Article 110

Where circumstances so warrant, goods placed under the customs warehousing procedure may be temporarily removed from the customs warehouse. Such removal must be authorized in advance by the customs authorities, who shall stipulate the conditions on which it may take place.

While they are outside the customs warehouse the goods may undergo the forms of handling referred to in Article 109 on the conditions set out therein.

Article 111

The customs authorities may allow goods placed under the customs warehousing procedure to be transferred from one customs warehouse to another.

Article 112

1. Where a customs debt is incurred in respect of import goods and the customs value of such goods is based on a price actually paid or payable which includes the cost of warehousing and of preserving goods while they remain in the warehouse, such costs need not be included in the customs value if they are shown separately from the price actually paid or payable for the goods.

2. Where the said goods have undergone the usual forms of handling within the meaning of Article 109, the nature of the goods, the customs value and the quantity to be taken into account in determining the amount of import duties shall, at the request of the declarant, be those which would be taken into account for the goods, at the time referred to in Article 214, if they had not undergone such handling. However, derogations from this provision may be adopted under the committee procedure.

3. Where, in accordance with Article 76, import goods are released for free circulation without being presented to customs and before the corresponding declaration is lodged, and the rules of assessment relating to those goods were ascertained or accepted at the time when the goods were placed under the customs warehousing arrangements, the said rules shall be considered to be those to be taken into account for the purposes of Article 214, without prejudice to a post-clearance examination within the meaning of Article 78.

Article 113

Community goods referred to in Article 98 (1) (b) which are covered by the common agricultural policy and are placed under the customs warehousing procedure must be exported or be assigned a treatment or use provided for by the Community legislation governing specific fields referred to in that Article.

Commission Regulation 2454/93/EEC (Implementing Regulations)

CHAPTER 2

Customs warehousing

Section 1

General provisions

Article 524

For the purposes of this Chapter concerning agricultural products, 'prefinanced goods' means Community goods intended for export in the unaltered state which are the subject of the payment of an amount equal to an export refund before the goods are exported, where such payment is provided for in Council Regulation (EEC) No 565/80

Article 525

1. Where a customs warehouse is public, the following classification shall apply:

(a) type A, if the responsibility lies with the warehousekeeper;

(b) type B, if the responsibility lies with the depositor;

(c) type F, if the warehouse is operated by the customs authorities.

2. Where a customs warehouse is private and responsibility lies with the warehousekeeper, who is the same person as the depositor but not necessarily the owner of the goods, the following classification shall apply:

(a) type D, where release for free circulation is made by way of the local clearance procedure and may be granted on the basis of the nature, the customs value and the quantity of the goods to be taken into account at the time of their placing under the arrangements;

(b) type E, where the arrangements apply although the goods need not be stored in a place approved as a customs warehouse;

(c) type C, where neither of the special situations under points (a) and (b) applies.

3. An authorisation for a type E warehouse may provide for the procedures laid down for type D to be applied.

Section 2

Additional conditions concerning the granting of the authorisation

Article 526

1. When granting the authorisation the customs authorities shall define the premises or any other location approved as a customs warehouse of type A, B, C or D. They may also approve temporary storage facilities as such types of warehouse or operate them as a type F warehouse.

2. A location may not be approved as more than one customs warehouse at the same time.

3. Where goods present a danger or are likely to spoil other goods or require special facilities for other reasons, authorisations may specify that they may only be stored in premises specially equipped to receive

them.

4. Type A, C, D and E warehouses may be approved as victualling warehouses within the meaning of Article 40 of Commission Regulation (EC) No 800/99 (1).

5. Single authorisations may be granted only for private customs warehouses.

Article 527

1. Authorisations may be granted only if any intended usual forms of handling, inward processing or processing under customs control of the goods do not predominate over the storage of the goods.

2. Authorisations shall not be granted if the premises of customs warehouses or the storage facilities are used for the purpose of retail sale. An authorisation may, however, be granted, where goods are retailed

with relief from import duties:

(a) to travellers in traffic to third countries;

(b) under diplomatic or consular arrangements;

(c) to members of international organisations or to NATO forces.

3. For the purposes of the second indent of Article 86 of the Code, when examining whether the administrative costs of customs warehousing arrangements are disproportionate to the economic needs involved, customs authorities shall take account, inter alia, of the type of warehouse and the procedure which may be applied therein.

Section 3

Stock records

Article 528

1. In warehouses of type A, C, D and E, the person designated to keep the stock records shall be the warehousekeeper.

2. In warehouses of type F, the operating customs office shall keep the customs records in place of stock records.

3. In type B warehouses, in place of stock records, the supervising office shall keep the declarations of entry for the arrangements.

Article 529

1. The stock records shall at all times show the current stock of goods which are still under the customs warehousing arrangements. At the times laid down by the customs authorities, the warehousekeeper shall lodge a list of the said stock at the supervising office.

2. Where Article 112(2) of the Code applies, the customs value of the goods before carrying out usual forms of handling shall appear in the stock records.

3. Information on the temporary removal of goods and on goods in common storage in accordance with Article 534(2) shall appear in the stock records.

Article 530

1. Where goods are entered for the type E warehouse arrangements, the entry in the stock records shall take place when they arrive at the holder's storage facilities.

2. Where the customs warehouse also serves as a temporary storage facility, the entry in the stock records shall take place at the time the declaration for the arrangements is accepted.

3. Entry in the stock records relating to discharge of the arrangements shall take place at the latest when the goods leave the customs warehouse or the holder's storage facilities.

Section 4

Other provisions concerning the operation of the arrangements

Article 531

Non-Community goods may undergo the usual forms of handling listed in Annex 72.

Article 532

Goods may be temporarily removed for a period not exceeding three months. Where circumstances so warrant, this period may be extended.

Article 533

Applications for permission to carry out usual forms of handling or to remove goods temporarily from the customs warehouse shall be made in writing on a case by case basis to the supervising office. They must contain all particulars necessary to apply the arrangements. Such permission may be granted as part of an authorisation to operate the warehousing arrangements. In this case the supervising office, in the manner it shall determine, shall be notified that such handling is to be carried out or the goods are to be temporarily removed.

Article 534

1. Where Community goods are stored on the premises of a customs warehouse or the storage facilities used for goods under the warehousing arrangements, specific methods of identifying such goods may be laid down with a view, in particular, to distinguishing them from goods entered for the customs warehousing arrangements.

2. The customs authorities may permit common storage where it is impossible to identify at all times the customs status of each type of goods. Prefinanced goods shall be excluded from such permission. Goods in common storage shall share the same eight-digit CN-code, the same commercial quality and the same technical characteristics.

3. For the purpose of being declared for a customs-approved treatment or use the goods in common storage, as well as, in particular circumstances, identifiable goods which fulfil the conditions of the second subparagraph of paragraph 2, may be deemed to be either Community goods or non-Community goods. Application of the first subparagraph shall, however, not result in a given customs status being assigned to a quantity of goods greater than the quantity actually having that status which is stored at the customs warehouse or the storage facilities when the goods declared for a customs-approved treatment or use are removed.

Article 535

1. Where operations of inward processing or processing under customs control are carried out on the premises of customs warehouses or in storage facilities, the provisions of Article 534 shall apply, mutatis mutandis, to the goods under these arrangements. Where, however, these operations concern inward processing without equivalence or processing under customs control, the provisions of Article 534 on common storage shall not apply with regard to Community goods.

2. Entries in the records shall allow the customs authorities to monitor the precise situation of all goods or products under the arrangements at any time.

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ANNEX 72

LIST OF USUAL FORMS OF HANDLING REFERRED TO IN ARTICLE

531 AND ARTICLE 809

Unless otherwise specified, none of the following forms of handling may give rise to a different eight-digit CN code. Usual forms of handling listed below shall not be granted if, in the opinion of the customs authorities, the operation is likely to increase the risk of fraud:

1. Ventilation, spreading-out, drying, removal of dust, simple cleaning operations, repair of packing, elementary repairs of damage incurred during transport or storage in so far as it concerns simple operations, application and removal of protective coating for transport;

2. reconstruction of the goods after transport;

3. stocktaking, sampling, sorting, sifting, mechanical filtering and weighing of the goods;

4. removal of damaged or contaminated components;

5. conservation, by means of pasteurisation, sterilisation, irradiation or the addition of preservatives;

6. treatment against parasites;

7. anti-rust treatment;

8. treatment:

— by simple raising of the temperature, without further treatment or distillation

process, or

— by simple lowering of the temperature;

even if this results in a different eight-digit CN code;

9. electrostatic treatment, uncreasing or ironing of textiles;

10. treatment consisting in:

— stemming and/or pitting of fruits, cutting up and breaking down of dried fruits or vegetables, rehydration of fruits, or

— dehydration of fruits even if this results in a different eight-digit CN

code;

11. desalination, cleaning and butting of hides;

12. addition of goods or addition or replacement of accessory components as long as this addition or replacement is relatively limited or is intended to ensure compliance with technical standards and does not change the nature or improve the performances of the original goods, even if this results in a different eight-digit CN code for the added or replacement goods;

13. dilution or concentration of fluids, without further treatment or distillation process, even if this results in a different eight-digit CN code;

14. mixing between them of the same kind of goods, with a different quality, in order to obtain a constant quality or a quality which is requested by the customer, without changing the nature of the goods;

15. dividing or size cutting out of goods if only simple operations are involved;

16. packing, unpacking, change of packing, decanting and simple transfer into containers, even if this results in a different eight-digit CN code, affixing, removal and altering of marks, seals, labels, price tags or other similar distinguishing signs;

17. testing, adjusting, regulating and putting into working order of machines, apparatus and vehicles, in particular in order to control the compliance with technical standards, if only simple operations are involved;

18. dulling of pipe fittings to prepare the goods for certain markets.

19. Any usual forms of handling, other than the abovementioned, intended to improve the appearance or marketable quality of the import goods or to prepare them for distribution or resale, provided that these operations do not change the nature or improve the performance of the original goods. Where costs for usual forms of handling have been incurred, such costs or the increase in value shall not be taken into account for the calculation of the import duty where satisfactory proof of these costs is provided by the declarant. However, the customs value, nature and origin of non-Community goods used in the operations shall be taken into account for the calculation of the import duties.

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Council Regulation (EC) No 1528/2007 (The Market Access Regulation)

TITLE I GENERAL PROVISIONS

Article 1

Definitions

For the purposes of this Annex:

(a) 'manufacture' shall mean any kind of working or processing including assembly or specific operations;

(b) 'material' shall mean any ingredient, raw material, component or part, etc., used in the manufacture of the product;

(c) 'product' shall mean the product being manufactured, even if it is intended for later use in another manufacturing operation;

(d) 'goods' shall mean both materials and products;

(e) 'customs value' shall mean the value as determined in accordance with the 1994 Agreement on implementation of Article VII of the General Agreement on Tariffs and Trade (WTO Agreement on customs valuation);

(f) 'ex-works price' shall mean the price paid for the product ex works to the manufacturer in whose undertaking the last working or processing is carried out, provided the price includes the value of all the materials used, minus any internal taxes which are, or may be, repaid when the product obtained is exported;

(g) 'value of materials' shall mean the customs value at the time of importation of the non-originating materials used, or, if this is not known and cannot be ascertained, the first ascertainable price paid for the materials in the territory concerned;

(h) 'value of originating materials' shall mean the value of such materials as defined in point (g) applied mutatis mutandis;

(i) 'added value' shall mean the ex-works price minus the customs value of materials imported into either the Community or the ACP States;

(j) 'chapters' and 'headings' shall mean the chapters and the headings (four-digit codes) used in the nomenclature which makes up the Harmonised Commodity Description and Coding System, referred to in this Annex as 'the Harmonised System' or 'HS';

(k) 'classified' shall refer to the classification of a product or material under a particular heading;

(l) 'consignment' shall mean products which are either sent simultaneously from one exporter to one consignee or covered by a single transport document covering their shipment from the exporter to the consignee or, in the absence of such a document, by a single invoice;

(m) 'territories' shall include territorial waters;

(n) 'OCT' shall mean the countries and territories mentioned in Appendix 12.