THE TARIFF CLASSIFICATION OF E-BOOK READERS
(GERMANY)

Fiscal Court of Hamburg, 14 February 2013, 4 K 78/12

On 14 February 2013
the Fiscal Court Hamburg answered the question regarding the tariff classification
of e-book readers and came to the conclusion that the e-book readers at hand
have to be classified under sub-heading 8543 7010.

Background

In June 2011, the
plaintiff imported e-book readers, i.e. reading devices for electronic books,
into Germany. The devices contain inter alia of a monochrome 6 inch e-ink
display with a microprocessor, an internal 4 GB storage, a key pad, loud
speakers and an USB port. The devices can also be used in order to surf the internet
and to listen to audio files. In addition, they contain a dictionary function. In
case words within a text are marked, the device automatically provides an
explanation of the word and links the user to the respective page in the dictionary which
is installed on the device. The installed dictionaries can also be accessed by
the main menu and used for research purposes.

After a discussion
with Customs about the tariff  classification
in 2011, the plaintiff filed an application for a BTI, proposing the devices’ tariff
classification under sub-heading 8543.70.10, which was denied by the defendant
who chose sub-heading 8543.70.90.

The plaintiff
consequently filed a claim at the Fiscal Court Hamburg, asking for the annulment
of the BTI and the obligation of the defendant to issue a BTI leading to the
devices’ tariff classification under sub-heading 8543.70.10.

Pursuant argued based
on the heading’s wording, it should not be a requirement, that the translation
or dictionary functions were the devices’ sole functions. Especially the word “with”
would indicate that the devices under the aforementioned sub-heading could
contain further functions.

The defendant applied
for a dismissal of action, due to a lack of exclusiveness of the respective functions
and a reference to Commission Implementing Regulation (EU) No 763/2011.

Findings

The Fiscal Court
referred to the consistent position of the ECJ and the German Federal Fiscal
Court, that, in the interests of legal certainty and ease of verification, the
decisive criterion for the classification of goods for customs purposes is in
general to be sought in their objective characteristics and properties, as defined
in the relevant headings of the Common Customs Tariff and the notes to the
sections or chapters. Likewise, for the purpose of interpreting the Common
Customs Tariff, both the notes which head the chapters of the Common Customs Tariff
and the Explanatory Notes to the Nomenclature of the Customs Cooperation Council
are important means for ensuring the uniform application of the Tariff and as
such may be regarded as useful aids to its interpretation. Consequently, the
Fiscal Court came to the conclusion that, pursuant to General Rule 3 a) of the
Combined Nomenclature, which states that the heading which provides the most specific
description shall be preferred to headings providing a more general
description, the devices have to be classified under the subheading 8543 7010.
According to the wording, the respective sub-heading does furthermore not
exclude devices which contain more functions than the translation or dictionary
function. Whereas sub-heading 8543.70.30 (“aerial amplifiers”) or sub-heading
8543.70.50 (“sunbeds, sunlamps and similar suntannig equipment”) contain
specific machines/apparatus, the sub-heading 8543.70.10 merely names two
functions, which have to be contained by the respective device. Any further
details in regards to an exclusive or main character of these functions are not
provided for.

In addition, a
reference to Commission Implementing Regulation (EU) No 763/2011 could not be
made, as apparatus with translation or dictionary functions are explicitly excluded
from the Regulation, pursuant to the description of the goods in the
Regulation’s annex.

Furthermore, pursuant
to the Explanatory Notes to the Combined Nomenclature of the European Union
(2011/C137/01) regarding subheading 8543 7090, this sub-heading covers small
electronic devices not mounted on a baseplate (including so-called
‘minicomputers’), which can be used to form words and sentences which are
translated into a chosen foreign language depending on the memory modules used
with these devices. Consequently, devices which provide translating or
dictionary functions among others are not intended to become subject to this
sub-heading, but to subheading 8543.70.10.

Therefore, the Fiscal
Court ruled that the plaintiff’s e-book readers are to be classified under
sub-heading 8543.70.10, the current BTI has to be annulled and a respective BTI
has to be issued.

Conclusion

This decision
outlines the importance of a detailed analysis of the wording and the content of
the Combined Nomenclature as well as its Explanatory Notes. Sometimes, the
answer to the classification question might not be found directly within the
sub-heading, the good is supposed to be classified under, but rather due to a
comparison with other sub-headings and the Explanatory Notes.

As we have outlined
before, in case of any doubts regarding the tariff classification of a good,
the application of a BTI can be helpful and is sometimes inevitable. However,
the decision at hand shows that a critical review in regards to BTI’s issued by
the Customs authorities is always appropriate in case of an aberration of the
applied and the issued subheading.

In case of any
questions concerning the tariff classification, an issued BTI and/or legal proceedings
in this regard, we are happy to support you with our broad experience.

Anna Marcinowski.

Customs & International Trade Communiqué,
Volume 58, European Customs
& Trade Communiqué, pages 6-7, www.pwc.com.