To scrunch or not to scrunch – that may or may not be the question

28/11/25

In one of the first dumping cases post-Brexit to be heard domestically rather than as previously in Luxembourg, the First-Tier Tribunal (Tax Chamber) has handed down a short, but interesting judgment covering the manner in which evidence is to be adduced in such cases by HMRC and how substantive issues on origin can be determined.

The case involved the import of kitchen foil by Morrisons from Thailand. The original material had been manufactured in China, but further processing was carried out in Thailand. That processing including annealing the intermediate product, leading to its metal temper changing. Thai origin certificates were issued for the imports in question. This meant that EU anti-dumping duties which were imposed on Chinese imports of the kitchen foil were not initially imposed on the imports from Thailand. However, following an investigation, HMRC asserted that the Thai factory was not economically justified as it was established for the purpose of avoiding the anti-dumping duty and the processing in the factor was not sufficiently substantial for the foil to be treated as having Thai origin.

In support of their case, HMRC adduced evidence from the reviewing officer from HMRC and from a lead investigator for the European Anti-Fraud Office [“OLAF”]. Their evidence on the substantive issues before the Tribunal – economic justification and sufficient processing – was held to be inadmissible by the Tribunal. Accordingly, the only admissible evidence came from factual witnesses in relation to the operation of the Thai factory and expert witnesses instructed by both parties.

The Tribunal’s finding that the processing in Thailand was not economically justified was largely based on contemporaneous screenshots from various websites stating that the Thai factory had been set up to “eliminate” the problem of anti-dumping duties. That evidence was held to be more compelling than the General Manager’s evidence that only 30% of the production from the Thai factory was exported, demonstrating that the production was largely to meet domestic demand on which EU anti-dumping duties were not imposed.

The Tribunal’s finding that the processing in question was insufficient was largely based on the Tribunal members “scrunching” pieces of the pre- and post-processed foil. Despite the fact that it was accepted that the metal temper changed because of the Thai processing, the Tribunal found that the “scrunch” test demonstrated that whilst the pre-processed foil was sharper to the touch, it could still be wrapped around a wallet and then unwrapped again – the wallet standing in for a sandwich. Their decision was not altered by the fact that the “scrunch” test did show that the pre-processed foil tore more easily than the post-processed foil.