The Sky+ set top box contains both a satellite television receiver and a hard disk on which television content can be recorded from Sky's satellite TV platform. The European Commission issued an Explanatory Note, loyally applied by national customs authorities including those in the United Kingdom, which classified the box as a video recorder and so subjected it to 13.9% customs duty on import into the EU. Sky challenged that categorisation in an appeal to the First Tier Tribunal (Tax Chamber) in London, which was referred to the European Court and was the subject of a preliminary ruling on 14 April 2011.
The Court upheld Sky's argument, on the basis that the recording function was dependent on the reception of television signals and that consumers who choose the product are therefore seeking primarily a television receiver, even though their choice may be influenced by the fact or nature of the recording function. In addition, the complex argument that duty-free import was required also by the WTO Agreement on trade in information technology products appears to have been accepted by the Court. Neither the Advocate General (who opted not to deliver an Opinion) nor the Court however provided any reasoning on that point.
Of more general importance is the Court's ruling that national customs authorities are obliged to classify goods in conformity with the Commission's Explanatory Notes, notwithstanding that such Notes lack legally binding force. A manufacturer or importer which disagrees with an Explanatory Note thus has no choice but to bring a legal claim, as Sky did in this case. In any claim of substance, a reference is likely to result. The steady flow of customs classification cases to the EU's senior court does not seem set to diminish.
The judgment is here.
David Anderson QC appeared for Sky.