On 18 April, the Department of Administrative Cases of the Supreme Court (Senate) suspended legal proceedings in a case initiated on the basis of application by SIA “Hydro Energo” for annulment of the State Revenue Service’s decision according to which customs duty and overdue payment has been calculated for the applicant in addition to applicant’s payment to the budget. The Senate decided to refer the case to the Court of Justice of the European Union for a preliminary ruling. The proceedings in the case are suspended until the judgment of the Court of Justice of the European Union enters into force.

In the present case, a tax debt was calculated for the applicant for the imported goods - the brass rods.

The applicant SIA Hydro Energo applied for release of goods for free circulation that are declared under subheading 7403 21 00 of the Combined Nomenclature (refined copper and copper alloys, unwrought copper and zinc alloys (brass). The basic rate of import duty for this item is set at 0%. They have been classified by the National Revenue Service as brass rods under heading 7407 21 10 of the Combined Nomenclature, stating that, according to the Harmonized Commodity Description and Coding System, heading 7403 (unwrought copper and its alloys) does not cover rolled products. Whereas, the applicant contends that those products do not fall within the definition of rods within the meaning of the Combined Nomenclature because they do not have a full, continuous cross-section, namely, there are giant pores, voids and cracks visible in the plane of the plate. As an additional observation, the applicant stated that the rectangular rolling was carried out solely for the convenience of transport and that the products could not be used for purposes other than remelting. In the applicant's view, when classifying products under heading 7403 or 7407 of the Combined Nomenclature, important is not only the shape and pre-treatment of the products but also their degree of treatment and their possible use.


The Regional Court agreed with the applicant's argument that the products did not meet the definition of rods because they did not have a full continuous cross-section along their entire length. At the same time, the Regional Court considered that, according to the evidence in the case, the product according to its chemical composition is refined copper and not copper alloy (brass) and therefore it has classified the goods under heading 7403 13 00.

In the opinion of the Senate, the decisive question in this case is whether the products meet the definition of rods within the meaning of the Combined Nomenclature. The Service rightly points out that the applicant's goods have a number of objective characteristics which correspond to those of the rods provided for in Note 1 (d) of Chapter 74 of the Combined Nomenclature, which would enable them to be classified under heading 7407. In addition, since the products in question are rolled according to the accompanying documents, this fact could be an additional reason to classify them under heading 7407. However, the applicant has reasonable doubts as to whether these goods also comply with the indication of a full continuous cross-section along their entire length, as giant pores, voids and cracks appear in the cross-sectional plane of the products.

In order to answer this question, it is necessary to interpret the rules of European Union law. The Senate has not established that the Court of Justice of the European Union has so far ruled on the indicated subject. In view of the above, the Senate decided to refer a question to the Court of Justice of the European Union for a preliminary ruling.

Case No SKA-220/2019; A420380214


Information prepared by Baiba Kataja, the Press Secretary of the Supreme Court

Tel.: +371 67020396; e-mail: baiba.kataja@at.gov.lv