Read the full decision here:
This case concerns the origin of garlic and whether, for the purposes of the Community Customs Code, it is Chinese, as HM Revenue and Customs contended, or, as the appellants’ argued, Indian.
The issue arose because, under the system of import licences, certificates of origin and management of tariff quotas for garlic imported into the European Union (“EU”) from third countries, it was subject to a quota, with any imports outside that quota being liable to a payment of €1,200 per tonne in addition to customs duty of 9.6%.
With approximately 77% of the garlic produced worldwide being of Chinese origin, the European Commission found that, to circumvent the quota system, large quantities of garlic originating from China was being brought into the EU via third countries.
On 12 August 2005, it published a Notice to Importers: Imports of Garlic into the Community in the Official Journal (which was published in the United Kingdom in a Joint Customs Consultative Committee information in September 2005), advising importers to check with their suppliers that the correct origin was being declared (2005/C197/05). This stated:
“The European Commission informs Community operators that there is reasonable doubt as to the origin of garlic of tariff heading CN 0703 20 00, which is released for free circulation into the Community in order to benefit:
- either from the GATT tariff quota open by Council Decision 2001/404/EC (1),
- or from preferential tariff measures, contained in agreements which the Community has concluded with or arrangements it has adopted unilaterally in respect of certain countries or group of countries.
From various investigations, it results that important quantities of garlic of Chinese origin are declared with another origin and then benefit from the tariff measures mentioned above, beyond the annual quota of 13,200 tonnes allocated to China.
Community operators declaring and/or presenting documentary evidence of origin for garlic of tariff heading CN 0703 20 00 are therefore advised to take all the necessary precautions, since the release of the goods in question for free circulation may give rise to a customs debt and lead to fraud against the Community's financial interests.”
HMRC argued that the significant quantities of garlic imported into the UK between April 2006 and May 2007 by Cyproveg Limited, Puregold Enterprises Limited and S&S Fruit and Vegetables Limited, although declared by each of them to have originated from India was, in fact, of Chinese origin, in excess of the quota and was shipped to the UK from China via Sri Lanka.
In essence, the grounds of appeal on which all of the appellants rely were:
(1) The garlic was correctly declared as being of Indian origin;
(2) Customs duty should be waived as the conditions under Article 220(2)(b) of the Community Customs Code have been satisfied; and
(3) Customs duties should be remitted under Article 239 of the Community Customs Code
The Tribunal held as follows:
"In our judgment, given the overwhelming weight of the evidence to the contrary, Mr Elnagy’s position that the garlic is of Indian origin is hopeless and cannot succeed.
We consider the only conclusion that can be drawn from the evidence, particularly the OLAF mission report, the shipping documentation and the conclusions of the analysis undertaken by Mr Redmond at the Savannah Laboratory of the US Customs and Border Protection, US Department of Homeland Security, is that the garlic was of Chinese origin."
Hammad Baig can assist with disputes of origin and classification.