Can you appeal if you disagree with the CN code recommendation issued by the Customs Laboratory?

You can ask the Customs Laboratory to classify your goods to double-check the commodity code you use or plan to use. However, the recommended product code might differ from yours, and you may disagree with it. What should be done in such a case? Should you ignore the recommendation of the Customs Laboratory? Or is it better to appeal against it? And, in general, is it possible to appeal against such non-binding conclusions? The Supreme Administrative Court of Lithuania (SACL) clarified the latter issue.

Let's look at the decision of the SACL on the 8^th of June, 2006, concerning the administrative case No. eP-72-442/2022.

Situation

The Company (also Applicant) contacted the Customs Laboratory stating that it was preparing to manufacture mixtures of beverages and, therefore, requested classification of the goods in the Combined Nomenclature (CN), the TARIC, and that the additional national code be set. The Company provided descriptions and samples of the goods for this purpose.

The Customs Laboratory concluded that the goods should be classified under the CN heading 2208 and informed that this was a non-binding recommendation. The Company disagreed with this. In its view, the correct CN code should have been 2206. Despite its allegedly non-binding nature, the recommendation was nevertheless the decision of a special customs office and was personally applicable to the Company concerning the application of the customs legislation.

Important fact: beverages falling within CN heading 2208 are subject to a significantly higher rate of excise duty than those falling within CN heading 2206.

What should the Company have done: ignored the conclusion or appealed against it?

The Company decided to appeal (lodging the appeal with the Customs Department) because, in its opinion:

• The commodity code determines the tax-legal situation of the product, including the rate of excise duty applicable to the beverage in question. When the Customs Laboratory found that the Applicant's beverage was to be classified under the CN heading 2208 and not under the CN heading 2206, it was found that the Applicant was liable to pay a significantly higher excise duty;
• If the Customs Laboratory determined that a specific product was subject to a specific CN code, entities in Lithuania have no other options than to follow the Customs Laboratory's ‘recommended' path, as there are no other competent, impartial testing laboratories accredited to examine the specific goods in Lithuania.

Continue reading the article ‘Can you appeal if you disagree with the CN code recommendation issued by the Customs Laboratory?’ by Enrika Naujokė, co-owner of UAB 'Muita'. The article was published in the Customs Compliance & Risk Management Journal. Would you like to get access to all the articles published since 2020? Check the pricing here and choose most suitable subscription plan.