In an interesting case, the fourth senate of the FG Hamburg in its judgement of 17.08.2018, 4 K 162/16 has expressed itself on the classification of an “emergency cigarette”. The product “emergency cigarette” is a small glass tube welded at both ends and containing a commercially available filter cigarette. The glass tube additionally contains a match and bears the inscription “In Emergency Break Glas!
The judgment shows that the customs and tax valuation of goods may well diverge, leading to apparently contradictory results.
Dispute over the classification of emergency cigarettes
The dispute was based on the question whether an “emergency cigarette” was to be regarded under customs and tax law as an entertainment or joke article, as a cigarette or as glassware.
Already at the time of importation of the goods, the applicant and the customs authorities disputed the classification. In any event, at the time of import clearance, the applicant declared the goods as ‘joke articles’ to be classified under subheading 9505 9000 of the Combined Nomenclature. The customs office then took samples and requested an expert opinion from the Education and Science Centre Hamburg (BWZ). The amount of duty was provisionally determined on the basis of the notified subheading. Tobacco tax was not initially levied on the product.
In its opinion, the BWZ concluded that the ’emergency cigarette’ should be classified as a cigarette under subheading 2402 2090 of the Combined Nomenclature. The cigarette characterises the product in this respect. On the basis of the expert opinion, the customs office collected import duties and tobacco duty. The applicant sought reimbursement of the post-clearance charges.
In its ruling, the FG Hamburg decided that the complaint was unfounded with regard to tobacco tax and predominantly justified with regard to customs duties.
“Emergency cigarette” is a cigarette under tobacco tax law
With regard to the tobacco tax, the FG Hamburg did not object to the post-clearance survey and merely made it clear that the “emergency cigarette” was a commercially available filter cigarette, i.e. a tobacco rod that was immediately suitable for smoking. This assessment would also not be affected by the glass tube surrounding the cigarette, since the glass wrapping would in any event not affect the cigarette’s suitability for smoking and the removal of the cigarette from the tube would, moreover, be possible without greater effort. Both customs sampling and BWZ investigations have shown that the cigarette can be removed undamaged. However, under tobacco tax law it would also not be of concern if the cigarette were to be contaminated with glass splinters by the smashing of the tube.
A joke article, a cigarette or glassware? The view of customs law
As regards the customs classification of the ’emergency cigarette’, the FG Hamburg concluded that it should be classified as ‘glassware’ under Chapter 70 of the Combined Nomenclature. According to general Rule 3b of the Combined Nomenclature, goods consisting of different components are classified according to the substance or component which gives them their essential character. According to the FG, the case of the ’emergency cigarette’ is such that the essential character of the cigarette is conferred by the glass tube and, unlike from a tobacco tax point of view, the cigarette is irrelevant to its classification in the customs tariff.
Classification as a cigarette under heading 2404 of the Combined Nomenclature is therefore out of the question. The inscription “In Emergency Break Glass” would create an association with an emergency button secured by a window, which would typically serve to alert firefighters, police and ambulances. However, since it is clear to any prudent observer that the product is in fact not a rescue button and that the unmet need for a cigarette does not have the same serious consequences as an emergency requiring paramedics or firefighters, this would be an ironic dramatisation of the need for smoking. For this reason, the glass tube with the inscription characterizes the character of the product.
Classification as a joke article in this position would also have to be ruled out, because such a classification would always require a certain surprise effect, such as that brought about by a “fart cushion”. A surprise effect would not emanate from the “emergency cigarette” because of the exclusive ironic play with the human need for smoking.
Distinction between customs law and tobacco tax law
In textbook terms, the FG Hamburg shows that the customs valuation must be carried out in accordance with customs law and the tobacco tax valuation in accordance with tobacco tax law. This can also lead to seemingly different outcomes, which economic operators should be aware of. This is because an incorrect assessment can result in follow-up notices and criminal investigation proceedings.
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