Tariff classification of medical tourniquets: the Court of Justice tightens the scope of CN heading 9018 in the Servoprax judgment

Facts and course of proceedings

Servoprax, a company that trades in medical devices, imported compression bands from China between 2017 and 2019. These bands consist mainly of elastic textile with a snap fastener and a sliding buckle. In 2016, the Hauptzollamt Hannover had granted Servoprax a binding tariff information (BTI) in which the product was classified under CN subheading 6307 90 98: a residual heading for textile products with a duty rate of 6.3%. Servoprax had intended to classify the product under subheading 9018 90 84 in its BTI application: the tariff heading for other medical instruments and appliances, which has a 0% customs duty. In the import declarations it submitted in the period from 2017 to 2019, Servoprax followed the tariff classification in accordance with the BTI granted to it and was also charged 6.3% import duty by the Hauptzollamt Duisburg accordingly. Later, on 8 July 2020, the company requested a reimbursement of the duties levied, arguing that the imported medical cuffs should have been classified under subheading 9018 90 84. As the Duisburg customs office did not comply with the request for a refund, this led to proceedings before the Finanzgericht Düsseldorf (Finance Court, Düsseldorf).

Servoprax based its request for a refund of 8 July 2020 not only on the assertion that the medical tourniquets materially belong under heading 9018 90 84 GN, but also linked it to a parallel appeal procedure before the Düsseldorf Finance Court. That other case concerned the same type of tension straps but related to declarations submitted up to and including September 2015, i.e. before the BTI was issued. In that case, the Düsseldorf Finance Court had already ruled that these tourniquets should be classified under CN subheading 9018 90 84 and, in its judgment of 11 March 2022, had ordered the Duisburg customs office to refund the customs duties levied on them. Servoprax referred to this earlier ruling to substantiate that the classification of the later imported tyres should not be any different.

Although the Finanzgericht Düsseldorf agreed with Servoprax that the tourniquets intended for medical purposes should be classified under heading 9018, the court nevertheless had doubts about the interpretation of the heading. Although the German court considered that the use of the tourniquet was clearly medical – after all, blood sampling is a medical procedure – it doubted whether the simplicity of the design did not fundamentally preclude classification under heading 9018. This tension between use and technical characteristics is at the heart of the first question referred for a preliminary ruling.

The Düsseldorf Finance Court also questioned the validity of Article 252, second sentence, of Delegated Regulation 2015/2446, because this article stipulates that BTI’s issued before 1 May 2016 are also binding on the holder from that date. Under the old Customs Code (Article 12 CCC) in force at the time, BTI's were only binding on customs, not on the holder. The German court therefore questioned whether the Commission was competent to retroactively increase the legal burden on BTI holders in this regard by means of a delegated act and how this relates to the principle of legitimate expectations.

The legal questions: classification and validity of Article 252 of Delegated Regulation 2015/2446

The first question referred for a preliminary ruling concerned the tariff classification: given their nature and use, do these medical cuffs fall under CN subheading 9018 90 84?

The second question, which would only be relevant if the first question were answered in the affirmative, concerned the validity of the second sentence of Article 252 of Delegated Regulation 2015/2446, which stipulates that BTI issued before 1 May 2016 are binding from that date not only on the customs authorities of the Member States but also on the holder of the decision. The BTI issued to Servoprax was issued under the CCC and it could therefore derive rights from it until 1 May 2016, but the BTI did not bind it. The transition to the UCC on 1 May 2016 meant that Servoprax was also bound by the BTI and the tariff classification indicated therein as of that date.  The Court of Justice ultimately did not have to answer this second question because it answered the first question in the negative.

The legal framework: instrument, apparatus or textile product?

The Court of Justice reiterates its established position that tariff classification must be based on the objective characteristics of a product, as set out in the CN text and the accompanying notes. The terms 'instruments, appliances and apparatus' are not defined, so their meaning in normal language use and their context within the CN must be considered. According to the Court of Justice, two elements stand out in this regard.

Firstly, the structure of Chapter 90 shows that the category of products classified therein primarily concerns sophisticated, precise and carefully finished (medical) instruments. The HS Explanatory Notes emphasise that such products often display technical sophistication and are used for scientific or surgical purposes. The Court also refers to earlier judgments, such as Lohmann & Medi Bayreuth and Unomedical, in which the distinction between complex medical equipment and simple devices was also central. In Unomedical, it was decided that collection bags for catheters and dialysis machines could not be classified as part of catheters or dialysis machines under heading 9018. According to the Court, this clarifies that the intended use of products for medical purposes alone is insufficient for classification under heading 9018.

Secondly, the CN explanatory note to subheading 9018 90 84 contains an explicit passage stating that 'tourniquets', which include pressure bands, are not covered by this subheading and are generally classified according to the material of which they are made. This also points to a textile heading and not to Chapter 90, according to the Court.

The Court of Justice's assessment: simplicity versus technical precision

The Court of Justice emphasises that the tourniquets in the case file consist of an elastic band, a snap fastener and a sliding buckle. The product works simply: tightening the band creates pressure on the arm, temporarily constricting the blood vessels. This design does not contain any technical components or precision elements that are characteristic of the products within Chapter 90. The band is therefore difficult to classify as an 'instrument' or 'apparatus' within the meaning of heading 9018.

The fact that medical personnel use the tourniquet for diagnostic purposes does not alter this. The Court warns against interpreting medical use too broadly: not every device used in healthcare automatically qualifies as a medical instrument in terms of tariff law. In other words, its use should not unnecessarily stretch the classification, especially when the product itself offers no basis for doing so.

A striking argument: 0% tariff as a reason for a narrow interpretation

Perhaps the most remarkable part of the judgment is the Court of Justice's consideration that, because it has a 0% tariff, CN heading 9018 must be interpreted strictly. The Court refers to its case law that exemptions and exceptions should not be interpreted broadly. Although the classification in Chapter 90 is not an exemption in the formal sense, the Court nevertheless finds reason to take the rate level into account in its assessment: according to the Court, the 0% duty constitutes a 'systematic exception' that would justify a narrow interpretation.

In our opinion, this reasoning is somewhat at odds with the general classification rules, which presuppose tariff neutrality. Nowhere in the general classification rules for the interpretation of the Combined Nomenclature is it stipulated that a CN heading with a 0% duty must be interpreted more strictly than a heading with a positive duty. After all, classification should be based solely on objective product characteristics. Nevertheless, in line with its broader approach to exceptions in customs law, the Court has chosen to use the 0% tariff as an additional reason for a restrictive interpretation. This means that the boundary of Chapter 90 is determined not only by technical characteristics, but also by the systematic position of the heading within the tariff.

Conclusion: tyres are classified under heading 6307, not under 9018

The Court concludes that CN subheading 9018 90 84 does not apply to medical tourniquets such as those imported by Servoprax. The product characteristics are too simple for this, the CN explanatory notes exclude 'tourniquets' and the context of Chapter 90 requires a degree of technical sophistication and precision that is lacking. The correct classification is therefore subheading 6307 90 98, as textile goods. The second question concerning the validity of Article 252 of Delegated Regulation 2015/2446 no longer needed to be answered.

Final consideration

With this judgment, the Court has once again firmly reinforced the interpretation of heading 9018 of Chapter 90, focusing in particular on the importance of technical precision and careful finishing. At the same time, it raises an interesting discussion about the role of the tariff in the interpretation of the CN. The idea that a 0% heading must by definition be interpreted narrowly is, in our view, certainly not uncontroversial and is not entirely consistent with the tariff-neutral logic of the general classification rules. Nevertheless, the Court of Justice has openly considered that it plays a role.

Whether this tension will be resolved or further confirmed in future case law remains to be seen. For now, anyone wishing to classify a product under heading 9018 will have to demonstrate that it possesses sufficient technical sophistication. Without these characteristics, there is a risk that customs will apply a stricter classification, as was the case with these simple tyres.

Ploum customs practice

Within Ploum’s customs practice, Jikke Biermasz, Arjan Wolkers and their team regularly advise on issues relating to tariff classification, strategy surrounding BTI applications, requests for refunds and cases in which tariff classification gives rise to possible preliminary questions. The Servoprax case shows how quickly discussions can arise about seemingly simple products and how important a carefully substantiated classification is. For entrepreneurs who are faced with these kinds of technical customs issues, Ploum offers practical and legal support to determine the right course of action in a timely manner.