Tariff and CN heading for medical devices with medical purpose

Pfizer won before the European Court of Justice in questions of customs tariff and combined nomenclature for it’s retail brand ThermaCare. Medical devices with a medical purpose are to be classified under CN heading 3005, the classification under implementing Regulation 2016/1140 is invalid.

In a very interesting case before the highest European Court of Justice (ECJ), medical devices with medical purpose were in focus, the retail brand ‘ThemaCare’ of Pfizer. Since 1987 there has been a Tariff and Combined Nomenclature (CN) and the Common Customs Tariff for medical devices in the sense of harmonising the economic area in the European Union.

Pfizer ThermaCare- with medical purpose

Pfizer’s ThermaCare retail brand for medical devices with a medical purpose, namely a heat therapeutic purpose, has been marketed and distributed in various European countries for many years. The product range includes heat-generating pads, most of which are available in several sizes and are intended for a specific area of the body. The heat therapeutic effect occurs as soon as the medical devices are unpacked and applied to the skin, according to which these medical devices are packaged for retail sale. ThermaCare is classified as an “active medical device” according to Directive 93/42 and is approved and certified with a CE mark.

ThermaCare has been classified in the customs tariff since 2012 by the customs authorities in DE and in the SLO in CN position 3005, but in 2016 – with the adoption of implementing regulation 2016/1140 – the EU tax authorities lifted the this CN position. Pfizer then applied for a new BTI for CN heading 3005, but in November 2017, under implementing Regulation 2016/1140, Pfizer received a BTI classifying these products under CN heading 3824. Pfizer opposed this.

Validity of Implementing Regulation 2016/1140 -doubted by UK

With regard to Pfizer’s ThermaCare medical devices, the referring British court (First-tier Tribunal, Tax Chamber (UK)) therefore found an objection to classification under the implementing Regulation 2016/1140 and questioned the validity of that implementing Regulation. Firstly, Pfizer’s medical device was already classified under CN heading 3005 before the implementing regulation of 2016 and, secondly, it is a medical device for a thermo-therapeutic purpose. Isn’t it likely that both contradict a classification under CN code heading 3824 pursuant to implementing Regulation 2016/1140?

The ECJ answered this with a clear yes. The court ruled that the implementing Regulation 2016/1140 is invalid for medical devices with a medical purpose.

CN heading 3005 and CN heading 3824

Classification under CN heading 3824 is fundamentally different from classification under CN heading 3005, because in CN heading 3824, classification is based on the chemicals which constitute the substance or constituent which gives them their essential character (in this case the ‘heat cells’ including chemicals), whereas in CN heading 3005, classification is based on the wording of the respective headings according to the more detailed description of the product.

Pfizer argued before the ECJ that the wording of CN heading 3005 also covers the goods within the meaning of implementing Regulation 2016/114. The products are “similar products” to mustard plasters, especially in their function for relieving pain. In addition, the medical products ThermaCare in their presentation were intended for retail sale for medical purposes.

Medical devices with a medical purpose

The court confirmed this view. It is true that the expression “for medical purposes” within the meaning of CN heading 3005 of the CN is not defined either in the CN or in its Explanatory Notes, the Court stated. Therefore, the use of the goods and also the nature and place of use are relevant aspects in determining whether a product is intended for medical purposes.

The ECJ held that a product manufactured specifically for the prevention, diagnosis or treatment of disease or injury must be regarded as having ‘medical purposes’ within the meaning of CN heading 3005 and recalled the meaning of the term medicine in common parlance.

The fact that these goods are classified as ‘active medical devices‘ under Directive 93/42 is also an additional indication in this respect. On the other hand, there is nothing to suggest that these goods are intended to improve their aesthetic appearance, the ECJ explained that, if that were the case, it would be a strong indication that they are not medical devices with a medical purpose.

If medical devices are not to be used in certain cases

The Commission had also argued that the general purpose of the products falling under CN heading 3005 was to treat pain or injury, but that the products in question contained warnings against their application to the skin to dress injuries, bruises or oedema. The terms ‘cotton wool, gauze [or] bandages‘ within the meaning of CN heading 3005 are therefore not at all fulfilled by ThemaCare medical devices.

The ECJ rejected this argumentation. The fact that goods should not be used in certain cases did not cast doubt on their use for the treatment of pain and injury, the Court stated.

Moreover, since, according to the wording of CN heading 3824, the goods covered by this heading are products which are “not elsewhere specified or included”, medical devices for medical purposes cannot be classified under this CN heading at all, but belong to CN heading 3005, the ECJ ruled.

Commission Implementing Regulation (EU) 2016/1140 of 8 July 2016 concerning the classification of certain goods in the Combined Nomenclature is invalid, the ruling of ECJ states.

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