ADMINISTRATIVE OBJECTION
(ΕΝΣΤΑΣΗ)
Filed pursuant to Article 44 of Regulation (EU) No. 952/2013 (Union Customs Code) and Article 63 of Law 4174/2013 (Greek Tax Procedure Code)
Before:
Directorate of Resolution of Disputes (Διεύθυνση Επίλυσης Διαφορών — DED) Independent Authority for Public Revenue (Ανεξάρτητη Αρχή Δημοσίων Εσόδων — AADE) Aristotelous 2, 101 87 Athens, Greece
Objecting Party:
Thalassa Shipping & Logistics Société Anonyme (Thalassa Shipping & Logistics Ανώνυμη Εταιρεία) EORI: GR094827361000 AFM (Greek Tax Identification Number): 094827361 Piraeus Commercial Registry No.: 78214/06/B/09/42 Registered Address: 47 Akti Miaouli, 185 35 Piraeus, Greece
Represented by:
Alexandros Vournas, Dikigoros (Δικηγόρος) Managing Partner Vournas & Theodorakis Dikigiriko Grafeio (Βούρνας & Θεοδωράκης Δικηγορικό Γραφείο) 22 Academias Street, 106 71 Athens, Greece Athens Bar Association Registration No. 18744 Tel.: +30 210 362 4800
Email: a.vournas@vournas-theodorakis.gr
Contested Act:
Additional Duty Assessment Notice No. AADE/ADAN/2022/0073 (Classification) Date of Issuance: August 12, 2022 Issuing Authority: Piraeus Regional Customs Office, Independent Authority for Public Revenue (AADE), 2 Karaoli & Dimitriou Street, 185 31 Piraeus, Greece Issuing Officer: Aikaterini Vlachopoulou, Chief Customs Auditor In connection with Post-Clearance Audit File: AADE/DTE/2022/PIR-04518 Audit Initiated: April 4, 2022 Audit Completed: August 1, 2022
Date of Filing: November 30, 2022
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I. SUBJECT OF THE OBJECTION
1. Thalassa Shipping & Logistics Société Anonyme ("TSL" or the "Objecting Party") hereby files this administrative objection (ένσταση) against Additional Duty Assessment Notice No. AADE/ADAN/2022/0073 (the "Assessment Notice" or "ADAN/2022/0073") in its entirety. TSL contests the legality, factual basis, and proportionality of the Assessment Notice, and respectfully requests that the Directorate of Resolution of Disputes annul the Assessment Notice together with all associated additional customs duties, administrative penalties, late payment interest, and import VAT adjustments assessed thereunder.
2. The Assessment Notice reclassifies twenty (20) units of specialized marine cargo-handling equipment imported by TSL from Hailong Heavy Industries Co., Ltd. (hereinafter "Hailong"), a manufacturer headquartered at No. 288 Gangkou Road, Zhenhai District, Ningbo, Zhejiang Province 315200, People's Republic of China (Unified Social Credit Code: 91330211MA2GR8KT5X), during the period from 2019 to 2022. The reclassified equipment consists of the following:
(a) Twelve (12) ship-to-shore ("STS") gantry cranes, Model: Hailong QC-65 Super Post-Panamax Ship-to-Shore Container Crane, imported under Master Purchase Contract No. HHI-TSL-2019-001, dated January 15, 2019, with a total declared CIF (Cost, Insurance, and Freight) customs value of €38,400,000 (i.e., €3,200,000 per unit); and
(b) Eight (8) automated stacking crane ("ASC") systems, Model: Hailong ASC-40R Automated Stacking Crane, imported under Master Purchase Contract No. HHI-TSL-2020-003, dated June 10, 2020, with a total declared CIF customs value of €28,800,000 (i.e., €3,600,000 per unit).
3. The total value base of the reclassified equipment is €67,200,000 (sixty-seven million two hundred thousand euros). The Assessment Notice reclassifies all twenty (20) units from Combined Nomenclature ("CN") code 8426 41 00 (carrying a Most Favoured Nation ("MFN") duty rate of 0%) to CN code 8428 90 90 (carrying an MFN duty rate of 2.2%). The resulting additional customs duty assessed under the Assessment Notice amounts to:
€67,200,000 × 2.2% = €1,478,400
4. In addition to the principal duty assessment of €1,478,400, the Assessment Notice imposes associated administrative penalties, import VAT adjustments, and late payment interest, all of which TSL contests and which are addressed in detail in Section IV of this objection.
5. TSL notes, for the avoidance of doubt, that eighteen (18) rubber-tired gantry ("RTG") cranes imported under a separate Master Purchase Contract No. HHI-TSL-2019-002, dated March 22, 2019, with a total declared CIF customs value of €25,200,000, remain classified under CN code 8426 41 00 and are not subject to reclassification under the Assessment Notice. AADE's auditors have confirmed in writing, within the body of the post-clearance audit report, that these RTG units are correctly classified, and no dispute exists with respect to them. The fact that AADE agrees the tyre-mounted RTG cranes are correctly classified as "cranes" under heading 8426 — while seeking to reclassify rail-mounted gantry cranes and automated stacking cranes out of the same heading — is itself revealing of the analytical inconsistency at the heart of the Assessment Notice.
6. All forty-seven (47) units of equipment imported under the four master purchase contracts were imported through the Port of Piraeus and cleared through the Piraeus Regional Customs Office under Single Administrative Documents ("SADs") filed by Peloros Customs Agency S.A. (EORI: GR801234567000), TSL's licensed customs broker. Peloros Customs Agency was represented in all import declarations by its managing director, Stavros Liapis, holding Greek Customs Broker License No. GR-CB-1287. The SADs were accepted and processed without objection at the time of clearance, and duties at the declared rate of 0% were assessed and paid. It was only upon the initiation of the post-clearance audit, approximately three years after the first clearances, that AADE raised any classification concern.
II. FACTUAL BACKGROUND
A. TSL and Its Terminal Operations
7. TSL is a Greek société anonyme (ανώνυμη εταιρεία, or "A.E."), incorporated and registered under the laws of the Hellenic Republic. The company was founded in 2009 and is headquartered at 47 Akti Miaouli, 185 35 Piraeus, Greece, in the heart of the traditional maritime business district adjacent to the Port of Piraeus. TSL is registered with the Piraeus Commercial Registry under number 78214/06/B/09/42, and holds EORI number GR094827361000 for customs purposes.
8. TSL's core business activities encompass container shipping, port terminal operations, freight forwarding, and marine equipment services. Since its founding, TSL has grown to become a significant participant in the Greek and Eastern Mediterranean maritime logistics sector. As of the date of this filing, TSL employs approximately 1,450 personnel across its operations in Greece, Cyprus, and Romania. For fiscal year 2021, TSL reported consolidated annual revenue of €387.2 million, reflecting the scale and scope of its integrated logistics operations.
9. TSL's shipping operations are conducted through a fleet of twenty-eight (28) container vessels of varying size and capacity, serving trade routes throughout the Mediterranean, Northern Europe, and the Middle East. In parallel with its shipping operations, TSL manages terminal operations at three Greek ports — Piraeus, Thessaloniki, and Volos — under long-term concession agreements granted by the relevant port authorities. These terminal operations constitute a critical component of TSL's integrated logistics platform, enabling the company to offer door-to-door supply chain solutions to its customers.
10. TSL's Chairman and Chief Executive Officer is Mr. Nikolaos Andreadis. The controlling shareholder of TSL is Andreadis Family Holdings LLC, a Delaware limited liability company (Delaware Division of Corporations File No. 5847291), which holds approximately 62% of TSL's outstanding equity capital. The remaining equity is held by a combination of institutional investors and minority shareholders. TSL is governed by a board of directors in accordance with Greek corporate law (Law 4548/2018 on Sociétés Anonymes).
11. The equipment that is the subject of this objection was procured specifically to modernize and expand TSL's container terminal operations at the three Greek port concessions described above. The investment in state-of-the-art STS gantry cranes and automated stacking crane systems reflects TSL's strategic commitment to enhancing terminal throughput capacity, improving safety, and achieving operational efficiencies necessary to remain competitive in the evolving global container shipping market.
B. Equipment Procurement
12. Between March 2019 and January 2022, TSL imported forty-seven (47) units of specialized marine cargo-handling equipment from Hailong Heavy Industries Co., Ltd. under four master purchase contracts. Hailong is a leading Chinese manufacturer of port and marine equipment, headquartered in Ningbo, Zhejiang Province, with manufacturing facilities in Ningbo and Nantong. The master purchase contracts, their dates, the equipment descriptions, unit counts, and declared CIF values are summarized in the following table:
13. The total declared CIF customs value across all four master purchase contracts was €98,000,000 (ninety-eight million euros). The equipment was procured under competitive international tender procedures, and the contract prices were negotiated at arm's length between TSL and Hailong. Delivery was effected on a CIF Piraeus basis, with Hailong responsible for ocean freight and marine cargo insurance to the Port of Piraeus.
14. The equipment was destined for use at TSL's terminal facilities at the ports of Piraeus, Thessaloniki, and Volos. The twelve STS gantry cranes were allocated to TSL's Piraeus container terminal (eight units) and Thessaloniki container terminal (four units). The eight ASC systems were allocated exclusively to the Piraeus container terminal, which was undergoing a major automation upgrade during the relevant period. The eighteen RTG cranes were distributed across all three terminal locations, with the majority deployed at Volos.
15. All equipment was delivered in partially assembled condition aboard heavy-lift vessels and subsequently assembled and commissioned on-site by Hailong's field engineering teams, with support from TSL's own technical personnel. The commissioning process, including integrated systems testing and trial operations, was completed in stages between 2019 and 2022, with final acceptance of the last ASC units occurring in approximately January 2022.
C. AADE Post-Clearance Audit
16. On April 4, 2022, AADE's Piraeus Regional Customs Office initiated a post-clearance audit of TSL's import declarations relating to the above-described equipment. The audit was conducted under audit file reference AADE/DTE/2022/PIR-04518 and was led by Chief Customs Auditor Aikaterini Vlachopoulou, together with a team of customs auditors and technical specialists attached to the Piraeus Regional Customs Office.
17. The scope of the audit encompassed both tariff classification and customs valuation of the imported equipment. The audit team reviewed the relevant SADs, commercial invoices, purchase contracts, technical specifications, product brochures, and correspondence between TSL, Hailong, and Peloros Customs Agency. The audit team also conducted site visits to TSL's Piraeus container terminal to inspect the installed equipment and observe it in operation.
18. The audit was completed on August 1, 2022. On August 12, 2022, AADE issued two separate Additional Duty Assessment Notices:
(a) ADAN/2022/0073 (Classification) — the Assessment Notice that is the subject of this objection, reclassifying twenty (20) units of equipment from CN 8426 41 00 to CN 8428 90 90 and assessing additional customs duties of €1,478,400; and
(b) ADAN/2022/0074 (Valuation) — a separate assessment notice adjusting the declared customs value of certain equipment, assessing additional customs duties of €218,680 (calculated on the basis of the 2.2% rate applicable under the reclassified heading 8428 90 90). TSL has filed a separate administrative objection to ADAN/2022/0074.
19. AADE has been advised in connection with this matter by external legal counsel from Meridian & Drakos Dikigiriko Grafeio, located at 15 Stadiou Street, 105 62 Athens, Greece. The responsible attorneys at Meridian & Drakos are Panagiotis Drakos, Senior Partner (Athens Bar Association Registration No. 29481), and Irini Konstantinou, Associate.
D. Classification at Issue
20. At the time of importation, TSL classified all forty-seven (47) units of equipment — including the twelve STS gantry cranes, the eighteen RTG cranes, and the eight ASC systems — under CN code 8426 41 00. This subheading falls within heading 8426 of Chapter 84 of the Combined Nomenclature, which covers, inter alia, "Ships' derricks; cranes, including cable cranes; mobile lifting frames, straddle carriers and works trucks fitted with a crane." The subheading 8426 41 00 specifically covers "Other self-propelled machinery — On tyres." The MFN duty rate applicable to all subheadings within heading 8426 is 0% (free).
21. AADE contends, in the Assessment Notice, that the twelve STS gantry cranes and eight ASC systems (a total of twenty units, with a combined declared CIF value base of €67,200,000) are improperly classified under heading 8426 and should instead be classified under CN code 8428 90 90. Heading 8428 covers "Other lifting, handling, loading or unloading machinery (for example, lifts, escalators, conveyors, teleferics)." Subheading 8428 90 90 is the residual subheading within heading 8428, covering "Other" machinery not elsewhere specified within that heading. The MFN duty rate applicable to CN 8428 90 90 is 2.2%.
22. The eighteen RTG cranes imported under Contract HHI-TSL-2019-002 remain undisputed under CN 8426 41 00 at a 0% duty rate. AADE's own audit report expressly confirms that the RTG cranes are correctly classified. As discussed below, this concession is significant to the analysis, because the RTG cranes, like the STS gantry cranes and ASC systems, are functionally cranes that lift containers by means of wire ropes from a gantry structure. The primary differences between the RTG cranes and the contested equipment are (i) the RTG cranes are tyre-mounted rather than rail-mounted, and (ii) the RTG cranes are operator-controlled rather than fully automated (in the case of the ASC systems). Neither of these differences supports reclassification to heading 8428.
III. GROUNDS OF OBJECTION
A. The Equipment Is Properly Classified Under Heading 8426 — "Cranes"
23. TSL submits that both the twelve STS gantry cranes and the eight ASC systems are properly classified under heading 8426 of the Combined Nomenclature — not under the residual heading 8428 as the Assessment Notice asserts. The equipment consists of cranes in every relevant sense: functionally, mechanically, and according to the plain meaning of the heading text, the Explanatory Notes, established EU customs practice, and industry classification standards. The grounds for this position are set out in detail below.
1. Applicable Legal Framework.
24. The classification of goods imported into the customs territory of the European Union is governed by the Combined Nomenclature ("CN"), established by Council Regulation (EEC) No. 2658/87 of 23 July 1987 on the tariff and statistical nomenclature and on the Common Customs Tariff, as amended. The CN is based on the Harmonized Commodity Description and Coding System ("HS") maintained by the World Customs Organization ("WCO").
25. Classification within the CN is determined by reference to the following hierarchy of interpretive instruments:
(a) The General Interpretive Rules ("GIRs") of the Harmonized System, which are incorporated into the CN by virtue of Article 1(2) of Regulation 2658/87. The GIRs set out the foundational principles for tariff classification and are binding as a matter of EU law. GIR 1 provides that classification is determined by the terms of the headings and any relevant Section or Chapter Notes. GIR 3 establishes rules for resolving cases where goods are prima facie classifiable under two or more headings. GIR 6 applies the same principles at the subheading level.
(b) The Section Notes and Chapter Notes of the CN, which have the force of law and prevail over other interpretive guidance. For the present dispute, the relevant notes are Section XVI Notes and Chapter 84 Notes.
(c) The Explanatory Notes to the Harmonized System published by the WCO, and the Explanatory Notes to the Combined Nomenclature published by the European Commission. While not legally binding, these Explanatory Notes constitute an important interpretive aid and are routinely relied upon by the Court of Justice of the European Union ("CJEU") in tariff classification disputes. See, e.g., Case C-201/12 Fruchthandelsgesellschaft Chemnitz, ECLI:EU:C:2013:691, paragraph 19.
26. The two headings at issue in this dispute are:
Heading 8426: "Ships' derricks; cranes, including cable cranes; mobile lifting frames, straddle carriers and works trucks fitted with a crane."
Heading 8428: "Other lifting, handling, loading or unloading machinery (for example, lifts, escalators, conveyors, teleferics)."
27. It is immediately apparent from the heading texts that heading 8426 specifically and expressly covers "cranes," whereas heading 8428 is a residual heading covering "other" lifting, handling, loading, or unloading machinery. The word "other" in heading 8428 signifies that this heading encompasses only machinery not covered by preceding headings in the Chapter — including, critically, heading 8426.
2. Application of GIR 1 — Heading Text.
28. GIR 1 provides that "classification shall be determined according to the terms of the headings and any relative Section or Chapter Notes." This is the starting point and, in many cases, the ending point of any classification analysis. The terms of the heading are to be given their plain and ordinary meaning, interpreted in context and in light of the overall structure of the tariff nomenclature.
29. Both the STS gantry cranes and the ASC systems are "cranes" within the plain and ordinary meaning of that term as used in heading 8426. This conclusion is supported by the following considerations:
30. Both products lift loads vertically by means of wire ropes and spreader mechanisms suspended from a trolley traveling along a horizontal boom or gantry crossbeam. This is the defining characteristic of a crane, in both ordinary language and established engineering and technical usage. A crane is, at its core, a machine that uses a hoisting mechanism — typically involving wire ropes, sheaves, and a hook or other load-handling device — to lift and lower loads, often combined with the ability to move loads horizontally via the traversing movement of a trolley or jib. This is precisely what both the QC-65 and the ASC-40R do.
31. The STS gantry crane (Model QC-65 Super Post-Panamax Ship-to-Shore Container Crane) is a quayside container crane designed to load and unload containers from container ships. Its principal technical characteristics include:
• Outreach (waterside): 65 meters
• Backreach (landside): 20 meters
• Lift height above quay: 52 meters
• Safe working load (SWL): 65 metric tonnes under spreader
• Hoist system: electrically powered, twin-wire-rope hoist with headblock and telescopic spreader
• Trolley system: rope-towed trolley traversing the horizontal boom
• Mounting: rail-mounted on quay apron crane rails (rail gauge: 30.48 meters)
• Operation: semi-automated, with operator cabin mounted on the trolley headblock
• Power supply: external power via festoon cable system (6.6 kV, 50 Hz)
32. The ASC system (Model ASC-40R Automated Stacking Crane) is a container yard stacking crane designed to stack, retrieve, and reposition containers in the terminal yard. Its principal technical characteristics include:
• Safe working load (SWL): 40 metric tonnes under spreader
• Hoist system: electrically powered, wire-rope hoist with headblock and telescopic spreader
• Trolley system: electrically driven trolley traversing the gantry crossbeam
• Mounting: rail-mounted on yard crane rails (rail gauge: 25.5 meters)
• Stacking height: six containers high (6+1)
• Operation: fully automated (unmanned), operated by the central terminal operating system using HaiControl Suite v4.2 software
• Automation sensors: LIDAR (Light Detection and Ranging), DGPS (Differential Global Positioning System), and optical container recognition cameras
• Power supply: external power via conductor bar system (440V, 50 Hz)
33. Both machines perform the classic crane operating cycle: hoist (vertical lift of the load by wire ropes), traverse (horizontal travel of the trolley carrying the load along the gantry beam), and lower (controlled descent of the load to its destination). This three-phase cycle — hoist, traverse, lower — is the fundamental operating sequence that defines a crane and distinguishes it from other categories of material-handling equipment such as conveyors (which move loads continuously along a fixed path), lifts (which move loads vertically within a fixed shaft), and escalators (which transport persons along an inclined path).
34. The characterization of both the QC-65 and the ASC-40R as "cranes" is further confirmed by the manufacturer's own product designations. Hailong identifies the QC-65 as a "Super Post-Panamax Ship-to-Shore Container Crane" and the ASC-40R as an "Automated Stacking Crane." While manufacturer designations are not dispositive for customs classification purposes, they constitute probative evidence of the common understanding and industry usage of the term, and are consistent with the classification position advanced by TSL.
35. The classification of both products as cranes is also consistent with international industry standards. The European Federation of Materials Handling ("FEM"), the principal European industry body for materials handling and logistics equipment, classifies both STS gantry cranes and automated stacking cranes as "cranes" within its Group A (Heavy Lifting Equipment) classification framework. Similarly, the International Organization for Standardization ("ISO") classifies both types of machines as "cranes" under ISO 4301-1:2016 (Cranes — Classification), which defines and categorizes various types of cranes including overhead travelling cranes, portal cranes, and container-handling cranes. These industry classifications, while not determinative of customs classification, are strongly indicative of the common understanding and ordinary meaning of the term "crane" as it applies to the equipment at issue.
3. Application of GIR 3(a) — Most Specific Description.
36. TSL submits that the application of GIR 1 is sufficient to resolve this classification dispute in TSL's favor. Both products are "cranes" within the plain meaning of heading 8426, and no further analysis is required. However, should the DED consider that the goods could prima facie be classifiable under both heading 8426 and heading 8428 — a proposition that TSL does not concede — GIR 3(a) provides a clear rule for resolving the conflict.
37. GIR 3(a) provides: "The heading which provides the most specific description shall be preferred to headings providing a more general description." This rule establishes a hierarchy between specific and residual headings. Where a product falls within the specific terms of one heading and within the general or residual terms of another, the specific heading prevails.
38. Heading 8426 specifically and expressly names "cranes" — the precise category of machinery at issue in this dispute. The heading text does not merely describe cranes by reference to their function; it identifies them by name. This is the paradigmatic case of a "specific description" within the meaning of GIR 3(a).
39. Heading 8428, by contrast, is a residual heading. It covers "other" lifting, handling, loading, or unloading machinery. The word "other" is the hallmark of a residual heading — it encompasses only machinery that is not specifically covered by any preceding heading in the Chapter. The parenthetical examples provided in heading 8428 — "for example, lifts, escalators, conveyors, teleferics" — illustrate machinery that is fundamentally different from cranes. Lifts move loads vertically within fixed shafts. Escalators transport persons along inclined paths. Conveyors move materials continuously along fixed horizontal or inclined paths. Teleferics are aerial tramways. None of these examples bears any meaningful resemblance to a crane.
40. Under GIR 3(a), the heading providing the most specific description prevails over the heading providing a more general description. Heading 8426's express, named reference to "cranes" is manifestly more specific than heading 8428's residual reference to "other" lifting and handling machinery. Accordingly, even if the equipment could be viewed as falling within the broad language of heading 8428 (which TSL does not concede), GIR 3(a) requires classification under heading 8426.
4. Explanatory Notes Support Heading 8426.
41. The Explanatory Notes to the Harmonized System ("HS Explanatory Notes"), published by the WCO, provide authoritative interpretive guidance on the scope of each heading. The HS Explanatory Notes to heading 8426 describe the heading as covering:
"Machines and apparatus designed to lift, load, or move objects or materials by means of ropes, chains, or other lifting gear suspended from a jib, boom, or overhead structure (gantry)."
42. Both the QC-65 STS gantry crane and the ASC-40R automated stacking crane satisfy every element of this description:
(a) They are machines designed to lift and move objects — specifically, intermodal shipping containers;
(b) They lift and move these objects by means of ropes — specifically, steel wire ropes;
(c) The ropes and associated lifting gear (headblock, spreader) are suspended from an overhead structure — specifically, a gantry comprising vertical legs and a horizontal crossbeam or boom.
43. The HS Explanatory Notes to heading 8426 further provide a detailed enumeration of the types of cranes covered by the heading. This enumeration includes, among others: overhead travelling cranes, portal cranes (portal jib cranes), gantry cranes, tower cranes, derrick cranes, and floating cranes. The STS gantry crane is a type of portal crane or gantry crane. The ASC is a type of gantry crane or overhead travelling crane. Both are squarely within the categories enumerated in the Explanatory Notes.
44. By contrast, the HS Explanatory Notes to heading 8428 describe a residual heading covering machinery "not falling in any of the preceding headings of this Chapter." The examples provided in the Explanatory Notes to heading 8428 include: bucket elevators, pneumatic conveyors, mechanical stackers (in the sense of warehouse shelf stackers), ski lifts, aerial ropeways for passenger transport, and similar equipment. None of these examples is a crane. The Explanatory Notes to heading 8428 thus confirm the residual character of the heading and its inapplicability to machinery that falls within the specific scope of heading 8426.
45. The CJEU has consistently held that the Explanatory Notes, while not legally binding, constitute an important aid to the interpretation of the scope of the various tariff headings and are to be given significant weight by national customs authorities and courts. See Case C-311/04 Algemene Scheeps Agentuur Dordrecht, ECLI:EU:C:2006:23, paragraph 25; Case C-500/04 Proxxon, ECLI:EU:C:2006:111, paragraph 22.
5. Heading 8428 Is a Residual — Inapplicable to Cranes.
46. TSL underscores the fundamental structural point that heading 8428 is, by its own terms, a residual heading. The opening word of the heading text — "Other" — restricts its scope to machinery that is not covered by any other heading in Chapter 84. This is a standard structural feature of the Harmonized System: within each Section and Chapter, specific headings are listed first, and residual or "basket" headings appear at the end to capture goods not specifically provided for elsewhere.
47. Cranes are specifically and expressly described in heading 8426. Goods that are specifically described in one heading cannot, as a matter of law, be classified under a residual heading. This principle is well established in CJEU case law and flows directly from GIR 1 and GIR 3(a). See, e.g., Case C-152/10 Unomedical, ECLI:EU:C:2011:402 (holding that goods specifically described in one heading cannot be classified under a more general or residual heading).
48. To classify the STS gantry cranes and ASC systems under heading 8428 would be to ignore the express text of heading 8426, which specifically covers "cranes," and to resort to a residual heading for goods that have a specific home in the nomenclature. This is precisely the analytical error that the GIRs are designed to prevent.
6. Automation Does Not Alter the Classification.
49. A central pillar of AADE's reasoning in the Assessment Notice — particularly with respect to the eight ASC-40R automated stacking crane systems — is the contention that the full automation of these machines fundamentally changes their nature, such that they are no longer "cranes" within the meaning of heading 8426 but are instead "other lifting, handling, loading or unloading machinery" within the meaning of heading 8428. TSL submits that this reasoning is legally and analytically incorrect.
50. The heading text of 8426 covers "cranes" without any qualification as to the method or degree of control. The heading text does not distinguish between manually operated cranes, semi-automated cranes, and fully automated cranes. It covers "cranes" — full stop. If the drafters of the Harmonized System had intended to limit heading 8426 to operator-controlled or manually operated cranes, they would have expressly so provided. They did not.
51. This conclusion is reinforced by Section XVI, Note 5 of the Combined Nomenclature. Note 5 provides that "references to machines or apparatus in Section XVI" cover "both the manual type and the power-operated type" and "both the hand-operated type and the machine-operated type." While this Note is principally addressed to the distinction between manual and powered operation, its underlying principle is clear: the classification of machinery under Section XVI is not dependent on the method by which the machine is controlled or operated, but rather on the nature of the machine itself and the function it performs. This principle applies with equal force to the distinction between human-operated and computer-operated machines. A crane controlled by a human operator is a crane. A crane controlled by a computer is still a crane. The method of control is a feature of the control system, not of the fundamental mechanical identity of the machine.
52. The proposition that automation changes the tariff classification of machinery would, if accepted, produce absurd and untenable consequences across the entire nomenclature. Consider the following analogous example: a CNC (computer numerically controlled) lathe is fully automated — it receives digital instructions from a computer and performs turning operations without direct human intervention during the machining cycle. Yet no one would contend that a CNC lathe ceases to be a "lathe" for purposes of heading 8458 and should instead be classified as "other machine tools" under heading 8479 merely because it is automated. The machine's automation does not alter its fundamental nature as a lathe. Similarly, the ASC-40R's automation does not alter its fundamental nature as a crane.
53. TSL further notes that the WCO Harmonized System Committee, which is the authoritative international body for classification questions under the HS, has not adopted any classification opinion, advisory opinion, or amendment to the Explanatory Notes that would reassign automated gantry cranes from heading 8426 to heading 8428. The absence of any such action, despite the widespread deployment of automated cranes in ports around the world, confirms that the international customs community does not regard automation as a basis for reclassification.
7. Section XVI, Note 3 — Principal Function Analysis.
54. In the alternative, TSL addresses the possibility that the DED may view the ASC-40R as a "composite machine" performing the functions of both lifting (heading 8426) and automated handling/storage management (heading 8428). TSL does not concede that this characterization is correct, but addresses it in the interest of completeness.
55. Section XVI, Note 3 of the Combined Nomenclature provides that "machines designed for the purpose of performing two or more complementary or alternative functions" are to be classified "as if consisting only of that component or as being a machine of a kind performing the principal function." In other words, where a composite machine performs functions falling within two or more headings, classification is determined by reference to the machine's principal function.
56. The principal function of both the QC-65 STS gantry crane and the ASC-40R automated stacking crane is the physical lifting, horizontal traversing, and lowering of containers — a crane function. This is the function for which the machines were designed, manufactured, and procured. This is the function they perform in every operating cycle. Without this physical crane function, neither machine would have any utility whatsoever.
57. The automated stacking optimization, yard management, and predictive maintenance functions performed by the HaiControl Suite v4.2 software are ancillary to this principal physical function. The software directs where and when the crane lifts, traverses, and lowers containers — it optimizes the sequencing of crane movements, manages the allocation of container storage positions within the yard, and monitors equipment condition for maintenance planning purposes. But these are operational management functions that serve the principal function. They do not constitute an independent or co-equal function that competes with the crane function for primacy. The software tells the crane what to do; the crane does it. The principal function — the actual physical work performed — is the crane function.
58. Accordingly, even under a composite machine analysis, Section XVI, Note 3 directs classification based on the principal function, which is the crane function falling within heading 8426.
8. Consistent EU Practice — Dutch BTI Ruling NL-BTI-2021-01234.
59. TSL's classification position is consistent with the published binding tariff information ruling of a fellow EU member state's customs authority. On June 14, 2021, the Douane Nederland (Dutch Customs and Tax Administration) issued BTI ruling NL-BTI-2021-01234, which classified substantially similar STS cranes and ASC-type systems under CN 8426 19 00 (a subheading within heading 8426).
60. The Dutch BTI ruling was issued in respect of equipment with materially similar technical characteristics to the QC-65 and ASC-40R — rail-mounted gantry cranes with wire rope hoisting systems and spreader mechanisms, including fully automated stacking cranes equipped with DGPS, LIDAR, and optical container recognition systems. The Dutch authority considered and rejected the argument that automation changes the classification, expressly holding:
"The addition of automated control systems does not alter the fundamental mechanical nature of the machine as a crane."
61. The Dutch ruling applied GIR 1 and the ordinary meaning of "crane," finding that the equipment fell squarely within the plain terms of heading 8426. The ruling further considered the Explanatory Notes and concluded that the equipment was properly classified under the heading covering cranes, not the residual heading covering other lifting and handling machinery.
62. While BTI rulings issued by the customs authorities of one member state are not binding on the customs authorities of another member state (see Article 33(2) UCC), they constitute persuasive evidence of EU customs practice and of the reasonable interpretation of the Combined Nomenclature. TSL's classification is consistent with this published ruling, and TSL submits that uniformity of classification across the Union — a fundamental objective of the Common Customs Tariff and the Union Customs Code — supports adoption of the Dutch approach.
63. A full copy of BTI ruling NL-BTI-2021-01234 is attached as Appendix 2 to this objection.
9. Rebuttal of AADE's Reliance on German BTI Ruling DE-BTI-2020-05678.
64. The Assessment Notice relies in part on BTI ruling DE-BTI-2020-05678, issued by the Hauptzollamt Hamburg-Hafen (Hamburg-Hafen Main Customs Office) on September 3, 2020, which classified an automated stacking crane system under CN 8428 90 90. TSL submits that this ruling is distinguishable, analytically flawed, and represents a minority position among EU member states.
65. Scope limitation. As an initial matter, the German ruling is limited to ASC systems. It does not address STS gantry cranes. Even under the reasoning of the German ruling, AADE's reclassification of the twelve STS gantry cranes from heading 8426 to heading 8428 finds no support. The STS gantry crane is a manned, semi-automated quayside crane — the very type of equipment that the German ruling implicitly concedes remains classified under heading 8426. AADE's extension of the heading 8428 classification to the STS gantry cranes goes beyond even the German position.
66. Analytical errors. The German ruling's reasoning with respect to ASC systems is, in TSL's submission, analytically flawed in several critical respects:
(a) The German ruling conflates the machine's physical function with its operational use. It treats the ASC's role as an "automated container storage and retrieval system" as its defining characteristic, rather than focusing on the machine's physical mechanism — which is that of a crane lifting containers by wire ropes from a gantry. Customs classification turns on what the machine is and what it does mechanically, not on the software-mediated purpose to which it is put. A crane that is directed by software to stack containers in a particular sequence is still a crane, just as a lathe that is directed by CNC software to machine a particular profile is still a lathe.
(b) The German ruling erroneously applies Section XVI, Note 3 by identifying "automated handling and storage" as the "principal function" of the ASC. But "automated handling and storage" is not a physical function performed by the machine — it is a software-mediated operational management activity. The physical function performed by the ASC is lifting, traversing, and lowering containers — a crane function. The Note 3 principal function analysis must focus on the machine's physical functions, not on the conceptual purpose described in software documentation.
(c) The German ruling draws an unsupported distinction between operator-controlled rail-mounted gantry ("RMG") cranes — which it concedes are properly classified under heading 8426 — and automated stacking crane ("ASC") systems — which it reclassifies to heading 8428. The heading text of 8426 does not condition classification on the presence of a human operator. An RMG crane and an ASC system differ only in their control systems; their physical mechanisms are identical. The German ruling provides no principled basis for treating the removal of the human operator as a classification-altering event.
(d) The German ruling represents a minority view among EU member states. As demonstrated by the Dutch BTI ruling NL-BTI-2021-01234, other EU member state customs authorities have reached the opposite conclusion. The divergence between the Dutch and German positions is itself significant: it confirms that genuine classification ambiguity exists with respect to automated stacking cranes, which has direct implications for the penalty analysis discussed in Section IV below.
67. A full copy of BTI ruling DE-BTI-2020-05678, together with TSL's rebuttal annotations, is attached as Appendix 3 to this objection.
B. Subheading Correction — CN 8426 41 00 to CN 8426 19 00
68. While maintaining that heading 8426 is the correct heading for all twenty (20) units of contested equipment, TSL acknowledges that the specific subheading declared on the SADs — CN 8426 41 00, covering "Other self-propelled machinery — On tyres" — is technically incorrect for the twelve STS gantry cranes and the eight ASC systems. Both the STS gantry cranes and the ASC systems are rail-mounted equipment, travelling on steel wheels running on steel crane rails embedded in the quay apron or yard pavement. They are not tyre-mounted. The subheading CN 8426 41 00 is therefore inapplicable.
69. The correct subheading within heading 8426 for both categories of equipment is CN 8426 19 00, which covers "Other overhead travelling cranes, transporter cranes, gantry cranes, bridge cranes, mobile lifting frames and straddle carriers — Other." This subheading encompasses gantry cranes that are not self-propelled on tyres and that do not fall within the other specific subheadings of heading 8426. Both the rail-mounted STS gantry cranes and the rail-mounted ASC systems are properly described as "gantry cranes" — overhead structures supported by legs running on rails — and fall within the scope of CN 8426 19 00.
70. Critically, this subheading correction has no duty impact whatsoever. All subheadings within heading 8426 of the Combined Nomenclature carry a 0% MFN duty rate. Whether the equipment is classified under CN 8426 41 00 or CN 8426 19 00, the applicable duty rate is 0%. No additional customs duty, VAT adjustment, or penalty arises from the subheading correction.
71. TSL accepts and proactively requests this subheading correction in the interest of accuracy and to demonstrate its good faith cooperation with the customs authorities. The original subheading declaration was an error attributable to the standardized commodity code templates used by TSL's customs broker, Peloros Customs Agency, which applied the same subheading code across all crane types without distinguishing between tyre-mounted and rail-mounted variants. TSL has brought this to the attention of its customs broker and has implemented revised classification procedures to prevent recurrence.
72. TSL emphasizes, however, that the subheading error within heading 8426 does not support or justify AADE's heading-level reclassification from heading 8426 to heading 8428. The subheading error concerns the incorrect identification of the mounting type (tyres vs. rails) within the crane heading; it does not suggest that the equipment is not a crane. To the contrary, the very fact that the equipment was declared under a subheading of heading 8426 confirms that both TSL and its customs broker correctly identified the equipment as cranes at the heading level. The error was at the subheading level only, and the correct subheading remains within heading 8426.
C. Pending BTI Application — Request for Suspension
73. On November 15, 2022, TSL filed a Binding Tariff Information ("BTI") application with AADE under Article 33 of Regulation (EU) No. 952/2013 (the Union Customs Code). The BTI application was assigned reference number BTI-GR-2022-003847.
74. The BTI application requests that AADE issue a binding ruling confirming that both the STS gantry cranes (Model Hailong QC-65) and the ASC systems (Model Hailong ASC-40R) are properly classified under CN 8426 19 00. The application is supported by comprehensive documentation, including:
(a) Annex B — Technical Annex: Detailed equipment specifications, engineering drawings, and functional descriptions for both the QC-65 and ASC-40R, including the HaiControl Suite v4.2 software architecture and automation system design;
(b) Annex C — Legal Argument Annex: A comprehensive legal brief setting forth the classification analysis under GIRs 1, 3(a), and 6, with reference to the Explanatory Notes to the HS and CN, WCO classification opinions, and relevant CJEU jurisprudence;
(c) Annex D — Expert Opinion of Dr. Lukas Brenner: An independent expert opinion prepared by Dr. Lukas Brenner, Managing Director of Argonaut Trade Consulting GmbH, based in Berlin, Germany. Dr. Brenner is a former member of the WCO Harmonized System Committee, having served from 2008 to 2016, and is a recognized authority on tariff classification of industrial and port equipment. Dr. Brenner's expert opinion concludes that both the QC-65 and ASC-40R are properly classified as cranes under heading 8426;
(d) Annexes E and F: Copies of BTI rulings NL-BTI-2021-01234 (Netherlands) and DE-BTI-2020-05678 (Germany);
(e) Annex G: Hailong Heavy Industries product brochures and technical data sheets for the QC-65 and ASC-40R; and
(f) Annex H: Photographs of the installed equipment at TSL's terminal facilities in Piraeus, Thessaloniki, and Volos.
75. The classification question at the heart of this administrative objection is the same question presented in the BTI application. A ruling by AADE on the BTI application would directly and conclusively resolve the classification dispute underlying the Assessment Notice.
76. Following the filing of the BTI application, AADE referred the application to the European Commission's Directorate-General for Taxation and Customs Union ("DG TAXUD") on February 7, 2023, for consultation under Article 34(10) of the Union Customs Code. AADE cited the divergent BTI rulings issued by the Netherlands and Germany as the basis for the referral, noting that the classification question requires harmonized resolution at the Union level to ensure uniform application of the Common Customs Tariff. The DG TAXUD consultation is currently pending. No timeline for resolution has been communicated to TSL or its legal representatives.
77. In recognition of the pendency of the DG TAXUD consultation and the desirability of avoiding conflicting administrative and regulatory proceedings, a standstill agreement was executed on March 1, 2023, between TSL and AADE. The standstill agreement was countersigned by Panagiotis Drakos of Meridian & Drakos Dikigiriko Grafeio on behalf of AADE's external legal advisors, and by Aikaterini Vlachopoulou on behalf of AADE's Piraeus Regional Customs Office. Under the terms of the standstill agreement:
(a) AADE will not enforce the Assessment Notices (ADAN/2022/0073 and ADAN/2022/0074) or take collection action during the BTI consultation period and any subsequent appeal period;
(b) TSL has posted a bank guarantee in the amount of €5,000,000 (five million euros) with Compass Maritime Bank SA (Guarantee No. CMB-BG-2023-0291, dated March 10, 2023) as security for the assessed amounts during the standstill period;
(c) DED proceedings on TSL's administrative objections are held in abeyance pending the outcome of the BTI application and DG TAXUD consultation; and
(d) Late payment interest continues to accrue during the standstill period; TSL has acknowledged this accrual but expressly reserves the right to contest the interest quantum upon resolution of the underlying classification dispute.
78. TSL respectfully requests that the DED defer resolution of this objection pending the outcome of BTI Application BTI-GR-2022-003847 and the completion of the DG TAXUD consultation under Article 34(10) UCC. This approach is consistent with the standstill agreement between the parties and serves the interests of administrative efficiency and legal certainty. Proceeding to a decision on this objection while the same classification question is under consideration by DG TAXUD would risk producing inconsistent outcomes and would be contrary to the principle of uniform application of the Common Customs Tariff.
IV. ADDITIONAL ASSESSMENT COMPONENTS — PENALTIES, INTEREST, AND VAT
A. Administrative Penalties
79. In addition to the principal duty assessment, AADE has assessed an administrative penalty under Article 42(1) of Regulation (EU) No. 952/2013 (Union Customs Code) and Article 77 of Commission Delegated Regulation (EU) 2015/2446 (UCC Delegated Regulation). The penalty is calculated at 30% of the additional duties assessed.
80. Applied to the classification-related duty assessment, the penalty amounts to:
€1,478,400 × 30% = €443,520
81. This penalty constitutes a component of the total 30% penalty of €509,124 assessed across both ADAN/2022/0073 (Classification) and ADAN/2022/0074 (Valuation). TSL contests the classification-related penalty of €443,520 in its entirety on the following grounds:
(a) Good faith. TSL acted in good faith throughout the classification process. TSL's classification of the imported equipment under heading 8426 was based on a reasonable and well-founded interpretation of the Combined Nomenclature, consistent with the plain meaning of the heading text, the Explanatory Notes, and the published BTI ruling of a fellow EU member state (NL-BTI-2021-01234). TSL had no reason to believe that its classification was incorrect, and no prior AADE guidance, advisory opinion, or adverse ruling suggested otherwise.
(b) Reliance on professional customs broker. TSL relied on the professional judgment of its licensed customs broker, Peloros Customs Agency S.A., and its managing director, Stavros Liapis, who holds Greek Customs Broker License No. GR-CB-1287. Peloros Customs Agency reviewed the technical specifications and characteristics of the equipment and confirmed the classification under heading 8426 prior to the filing of the SADs. TSL's reliance on a licensed customs professional is a recognized mitigating factor in the assessment of administrative penalties.
(c) Genuine classification ambiguity. The divergent BTI rulings issued by the Netherlands (heading 8426) and Germany (heading 8428) conclusively demonstrate that the classification of automated stacking cranes is a matter of genuine ambiguity within the EU customs framework. The fact that two sophisticated customs administrations, applying the same legal framework, reached opposite conclusions confirms that the classification question is a close one. Penalizing TSL for adopting the interpretation endorsed by one member state — and contested by another — would be unreasonable and disproportionate.
(d) No prior adverse guidance. Prior to the issuance of the Assessment Notice, AADE had not issued any guidance, circular, or ruling indicating that STS gantry cranes or automated stacking cranes should be classified under heading 8428 rather than heading 8426. TSL was not on notice that AADE would adopt the German rather than the Dutch position. In the absence of such guidance, TSL cannot fairly be said to have acted negligently or recklessly in its classification.
(e) Proportionality. Article 42(1) UCC requires that penalties for customs infringements be "effective, proportionate, and dissuasive." The imposition of a 30% penalty on a good-faith classification dispute arising from acknowledged EU-wide ambiguity — and in respect of which the classification question has been referred to DG TAXUD for harmonized resolution — would be disproportionate. The penalty would be disproportionate to the degree of culpability (which is nil, in TSL's submission), to the nature of the alleged infringement (a classification disagreement, not fraud or smuggling), and to the broader objectives of the penalty regime.
(f) Full cooperation. TSL has fully cooperated with the AADE post-clearance audit from its inception. TSL provided all requested documentation, facilitated site visits to its terminal facilities, and engaged constructively with the audit team throughout the process. TSL's cooperative posture is a recognized mitigating factor and supports the conclusion that no penalty is warranted.
82. For these reasons, TSL submits that the administrative penalty of €443,520 should be annulled in its entirety. In the alternative, if the DED determines that some penalty is warranted, TSL requests that the penalty be substantially reduced to reflect TSL's good faith, reliance on professional advice, and the genuine classification ambiguity at issue.
B. Late Payment Interest
83. The Assessment Notice estimates accrued late payment interest at approximately €3,872,000 across both ADAN/2022/0073 (Classification) and ADAN/2022/0074 (Valuation), calculated from the original dates of entry through the date of the Assessment Notice (August 12, 2022) at the statutory rate of 0.73% per month. This interest amount reflects the cumulative accrual over a period of approximately three years from the earliest clearances in 2019.
84. TSL contests the interest calculation and reserves the right to challenge the interest quantum upon resolution of the underlying classification dispute. If the classification reclassification is annulled and the equipment remains classified under heading 8426 at a 0% duty rate, no additional customs duty will be owed, and no interest will be due. Interest is ancillary to the principal obligation and falls with it.
85. TSL further notes that interest continues to accrue during the standstill period. TSL has acknowledged this accrual in the standstill agreement, but expressly reserves the right to contest both the applicability and the quantum of interest upon final resolution of the dispute. To the extent interest is ultimately found to be owing, TSL reserves the right to submit a detailed recalculation based on the actual entry dates and applicable interest rates.
C. Import VAT Adjustments
86. The reclassification of the equipment from CN 8426 41 00 (0% duty) to CN 8428 90 90 (2.2% duty) generates an additional customs duty of €1,478,400. Because import VAT is assessed on the customs value inclusive of customs duty, the reclassification triggers a corresponding import VAT adjustment. The additional import VAT assessed is:
€1,478,400 × 24% (Greek standard VAT rate) = €354,816
87. TSL contests this VAT adjustment as contingent on the classification reclassification, which TSL maintains is incorrect. If the classification reclassification is annulled, the VAT adjustment falls with it.
88. TSL further notes, for completeness, that any import VAT adjustment would be recoverable by TSL as an input VAT credit under Article 30 of the Greek VAT Code (Law 2859/2000, as codified). TSL is a fully VAT-registered business with the right to deduct input VAT on goods and services used in its taxable business activities. Accordingly, even if the VAT adjustment were ultimately upheld, the net cash impact on TSL would be limited to a timing difference — the period between payment of the additional import VAT and recovery of the corresponding input VAT credit through TSL's periodic VAT returns. This does not, however, diminish TSL's right to contest the adjustment on the merits.
V. INTERRELATION WITH ADAN/2022/0074 (VALUATION)
89. TSL draws the DED's attention to the interrelation between the classification assessment under ADAN/2022/0073 (the subject of this objection) and the separate valuation assessment under ADAN/2022/0074. The valuation assessment under ADAN/2022/0074 adjusts the declared customs value of certain equipment by €9,940,000, resulting in additional customs duties of €218,680. Critically, this additional duty amount is calculated at the 2.2% duty rate applicable under CN 8428 90 90 — the reclassified heading asserted in ADAN/2022/0073.
90. The calculation underlying ADAN/2022/0074 therefore presupposes the validity of the reclassification under ADAN/2022/0073. If the classification reclassification is annulled — as TSL maintains it should be — and the equipment remains classified under heading 8426 at a 0% MFN duty rate, then the valuation adjustments under ADAN/2022/0074 would produce no additional customs duty whatsoever:
0% × €9,940,000 = €0
91. TSL acknowledges that even if the classification reclassification is annulled, the underlying customs valuation adjustments asserted in ADAN/2022/0074 may remain relevant for purposes of import VAT calculations, since import VAT is assessed on the customs value regardless of the applicable duty rate. Accordingly, the classification and valuation assessments are interlinked but not entirely coterminous: the classification outcome is dispositive of the customs duty component of the valuation assessment, but not of the VAT component.
92. TSL has filed a separate administrative objection to ADAN/2022/0074 (Valuation), addressing both the customs duty and VAT implications of the valuation adjustments. TSL respectfully requests that the DED consider the two objections in a coordinated manner, given their factual and legal interdependence.
VI. RELIEF REQUESTED
93. For all of the reasons set forth in this objection, Thalassa Shipping & Logistics Société Anonyme respectfully requests that the Directorate of Resolution of Disputes:
1. Annul Additional Duty Assessment Notice No. AADE/ADAN/2022/0073 in its entirety, including:
(a) All additional customs duties assessed thereunder in the amount of €1,478,400;
(b) The administrative penalty of €443,520 (being the classification-related component of the total penalty of €509,124);
(c) All late payment interest assessed or accrued in connection with the classification-related duty assessment;
(d) The import VAT adjustment of €354,816 assessed in connection with the classification-related duty assessment; and
(e) Any and all other charges, surcharges, or assessments arising from or related to the reclassification of the equipment from CN 8426 41 00 to CN 8428 90 90;
or, in the alternative,
2. Suspend proceedings on this objection pending:
(a) The resolution of BTI Application No. BTI-GR-2022-003847, filed by TSL on November 15, 2022;
(b) The completion of the consultation initiated by AADE with the European Commission's Directorate-General for Taxation and Customs Union (DG TAXUD) under Article 34(10) of Regulation (EU) No. 952/2013, referred on February 7, 2023; and
(c) The issuance of any classification guidance, classification regulation, or implementing regulation by DG TAXUD or the Customs Code Committee in connection with the classification of automated stacking cranes and STS gantry cranes,
consistent with the terms of the standstill agreement between the parties dated March 1, 2023.
94. TSL further requests that, upon the subheading correction described in Section III.B of this objection, the DED direct the amendment of the relevant SADs to reflect the correct subheading classification of CN 8426 19 00, with no change to the applicable duty rate of 0%.