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Pringles cashes chips in court

July 05, 2008|From Bloomberg News

Pringles, Procter & Gamble Co.'s salty snack stacked in a tube, are not potato chips, a London judge ruled Friday in a tax dispute.

Pringles don't fulfill the legal definition of "potato crisp," the British term for "chip," allowing them to be sold tax-free in Britain, Justice Nicholas Warren at the High Court in London ruled.

Under the law, most food is exempt from Britain's 17.5% sales tax. Even so, the national tax office claimed that Pringles were covered by an exception for products such as potato chips, sticks or puffs "and similar products made from the potato, or from potato flour, or from potato starch."

Procter & Gamble's lawyers argued at a May hearing that Pringles didn't look like a chip, didn't feel like a chip and didn't taste like a chip, according to the judgment. They also maintain that the snack isn't made like a chip because it is cooked from baked dough, not potato slices.

Potato chips "give a sharply crunchy sensation under the tooth and have to be broken down into jagged pieces when chewed," the Cincinnati-based company's lawyers argued. "It is totally different with a Pringle, indeed a Pringle is designed to melt down on the tongue."

Warren agreed. Pringles aren't "made from the potato" for the purposes of the tax exemption, he said. He didn't say what Pringles are, other than that they're tax-exempt.

The British tax office said in an e-mailed statement that it would consider the judgment "with a view to deciding whether to appeal."

In a similar case in April, the British government was told by Europe's highest court, the European Court of Justice, to entirely refund to Marks & Spencer Group more than 20 years of sales duty charged on chocolate-covered tea cakes.

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