Satellite broadcaster Sky today won a European legal battle over customs duties on imports of its Sky+ box.
The European Court of Justice settled a dispute with UK Revenue and Customs by ruling that the programme decoder should not be subject to 13.9% import duty.
HMRC had insisted that, under EU rules, the satellite receiver should be classified as a recording device and thus liable to the levy.
But the judges said that, despite its built-in recording function, the Sky+ box was primarily intended to receive television signals, and was therefore exempt from duty.
Today's verdict said: "Decoders with a hard disk drive - such as the Sky+ box - must be classified, for customs purposes, as set-top boxes with a communication function and not as recording apparatus. As a result, they are exempt from customs duties instead of being subject to a rate of 13.9%."
The Sky+ box made for British Sky Broadcasting, the UK's main supplier of digital satellite television services, has a communication function, contains a hard disk drive and allows the owner to record programmes broadcast by Sky.
HMRC claimed that under the EU's own guidance for duty rates on imported goods, the device should be classified as a recording apparatus and therefore liable to import duty.
Sky, backed by the box manufacturer Pace, said it was "a set-top box with a communication function".
The case was referred to the European Court of Justice in Luxembourg which ruled today that electronic equipment with several functions should be classified for import duty purposes according to the device's principal function.
The ruling said: "Consumers subscribe to service providers such as Sky principally to be able to access the television programmes offered and, in order to do so, they need a box such as the Sky+ box. The television programme recording function, which is also available on that model, is merely an additional service.
"Consumers who choose that product are seeking, primarily, not a recording function, but rather a function of decoding television signals, although their choice may be influenced by the fact it has a recording function or by the number of hours of programming that can be recorded."
The judges went on: "That conclusion is borne out by the fact that the Sky+ box cannot record video content from any other external source (from television receivers, cameras or video recorders), it cannot play video content from external media - such as DVDs or videotapes - and is not capable of recording video content on to external media.
"It follows that the Sky+ box is principally intended to be used to receive television signals and that function is inherent in that device. It thus constitutes its principal function and the recording function is only secondary."
An HMRC spokesman said: "HMRC are studying the judgment carefully, and will respond more fully in due course.
"In the meantime, the decision will be useful in the future classification of a range of set-top boxes."