Contents
In Case 86/76,Reference to the Court under Article 177 of the EEC Treaty by the Bundesfinanzhof for a preliminary ruling in the action pending before that court betweenGERVAIS-DANONE AG, Munich,andHAUPTZOLLAMT (PRINCIPAL CUSTOMS OFFICE) München-Mitte,THE COURT (First Chamber)composed of: A. M. Donner, President of Chamber, J. Mertens de Wilmars and G. Bosco, Judges,Advocate-General: J.-P. WarnerRegistrar: A. Van Houttegives the following
Judgment
Facts
The facts, the procedure and the written observations submitted under Article 20 of the Protocol on the Statute of the Court of Justice of the EEC may be summarized as follows:
I —Facts and written procedure
II —Written observations submitted under Article 20 of the Protocol on the Statute of the Court of Justice
A —Observations submitted by Gervais-Danone
Relying upon an expert's report produced as Annex I to its observations, Gervais-Danone first of all points out that the products referred to in the present case were not merely mixtures of various fats with a preponderant percentage of butter; they were also edible fats which had undergone preparation. More particularly, the mixtures included what are by common agreement referred to as ‘shortenings’ (obtained by the texturation of oils or fats) and ‘emulsified fats’.Simple fats or mixtures of fats to which refined suet of bovine animals, curd and/or skimmed milk powder are added, are better suited to cooking than pure simple fats, such as butyric fat or lard. These cooking properties are greatly enhanced when fats have subsequently been processed by texturation or emulsification.Even if, in relation to other mixtures, mixtures of fats based mainly on butyric fat do not manifest structural differences as regards cooking properties, at all events they have the advantage of bringing out the desired taste of butter. That is the reason why such mixtures, in particular ‘shortenings’ and emulsified fats, are used in fine pastry and biscuit making.After setting out these considerations, Gervais-Danone goes on to point out, as regards the law, that pursuant to Articles II a and II b of the Brussels Convention of 15 December 1950, the Common Customs Tariff adopted heading 15.13 without any amendment from the wording used since 1955 by the Customs Cooperation Council of Brussels in its nomenclature. By so doing, the Council of the European Communities made plain its intention also to adopt the content and scope of that heading. Established case-law of the Court has specifically acknowledged that, although they do not have mandatory force, the explanatory notes formulated by the Cooperation Council before the entry into force of the CCT constitute essential factors in the interpretation of the tariff headings, as long as the Community authorities have not adopted annotations or more precise provisons on the date of the imports which are in question.The fact that the entry into force of the common organization of the agricultural markets altered the economic relations and balance of interests between importers and exporters in regard to the various tariff headings does not make it permissible to change the content and scope of the tariff headings, in so far as those headings are adopted by the CCT without any amendment. Such change is permissible only if the tariff heading itself is amended. However, such amendment is superfluous within the framework of the common organization of a market. Indeed, such organization has other means at its disposal to prevent disturbances on the market and to avoid distortions of competition, without having to amend a tariff heading: it can call upon the appropriate system of levies and refunds.The products under tariff heading 15.13 fall precisely within the common organization of the market in oils and fats, established by Regulation No 136/66 of the Council of 22 September 1966 (OJ, English Special Edition 1965-1966, p. 221).Supposing that a prepared edible fat, mostly consisting of milkfats, had provoked disturbances on the market, the Council could have eased those difficulties by amending Article 2 (1) of the said regulation and instituting levies or refunds, but in no case could it have attempted to attain the same result by changing the classification of certain products by artificial annotations.Moreover, the second recital of the preamble to Regulation No 97/69 of the Council of 16 January 1969 (OJ, English Special Edition 1969 (I), p. 12), upon which Regulations Nos 496/69 and 663/69 of the Commission (OJ, English Special Edition 1969 (I) p. 109 and p. 190) are based, empowers the Commission to adopt provisions intended to ‘specify the content of the headings or subheadings of the Common Customs Tariff without, however, amending the text thereof’.Although it is true that the wording of that recital is not absolutely clear, none the less it cannot be inferred therefrom that although the Commission is bound by the wording of a tariff heading, it can however, by means of closer definition, amend the content and the scope thereof. Such a practice is forbidden in the internal legal orders of the Member States, including the Federal Republic of Germany, which on the contrary acknowledges the general legal principle according to which the interpretation of a legal instrument is not bound to the literal meaning, but to the actual intention and express purposes of that instrument.Therefore, when Regulation No 97/69 stipulated that the Commission should not amend the text of the headings or subheadings of the Common Customs Tariff which it purports to specify, that regulation did not empower the Commission to amend the content and scope of the said headings or subheadings.Consequently the Commission cannot adopt explanatory regulations which in reality have the effect of amending tariff headings. Although the Commission has wide discretion in the classification of new products, in respect of which no clear practice has hitherto emerged, that discretion is not however so wide that further specification of the headings would involve amendment thereof.After putting forward these general considerations, Gervais-Danone examines the two questions referred to the Court for a preliminary ruling.
B —Observations submitted by the Commission of the European Communities
1.The first question
The Commission points out that the tariff headings to be considered for the classification of butyric fat containing small added quantities of foreign substances are headings 04.03, 15.13 and 21.07.Since the products to which each of these headings relates are covered by a common organization of the market, account must be taken in defining those headings both of the function which the CCT fulfils within the framework of the organization of the markets and of its function purely for customs purposes.
(a)The interpretation of the Common Customs Tariff Nomenclature
Tariff heading 21.07 groups together such ‘food preparations’ as are not specified or included under other headings of the Common Customs Tariff. Subheadings F II to F IX cover in particular preparations having a content by weight of milkfats varying from 1.5 % to more than 85 %. The mixing of milkfats with suet of bovine animals and sesame oil or with suet of bovine animals, curd and skimmed milk powder gives rise to products which must necessarily be considered as ‘preparations’ within the meaning of the tariff heading in question. Therefore the products in dispute can be classified under that tariff heading if they are not ‘elsewhere specified or included’.In fact, on the one hand, they are not expressly ‘specified’ under any other tariff heading. Granted, tariff heading 15.13 mentions ‘imitation lard’, but tariff classification as such depends only on the nature and objective composition of the product, not on the description which the importer applies to it.On the other hand, the said products are also not ‘included’ under tariff heading 04.03 or 15.13.Indeed, tariff heading04.03 isolates ‘butter’ from the heading ‘Dairy produce’ of Chapter 4. The ambit of headingis not limited to butter, but includes, in the absence of other autonomous tariff headings, the other forms which milkfat can take.According to the Explanatory Notes to the Brussels Nomenclature relating to heading 04.03, that heading covers ‘resolidified butter (beurre fondu), dehydrated butter, butterfat, ghee (a kind of butter made from buffalo's milk) and rancid butter’ (cf. the annex to the written observations). As to resolidified butter, it emerges from the Explanatory Notes to the CCT concerning heading 04.03 that, apart from resolidified butter properly so-called, that description covers other similar kinds of dehydrated butter.If the butter or the resolidified butter contains other added substances, the product thus obtained is still butter within the meaning of heading 04.03, if it retains the essential characteristics of butter or resolidified butter. Thus the said heading includes, for example, butter containing very small quantities of herbs, spices and flavourings, essentially intended to improve the particular taste of the butter for certain consumers, and butter containing added sesame oil, which is used as. a means of identification and affects neither the taste nor the use of the product.Considering first the composition stated by Gervais-Danone for the product which the national court has designated by the letter (a), the presence of 10 % of suet of bovine animals and 5 % of sesame oil seems to exclude the possibility of speaking of the addition of very small quantities of foreign substances. On the other hand, the addition of negligible quantities of tasteless and odourless suet of bovine animals and sesame oil does not confer upon the resolidified butter any particular qualities, characteristics or opportunities for utilization in excess of those of the normal product.Furthermore, the proportion of 5 % of sesame oil is too small for that oil to be considered as an autonomous and decisive constituent of the fat. Therefore classification under heading 04.03 is not ruled out.Similar considerations can be expressed in relation to the product designated by the letter (b) by the national court. By the addition of the curd and the skimmed milk powder, the pure butterfat merely contains, apart from the suet of bovine animals, the quantity of which is even smaller in this case, two other constituents of the common basic product (milk), which are found in small quantities even in normal butter. On the other hand, the total stated content of curd and milk powder probably represents more than the addition of ‘very small quantities’ within the meaning of the Notes Explicatives du Tarif Douanier Commun relating to heading 04.03.On the other hand, tariff heading15.13 falls within a chapter from which butter and other milkfats are in principle excluded. Since, as ‘dairy produce’ referred to in Chapter 4, they are the subject of autonomous rules, they cannot at the same time constitute an animal fat within the meaning of Chapter 15.Heading 15.13 isolates two specific mixtures of fats from the other products in that chapter: ‘margarine’ and ‘imitation lard’. The products in dispute constitute neither one nor the other of these products. As to the content of the term ‘imitation lard’, the descriptions ‘imitation lard’ and ‘simili-saindoux’, used in the original versions of the Brussels Nomenclature, leave no doubt about the fact that they refer exclusively to mixtures of fats based on lard. Moreover, according to German legislation, the word ‘Kunstspeisefett’ which is used to translate these descriptions signifies only ‘preparations similar to lard, the fat content of which does not consist exclusively of lard’; which implies that those preparations, at least in part, contain lard. In this case, the products in dispute do not contain any lard.Finally, as to ‘other prepared edible fats’, the question is essentially whether milkfat, containing small added quantities of suet and sesame oil, can also be considered as such a ‘prepared edible fat’. This possibility is excluded by the wording of the Common Customs Tariff, from which it emerges that milkfat is the subject-matter of an autonomous tariff heading (04.03), and that mixtures of milkfats with other fats and products are expressly covered by tariff heading 21.07, as particular food preparations. Therefore the expression ‘other prepared edible fats’ in tariff heading 15.13 should not be interpreted a priori as having any other meaning than that which it has in all other parts of Chapter 15, namely that of animal or vegetable fats not specified in the said chapter, excluding milkfat and preparations thereof. Thus that expression constitutes a collective description serving as a ‘catch-all’, another example of which is to be found in heading 21.07: preparations based on milkfats fall within heading 21.07, whereas those based on other fats are covered by heading 15.13. Doubtless milkfats added to another fat can be found in the mixtures under heading 15.13, but such milkfats are added only in very small quantities and must in no case be the only or principal fat constituent. These considerations are in accordance with the Explanatory Notes to the Brussels Nomenclature, which specify that heading 15.13 covers ‘solid edible preparations’, generally consisting of mixtures of— different animal fats and oils,— different vegetable fats and oils, or— animal and vegetable fats and oils,which may have been previously hydrogenated. Even if it is admitted that the products in dispute may be considered as mixtures of fats, they cannot however constitute mixtures of ‘different animal fats’. If indeed, according to current usage, milkfat may be regarded as an ‘animal fat’, it cannot however be considered as such in the terminology of the Common Customs Tariff and in particular of Chapter 15 thereof, since under heading 04.03 it comes within the ‘dairy produce’ of Chapter 4. There are no grounds for thinking that the Brussels Explanatory Notes intended to give the expression ‘animal fats’ a meaning other than that which it has in the nomenclature.Furthermore, the general considerations placed at the head of Chapter 15 expressly exclude from that chapter butter within the meaning of heading 04.03. Certainly, the Explanatory Notes to the Brussels Nomenclature do not exclude a priori the presence of milkfats in products under heading 15.13, but it follows from the very wording of those Notes that in such cases it is a question of mixtures in which the aforesaid milkfats may be detected but must not be the only or principal fat constituent. Moreover, the practice followed by the Customs Cooperation Council and its relevant departments in relation to those Notes is inspired by the same principles: there was never any intention to classify mixtures composed largely or mostly of milkfats under the description ‘other prepared edible fats’ in heading 15.13; they were to be classified as food preparations under heading 21.07. This interpretation underlies the practice followed by the Commission and the Committee on the Common Customs Tariff Nomenclature.The Commission contends that if, in the light of the foregoing considerations, classification of the product which the national court designated by the letter (a) cannot be allowed under heading 15.13, then a fortiori that classification cannot be allowed in respect of the other product designated by the letter (b). Indeed, by virtue of its very composition, a mixture of milkfats with curd, milk powder and suet of bovine animals is a ‘food preparations not elsewhere specified or included’ within the meaning of heading 21.07.
(b)Classification considered from the point of view of the common organization of the markets
The Commission points out that Regulation No 13/64 for the first time made milk and the milk products referred to in Chapter 4 of the Common Customs Tariff subject to a common organization of the market, the operation of which is currently governed by Regulation No 804/68 (OJ English Special Edition 1968 (I), p. 176). It soon became clear that the definition of the ambit of those regulations, as it results from the nomenclature of Chapter 4, was an obstacle, because it allowed a certain number of the principal products resulting from the processing of milk and milkfats to escape the measures laid down within the framework of the common organization. Regulation No 160/66 was enacted in order to ease these difficulties (JO 1966, L 195, p. 3361). The customs specifications relating to the products referred to in that regulation were prescribed in Regulation No 83/67 (JO 1967, L 81, p. 1597).Preparations and mixtures of milkfats were on that occasion considered without exception as products falling within heading 21.07, not heading 15.13. The import charges aligned upon the levies applied to butter which were laid down by Regulation No 160/66 were applied only to goods falling within heading 21.07, heading F of which was for that purpose divided up into numerous subheadings, corresponding to different milkfat contents.At the same time, all the products under heading 15.13 were made subject to the common organization of the market in oils and fats which was set up by Regulation No 136/66 (OJ, English Special Edition 1965-1966, p. 221) and which provided solely for the levying of the (consolidated) import charge laid down by the Common Customs Tariff, in addition to which a compensatory amount could be levied in the event of dumping.In 1966, all uncertainty as to the fundamental definition of headings 21.07 and 15.13 within the framework of the Common Customs Tariff nomenclature had been eliminated. This definition of the ambit of Regulations Nos 160/66 and 136/66 proceeds clearly from the aforesaid interpretation of the Common Customs Tariff. It is only in this way that the existing difference between the import system applied to products under heading 21.07 and that applied to products under heading 15.13 can be understood. That difference would be rendered meaningless if preparations based on butter, in particular those containing 85 % or more of milkfats, fell in principle within heading 15.13.Moreover, that heading was bound under the General Agreement on Tariffs and Trade (GATT) during the years 1960-1961, and in the course of the negotiations which then took place it was never contemplated that preparations based on milkfats could be added to margarine and imitation lard.
(c)The measures taken within the framework of an organization of the market
The measures taken within the framework of the common organization of the market in milk and milk products confirm that this analysis is well founded. Within the framework of the intervention systems provided for by that organization, products of the type in issue in the present case have always been treated as resolidified butter within the meaning of heading 04.03 or as food preparations within the meaning of heading 21.07. On several occasions the Community attempted, by means of considerable price reductions, to dispose of surplus quantities of butter from the intervention stocks, while demanding an undertaking from the buyers that they would use that butter for precise purposes. During the period in which the imports in dispute were effected, the Commission authorized on 26 July 1968 the disposal from stock of certain quantities of ‘concentrated butter for use in cooking’, to which the product designated by the national court by the letter (a) is by its nature very close.On the other hand, Regulation No 1354/68 (JO 1968, L 217, p. 6) authorized the disposal of stocks of butter provided that the buyer gave an undertaking to export that butter after processing it into semi-finished products falling within subheadings 18.06 D II (c) and 21.07 F II to 21.07 F IX. The addition of amounts of curd and milk powder to the product designated by the national court by the letter (b) is sufficient for the mixture thus obtained to be considered as a food preparation within the meaning of heading 21.07.In the light of these observations, the Commission proposes that the first question should be answered as follows:‘Before the entry into force of Regulation No 496/69 of 18 March 1969 tariff heading 15.13 of the Common Customs Tariff was to be interpreted as meaning that mixtures of fats consisting of(a) 85 % pure butyric fat (99.5 %)10 % refined suet5 % sesame oilor(b) 85 % butyric fat5 % curd5 % skimmed milk powder5 % refined suet of bovine animals did not fall within that tariff heading.’
2.The second question
The Commission takes the view that the foregoing considerations as to the way in which tariff headings 04.03, 15.13 and 21.07 should be interpreted and defined in regard to the products in dispute already provide an answer to the question referred. Regulation No 496/69 merely drew the logical consequences from those headings and made them mandatory with regard to classification.Moreover, the Commission considers it apposite in the present case to recall certain principles which it has already put forward in Case 37/75, Bagusat [1975] ECR 1339:— The fact that a classification different from that laid down is conceivable according to the wording of the tariff is not sufficient for it to be considered as an unacceptable amendment to the tariff not justified by Regulation No 97/69.— In order to fulfil their function and safeguard the principle of legal certainty, regulations on tariff classification cannot be declared void unless the decision which they contain is clearly contrary to the letter, the structure and the rules of tariff classification, is clearly arbitrary and wrong and can no longer be justified by means of substantive arguments.— Legal certainty is not the only purpose of the regulations concerning classification: they are also intended to ensure a uniform interpretation and application of the Common Customs Tariff in all the Member States. For this reason, those regulations are applicable principally in those cases in which the competent authorities of the Member States adopt divergent positions with regard to tariff classification and in which uniformity of interpretation can be ensured only by a rule of Community law binding upon all those authorities; when there are no divergences between the national administrative authorities, the adoption of explanatory notes and of tariff classification opinions suffice to guarantee a uniform application of the tariff.— The fact that a regulation concerning tariff classification does not correspond to the interpretation given to the tariff in certain Member States cannot justify the conclusion that such a regulation is void: in that case the regulation should not be annulled, but the tariff classification as applied by the Member States in question should be revised.Taking these observations into account, the Commission contends that ‘Regulation No 496/69 is valid’.
III —Oral procedure
Gervais-Danone and the Commission of the European Communities presented oral observations at the hearing on 10 February 1977.In reply to the assertion by the Commission in its written observations that it is not possible to detect with sufficient certainty by means of analysis the presence in the mixture of the small quantities of suet referred to in this case, Gervais-Danone produced an expert's report establishing that the presence in the mixture of a suet content of 10 % or 5 % can be detected by analysis with a sufficient degree of certainty.The Advocate-General delivered his opinion at the hearing on 9 March 1977.
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