B.A.S. Trucks BV v Staatssecretaris van Financiën (C-400/05)

Contents

Judgment of the Court (Fifth Chamber)11 January 2007^noteIn Case C-400/05,REFERENCE for a preliminary ruling under Article 234 EC from the Hoge Raad der Nederlanden (Netherlands), made by decision of 11 November 2005, received at the Court on 16 November 2005, in the proceedingsB.A.S. Trucks BVvStaatssecretaris van Financiën,THE COURT (Fifth Chamber),composed of R. Schintgen, President of the Chamber, A. Borg Barthet (Rapporteur) and E. Levits, Judges,Advocate General: J. Mazák,Registrar: R. Grass,having regard to the written procedure and further to the hearing on 16 November 2006,after considering the observations submitted on behalf of:— B.A.S. Trucks BV, by H. de Bie and M. Ouwehand, advocaten,— the Netherlands Government, by H.G. Sevenster, C ten Dam and P. van Ginneken, acting as Agents,— the Commission of the European Communities, by J. Hottiaux, acting as Agent, assisted by F. Tuytschaever, advocaat,having decided, after hearing the Advocate General, to proceed to judgment without an Opinion,gives the following

Judgment

1The reference for a preliminary ruling concerns the interpretation of subheading 870410 of the Combined Nomenclature, in Annex I to Council Regulation (EEC) No 2658/87 of 23 July 1987 on the tariff and statistical nomenclature and on the Common Customs Tariff (OJ 1987 L 256, p. 1), as amended by Commission Regulation (EC) No 2261/98 of 26 October 1998 (OJ 1998 L 292, p. 1) (‘the CNT’).

2That reference was made in the course of proceedings between B.A.S. Trucks BV (‘BAS Trucks’), and the Inspecteur der Belastingdienst — Douanedistrict Rotterdam (Customs Inspector of Rotterdam District) on the tariff classification of two motor vehicles called ‘Dumptrucks’ in subheading 870410 of the CN as dumpers designed for off-highway use.

Legal context

International law

3The International Convention establishing the Harmonised Commodity Description and Coding System (‘the HS’), concluded in Brussels on 14 June 1983, and the Protocol of Amendment thereto of 24 June 1986 (‘the HS Convention’) were approved on behalf of the Community by Council Decision 87/369/EEC of 7 April 1987 (OJ 1987 L 198, p. 1).

4Under Article 3(1) of that convention, each contracting party undertakes to ensure that its customs tariff and statistical nomenclatures will be in conformity with the HS, to use all of the headings and subheadings of the HS without addition or modification, together with their related codes, and to follow the numerical sequence of that system. Each contracting party also undertakes to apply the general rules for the interpretation of the HS and all the section, chapter and subheading notes of the HS, and not to modify their scope.

5The Customs Cooperation Council, now the World Customs Organisation, established by the International Convention for creation of that council, signed at Brussels on 15 December 1950, approves, under the conditions laid down in Article 8 of the HS Convention, the explanatory notes to the HS adopted by the HS Committee provided for in Article 6 thereof.

6The explanatory note to the HS relating to heading 8704 thereof states:‘This heading also covers:(1) Dumpers; sturdily built vehicles with a tipping or bottom opening body, designed for the transport of excavated or other materials. These vehicles, which may have a rigid or articulated chassis, are generally fitted with off-the-road wheels and can work over soft ground. ......’

7As regards subheading 870410, the HS explanatory note contains the following passages:‘These dumpers can generally be distinguished from other vehicles for the transport of goods (in particular, tipping lorries) by the following characteristics:— ...— lack of axle suspension;— high braking capacity;— limited speed and area of operation;— special earth-moving tyres;— ...It should be noted, however, that certain dumpers are specially designed for working in mines or tunnels, for example, those with a bottom-opening body. ...’

Community law

8Regulation No 2658/87 established, for the needs of both the Common Customs Tariff and the external trade statistics of the Community, the combined nomenclature, which is based on the HS, from which it takes the six-digit headings and subheadings, only the seventh and eighth digits forming subdivisions specific to the combined nomenclature.

9The version of the combined nomenclature applicable at the time of the facts in the main proceedings is set out in Annex I to Regulation No 2261/98. The second part of that annex includes a Section XVII, entitled ‘Vehicles, aircraft, vessels and associated transport equipment’. That section contains, inter alia, a Chapter 87, entitled ‘Vehicles other than railway or tramway rolling-stock, and parts and accessories thereof’. Under that chapter, heading 8704 is found with, inter alia, the following subheadings:8704 | Motor vehicles for the transport of goods:870410 | — Dumpers designed for off-highway use:| — — With compression-ignition internal combustion piston engine (diesel or semi-diesel), or with spark-ignition internal combustion piston engine:87041011 | — — — With compression-ignition internal combustion piston engine (diesel or semi-diesel) of a cylinder capacity exceeding 2500 cm3, or with spark-ignition internal combustion piston engine of a cylinder capacity exceeding 2800 cm3.| ...| — Other, with compression-ignition internal combustion piston engine (diesel or semi-diesel):| ...870423 | — — Of a gross vehicle weight exceeding 20 tonnes:| ...| — — — Other:| ...87042399 | — — — — Used.

10All the sections and, within each section, all the chapters of the CN are preceded by some notes, that is section or chapter notes.

11Section XVII does not contain any note which should be taken into account in these proceedings.

12The Commission of the European Communities has however, published explanatory notes to the combined nomenclature in accordance with Article 10(1) of Regulation No 2658/87 (OJ 1998 C 287, p. 1). In the version applicable at the date of the facts in the main proceedings, those explanatory notes provide, inter alia, the following as regards subheadings 87041011 to 87041090 of the CN:‘These subheadings mainly cover vehicles fitted with a front or rear tipping body or a bottom-opening body that have been specially designed to transport sand, gravel, earth, stones, etc. and are intended for use in quarries, mines or on building sites, at roadworks, airports and ports. ...’

13The general rules for the interpretation of the CN, which are in Part One, Section I, A, of the CN, state in particular:‘Classification of goods in the combined nomenclature shall be governed by the following principles:1. The titles of sections, chapters and sub-chapters are provided for ease of reference only; for legal purposes, classification shall be determined according to the terms of the headings and any relative section or chapter notes and, provided such headings or notes do not otherwise require, according to the following provisions....3. When ... goods are prima facie classifiable under two or more headings, classification shall be effected as follows:(a) the heading which provides the most specific description shall be preferred to headings providing a more general description. ......6. For legal purposes, the classification of goods in the subheadings of a heading shall be determined according to the terms of those subheadings and any related subheading notes and, mutatis mutandis, to the above rules, on the understanding that only subheadings at the same level are comparable. For the purposes of this rule, the relative section and chapter notes also apply, unless the context requires otherwise.’

The dispute in the main proceedings and the question referred for a preliminary ruling

14BAS Trucks imports into the European Union, inter alia, second-hand dumper trucks. In the course of June 1998, it submitted two applications for binding tariff information with respect to a MAN vehicle and a Scania vehicle.

15By tariff information of 30 July 1998, the Netherlands customs authorities classified the two vehicles at issue in subheading 87042399 of the CN.

16Taking the view that those vehicles should be classified under subheading 87041011 of the CN, BAS Trucks brought an objection against that binding tariff information, which was rejected. It appealed against the decision of rejection, which was confirmed by the Gerechtshof te Amsterdam (Amsterdam Regional Court of Appeal). BAS Trucks therefore brought an appeal in cassation before the Hoge Raad der Nederlanden (Supreme Court of the Netherlands).

17The referring court describes the products in question as follows:‘Both vehicles are fitted with driver cabs and a flat-bottomed tipper and are designed for the transport of sand, stones, rubble and such like. The forward end of the tipper can be raised to the upper edge of the cab. The vehicles are also fitted with a rigid and reinforced chassis, to which are attached four axles, the two forward ones of which can be steered. The axles are equipped with hub reduction to provide greater wheel purchase over rough ground.The vehicles are fitted with 22 or 24 inch wheels with a special type of tyre (zigzag profile) for use over unpaved terrain. Their maximum unladen speed is 85 kph. The fuel tank capacity is 300/400 litres respectively and with an average fuel consumption of 1 litre/1.3 kilometres, the vehicles have an operating range of 400/550 km respectively. The braking power of the vehicles, 4100 kW, is greater than that of an ordinary lorry (1900 to 2400 kW). The vehicles have compression-ignition internal combustion piston engines. The Scania P 113 8x4 has an engine capacity of 11028 cm³. The engine capacity of the MAN 41372 8x4 is 22967 cm³.The unladen weight of the Scania P 113 8x4 is 14800 kg and it has a load capacity of 21200 kg. The unladen weight of the MAN 41372 8x4 is 14420 kg and it has a load capacity of 21580 kg. The ratio for both vehicles between unladen weight and payload capacity does not exceed 1:1.6.’

18The referring court considers that the wording of subheading 870410 of the CN provides insufficient support for a definite tariff classification of the vehicles in question, even in the light of the information on heading 8704 provided by the World Customs Organisation and the European Community. It also takes the view that, although the judgment in Case C-396/02 DFDS [2004] ECR I-8439 establishes beyond reasonable doubt that the vehicles here in issue are to be treated as ‘dumpers’ within the terms of subheading 870410 of the CN, it does not explain how to interpret the criterion ‘designed for off-highway use’ which is also part of the wording of that subheading.

19In those circumstances, the Hoge Raad der Nederlanden decided to stay proceedings and to refer the following question to the Court for a preliminary ruling:‘Does the fact that dumpers are, in view of their distinctive characteristics, also designed for use on paved, public roads preclude their classification under subheading 870410 of the [CN]?’

On the question referred

Observations submitted to the Court

20BAS Trucks claims that the dumper trucks in dispute are designed for off-highway use. It is of the view that the fact that those trucks can be driven on paved, public roads does not preclude them having been designed for off-highway use. It submits that neither the notes relating to Chapter 87 nor subheading 870410 of the CN states that dumpers must be designed exclusively to be used off public roads. It adds that, although those trucks can be driven on roads, that is not economically profitable in the light of the high costs and their limited area of operation in comparison with ordinary lorries.

21Consequently, BAS Trucks suggests that the Courts answer to the question should be that the fact that dumpers designed for use off public roads can also, incidentally, be driven on them because of their properties does not preclude their classification under subheading 870410 of the CN.

22The Netherlands Government contends that the wording of subheading 870410 of the CN is based on the premiss that a vehicle must fulfil two cumulative conditions in order to be classified under that subheading, namely, be a ‘dumper’ and be designed for off-highway use. That government contends that that second condition is an independent requirement which must be fulfilled separately from the first, and contends that the fact that those trucks are not intended solely for off-highway use, but also for use on public roads, does not allow them to be classified under subheading 870410 of the CN. The Netherlands Government interprets the words ‘designed for off-highway use’ as meaning that the trucks must be designed exclusively for off-highway use in order to be covered by subheading 870410 of the CN.

23Consequently, the Netherlands Government requests that the Court's answer to the question should be that the fact that dumpers are designed to be used also on paved, public roads, in view of their distinctive characteristics, precludes their classification under subheading 870410 of the CN.

24The Commission considers that nothing in the wording of the CN heading itself, the explanatory notes to the CN or those to the HS indicates that dumpers must be designed exclusively for off-highway use. That institution takes the view that the competent national authorities must, in practice, check in each case whether the dumper truck is in the first place designed for off-highway use or use on public paved roads. In the latter case, the truck cannot be classified under subheading 870410 of the CN.

25Consequently, the Commission suggests that the Court's answer to the question should be that the fact that dumpers are designed to be used also on paved, public roads, in view of their distinctive characteristics, does not itself preclude their classification under subheading 870410 of the CN. It adds that it is for the national court to assess, on the basis of all of the characteristics of the dumpers, and in the light of the relevant explanatory notes to the CN and the HS, whether they are covered or not under subheading 870410 of the CN.

The Court's answer

26The referring court is essentially asking whether the fact that ‘dumpers’ within the meaning of subheading 870410 of the CN are designed in such a way as to be capable of being used also on paved, public roads, precludes their classification under that subheading.

27It should be noted at the outset that it is settled case-law that, in the interests of legal certainty and ease of verification, the decisive criterion for the classification of goods for customs purposes is in general to be found in their objective characteristics and properties as defined in the wording of the relevant heading of the combined nomenclature and of the notes to the sections or chapters (see, inter alia, DFDS, paragraph 27; Case 0495/03 Intermodal Transports [2005] ECR I-8151, paragraph 47; and Case C-445/04 Possehl Erzkontor [2005] ECR I-10721, paragraph 19).

28The explanatory notes drawn up, as regards the combined nomenclature, by the Commission and, as regards the HS, by the World Customs Organisation may be an important aid to the interpretation of the scope of the various headings but do not have legally binding force (see Case C-405/97 Mövenpick Deutschland [1999] ECR I-2397, paragraph 18).

29In addition, the intended use of a product may constitute an objective criterion for classification if it is inherent to the product, and that inherent character must be capable of being assessed on the basis of the products objective characteristics and properties (see Case C-459/93 Thyssen Haniel Logistic [1995] ECR I-1381, paragraph 13).

30As the Court observed in paragraph 31 of DFDS, the wording of subheading 870410 of the CN requires that a vehicle meets two conditions to be classifiable thereunder, namely be a ‘dumper’ and be designed for use off-highway.

31The only criterion noted by the Netherlands Government to refuse the classification of the vehicles at issue as ‘dumpers’ within the meaning of subheading 870410 of the CN is the fact that those trucks are designed to be used not exclusively off-highway, but also on paved, public roads.

32It is apparent from its wording that subheading 870410 of the CN is a specific heading for vehicles designed for a special use, namely use off-highway for the loading and unloading of various materials. The other categories of motor vehicles for the transport of goods are covered by general subheadings which make a distinction on the basis of the specific technical characteristics of those vehicles rather than according to the use made of them. It follows that, as Advocate General Stix-Hackl pointed out in point 33 of her Opinion in DFDS, the special purpose of the dumpers is the decisive criterion for classification under subheading 870410 of the CN.

33The explanatory notes to the combined nomenclature relating to subheadings 87041011 to 87041090 describe dumpers as vehicles ‘specially designed to transport sand, gravel, earth, stones, etc. and ... intended for use in quarries, mines or on building sites, at roadworks, airports and ports’.

34The explanatory notes to the HS relating to subheadings 8704 and 870410 describe dumpers as vehicles ‘generally fitted with off-the-road wheels and [able to] work over soft ground’, whose speed and area of operation are limited in comparison with vehicles designed at the outset to be used on paved, public roads and which are in general fitted with special earth-moving tyres.

35As a general rule, in the light of the inherent characteristics of the dumpers covered by subheading 870410 of the CN, namely off-the-road wheels, special earth-moving tyres and limited speed and area of operation, such vehicles seem to be intended primarily for the transport of materials in quarries mines or on building sites, that is to say, off-highway. Those characteristics distinguish them from other vehicles intended for the transport of goods in so far as, unlike those vehicles, they are primarily intended to be driven on ground other than paved, public roads.

36It follows from the foregoing that, in order to be classifiable under subheading 870410 of the CN, dumpers must have been specially designed for off-highway use for the transport and unloading of materials.

37However, neither the wording of subheading 870410 of the CN nor the explanatory notes to the combined nomenclature and the HS indicate that those dumpers must have been designed in such a way that they can be used exclusively off-highway.

38In contrast to what the Netherlands Government contends, the essential characteristic of the dumpers covered by subheading 870410 of the CN does not lie in the fact that they must be incapable of being driven on the highway, but that they are primarily designed to be capable of being driven on ground which is more or less uneven. The fact that dumpers are designed so as to be also capable, incidentally, of being driven on paved, public roads is therefore not a decisive factor for their classification in the CN.

39It follows from the foregoing that the fact that a truck is designed so as to be capable of being driven not only off-highway but also on paved, public roads cannot in itself suffice to preclude that vehicle from classification as a dumper within the meaning of subheading 870410 of the CN.

40It is for the national authorities to ascertain on a case-by-case basis, under the courts supervision, whether a truck is designed specifically and primarily for off-highway use or whether, on the contrary, it is designed primarily to be used on paved, public roads. Accordingly, it is appropriate to establish on the basis of all the characteristics of the vehicle concerned whether it has the essential characteristics listed in the relevant explanatory notes to the combined nomenclature and to the HS.

41Consequently, the answer to the question referred is that subheading 870410 of the CN must be interpreted as meaning that it covers dumpers within the meaning of that subheading which are specifically and primarily designed for use off paved, public roads. The fact that dumper trucks have distinctive characteristics which enable them to be driven, incidentally, on paved, public roads does not preclude their classification as dumpers within the meaning of that subheading.

Costs

42Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.

Operative part

On those grounds, the Court (Fifth Chamber) hereby rules: Subheading 870410 of the combined nomenclature, in Annex I to Council Regulation (EEC) No 2658/87 of 23 July 1987 on the tariff and statistical nomenclature and on the Common Customs Tariff, as amended by Commission Regulation (EC) No 2261/98 of 26 October 1998, must be interpreted as meaning that it covers dumpers within the meaning of that subheading which are designed specifically and primarily for use off paved, public roads. The fact that dumper trucks have distinctive characteristics which enable them to be driven, incidentally, on paved, public roads does not preclude their classification as dumpers within the meaning of that subheading.