Contents
Judgment of the Court (Sixth Chamber)6 February 2014note(Common Customs Tariff — Tariff classification — Combined Nomenclature — Chapter 64 — Import of components required for the manufacture of sports footwear — Heading 6404 — Footwear with outer soles of rubber, plastics, leather or composition leather and uppers of textile materials — Heading 6406 — Parts of footwear — General Rule 2(a) for the Interpretation of the Combined Nomenclature — Incomplete or unfinished article having the essential character of the complete or finished article — Article presented unassembled or disassembled — Explanatory Note for the interpretation of the Harmonised System — Assembly operations and not working operations for completion into the finished state)In Case C‑2/13,REQUEST for a preliminary ruling under Article 267 TFEU from the Cour de cassation (France), made by decision of 4 December 2012, received at the Court on 2 January 2013, in the proceedingsDirecteur général des douanes et droits indirects,Chef de l’agence de la direction nationale du renseignement et des enquêtes douanièresvHumeau Beaupréau SAS,THE COURT (Sixth Chamber),composed of A. Borg Barthet (Rapporteur), President of the Chamber, E. Levits and M. Berger, Judges,Advocate General: N. Wahl,Registrar: A. Calot Escobar,having regard to the written procedure,after considering the observations submitted on behalf of:— Humeau Beaupréau SAS, by F. Puel, avocat,— the French Government, by D. Colas and C. Candat, acting as Agents,— the European Commission, by L. Keppenne and B.-R. Killmann, acting as Agents,having decided, after hearing the Advocate General, to proceed to judgment without an Opinion,gives the following
Judgment
1This reference for a preliminary ruling concerns the interpretation of General Rule 2(a) for the interpretation of the Combined Nomenclature set out 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), in the version in force at the material time (‘the CN’).
2The reference has been made in proceedings between the Directeur général des douanes et droits indirects (the Director General of Customs and Excise) and the Chef de l’agence de la direction nationale du renseignement et des enquêtes douanière (the Head of the Agency of the National Customs Intelligence and Investigations Directorate) and Humeau Beaupréau SAS (‘Humeau’), an undertaking governed by French law, concerning the classification in the CN of the components required for the manufacture of sports footwear and imported, between May 1998 and November 2000, from China.
Legal context
European Union law
3The CN, established by Regulation (EEC) No 2658/87, is based on the Harmonised Commodity Description and Coding System (‘the HS’) drawn up by the Customs Cooperation Council, now the World Customs Organisation (WCO), adopted by the International Convention on the Harmonised Commodity Description and Coding System, concluded in Brussels on 14 June 1983 and approved on behalf of the European Economic Community by Council Decision 87/369/EEC of 7 April 1987 (OJ 1987 L 198, p. 1). The CN reproduces the headings and subheadings of the HS to six digits, with only the seventh and eighth figures creating further subheadings which are specific to it.
4Part One of the CN consists of a number of preliminary provisions. In Section I of Part One, which contains general rules, subsection A, entitled ‘General rules for the interpretation of the [CN]’, provides:‘Classification of goods in the [CN] 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.2.(a) Any reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as presented, the incomplete or unfinished article has the essential character of the complete or finished article. It shall also be taken to include a reference to that article complete or finished (or falling to be classified as complete or finished by virtue of this rule), presented unassembled or disassembled.…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 …’
5Part Two of the CN includes Section XII, which in turn includes, in particular, Chapter 64, entitled ‘Footwear, gaiters and the like; parts of such articles’.
6Heading 6404 of the CN, entitled ‘Footwear with outer soles of rubber, plastics, leather or composition leather and uppers of textile materials’, includes sub-heading 6404 11 00, worded as follows:‘Sports footwear; tennis shoes, basketball shoes, gym shoes, training shoes and the like.’
7Heading 6406 of the CN is entitled ‘Parts of footwear (including uppers whether or not attached to soles other than outer soles); removable insoles, heel cushions and similar articles; gaiters, leggings and similar articles, and parts thereof’.
8Sub-heading 6406 10 covers ‘Uppers and parts thereof, other than stiffeners’.
9Sub-heading 6406 20 corresponds to ‘Outer soles and heels, of rubber or plastics’.
10Article 249 of Council Regulation (EEC) No 2913/92 of 12 October 1992 establishing the Community Customs Code (OJ 1992 L 302, p. 1), as amended by Regulation (EC) No 2700/2000 of the European Parliament and of the Council of 16 November 2000 (OJ 2000 L 311, p. 17), (‘the Customs Code’) provides:‘The [Customs Code] Committee may examine any question concerning customs legislation which is raised by its chairman, either on his own initiative or at the request of a Member State’s representative.’
The Explanatory Notes to the HS
11The WCO approves, under the conditions laid down in Article 8 of the International Convention on the Harmonised Commodity Description and Coding System, the Explanatory Notes and Classification Opinions adopted by the HS Committee.
12The Explanatory Note relating to General Rule 2(a) for the interpretation of the HS (‘the HSEN to General Rule 2(a)’), which rule is identical to General Rule 2(a) for the interpretation of the CN, reads as follows:(I) The first part of Rule 2(a) extends the scope of any heading which refers to a particular article to cover not only the complete article but also that article incomplete or unfinished, provided that, as presented, it has the essential character of the complete or finished article.…Articles presented unassembled or disassembled(V) The second part of Rule 2(a) provides that complete or finished articles presented unassembled or disassembled are to be classified in the same heading as the assembled article. When goods are so presented, it is usually for reasons such as requirements or convenience of packing, handling or transport.(VI) This Rule also applies to incomplete or unfinished articles presented unassembled or disassembled provided that they are to be treated as complete or finished articles by virtue of the first part of this Rule.(VII) For the purposes of this Rule, “articles presented unassembled or disassembled” means articles the components of which are to be assembled either by means of fixing devices (screws, nuts, bolts, etc.) or by riveting or welding, for example, provided only assembly operations are involved.No account is to be taken in that regard of the complexity of the assembly method. However, the components shall not be subjected to any further working operation for completion into the finished state.Unassembled components of an article which are in excess of the number required for that article when complete are to be classified separately.(VIII) Cases covered by this Rule are cited in the General Explanatory Notes to Sections or Chapters (e.g., Section XVI, and Chapters 44, 86, 87 and 89).(IX) In view of the scope of the headings of Sections I to VI, this part of the Rule does not normally apply to goods of these Sections.’
French law
13Under Article 443(1) of the French Code des douanes (Customs Code), as amended by loi no 77-1453 du 29 décembre 1977, accordant des garanties de procédure aux contribuables en matière fiscale et douanière (Law No 77-1453 of 29 December 1977 granting procedural guarantees to taxable persons in tax and customs matters; JORF, 30 December 1977, p. 6279; ‘the Customs Code’):‘The Commission de conciliation et d’expertise douanière (Customs Arbitration and Advisory Commission) shall consist of:— a judge, who shall be Chairman;— two assessors appointed for their technical ability;— a member of the administrative court.In the event of a tie, the vote of the Chairman shall be decisive.’
14Article 450 of the Customs Code, as amended by loi no 96-314, du 12 avril 1996, portant diverses dispositions d’ordre économique et financier (Law No 96-314 of 12 April 1996 laying down various economic and financial provisions; JORF du 13 avril 1996, p. 5707), provides:1.Where there are challenges as to the type, origin or value made after customs clearance of goods on inspections or inquiries carried out in the circumstances provided for in, particularly, Articles 63b, 65 and 334 above:(a) either party may, within two months of the notification of the administrative document containing the finding of the infringement, consult the Commission de conciliation et d’expertise douanière in order to obtain an opinion ……(d) in the event of subsequent proceedings before the courts, the opinions issued by the Commission de conciliation et expertise douanière following the consultation referred to in (a) and (b) above shall be added to the court file by the Chairman of that Commission.2. In every case where proceedings are brought before the courts, whether or not there has been prior consultation of the Commission de conciliation et d’expertise douanière, the preparation of the expert legal report, if ordered by the court having jurisdiction to rule on customs disputes, shall be carried out by that Commission.’
The dispute in the main proceedings and the question referred for a preliminary ruling
15Humeau’s business activity is the manufacture of footwear. Between May 1998 and November 2000, it imported components required for the manufacture of sports footwear from China.
16As is apparent from the file submitted to the Court of Justice, the following components were imported in identical quantities:— uppers, declared to customs as coming under sub-heading 64 06 10 90 of the CN;— outer soles, declared to customs as coming under sub-headings 6406 20 10 and 6406 20 90 of the CN;— inner soles, declared to customs as coming under sub-heading 6406 99 80 of the CN, and— laces, declared to customs as coming under sub-heading 6307 90 99 of the CN.
17The soles, outer and inner, and the uppers were subject to import duties of 3.3% in 1998 then of 3% from 1999, while the laces were taxed at 6.3%.
18Following a customs control in Humeau’s premises, the French customs authorities took the view, applying General Rule 2(a) for the interpretation of the CN, that those goods had to be classified under tariff heading 6404 11 00 as footwear presented unassembled. Those authorities thus took the view that, after import, those goods did not need working but merely assembly, so that the relevant customs duty was that applicable to the finished product for which those components were intended, namely 17.6% in 1998 and 17% from 1999. In consequence, on 5 June 2001, they issued an official statement of infringement.
19On 24 July 2001, Humeau brought the matter before the Commission de conciliation et d’expertise douanière. By opinion of 2 July 2002, that Commission stated that the components imported by Humeau were to be classified as parts of footwear. It took the view, ‘after examination of the samples and presentation of the manufacturing process, the Commission takes the view that two of the four components imported, the upper and the outer sole, have undergone working operations, in this case shaping of the counter with humidification as regards the upper and roughing of both the upper and the sole, “for completion into the finished state”, which, by application of the [HSEN to General Rule 2(a)], prevents the article at issue “the different components of which are – as in the present case – to be assembled” from being regarded as presented unassembled or disassembled within the meaning of that rule’.
20On 8 July 2004, the customs authorities nevertheless took the view that the goods in question in the main proceedings came under tariff heading 6404 11 00 and, consequently, issued a recovery notice for the sum of EUR 349 517.
21By letter of 30 July 2004, Humeau brought an administrative appeal before those authorities, by which it challenged the merits of that opinion.
22In parallel, those authorities asked the Customs Code Committee for a ruling on the question of the tariff classification of the goods at issue in the main proceedings. Following the meeting of 6 and 7 March 2008, that committee took the view that ‘the assembly of the non-assembled components is carried out by assembly operations only (see the first paragraph and the first sentence of the second paragraph of (VII) of the HSEN to General Rule 2(a)) and that the unfinished article has the essential character of the finished article within the meaning of the first part of Rule 2(a) for the interpretation of the CN’.
23On 11 June 2008, the customs authorities dismissed the administrative appeal.
24On 29 July 2008, Humeau then brought an action before the Tribunal d’instance du 11ème arrondissement de Paris (District Court of the 11th District of Paris), seeking the annulment of that notice of recovery. By a judgment delivered on 16 March 2010, that court gave judgment in favour of Humeau, ruling in particular that ‘the finding of the infringement was based on an incorrect assessment of the operations required to go from the state of separate parts to the finished product’.
25Ruling on the appeal brought by the customs authorities, the Cour d’appel de Paris (Court of Appeal, Paris) also held that the description by the customs administration of the operations required to go from the state of separate parts to the finished product, according to which, ‘technically, gluing suffices to put the footwear together’, did not reflect reality.
26Taking the view that some parts had to undergo processing, such as the roughing of the sole and of the lower part of the upper, as well as finishing operations on the edge of the soles, and also that certain operations, such as the setting up on and stretching over a last and the shaping of the counter, did not fall within the scope of mere assembly, even complex assembly, the Cour d’appel de Paris inferred from this that the customs infringement imputed to Humeau is based on an incorrect assessment of the operations required to complete the finished product and, in consequence, annulled the recovery notice dated 8 July 2004.
27The customs authorities appealed in cassation before the referring court, submitting in particular that, by holding that the roughing of that upper and of the imported outer sole and the shaping of the counter inserted into the imported upper constituted working operations for completion of the imported uppers and outer soles into the finished state, when these were only assembly operations of preformed components for the purposes of constructing footwear, the Cour d’appel de Paris infringed General Rule 2(a) for the interpretation of the HS and point VII of the HSEN to that rule.
28Accordingly, the Cour de cassation (Court of Cassation) decided to stay the proceedings and to refer the following question to the Court for a preliminary ruling:‘In the process of manufacturing footwear, must the operations of shaping the counter of an upper and of roughing of that upper and an outer sole, prior to their assembly, be classified as “assembly operations” or “working operations for completion into the finished state”, within the meaning of point VII of the [HSEN to General Rule 2(a)]?’
Consideration of the question referred
29By its question, the referring court asks whether, in the process of manufacture of a shoe, the operations of shaping the counter of an upper and of roughing that upper and an outer sole, prior to their assembly, are to be classified as ‘assembly operations’ or ‘working operations for completion into the finished state’, within the meaning of point VII of the HSEN to General Rule 2(a).
30It must first of all be borne in mind that, under the first sentence of Article 2(a) of the General Rules for the Interpretation of the CN, any reference to an article in a particular heading covers that article incomplete or unfinished, provided that, as presented, it has the essential character of the complete or finished article. Under the second sentence of Article 2(a), complete or finished articles, or those to be treated as such by virtue of the first sentence, presented unassembled or disassembled, are also to be classified in that heading.
31Point VII of the HSEN to General Rule 2(a) states, in that regard, that articles presented unassembled or disassembled are articles the components of which are to be assembled, provided, however, only assembly operations are involved and that the components are not subjected to any working operation for completion into the finished state.
32Although the Explanatory Notes drawn up by the WCO are an important means of ensuring the uniform application of the Common Customs Tariff and, as such, may be regarded as useful aids to its interpretation (see, in particular, Case C-568/11 Agroferm [2013] ECR, paragraph 28 and the case-law cited), they do not have legally binding force (see, in particular, Case 798/79 Chem-Tec [1980] ECR 2639, paragraph 11; Case C-35/93 Develop Dr. Eisbein [1994] ECR I-2655, paragraph 21; and Case C‑558/11 Kurcums Metal [2012] ECR, paragraph 30).
33Accordingly, the question referred must be reformulated so as to mean that the referring court thereby asks, in essence, whether General Rule 2(a) for the interpretation of the CN is to be interpreted as meaning that an upper, an outer sole and an inner sole, as an article presented unassembled having the essential character of footwear, come under heading 6404 of the CN where, following their import, the upper and the outer sole must be roughed prior to their assembly and a counter, inserted into the upper, must be shaped by humidification.
34The character of a shoe lies in essence in the combinations of an upper and an outer sole. Those components represent the greater part of the complete article for which they are intended and give that article the appearance of a shoe. In addition, they surround and protect the wearer’s foot, thus enabling the shoe to fulfil its primary function.
35It is also significant in that regard that, in order to determine the tariff heading under which footwear is to be classified, its uppers and outer soles must be examined, in accordance with the terms of headings 6401 to 6405 of the CN.
36Finally, according to the wording of heading 6406 of the CN, uppers constitute ‘parts of footwear’, even when they are attached to soles other than outer soles. It follows therefore, a contrario, that an article made up of a shoe upper attached to an outer sole cannot be classified under heading 6406 of the CN and, accordingly, comes under one of headings 6401 to 6405 of the CN which correspond to completed footwear.
37Accordingly, an article consisting of an upper, an outer sole and an inner sole must, pursuant to the first sentence of General Rule 2(a) of the CN, be regarded as having the essential character of a shoe.
38Next, with regard to the point, which is decisive for the referring court, whether the goods imported by Humeau must be regarded as being ‘unassembled’ footwear within the meaning of that rule, it must be noted that the CN does not contain any definition of the concept of an ‘unassembled’ article within the meaning of General Rule 2(a) to that CN.
39However, the Explanatory Notes to the HS which, in accordance with the case-law cited in paragraph 32 of this judgment, are an important means of ensuring the uniform application of the Common Customs Tariff and, as such, may be regarded as useful aids to its interpretation, state, in point VII of the HSEN to General Rule 2(a), that articles presented unassembled or disassembled means articles the components of which are to be assembled … by riveting or welding, for example, provided only assembly operations are involved. In addition, the components are not to be subjected to any further working operation for completion into the finished state.
40First of all, as regard the roughing of the upper and the outer sole, it is apparent from the written observations lodged by the French Republic and the European Commission that, in the process of manufacture of a shoe, such an operation consists in abrading that part of the upper and that part of the outer sole which are intended to be in contact to be glued.
41Accordingly, if, as the French Republic and the Commission argue, that operation is intended solely to improve the adhesion between the upper and the outer sole, which it is for the referring court to ascertain, it must be regarded as a stage in the gluing process and, as such, cannot be regarded as a ‘working operation for completion into the finished state’ of those components within the meaning of point VII of the HSEN to General Rule 2(a).
42Next, with regard the shaping by humidification of the counter, it must be noted at the outset that, as is apparent from the file, unlike the uppers and the inner and outer soles, the counters were not imported but were purchased from within the European Union.
43It follows from points VI and VII of the HSEN to General Rule 2(a) that, in the case of an incomplete article presented unassembled, the requirement that the assembly of the different components must involve only assembly operations with no working required in order to complete them into the finished state applies to the components which have been presented to the customs authorities for customs clearance.
44However, it is not important that components which, like the counter at issue in the main proceedings, were purchased within the European Union are worked before being assembled with the imported components.
45If the opposite were true, the tariff classification of the imported components would depend on a fact which not intrinsic to those goods, since the customs authorities are not in a position to ascertain whether components which were not presented to customs have to be worked or not before being capable of assembly with the imported components, which would undermine the objective of ease of verification by the customs and legal certainty which must govern that classification.
46It follows that, in the context of the main proceedings, the shaping by humidification of the counter, whatever its classification in the light of point VII of the HSEN to General Rule 2(a), has no bearing on the application of General Rule 2(a) for the interpretation of the CN.
47However, it is necessary to examine, finally, whether the addition of the counter means that there is some working operation as regards the imported components.
48In that regard, it does not appear, subject to verification by the referring court, that the operation of inserting a counter into the upper of the shoe means more than the insertion and fixing of that component between the external part and the lining of the upper of the shoe.
49If that is actually the case, that stage is an assembly operation and, as such, cannot be regarded as a working operation for completion into the finished state within the meaning of point VII of the HSEN to General Rule 2(a).
50In that regard, the Customs Code Committee, following the meeting on 6 and 7 March 2008, took the view, in respect of the goods at issue in the main proceedings, that ‘the assembly of the non-assembled components is carried out by assembly operations only’.
51The conclusions of the Customs Code Committee, although they do not have legally binding force, they constitute an important means of ensuring the uniform application of the Customs Code by the customs authorities of the Member States and as such may be considered as a valid aid to the interpretation of the Code (see, inter alia, Case C-165/07 Ecco Sko [2008] ECR I-4037, paragraph 47).
52Having regard to all the foregoing considerations, the answer to the question referred is that General Rule 2(a) for the interpretation of the CN must be interpreted as meaning that an upper, an outer sole and an inner sole, as an article presented unassembled having the essential character of footwear, come under heading 6404 of the CN where, following their import, a counter must be inserted into the upper, and the upper and the outer sole must be roughed for the purpose of their assembly.
Costs
53Since 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 (Sixth Chamber) hereby rules: General Rule 2(a) for the interpretation of the Combined Nomenclature set out 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, in the version in force at the material time, must be interpreted as meaning that an upper, an outer sole and an inner sole, as an article presented unassembled having the essential character of footwear, come under heading 6404 of the combined nomenclature where, following their import, a counter must be inserted into the upper and the outer sole and the upper must be roughed for the purpose of their assembly.
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