Kubota (UK) Limited and EP Barrus Limited v Commissioners for Her Majesty's Revenue & Customs (C-545/16)

Contents

Judgment of the Court (Sixth Chamber)22 February 2018^note(Reference for a preliminary ruling — Common Customs Tariff — Tariff headings — Motor vehicles for the transport of goods — Subheadings 8704 10 10 and 8704 21 91 — Regulation (EU) 2015/221 — Validity)In Case C—545/16,REQUEST for a preliminary ruling under Article 267 TFEU from the First-tier Tribunal (Tax Chamber) (United Kingdom) made by decision of 26 October 2016, received at the Court on 28 October 2016, in the proceedingsKubota (UK) Ltd,EP Barrus LtdvCommissioners for Her Majesty’s Revenue and Customs,THE COURT (Sixth Chamber),composed of J.-C. Bonichot, acting as President of the Chamber, S. Rodin (Rapporteur) and E. Regan, Judges,Advocate General: N. Wahl,Registrar: L. Hewlett, Principal Administrator,having regard to the written procedure and further to the hearing on 27 September 2017,after considering the observations submitted on behalf of– Kubota (UK) Ltd and EP Barrus Ltd, by V. Sloane, Barrister, and S. Cock– the United Kingdom Government, by C. Crane and M. Fell, acting as Agents,– the European Commission, by A. Caeiros and J. Hradil, acting as Agents,having decided, after hearing the Advocate General, to proceed to judgment without an Opinion,gives the following

Judgment

1This request for a preliminary ruling concerns the interpretation of headings 8704 10 10 and 8704 21 91 of the Combined Nomenclature in annex I to Council Regulation No (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 Implementing Regulation (EU) No 927/2012 of 9 October 2012 (OJ 2012 L 304, p. 1) (‘the NC’), and the validity of Commission Implementing Regulation (EU) 2015/221 of 10 February 2015 concerning the classification of certain goods in the Combined Nomenclature (OJ 2015 L 37, p. 1).

2The request has been made in proceedings between, on the one hand, Kubota (UK) Ltd and EP Barrus Ltd and, on the other hand, the Commissioners for Her Majesty’s Revenue & Customs concerning the tariff classification of certain motor vehicles for the transport of goods imported by those companies into the European Union.

Legal context

European Union law

3Article 2 of Council Regulation (EEC) No 2913/92 of 12 October 1992 establishing the Community Customs Code (OJ 1992 L 302, p. 1), provides:1. Save as otherwise provided, either under international conventions or customary practices of a limited geographic and economic scope or under autonomous Community measures, Community customs rules shall apply uniformly throughout the customs territory of the Community.2. Certain provisions of customs rules may also apply outside the customs territory of the Community within the framework of either rules governing specific fields or international conventions.’

4Article 12(6), first paragraph, of the basic regulation provides:‘The holder of binding tariff information which ceases to be valid pursuant to paragraph 5(a)(ii) or (iii) or (b)(ii) or (iii), may still use that information six months from the date of publication or notification provided that he concluded binding contracts for the purchase or sale of the goods in question on the basis of the binding information before that tariff measure was adopted. However, in the case of products for which an import, export or advance fixing certificate is submitted when customs formalities are carried out, the period of six months is replaced by the period of validity of the certificate.’

5The CN, introduced by Regulation No 2658/87, is based on the Harmonised Commodity Description and Coding System (‘the HS’), which was drawn up by the Customs Cooperation Council, now the World Customs Organisation (WCO), and established by the International Convention on the Harmonised Commodity Description and Coding System, concluded in Brussels on 14 June 1983. That convention, with its amending protocol of 24 June 1986, was approved on behalf of the European Economic Community by Council Decision 87/369/EEC of 7 April 1987 (OJ 1987 L 198, p. 1).

6Part One of the CN contains ‘preliminary provisions’. Under Section I of that part, which sets out general rules, part A, entitled ‘General rules for the interpretation of the [CN]’, provides:‘Classification of goods in the [CN] shall be governed by the following principles....3. When, by application of rule 2(b) or for any other reason, 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. However, when two or more headings each refer to part only of the materials or substances contained in mixed or composite goods or to part only of the items in a set put up for retail sale, those headings are to be regarded as equally specific in relation to those goods, even if one of them gives a more complete or precise description of the goods;... ’

7Heading 8704 of the CN is structured as follows:8704 | Motor vehicles for the transport of goods:8704 10 | – Dumpers designed for off-highway use:8704 10 10 | – – With compression-ignition internal combustion piston engine (diesel or semi-diesel), or with spark-ignition internal combustion piston engine8704 10 90 | – – other| – Other, with compression-ignition internal combustion piston engine (diesel or semi-diesel):8704 21 | – – Of a gross vehicle weight not exceeding 5 tonnes;[...] | [...]| – – – – With engines of a cylinder capacity not exceeding 2500 cm3;8704 21 91 | – – – – – new[...] | [...]

8The annex to Regulation 2015/221, adopted pursuant to Article 9(1)(a) of Regulation No 2658/87, classifies the goods described in column 1 of the table in the annex of that regulation under the corresponding CN code referred to in column 2, for the reasons given in column 3 of that table. That annex is worded as follows:‘Description of the goods | Classification (CN code) | Reasons(1) | (2) | (3)A new, four-wheel drive utility vehicle with a compression-ignition internal combustion piston engine (diesel) of a cylinder capacity of 720 cm3, with a net weight including fluids) of approximately 630 kg, an unbraked towing capacity of 750 kg and with dimensions of approximately 300 x 160 cm.The vehicle has an open cabin with two seats (including the driver) fitted with a full roll-over protection frame, a cargo bed constructed of a strong steel frame with a sturdy flat-bed tipping body, with a manual tipper and of a capacity of 0,4 m3or, approximately, 400 kg. It has a high ground clearance (27 cm) and a wheel base of 198 cm.It is equipped with off-road earth moving tyres, wet-type disc brakes, a coupling device and a front hitch. The vehicle has a limited speed of 25 km/h, and a high brake capacity.The vehicle is designed for off-road use, particularly in very rough terrain. The vehicle is presented to be used for a range of functions, for example, pushing, hauling trailers, moving animals, transporting plants, boxes, water and equipment, carrying munitions and transporting feed for animals. | 8704 21 91 | Classification is determined by general rules 1 and 6 for the interpretation of the Combined Nomenclature and by the wording of CN codes 8704, 8704 21 and 8704 21 91.The vehicle is designed as a multipurpose vehicle that can be used for a range of functions in different environments. It has objective characteristics of motor vehicles for transport of goods of heading 8704. (See also the Harmonised System Classification Opinions 8704 31/3 and 8704 90/1.)The vehicle is not a dumper designed for off-highway use. It is not sturdily built with a tipping or bottom opening body, designed for the transport of excavated or other materials (see also the Harmonised System Explanatory Notes to heading 8704, sixth paragraph, point (1)). Classification under subheading 8704 10 is therefore excluded.

9The explanatory notes to the Combined Nomenclature of the European Union of 6 May 2011 (OJ 2011 C 137, p. 1) (‘the Explanatory Notes to the CN’) provide, as regards code 8704:8704 | Motor vehicles for the transport of goodsThe explanatory note to heading 8703 applies, mutatis mutandis.For the definition of cylinder capacity, see the HS Explanatory Note to subheadings 8407 31, 8407 32, 8407 33 and 8407 34.This heading includes four-wheel drive, articulated chassis, all-terrain vehicles in which the front section houses a diesel engine and a cab fitted with controls. The rear section consists of a two-wheeled chassis, without equipment, but designed to be fitted with a variety of equipment.This heading does not however include such vehicles when fitted with agricultural or other special purpose equipment (heading 8705).8704 10 10and8704 10 90 | Dumpers designed for off-highway use1. | 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. Examples illustrating various types of dumper are given at the end of these notes.2. | These subheadings also cover smaller vehicles of the type used on construction sites for carrying earth, rubble, fresh cement and concrete, etc. These have a fixed or articulated chassis and two- or four-wheel drive, the dumper hopper being located above one axle and the driver’s seat above the other. The driver’s seat is not usually inside a cab.

The product is therefore to be classified under CN code 8704 21 91 as a new motor vehicle for the transport of goods.

The HS explanatory notes

10Under Article 6(1) of the international convention referred to in paragraph 5 above, a committee entitled the ‘Harmonised System Committee’, composed of representatives of each contracting party, was set up under the auspices of the Customs Cooperation Council. One of its tasks, in particular, is to propose amendments to that convention and to prepare explanatory notes (‘HS Explanatory Notes’), classification opinions and other advice on the interpretation of the HS.

11The explanatory notes to the HS are worded as follows as regards subheading 8704 10:‘These dumpers can generally be distinguished from other vehicles for the transport of goods (in particular, tipping lorries (trucks)), by the following characteristics:– the dumper body is made of very strong steel sheets; its front part is extended over the driver’s cab to protect the cab; the whole or part of the floor slopes upwards towards the rear;– in some cases, the driver’s cab is half-width only;– lack of axle suspension;– high braking capacity;– limited speed and area of operation;– special earth-moving tyres;– because of their sturdy construction, the tare weight/payload ration does not exceed 1:1.6;– the body may be heated by exhaust gases to prevent materials from sticking or freezing.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. These have some of the characteristics mentioned above, but do not have a cab or an extended protective front part of the body.’

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

12Following a decision of the Upper Tribunal (Tax and Chancery Chamber) (United Kingdom), The Commissioners for Her Majesty’s Revenue and Customs, on the request of the appellants in the main proceedings, issued to them binding tariff information (‘BTIs’) classifying certain motor vehicles for the transport of goods that they imported as being dumpers falling under the subheading 8704 10.

13In 2014, the Customs Code Committee carried out an examination of the classification of certain motor vehicles, which was motivated, according to the referring court, by the decision of the Upper Tribunal (Tax and Chancery Chamber). Following that examination, the European Commission adopted Regulation 2015/221, which classifies vehicles of a type similar to those at issue in the main proceedings under subheading 8704 21 91. That committee implemented that regulation and the Commissioners of Her Majesty’s Revenue and Customs informed the appellants in the main proceedings of the revocation of the BTIs.

14The appellants in the main proceedings appealed against that revocation to the referring court, relying on two grounds. By the first, they submitted that Regulation 2015/221 is inapplicable to the vehicles that they import and, by the second, that that regulation is invalid to the extent that it classifies the vehicle in question in its annex under subheading 8704 21 91.

15After finding that Regulation 2015/221 applied to the vehicles at issue in the main proceedings, the referring court found that the arguments advanced by the appellants in the main proceedings challenging the validity of that regulation were not unfounded.

16In those circumstances, the First-tier Tribunal (Tax Chamber) (United Kingdom) decided to stay the proceedings and to refer the following questions to the Court for a preliminary ruling:(1) Is [Regulation 2015/221] concerning the classification of certain goods in the Combined Nomenclature invalid in so far as it classifies the vehicles specified in the Regulation under CN Code 8704 21 91, rather than CN Code 8704 10?(2) In particular, is [Regulation 2015/221] concerning the classification of certain goods in the Combined Nomenclature invalid in so far as it: unduly restricts the scope of subheading 8704 10; takes into account impermissible factors; is internally inconsistent; does not take proper account of the Explanatory Notes, CN headings and GIRs; and/or fails to take account of the relevant requirements identified by case-law of the Court of Justice of the European Union in relation to CN heading 8704 10?’

Consideration of the questions referred

Admissibility

17As a preliminary matter, the Commission queries the admissibility of the questions referred since the issue of the validity of Regulation 2015/221 is merely hypothetical. The reason why the BTIs at issue in the main proceedings were revoked by the Commissioners of Her Majesty’s Revenue and Customs are not clear, because the appellants in the main proceedings were able, pursuant to the combined provisions of Article 2 of that regulation and Article 12(6) of Regulation No 2913/92, to continue to rely on them until 5 June 2015.

18In that regard, it is necessary to state at the outset that, in accordance with settled case-law, in proceedings under Article 267 TFEU, it is solely for the national court before which the dispute has been brought, and which must assume responsibility for the subsequent judicial decision, to determine, in the light of the particular circumstances of the case, both the need for a preliminary ruling and the relevance of the questions which it submits to the Court. Consequently, where questions submitted concern the interpretation of EU law, the Court is bound, in principle, to give a ruling (judgment of 26 January 2017, Banco Primus, C‑421/14, EU:C:2017:60, paragraph 29 and the case-law cited).

19In the context of the instrument of cooperation between the Court of Justice and national courts that is established by Article 267 TFEU, questions concerning EU law enjoy a presumption of relevance. The Court may refuse to give a ruling on a question referred by a national court for a preliminary ruling, under Article 267 TFEU, only where, for instance, the requirements concerning the content of a request for a preliminary ruling, set out in Article 94 of the Rules of Procedure of the Court of Justice, are not satisfied or where it is quite obvious that the interpretation of a provision of EU law, or the assessment of its validity, which is sought by the national court, bears no relation to the actual facts of the main action or to its purpose or where the problem is hypothetical (judgment of 28 March 2017, Rosneft, C‑72/15, EU:C:2017:236, paragraph 50 and the case-law cited).

20In the present case, while the case-file available to the Court does not state that the object of the dispute in the main proceedings concerns the interpretation or applicability of Article 2 of Regulation 2015/221, it remains the case that the appellants in the main proceedings contest, by the second ground of their appeal, the validity of that regulation insofar as it classifies the goods that it covers under the subheading 8704 21 91 of the CN. The referring court, which considers that the vehicles at issue in the main proceedings fall within the scope of the regulation, takes the view that a reply from the Court as regards its validity is necessary in order to determine the outcome of the dispute.

21Accordingly, since the issue raised by the questions referred is not hypothetical, those questions are admissible.

Substance

22By its first and second questions, which it is appropriate to examine together, the referring court queries, in essence, the validity of Regulation 2015/221.

23It must be recalled, as a preliminary point, that according to the Court’s settled case-law, the Council of the European Union has conferred upon the Commission, acting in cooperation with the customs experts of the Member States, broad discretion to define the subject matter of tariff headings falling to be considered for the classification of particular goods. However, the Commission’s power to adopt the measures referred to in Article 9 of Regulation No 2658/87 does not authorise it to alter the subject-matter and the scope of the tariff headings (judgment of 4 March 2004, Krings, C‑130/02, EU:C:2004:122, paragraph 26, and the case-law cited).

24In the present case, it is necessary to examine whether the Commission, in having proceeded to make the tariff classification of the vehicle designated in column 1 of the table in the annex to Regulation 2015/221 under subheading 8704 21 91 and not under subheading 8704 10, altered the content of those two tariff subheadings.

25In that regard, the settled case-law of the Court states 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 sought in their objective characteristics and properties as defined in the wording of the relevant heading of the CN and in the section or chapter notes (judgments of 27 April 2006, Kawasaki Motors Europe, C‑15/05, EU:C:2006:259, paragraph 38; 29 October 2009, Dinter and Europol Frost-Food, C‑522/07 and C‑65/08, EU:C:2009:663, paragraph 29, and of 22 December 2010, Premis Medical, C‑273/09, EU:C:2010:809, paragraph 42).

26Furthermore, 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 product’s objective characteristics and properties (judgment of 22 March 2017, GROFA and Others, C‑435/15 and C‑666/15, EU:C:2017:232, paragraph 40).

27In the present case, as is clear from the wording in column 1 of the table in the annex to Regulation 2015/221 on the subheading 8704 21 91, the vehicle covered by it is a new, four-wheel drive utility vehicle, weighing approximately 630 kg, with an unbraked towing capacity of 750 kg and measuring approximately 300 x 160 cm. The vehicle has an open cabin with two seats fitted with a full roll-over protection frame, a cargo bed constructed of a strong steel frame with a sturdy flat-bed tipping body, and a manual tipping mechanism. The vehicle is equipped with off-road earth moving tyres, a coupling device and a front hitch and has a limited speed of 25 km/h, and a high brake capacity. The vehicle is designed for off-road use, particularly in very rough terrain. The vehicle is presented to be used for a range of functions, for example, pushing, hauling trailers, moving animals, transporting plants, boxes, water and equipment, carrying munitions and transporting feed for animals.

28It must be recalled that the goods under subheading 8704 10 are, in accordance with the wording of that subheading, ‘dumpers designed for off-highway use’. Therefore, the wording requires that a vehicle meets two conditions to be classifiable thereunder, namely that it is a ‘dumper’ and is designed for use off-highway (judgment of 16 September 2004, DFDS, C‑396/02, EU:C:2004:536, paragraph 31).

29As the Commission itself confirms, the vehicle covered by Regulation 2015/221 complies with the condition as to off-highway use, since it is equipped with off-road earth moving tyres and its speed is limited to 25 km/h.

30It remains to be determined whether such a vehicle also satisfies the condition as to being a ‘dumper’.

31In that regard, it must be recalled that the subheading 8704 10 of the CN is a specific heading for vehicles that are specially designed for off-highway use for the transport and unloading of materials (see, to that effect, the judgment of 11 January 2007, B.A.S. Trucks, C‑400/05, EU:C:2007:22, paragraph 36) and an essential characteristic of dumpers is to have a tipping hopper or an opening bottom for the transport of those materials (see, to that effect, the judgment of 16 September 2004, DFDS, C‑396/02, EU:C:2004:536, paragraph 32).

32Furthermore, according to the explanatory notes to the NC, the subheadings 8704 10 10 to 8704 10 90 cover, in particular, vehicles specially designed to transport sand, gravel, earth, stones, namely loose materials, and intended for use in quarries, mines or on building sites, at roadworks, airports and ports.

33It is necessary therefore to examine whether the vehicle covered by Regulation 2015/221 is specially designed for such a particular use.

34In that regard, the wording of that regulation itself states that such a vehicle is equipped with an open cabin and a tipping body with a capacity of 0.4 m³ or, approximately, 400 kg.

35The vehicle covered by Regulation 2015/221, owing to the fact that it is not very sturdy, has limited cargo capacity, its open cabin has no protection for the driver against loose materials and it is presented to be used for a range of transportation functions for various items such as plants or animals, materials, boxes or munitions.

36In addition, that vehicle, given its objective technical characteristics and properties cannot be regarded as the same as the vehicles under subheading 8704 10 since it does not have the necessary sturdiness for use on construction sites which is inherent in dumpers (see, to that effect, the judgment of 11 January 2007, B.A.S. Trucks, C‑400/05, EU:C:2007:22, paragraph 35).

37Consequently, the fact that such a vehicle is equipped with a tipper enabling it, additionally, to transport small quantities of loose material, does not call into question the well-foundedness of its classification under subheading 8704 21 91.

38Finally, as recalled in paragraph 23 above, the Commission has a broad discretion to define the subject matter of tariff headings.

39Since the analysis of the case-file submitted to the Court has not disclosed any ground of invalidity, Regulation 2015/221 correctly classified the vehicle that it describes under the subheading 8704 21 91 and not under subheading 8704 10.

40Consequently, the reply to the questions referred must therefore be that consideration of the questions referred has disclosed no factor capable of affecting the validity of the regulation.

Costs

41Since 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: The examination of the questions referred has disclosed no factor capable of affecting the validity of Commission Implementing Regulation (EU) 2015/221 of 10 February 2015 concerning the classification of certain goods in theCombined Nomenclature (OJ 2015 L 37, p. 1).

Delivered in open court in Luxembourg on 22 February 2018.