KORADO, a.s. v Generální ředitelství cel (C-306/18)

Contents

Judgment of the Court (Eighth Chamber)15 May 2019^note(Reference for a preliminary ruling — Common Customs Tariff — Tariff classification — Combined Nomenclature — Welded steel parts — Radiators for central heating, not electrically heated — Headings 7307 and 7322 — Concepts of radiator parts and tube or pipe fittings — Implementing Regulation (EU) 2015/23 — Validity)In Case C‑306/18,REQUEST for a preliminary ruling under Article 267 TFEU from the Krajský soud v Ostravě — pobočka v Olomouci (Ostrava Regional Court, sitting in Olomouc, Czech Republic), made by decision of 29 March 2018, received at the Court on 7 May 2018, in the proceedingsKORADO a.s.vGenerální ředitelství cel,THE COURT (Eighth Chamber),composed of F. Biltgen (Rapporteur), President of the Chamber, C.G. Fernlund and L.S. Rossi, Judges,Advocate General: Y. Bot,Registrar: M. Aleksejev, Head of Unit,having regard to the written procedure and further to the hearing on 28 February 2019,after considering the observations submitted on behalf of– KORADO a.s., by P. Mrázek and V. Beringerová, advokáti,– the Czech Government, by M. Smolek, J. Vláčil and O. Serdula, 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 7307 and 7322 of the Combined Nomenclature (‘CN’) 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 Implementing Regulation (EU) No 1101/2014 of 16 October 2014 (OJ 2014 L 312, p. 1), and the validity of Commission Implementing Regulation (EU) 2015/23 of 5 January 2015 concerning the classification of certain goods in the combined nomenclature (OJ 2015 L 4, p. 15).

2The request was made in the context of a dispute between KORADO a.s. (‘Korado’) and the Generální ředitelství cel (General Customs Directorate, Czech Republic) concerning the classification of certain goods in the CN.

Legal context

The HS

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

4The Customs Cooperation Council, now the World Customs Organisation (WCO), set up by the International Convention establishing that council, concluded at Brussels on 15 December 1950, is to approve, under the conditions laid down in Article 8 of the HS Convention, referred to in the preceding paragraph, the Explanatory Notes and the Classification Opinions adopted by the HS Committee.

5Under Article 3(1)(a) of that Convention on the HS, each Contracting Party undertakes to ensure that its customs tariff and statistical nomenclatures are to be in conformity with the HS, to use all the headings and subheadings of the HS without addition or modification, together with their related numerical codes, and to follow the numerical sequence of the HS. The same provision also provides that each contracting party must apply the general rules for the interpretation of the HS and all the section, chapter and subheading notes of the HS, and must not modify the scope of the sections, chapters, headings or subheadings.

6The HS explanatory note relating to Section XV, entitled ‘Parts of Articles’, reads as follows:‘... parts of general use (as defined in Note 2 to this Section) presented separately are not considered as parts of articles, but are classified in the headings of this Section appropriate to them. This would apply, for example, in the case of bolts specialised for central heating radiators or springs specialised for motor cars. The bolts would be classified in heading 73.18 (as bolts) and not in heading 73.22 (as parts of central heating radiators). The springs would be classified in heading 73.20 (as springs) and not in heading 87.08 (as parts of motor vehicles)’.

7The explanatory note relating to heading 7307 of the HS states:‘…This heading covers fittings of iron or steel, mainly used for connecting the bores of two tubes together, or for connecting a tube to some other apparatus, or for closing the tube aperture. This heading does not however cover articles used for installing pipes and tubes but which do not form an integral part of the bore (e.g., hangers, stays and similar supports which merely fix or support the tubes and pipes on walls, clamping or tightening bands or collars (hose clips) used for clamping flexible tubing or hose to rigid piping, taps, connecting pieces, etc.) (heading 73.25 or 73.26).…This heading therefore includes flat flanges and flanges with forged collars, elbows and bends and return bends, reducers, tees, crosses, caps and plugs, lap joint stub-ends, fittings for tubular railings and structural elements, off sets, multi-branch pieces, couplings or sleeves, clean out traps, nipples, unions, clamps and collars.’

8The explanatory note relating to heading 7322 of the HS states, inter alia:‘…This heading includes:…(2) Identifiable “sections” and other parts of radiators.The following are not regarded as parts:(a) Pipes and fittings to connect up central heating boilers and radiators (headings 7303 to 7307).…’

The CN

9The customs classification for goods imported into the European Union is governed by the CN, which is based on the HS. The version in force at the material time is that resulting from Regulation No 2658/87, as amended by Implementing Regulation No 1101/2014.

10Part One of the CN contains a series of preliminary provisions. In that part, under Section I of the CN, setting out general rules, Section A lays down general rules for the interpretation of the CN in accordance with which the classification of goods in the CN is to be governed. It is provided, inter alia, that, for legal purposes, classification is to be determined according to the terms of the headings and any relative section or chapter notes, the titles of sections, chapters and sub-chapters being provided for ease of reference only.

11Part Two of the CN contains Section XV, concerning ‘Base metals and articles of base metal’.

12That section, comprising chapters 72 to 83, contains, inter alia, chapter 73, which is entitled ‘Articles of iron or steel’.

13Explanatory note 2 to Section XV of the CN states:‘Throughout the nomenclature, the expression “parts of general use” means:(a) articles of heading 7307, 7312, 7315, 7317 or 7318 and similar articles of other base metal;…In Chapters 73 to 76 and 78 to 82 (but not in heading 7315) references to parts of goods do not include references to parts of general use as defined above.…’

14CN heading 7307 is worded as follows:‘Tube or pipe fittings (for example, couplings, elbows, sleeves), of iron or steel:…730793 – – Butt welding fittings:– with greatest external diameter not exceeding 609.6 mm:…73079319 – – – – Other’…’

15CN heading 7322 is worded as follows:‘Radiators for central heating, not electrically heated, and parts thereof, of iron or steel; air heaters and hot-air distributors (including distributors which can also distribute fresh or conditioned air), not electrically heated, incorporating a motor-driven fan or blower, and parts thereof, of iron or steel:– Radiators and parts thereof:…73221900 – – Other…

Implementing Regulation 2015/23

16In order to ensure uniform application of the CN, the European Commission adopted Implementing Regulation 2015/23 which, in accordance with Article 3, entered into force on 28 January 2015.

17Recitals 1 to 5 of Implementing Regulation 2015/23 state as follows:(1) In order to ensure uniform application of the [CN] annexed to Regulation (EEC) No 2658/87, it is necessary to adopt measures concerning the classification of the goods referred to in the Annex to this Regulation.(2) Regulation (EEC) No 2658/87 has laid down the general rules for the interpretation of the [CN]. Those rules apply also to any other nomenclature which is wholly or partly based on it or which adds any additional subdivision to it and which is established by specific provisions of the Union, with a view to the application of tariff and other measures relating to trade in goods.(3) Pursuant to those general rules, the goods described in column (1) of the table set out in the Annex should be classified under the CN code indicated in column (2), by virtue of the reasons set out in column (3) of that table.(4) It is appropriate to provide that binding tariff information issued in respect of the goods concerned by this Regulation which does not conform to this Regulation may, for a certain period, continue to be invoked by the holder in accordance with Article 12(6) of Council Regulation (EEC) No 2913/92 [of 12 October 1992 establishing the Community Customs Code (OJ 1992 L 302, p. 1)]. That period should be set at three months.(5) The measures provided for in this Regulation are in accordance with the opinion of the Customs Code Committee.’

18Article 1 of Implementing Regulation 2015/23 provides:‘The goods described in column (1) of the table set out in the Annex shall be classified within the [CN] under the CN code indicated in column (2) of that table.’

19Article 2 of that Implementing Regulation provides that:‘Binding tariff information which does not conform to this Regulation may continue to be invoked in accordance with Article 12(6) of Regulation (EEC) No 2913/92 for a period of three months from the date of entry into force of this Regulation.’

20The Annex to Implementing Regulation 2015/23 is worded as follows:‘Description of the goods | Classification(CN code) | Reasons(1) | (2) | (3)T shaped article of steel. The external diameter of the shoulders is 23 mm and the largest diameter of the central part of the article is 40 mm. Its lateral endings are bevelled, suitable for butt welding, and its third ending is threaded on the inside.The lateral endings are to be welded in between the panels of the radiator. The third ending is used for installing either a vent valve or a regulating valve, or for connecting the radiator with a pipe that connects it to, for example, a boiler.See the image (*). | 7307 93 19 | Classification is determined by general rules 1 and 6 for the interpretation of the Combined Nomenclature, note 2(a) to Section XV, and by the wording of CN codes 7307, 730793and 73079319.The article has the objective characteristics of tube and pipe fittings classified under heading 7307. Articles of heading 7307 are, in accordance with note 2(a) to Section XV, parts of general use. As references to parts, inter alia, in Chapter 73 do not include references to parts of general use as defined in that note, classification of the article under heading 7322 as a part of radiators for central heating is excluded (see also the Harmonised System Explanatory Notes to heading 7322, point (2)(a)).The article is therefore to be classified under CN code 73079319 as other butt welding tube or pipe fittings of steel with the external diameter not exceeding 609,6 mm.(*) The image is purely for information.’

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

21On 9 November 2015, the applicant in the main proceedings applied to the Celní úřad pro Olomoucký kraj (Customs Office for the Region of Olomouc, Czech Republic) for binding tariff information concerning the classification of certain goods. The applicant in the main proceedings proposed that they be classified under CN subheading 73221900.

22The goods at issue in the main proceedings, under the references ‘T 74‑32’, ‘T 40‑32’ and ‘L 35‑32’ are welded steel parts manufactured for radiators for central heating, not electrically heated.

23The goods consist of two or three endings, comprising, first, one or more shoulders designed to be connected to the radiator panels by butt welding and, second, an end piece with a threaded collar used either to connect a drain valve, control valve or other device, or to connect any kind of pipe leading to a heating source.

24By several decisions of 24 November 2015, the Customs Office for the Region of Olomouc, in accordance with Implementing Regulation 2015/23, classified the goods at issue in the main proceedings under subheading 73079319 of the CN.

25The applicant in the main proceedings appealed against those decisions before the Directorate-General for Customs. Since those appeals were rejected, it brought an action before the Krajský soud v Ostravě — pobočka v Olomouci (Ostrava Regional Court, sitting in Olomouc, Czech Republic).

26The referring court considers that, even if the goods at issue in the main proceedings are identical or sufficiently similar to the product covered by Implementing Regulation 2015/23 and must therefore be classified under CN heading 7307 as ‘tube or pipe fittings of iron or steel’, and more particularly under CN subheading 73079319, such a classification would not be correct in the light, in particular, of the nature of those goods.

27The referring court notes that note 2 to Section XV of the CN states that goods which come under CN heading 7307 must be regarded as ‘parts of general use’. It considers that the goods at issue in the main proceedings constitute not parts of general use, but a specific part of the radiators manufactured to order for the applicant in the main proceedings, according to the technical documentation drawn up by the radiator manufacturer. Therefore, by their nature, they fall under CN heading 7322.

28Furthermore, the referring court considers, as does the applicant in the main proceedings, that the goods at issue in the main proceedings cannot be regarded as accessories and points out, in that respect, that, in the judgment of 26 October 2006, Turbon International (C‑250/05, EU:C:2006:681), the Court held that the concept of ‘parts’ implies a whole for the operation of which those parts are essential and that the notion of ‘accessories’ implies interchangeable parts or devices designed to adapt a machine for a particular operation, or to increase its range of operations, or to perform a particular service relative to the main function of the machine.

29According to the referring court, the goods at issue in the main proceedings are essential to the operation of the radiator with which they form a whole. They must therefore be regarded not as ‘tube or pipe fittings’ within the meaning of CN heading 7307, but as ‘parts’ of radiators, which come under CN heading 7322.

30In the light of those considerations, the referring court is uncertain as to the validity of Implementing Regulation 2015/23 and, in particular, whether or not that regulation has unlawfully extended the scope of CN subheading 73079319.

31In that context, the Krajský soud v Ostravě — pobočka v Olomouci (Ostrava Regional Court, sitting in Olomouc) decided to stay the proceedings and to refer the following questions to the Court for a preliminary ruling:(1) Is [Implementing Regulation 2015/23], in which the goods described in column 1 of the table in the annex are classified under subheading 73079319 of the [CN], valid?(2) If that regulation is invalid, could the articles concerned be classified under subheading 73221900 of the [CN]?(3) If that regulation is valid, must the articles concerned be classified under subheading 73079319 of the [CN]?’

Consideration of the questions referred

32By its questions, which must be examined together, the referring court asks, in essence, first, whether the CN must be interpreted as meaning that welded steel parts such as those at issue in the main proceedings must be classified under CN heading 7307 as ‘tube or pipe fittings’, or rather under CN heading 7322, as ‘parts’ of radiators, and, secondly, in the alternative, whether Implementing Regulation 2015/23 is valid.

33As a preliminary point, it should be recalled that, in accordance with settled case-law, when the Court is requested to give a preliminary ruling on a matter of tariff classification, its task is to provide the national court with guidance on the criteria which will enable the latter to classify the products at issue correctly in the CN, rather than to effect that classification itself, a fortiori since the Court does not necessarily have available to it all the information which is essential in that regard. Thus, the national court is in a better position to do so (see, inter alia, judgment of 25 February 2016, G. E. Security, C‑143/15, EU:C:2016:115, paragraph 41 and the case-law cited).

34Therefore, it is for the national court to classify the goods at issue in the main proceedings in the light of the answers given by the Court to the question referred to it.

35In order to provide a helpful answer to the referring court, it must be stated at the outset that, first, the general rules for the interpretation of the CN provide that the classification of goods is to be determined according to the terms of the headings and any section or chapter notes, the titles of sections, chapters and sub-chapters being provided for ease of reference only. In spite of the fact that they lack binding force, the explanatory notes to the HS and CN are an important aid in interpreting the scope of the various tariff headings (judgment of 12 June 2014, Lukoyl Neftohim Burgas, C‑330/13, EU:C:2014:1757, paragraphs 33 and 35 and the case-law cited).

36According to the Court’s settled case-law, 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 of the notes relating to the sections or chapters (judgment of 25 February 2016, G. E. Security, C‑143/15, EU:C:2016:115, paragraph 44 and the case-law cited).

37The Court has also held that the intended use of a product may constitute an objective criterion for classification if it is inherent in the product, and that inherent character must be capable of being assessed on the basis of the product’s objective characteristics and properties (judgments of 13 July 2006, Uroplasty, C‑514/04, EU:C:2006:464, paragraph 42, and of 26 April 2017, Stryker EMEA Supply Chain Services, C‑51/16, EU:C:2017:298, paragraph 40).

38In the case in the main proceedings, the referring court asks, in essence, under which CN heading, namely CN heading 7307 or CN heading 7322, welded steel parts such as those at issue in the main proceedings should be classified.

39In that regard, it follows from the wording of CN heading 7307 that it covers tube or pipe fittings, such as couplings, elbows and sleeves, of iron or steel.

40The explanatory note relating to heading 7307 of the HS also specifies that that heading covers fittings of iron or steel, mainly used for connecting the bores of two tubes together, or for connecting a tube to some other apparatus, or for closing the tube aperture.

41The wording of CN heading 7322 indicates, for its part, that that heading covers radiators for central heating, not electrically heated, and parts thereof, of iron or steel.

42It follows that, for the purposes of classifying welded steel parts such as those at issue in the main proceedings, it is necessary to determine whether they constitute ‘tube or pipe fittings’, within the meaning of CN heading 7307, or ‘parts’ of radiators, within the meaning of CN heading 7322.

43It must be noted, in that regard, that, even though the CN does not define ‘parts’, within the meaning of CN heading 7322, it is clear from the Court’s case-law, developed in the context of Chapters 84 and 85 of Section XVI and of Chapter 90 of Section XVIII of the CN, that the notion of ‘parts’ implies a whole for the operation of which the part is essential. In order to classify an article as ‘parts’ within the meaning of those chapters, it is not sufficient to show that, without that article, the machine or apparatus is not able to carry out its intended functions. It must also be established that the mechanical or electrical functioning of the machine or apparatus in question is dependent on that article (judgment of 12 December 2013, HARK, C‑450/12, EU:C:2013:824, paragraph 36).

44In the interests of a consistent and uniform application of the Common Customs Tariff, the notion of ‘parts’, within the meaning of CN heading 7322, must be given the same definition as that established by the case-law on other chapters of the CN (see, by analogy, judgment of 12 December 2013, HARK, C‑450/12, EU:C:2013:824, paragraph 37).

45In the present case, it is apparent from the file before the Court that the welded steel parts at issue in the main proceedings are essential to the operation of the radiators to which they are connected and with which they form a whole.

46Consequently, they may be classified as ‘parts’ of radiators falling under CN heading 7322.

47However, it must be noted that the Court has already held that the classification of a given product under CN heading 7307 as a ‘tube or pipe fitting’ and accordingly under ‘parts of general use’, within the meaning of note 2 to Section XV of the CN, rules out the classification of that product as ‘parts’ under another CN heading (judgment of 12 December 2013, HARK, C‑450/12, EU:C:2013:824, paragraphs 40 to 43).

48Under note 2 to Section XV of the CN, the references to ‘parts’ in Chapters 73 to 76 and 78 to 82 of the CN do not include ‘parts of general use’. Note 2 to Section XV of the CN states that goods which come, inter alia, under CN heading 7307 constitute ‘parts of general use’.

49Consequently, it is necessary to examine whether welded steel parts such as those at issue in the main proceedings must be regarded as ‘tube or pipe fittings’ under CN heading 7307 and, therefore, as ‘parts of general use’, within the meaning of note 2 to Section XV of the CN, which precludes the classification of those parts as ‘parts’ of radiators under CN heading 7322.

50It must be stressed, in that regard, that, in order to be classified as ‘parts of general use’, within the meaning of note 2 to Section XV of the CN, the product at issue must, on the basis of its characteristics, and objective properties and inherent purpose, be intended to connect the bores of two tubes together or to connect a tube to some other apparatus (see, to that effect, judgment of 12 December 2013, HARK, C‑450/12, EU:C:2013:824, paragraphs 41 and 42).

51In the present case, as noted in paragraph 23 of the present judgment, the welded steel parts at issue in the main proceedings consist of two or three endings, comprising, first, one or more shoulders designed to be connected to the radiator panels by butt welding and, second, an end piece with a threaded collar used either to connect a drain valve, control valve or other device, or to connect any kind of pipe leading to a heating source.

52In addition, the applicant in the main proceedings acknowledged, at the hearing before the Court, that the internal diameter of the threaded collar fitted to the welded steel parts at issue in the main proceedings corresponds to the conventional diameter used, in general, for tube and pipe fittings.

53It follows that welded steel parts such as those at issue in the main proceedings must, subject to verification by the referring court of all the factual information available to it, be regarded as ‘parts of general use’ within the meaning of note 2 to Section XV of the CN and, more particularly, as ‘tube or pipe fittings’ under CN heading 7307.

54As regards the validity of Implementing Regulation 2015/23, it must be noted that, according to the settled case-law of the Court, first, that a classification regulation is adopted by the Commission when the classification in the CN of a particular product is such as to give rise to difficulty or to be a matter for dispute and, secondly, that such a regulation is of general application in so far as it does not apply to an individual trader but, in general, to products identical to the one thus classified (judgments of 19 February 2009, Kamino International Logistics, C‑376/07, EU:C:2009:105, paragraph 63 and of 26 April 2017, Stryker EMEA Supply Chain Services, C‑51/16, EU:C:2017:298, paragraph 59 and the case-law cited).

55In the present case, the information in the order for reference does not make it possible to determine clearly whether the welded steel parts at issue in the main proceedings are identical to the product covered by Implementing Regulation 2015/23 and therefore whether that regulation is applicable to such parts.

56Even assuming that that implementing regulation is applicable, the Court has previously held that such an application is not necessary where the Court, by its answer to a question referred for a preliminary ruling, has provided the referring court with all the information necessary to classify a product under the appropriate CN heading (judgment of 26 April 2017, Stryker EMEA Supply Chain Services, C‑51/16, EU:C:2017:298, paragraph 62)

57It follows that, since it is clear from the reasoning above that the Court has provided the referring court with all the information necessary to classify the welded steel parts at issue in the main proceedings under the appropriate CN heading, there is no need to rule on the validity of Implementing Regulation 2015/23.

58Having regard to all of the above considerations, the answer to the questions raised is that the CN must be interpreted as meaning that welded steel parts such as those at issue in the main proceedings must, subject to the referring court’s assessment of all the factual information available to it, be classified under CN heading 7307, as ‘tube or pipe fittings’.

Costs

59Since 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 (Eighth Chamber) hereby rules: 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, as amended by Commission Implementing Regulation (EU) No 1101/2014 of 16 October 2014, must be interpreted as meaning that welded steel parts such as those at issue in the main proceedings must, subject to the referring court’s assessment of all the factual information available to it, be classified under CN heading 7307, as ‘tube or pipe fittings’.