SIA 'PRODEX' v Valsts ieņēmumu dienests (C-72/21)

Contents

Judgment of the Court (Eighth Chamber)28 April 2022^note(Reference for a preliminary ruling — Customs Union — Common Customs Tariff — Combined Nomenclature — Tariff headings — Subheading 441820 — Scope — Doors and their frames and thresholds — MDF panels and mouldings — The first part of general rule 2(a) for the interpretation of the combined nomenclature — Incomplete or unfinished article — Definition)In Case C‑72/21,REQUEST for a preliminary ruling under Article 267 TFEU from the Augstākā tiesa (Senāts) (Supreme Court (Senate), Latvia), made by decision of 2 February 2021, received at the Court on 4 February 2021, in the proceedings‘PRODEX’ SIAvValsts ieņēmumu dienests,THE COURT (Eighth Chamber),composed of: N. Jääskinen, President of the Chamber, N. Piçarra (Rapporteur) and M. Gavalec, Judges,Advocate General: T. Ćapeta,Registrar: A. Calot Escobar,having regard to the written procedure,after considering the written observations submitted on behalf of:– ‘PRODEX’ SIA, by J. Kārkliņš, advokāts,– the Latvian Government, by K. Pommere, J. Davidoviča and E. Bārdiņš, acting as Agents,– The European Commission, by M. Salyková and E. Kalniņš, 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 tariff subheading 441820 and tariff headings 4411 and 4412 of the Combined Nomenclature (‘the CN’) and the first part of general rule 2(a) for the interpretation of that nomenclature, included 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 1001/2013 of 4 October 2013 (OJ 2013 L 290, p. 1).

2The request was made in proceedings between ‘PRODEX’ SIA (‘Prodex’) and Valsts ieņēmumu dienests (State Tax Authority, Latvia) (‘the tax authority’) concerning the tariff classification of goods imported under subheading 441820 of the CN, as doors, door frames and thresholds.

Legal framework

The HS

3The Harmonised Commodity Description and Coding System (‘HS’) was established by the International Convention on the Harmonised Commodity Description and Coding System concluded in Brussels on 14 June 1983, under the auspices of the World Customs Organisation (WCO) and approved, with its amending protocol of 24 June 1986, on behalf of the European Economic Community, by Council Decision 87/369/EEC of 7 April 1987 (OJ 1987 L 198, p. 1) (‘the Convention on the HS’). The explanatory notes to the HS are drawn up within the WCO in accordance with the provisions of that convention.

4Under Article 3(1) of the Convention on the HS, each contracting party undertakes to apply the general rules for the interpretation of the HS and all the section, chapter and subheading notes, and not to modify the scope of sections, chapters or subheadings of the HS.

5General rule 2(a) for the interpretation of the HS provides, in its first part, that 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, and, in its second part, that any such reference 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.

6General rule 3 for the interpretation of the HS provides:‘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:…(b) Mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets for retail sale, which cannot be classified by reference to 3(a), shall be classified as if they consisted of the material or component which gives them their essential character, in so far as this criterion is applicable.…’

7Points I, V and VI of the explanatory note to the HS relating to general rule 2(a) state:(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.…(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.…’

8Point X of the explanatory note to the HS relating to general rule 3(b) states:‘For the purposes of this Rule, the term “goods put up in sets for retail sale” shall be taken to mean goods which:(a) consist of at least two different articles which are, prima facie, classifiable in different headings. ……’

9The third paragraph of the explanatory note relating to heading 4412 of the HS states:‘The products of this heading remain classified herein whether or not they have been worked to form the shapes provided for in respect of the goods of heading 44.09, curved, corrugated, perforated, cut or formed to shapes other than square or rectangular and whether or not they have been worked at the surface, the edge or the end, or coated or covered (e.g., with textile fabric, plastics, paint, paper or metal) or submitted to any other operation, provided these operations do not thereby give such products the essential character of articles of other headings.’

The CN

10As is apparent from Article 1(1) of Regulation No 2658/87, as amended by Council Regulation (EC) No 254/2000 of 31 January 2000 (OJ 2000 L 28, p. 16), the CN, established by the European Commission, governs the tariff classification of goods imported into the European Union. It 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.

11Under Article 12(1) of Regulation No 2658/87, the Commission is to adopt each year by means of a regulation, a complete version of the CN together with the corresponding autonomous and conventional rates of duty of the Common Customs Tariff, as follows from measures adopted by the Council of the European Union or by the Commission. That regulation is to be published in the Official Journal of the European Union not later than 31 October, to apply from 1 January of the following year.

12It is apparent from the file before the Court that the version of the CN applicable to the case in the main proceedings is that resulting from Implementing Regulation No 1001/2013.

13Under the general rules for the interpretation of the CN, contained in Annex I, Part One, Section I, Subsection A of that implementing regulation:‘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. ……’

14Part Two of the CN, entitled ‘Schedule of customs duties’, contains Section IX, entitled ‘Wood and articles of wood; wood charcoal; cork and articles of cork; manufactures of straw, of esparto or of other plaiting materials; basketware and wickerwork’, which includes Chapter 44, entitled ‘Wood and articles of wood; wood charcoal’, note 4 of which states:‘Products of headings 4410, 4411 or 4412 may be worked to form the shapes provided for in respect of the goods of heading 4409, curved, corrugated, perforated, cut or formed to shapes other than square or rectangular or submitted to any other operation, provided it does not give them the character of articles of other headings.’

15The schedule of customs duties for Chapter 44, in the version applicable to the dispute in the main proceedings, contained the following headings:CN code | Description | Conventional rate of duty (%) | Supplementary unit4411 | Fibreboard or wood or other ligneous materials, whether or not bonded with resins or other organic substances | || – Medium density fibreboard (MDF) | |… | | |441113 | – – Of a thickness exceeding 5 mm but not exceeding 9 mm | |44111310 | – – – Not mechanically worked or surface covered | 7 | m344111390 | – – – Other | 7 | m3441114 | – – Of a thickness exceeding 9 mm | |44111410 | – – – Not mechanically worked or surface covered | 7 | m344111490 | – – – Other | 7 | m3… | | |4412 | Plywood, veneered panels and similar laminated wood | |44121000 | – Of bamboo | 10 | m3| – Other plywood consisting solely of sheets of wood (other than bamboo), each ply not exceeding 6 mm | |… | | |441299 | – – Other | |… | | |44129985 | – – – – Other | 10 | m3… | | |4418 | Builders’ joinery and carpentry of wood, including cellular wood panels, assembled flooring panels, shingles and shakes | |… | | |441820 | – Doors and their frames and thresholds | |… | | |44182050 | – – Coniferous | Free | p/st**A door with or without its frame or threshold is considered as one piece.’

16Under the explanatory notes to subheadings 44182010 to 44182080 of the CN:‘These subheadings include solid laminated wood panels with thick cores, provided that they have been further worked to an extent which identifies them exclusively for use as doors (for example, by the cutting of recesses for handles, locks or hinges). These subheadings do not include unworked panels, sometimes known as “solid-core doorblanks”, even if their edges are veneered (heading 4412).’

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

17On 23 September 2014, Prodex declared, for the purposes of their release for free circulation, goods presented as interior doors of coniferous woods with their frames and thresholds, under code CN 44182050, at a rate of import duty of 0%.

18By decision of 7 September 2015, the tax authority found that the goods at issue, at the time of import, did not have the characteristics of a set for retail sale, clearly identifiable as a single unit. That authority concluded that those goods could not be classified under subheading 441820 of the CN and that, therefore, they had to be classified separately under subheadings 44111390 and 44111490 of the CN as ‘medium density fibreboard (MDF)’, at a rate of import duty of 7%, and under subheading 44129985 as ‘plywood, veneered panels and similar laminated wood’, at a rate of import duty of 10%.

19Prodex brought an action for the annulment of that decision before the administrative court. The Administratīvā apgabaltiesa (Regional Administrative Court, Latvia) dismissed the action on appeal. Prodex then brought an appeal against that ruling before the Augstākā tiesa (Senāts) (Supreme Court (Senate), Latvia), the referring court.

20In order to settle the dispute which, according to that court, relates, in essence, to the question of whether the imported goods at issue are doors or wood panels, that court considers it necessary, first, to determine the scope of subheading 441820 of the CN. It points out in that regard that the footnote relating to that subheading does not state whether a frame or threshold without a door may also be classified under that subheading.

21The referring court states that, according to Prodex, heading 4418 of the CN covers not only a full set comprising a door with its frame and threshold, but also each of those articles taken separately, as a finished article, while the tax authority maintains, on the basis of a WCO recommendation, that the goods at issue, which it has described as mouldings and beadings, cannot be classified under heading 4418, since they are not presented in the form of a set of unassembled articles for retail sale.

22That court therefore considers it necessary to determine the essential character, within the meaning of the first part of general rule 2(a) for the interpretation of the CN, which the goods at issue must have in order to be regarded as a door frame or threshold and be able to be classified under subheading 441820 of the CN. It points out, first, that although the goods imported by Prodex could appear, at first sight, to be simply mouldings and beadings, the characteristics of those goods make them solely and exclusively usable as components of a door and, secondly, that the tax authority, although it had refused to classify those goods as door components, described them as mouldings intended for the manufacture of doors and not as generic semi-manufactures of wood. It points out, in that regard, that the styles of wood doors which are usual nowadays no longer require specific major preparation work in order for their direct connection to finished doors to be clearly visible, and that there are simple techniques for assembling the various components which do not need specific fasteners.

23As regards general rule 2(a) for the interpretation of the CN, the referring court notes that the tax authority and the court of first instance relied on the second part of that rule, concerning disassembled or unassembled articles, although Prodex claims that it is the first part of the rule, concerning incomplete or unfinished articles, which should be applied to the goods at issue.

24The referring court states that if the first part of general rule 2(a) is interpreted as meaning that the level of finishing must be such that all that remains, for those goods to be described as finished articles, is to assemble them, it is by no means clear that that provision is applicable to the goods at issue. That court emphasises, however, that such an interpretation cannot be ruled out, in view of the uncertainty as to whether that general rule is consistent with the chapter notes and certain explanatory notes concerning the goods at issue.

25In those circumstances, the Augstākā tiesa (Senāts) (Supreme Court (Senate)) decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:(1) Must the [CN] be interpreted as meaning that subheading 441820 can include door frames and thresholds as separate goods?(2) In the light of the first sentence of rule 2(a) of the general rules for the interpretation of the [CN] …, can subheading 441820 also include unfinished doorframes, door panels and thresholds provided that they have the essential features of complete and finished doorframes and thresholds?(3) Must the wood panels and mouldings at issue in the main proceedings, which have a profile and decorative finish which objectively establish that their use in the manufacture of doors, door frames and thresholds is foreseeable, but which, prior to assembly of the door, must be cut to adjust their length and must have spaces made on them for fixing, and, if necessary, must have spaces for hinges and spaces for locks included in them, be classified under subheading 441820 or, based on the specific panels or mouldings, under headings 4411 and 4412 of the Combined Nomenclature?’

The questions referred for a preliminary ruling

26By its questions, which should be considered together, the referring court is asking, in essence, whether subheading 441820 of the CN, read in conjunction with the first part of general rule 2(a) for the interpretation of the CN, is to be interpreted as meaning that it covers, as separate articles, goods described as wood panels and mouldings, which have a profile and decorative finish which objectively establish that their use in the manufacture of doorframes and thresholds is foreseeable, even if they are incomplete or unfinished.

27It should be noted, at the outset, that, when the Court is requested to give a preliminary ruling on a matter of classification for customs purposes, its task is to provide the national courts with guidance on the criteria which will enable the latter to classify the goods at issue correctly in the CN, rather than to effect that classification itself, Indeed, the description, for classification purposes, of the goods at issue is the consequence of a simple finding of fact which it is not for the Court to make in the context of the reference for a preliminary ruling (see, to that effect, order of 27 February 2020, Gardinia Home Decor, C‑670/19, EU:C:2020:117, paragraphs 35 and 39 and the case-law cited).

28It is also important to point out that, according to general rule 1 for the interpretation of the CN, the classification of goods is to be determined according to the terms of the headings and any section or chapter notes to that nomenclature. In the interests of legal certainty and ease of verification, the decisive criterion for the tariff classification of goods is, in general, to be sought in their objective characteristics and properties as defined in the wording of the relevant heading of that nomenclature and in the section or chapter notes. The intended use of a product may also 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 (see, to that effect, judgments of 3 June 2021, Flavourstream, C‑822/19, EU:C:2021:444, paragraph 34, and of 28 October 2021, KAHL and Roeper, C‑197/20 and C‑216/20, EU:C:2021:892, paragraph 31).

29Moreover, the Court has repeatedly held that, although the explanatory notes to the HS and to the CN do not have binding force, they 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, to that effect, judgment of 12 June 2014, Lukoyl Neftohim Burgas, C‑330/13, EU:C:2014:1757, paragraph 35 and the case-law cited).

30As regards, in the first place, the issue of whether the articles to which subheading 441820 of the CN refers may be classified under that subheading as separate articles, it must be stated, first, that nothing in the wording of that subheading requires, for that purpose, doors, door frames and thresholds to be put up in sets for retail sale.

31Secondly, it may be inferred from the footnote relating to subheading 44182050 of the CN – which states that a door, with or without its frame or threshold, ‘is considered as one piece’ – that a door frame or threshold without a door is also to be considered as a separate product, which may be classified as such under that subheading.

32Thirdly, paragraphs 1 and 2 of Part A of the Commission’s Guidelines for the classification in the Combine Nomenclature of goods put up in sets for retail sale (OJ 2013 C 105, p. 1) point out that, according to general rule 3(b) for the interpretation of the HS, read in the light of Point X of the explanatory note to that rule, the first condition for different articles to be considered as goods put up in sets for retail sale is that those goods must be classifiable in different headings or in different subheadings of the same heading.

33Doors, door frames and thresholds all come under the subheading 441820, even though, as the Commission points out in its written observations, they cannot be considered as goods put up in sets for retail sale and may therefore be considered as separate goods, under that subheading.

34It follows that subheading 441820 of the CN is to be interpreted as meaning that it covers a door frame and threshold, as individual articles.

35As regards, in the second place, the issue of whether an incomplete or unfinished article, within the meaning of the first part of general rule 2(a) for the interpretation of the CN, the wording of which is the same as that of the first part of general rule 2(a) for the interpretation of the HS, may come under subheading 441820, it should be pointed out that, according to that rule, 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. As stated in Point I of the explanatory note relating to general rule 2(a) of the HS, the first part of that rule extends the scope of any heading which refers to a particular article.

36It should be noted in that regard that the explanatory notes to the CN relating to that subheading state, by way of example, that wood panels may be classified under that subheading, provided that they have been further worked to an extent which identifies them exclusively for use as doors (for example, by the cutting of recesses for handles, locks or hinges), whereas unworked panels, sometimes known as ‘solid-core doorblanks’, must be classified under heading 4412.

37Conversely, note 4, relating to Chapter 44 of the CN, read in conjunction with the first subparagraph of the explanatory note relating to heading 4412 of the HS, states that articles which have been further worked may be classified under heading 4412, as ‘plywood, veneered panels and similar laminated wood’ provided that it does not give them the essential character of articles referred to under other headings.

38This means that, irrespective of any additional preparatory work, such as that mentioned by the referring court in the third question referred, the goods at issue, in order to be able to be classified under subheading 441820 of the CN, as articles which are incomplete or unfinished but which, as presented, have the essential character of the articles coming under that subheading, within the meaning of the first part of general rule 2(a) for the interpretation of the CN, must have been further worked to an extent which identifies them exclusively for use as doors, door frames and thresholds.

39By contrast, if those goods are not further worked enabling them to be considered as intended to be used exclusively as doors, door frames and thresholds, they cannot be classified under subheading 441820 and must, as appropriate, be classified under heading 4411 and 4412 of the CN, as fibreboard or plywood, veneered panels or similar laminated wood.

40In the light of all the foregoing considerations, the reply to the questions raised must be that subheading 441820 of the CN, read in conjunction with the first part of general rule 2(a) for the interpretation of the CN, is to be interpreted as meaning that it covers, as separate articles, goods described as wood panels and mouldings, which have a profile and decorative finish which objectively establish that their use in the manufacture of doorframes and thresholds is foreseeable, even if they are incomplete or unfinished, provided that they have been subject to preparation work making them usable exclusively as such and that they have the essential character of the finished articles.

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 (Eighth Chamber) hereby rules: Subheading 441820 of the Combined Nomenclature, read in conjunction with the first part of general rule 2(a) for the interpretation of that nomenclature, contained 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 1001/2013 of 4 October 2013must be interpreted as meaning that it covers, as separate articles, goods described as wood panels and mouldings, which have a profile and decorative finish which objectively establish that their use in the manufacture of doorframes and thresholds is foreseeable, even if they are incomplete or unfinished, provided that they have been subject to preparation work making them usable exclusively as such and that they have the essential character of the finished articles.