A GmbH & Co. KG v Hauptzollamt B (C-104/23)

Contents

Judgment of the Court (Tenth Chamber)13 June 2024^note(Reference for a preliminary ruling — Customs union — Common Customs Tariff — Classification of goods — Combined Nomenclature — Tariff heading 940600 — Prefabricated buildings — Scope of the concept of building — Calf hutches — Request for classification under subheading 94060080 — Classified under subheading 39269097)In Case C‑104/23,REQUEST for a preliminary ruling under Article 267 TFEU from the Bundesfinanzhof (Federal Fiscal Court, Germany), made by decision of 23 August 2022, received at the Court on 22 February 2023, in the proceedingsA GmbH & Co. KGvHauptzollamt B,THE COURT (Tenth Chamber),composed of Z. Csehi, President of the Chamber, M. Ilešič (Rapporteur) and I. Jarukaitis, Judges,Advocate General: A.M. Collins,Registrar: A. Calot Escobar,having regard to the written procedure,after considering the observations submitted on behalf of:– the European Commission, by B. Eggers and M. Salyková, acting as Agents,after hearing the Opinion of the Advocate General at the sitting on 18 January 2024,gives the following

Judgment

1This request for a preliminary ruling concerns the interpretation of tariff heading 940600 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) (‘Annex I’).

2The request has been made in proceedings between A GmbH & Co. KG, a company incorporated under German law, and Hauptzollamt B (Principal Customs Office B, Germany) (‘Customs Office B’) concerning the tariff classification in the CN of devices that are used to protect animals from the weather, known as ‘calf hutches’.

Legal context

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 Organization (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).

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

5Classification of goods in the HS nomenclature is governed by those general rules, rule 3 of which states:‘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.(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.(c) When goods cannot be classified by reference to 3(a) or 3(b), they shall be classified under the heading which occurs last in numerical order among those which equally merit consideration.’

6Chapter 39 of the HS is entitled ‘Plastics and articles thereof’.

7Chapter 94 of the HS is entitled ‘Furniture; bedding, mattresses, mattress supports, cushions and similar stuffed furnishings; lamps and lighting fittings, not elsewhere specified or included; illuminated signs, illuminated name-plates and the like; prefabricated buildings’.

Explanatory notes to the HS

8The explanatory notes to the HS are drawn up within the WCO, in accordance with the provisions of the International Convention on the Harmonised Commodity Description and Coding System.

9In the version applicable at the material time, Chapter 39 of the HS contained an explanatory note on ‘plastics’, which stated, in particular:‘1. Throughout the Nomenclature the expression “plastics” means those materials of headings 39.01 to 39.14 which are or have been capable, either at the moment of polymerisation or at some subsequent stage, of being formed under external influence (usually heat and pressure, if necessary with a solvent or plasticiser) by moulding, casting, extruding, rolling or other process into shapes which are retained on the removal of the external influence.Throughout the Nomenclature any reference to “plastics” also includes vulcanised fibre. The expression, however, does not apply to materials regarded as textile materials of Section XI.2. This Chapter does not cover:…(x) Articles of Chapter 94 (for example, furniture, lamps and lighting fittings, illuminated signs, prefabricated buildings);…’

10The explanatory note concerning Chapter 94 of the HS stated, in the version applicable at the material time:‘…4. For the purposes of heading 94.06, the expression “prefabricated buildings” means buildings which are finished in the factory or put up as elements, presented together, to be assembled on site, such as housing or worksite accommodation, offices, schools, shops, sheds, garages or similar buildings.’

11An explanatory note for heading 94.06 of the HS was worded as follows:‘94.06 – Prefabricated buildings.This heading covers prefabricated buildings, also known as “industrialised buildings”, of all materials.These buildings, which can be designed for a variety of uses, such as housing, worksite accommodation, offices, schools, shops, sheds, garages and greenhouses, are generally presented in the form of:– complete buildings, fully assembled, ready for use;– complete buildings, unassembled;– incomplete buildings, whether or not assembled, having the essential character of prefabricated buildings.In the case of buildings presented unassembled, the necessary elements may be presented partially assembled (for example, walls, trusses) or cut to size (beams, joists, in particular) or, in some cases, in indeterminate or random lengths for cutting on the site (sills, insulation, etc.).The buildings of this heading may or may not be equipped. However, only built‑in equipment normally supplied is to be classified with the buildings. This includes electrical fittings (wiring, sockets, switches, circuit‑breakers, bells, etc.), heating and air conditioning equipment (boilers, radiators, air conditioners, etc.), sanitary equipment (baths, showers, water heaters, etc.), kitchen equipment (sinks, hoods, cookers, etc.) and items of furniture which are built in or designed to be built in (cupboards, etc.).Material for the assembly or finishing of prefabricated buildings (e.g., nails, glues, plaster, mortar, electric wire and cables, tubes and pipes, paints, wallpaper, carpeting) is to be classified with the buildings, provided it is presented therewith in appropriate quantities.Presented separately, parts of buildings and equipment, whether or not identifiable as intended for these buildings, are excluded from the heading and are in all cases classified in their own appropriate headings.’

Cn

12As is apparent from Article 1(1) of Regulation No 2658/87, the CN, established by the European Commission, governs the tariff classification of goods imported into the European Union. According to Article 3(1) of that regulation, that nomenclature reproduces the six-digit headings and subheadings of the HS, with only the seventh and eighth digits creating further subheadings that are specific to the CN.

13Under 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 rates of duty in accordance with Article 1, as resulting from measures adopted by the Council of the European Union or by the Commission. The said regulation is to be published not later than 31 October in the Official Journal of the European Union and is to apply from 1 January of the following year.

14It 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 1101/2014, which amended the CN with effect from 1 January 2015.

15According to the general rules for the interpretation of the CN, which are set out in Part One, entitled ‘Preliminary provisions’, under Section I.A of Annex I:‘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.…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. …(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;…4. Goods which cannot be classified in accordance with the above rules shall be classified under the heading appropriate to the goods to which they are most akin.…6. For legal purposes, the classification of goods in the subheadings of a heading shall be determined according to the terms of those subheadings and any related subheading notes and, mutatis mutandis, to the above rules, on the understanding that only subheadings at the same level are comparable. For the purposes of this rule, the relative section and chapter notes also apply, unless the context requires otherwise.’

16Part Two of Annex I, entitled ‘Schedule of customs duties’, contains a Section VII, entitled ‘Plastics and articles thereof; rubber and articles thereof’, which includes Chapter 39, entitled ‘Plastics and articles thereof’.

17That chapter includes, inter alia, CN heading 3926, which is structured as follows:CN code | Description | Conventional rate of duty (%) | Supplementary unit3926 | Other articles of plastics and articles of other materials of headings 3901 to 3914: | |39261000 | – Office or school supplies | 6.5 | –39262000 | – Articles of apparel and clothing accessories (including gloves, mittens and mitts) | 6.5 | –39263000 | – Fittings for furniture, coachwork or the like | 6.5 | –39264000 | – Statuettes and other ornamental articles | 6.5 | –392690 | – Other: | |39269050 | – – Perforated buckets and similar articles used to filter water at the entrance to drains | 6.5 | –| – – Other: | |39269092 | – – – Made from sheet | 6.5 | –39269097 | – – – Other | 6.5 … | –

18Part Two of Annex I also contains a Section XX, entitled ‘Miscellaneous manufactured articles’, which includes Chapter 94, entitled ‘Furniture; bedding, mattresses, mattress supports, cushions and similar stuffed furnishings; lamps and lighting fittings, not elsewhere specified or included; illuminated signs, illuminated nameplates and the like; prefabricated buildings’.

19That chapter includes, inter alia, CN heading 940600, which is worded as follows:CN code | Description | Conventional rate of duty (%) | Supplementary unit940600 | Prefabricated buildings | |94060011 | – Mobile homes | 2.7 | –| – Other: | |94060020 | – – Of wood | 2.7 | –| – – Of iron or steel: | |94060031 | – – – Greenhouses | 2.7 | –94060038 | – – – Other | 2.7 | –94060080 | – – Of other materials | 2.7 | –

CN notes

20Notes 1 and 2 to Chapter 39 of the CN state:1. Throughout the nomenclature, the expression “plastics” means those materials of headings 3901 to 3914 which are or have been capable, either at the moment of polymerisation or at some subsequent stage, of being formed under external influence (usually heat and pressure, if necessary with a solvent or plasticiser) by moulding, casting, extruding, rolling or other process into shapes which are retained on the removal of the external influence.Throughout the nomenclature, any reference to “plastics” also includes vulcanised fibre. The expression, however, does not apply to materials regarded as textile materials of Section XI.2. This chapter does not cover:…(x) articles of Chapter 94 (for example, furniture, lamps and lighting fittings, illuminated signs, prefabricated buildings);…’

21Note 4 to Chapter 94 of the CN states:‘For the purposes of heading 9406, the expression “prefabricated buildings” means buildings which are finished in the factory or put up as elements, presented together, to be assembled on site, such as housing or worksite accommodation, offices, schools, shops, sheds, garages or similar buildings.’

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

22On 5 August 2015, A applied to Customs Office B for the issue of binding tariff information (‘BTI’) in relation to the calf hutches which it was importing into Germany.

23It is apparent from the order for reference that the calf hutches at issue in the main proceedings are usually installed outside cowsheds to protect the animals from the weather. They consist of a shell composed of walls and a roof and, depending on the model, a floor element. They have openings for bedding and ventilation, and an entrance at the front, generally without a door, which is available as an optional accessory for some models.

24The calf hutches are made of polyethylene (containing 8% titanium dioxide) and include a basic metal frame for all hutches, with another metal frame welded to the door frame if a door is envisaged. Those metal components make up between 12% and 21% of the overall product. The smallest model is 147 cm long, 109 cm wide and 117 cm high. A group hutch measures 220 cm x 273 cm x 183 cm.

25A requested that these hutches be classified under CN subheading 94060080 as ‘prefabricated buildings of other materials’, for which the applicable rate of customs duty on imports is 2.7%.

26By decision of 29 September 2015 that served as BTI, Customs Office B classified those hutches under CN subheading 39269097 as ‘other articles of plastics and articles of other materials of headings 3901 to 3914, other than those falling under CN subheadings 39261000 to 39269092’, attracting a rate of duty of 6.5%. A challenged that decision.

27Following the rejection of its challenge, A brought an action before the Finanzgericht (Finance Court, Germany), which was unsuccessful. According to that court, the polyethylene plastic material gives the calf hutches their essential character. In addition, in so far as the whole of the front of the calf hutches comprises an entrance that is not closed by a door or by a similar device, they do not form an ‘enclosed space’, which would, however, be a prerequisite for classification of a product as a ‘building’. Accordingly, those hutches do not constitute products falling in Chapter 94, much less under CN heading 940600. That court therefore considered Customs Office B to have classified them correctly under CN subheading 39269097.

28A brought an appeal on a point of law against that judgment before the Bundesfinanzhof (Federal Fiscal Court, Germany), which is the referring court.

29Before that court, the parties disagree, in essence, as to whether ‘prefabricated buildings’, for the purposes of the CN, must necessarily form an enclosed space and be accessible to persons in an upright position.

30The referring court observes that, in accordance with the general rules for the interpretation of the CN, the calf hutches would be classifiable under heading 3926 unless they were excluded from it, in accordance with note 2(x) to Chapter 39 of the CN, on the basis that they are prefabricated buildings covered by Chapter 94 of the CN. Contrary to the approach taken by the Finanzgericht (Finance Court), the referring court is minded to find that, in the light of the wording of CN heading 9406, that heading does not require a prefabricated building to form a fully enclosed space. However, the referring court also considers that, in order to be covered by CN heading 9406, a prefabricated building must be such that persons of average height can enter and use it whilst upright, which is not the case for the products at issue in the main proceedings, which are too low for that purpose.

31In those circumstances, the Bundesfinanzhof (Federal Fiscal Court) decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:(1) Does CN heading 9406 necessarily require that a prefabricated building completely enclose a space on all sides?(2) If Question 1 is answered in the negative, does CN heading 9406 require that the prefabricated building be large enough for a person of average height to be able to enter it, and does that require it to have at least one area that such a person can enter in an upright position, or is it sufficient for the person to be able to enter it in a bent-over position?’

Consideration of the questions referred

32By the two questions referred for a preliminary ruling, which it is appropriate to consider together, the referring court asks, in essence, whether CN heading 940600 must be interpreted as meaning that the concept of ‘prefabricated building’ included therein covers a product made of plastic which is used to protect animals from the weather, known as a ‘calf hutch’, which has a roof and walls but which does not necessarily form a space that is fully enclosed on all sides and the dimensions of which are such that a person of average height cannot enter it in an upright position and carry out activities inside it whilst upright.

33As a preliminary point, it must be noted that, 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 national court to classify the products concerned correctly in the CN, rather than to effect such a classification itself. That classification results from a purely factual assessment which it is not for the Court to make in the context of a reference for a preliminary ruling (judgment of 20 October 2022, Mikrotīkls, C‑542/21, EU:C:2022:814, paragraph 21 and the case-law cited).

34It should also be noted that, in accordance with general rule 1 for the interpretation of the CN, the tariff classification of goods is to be determined according to the terms of the headings and any relative section or chapter notes to that nomenclature.

35According to the settled case-law of the Court, in the interests of legal certainty and ease of verification, the decisive criterion for the tariff classification of those goods 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 corresponding section or chapter notes. The intended use of the product concerned may constitute an objective criterion for classification if it is inherent to that product, and that inherent character must be capable of being assessed on the basis of the product’s objective characteristics and properties (judgment of 20 October 2022, Mikrotīkls, C‑542/21, EU:C:2022:814, paragraph 22 and the case-law cited).

36Furthermore, the Court has repeatedly held that, although the explanatory notes to the HS and 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 (judgment of 20 October 2022, Mikrotīkls, C‑542/21, EU:C:2022:814, paragraph 23 and the case-law cited).

37In the present case, since it is to be determined in the dispute in the main proceedings whether the goods concerned are to be classified under a subheading of heading 3926 or under subheading 940600 of the CN, it must also be recalled that such a classification is, under general rule 6 for the interpretation of the CN, determined according to the terms of those subheadings and of the subheading notes, and that the corresponding section and chapter notes are also applicable, unless otherwise provided.

38In accordance with note 2(x) to Chapter 39 of the CN, that chapter does not cover articles of Chapter 94 of the CN. Consequently, if a product comes under Chapter 94, it cannot, therefore, be classified in Chapter 39 of the CN.

39Heading 940600 of Chapter 94 of the CN, to which the questions raised relate, is described as ‘Prefabricated buildings’.

40Neither the CN nor the HS defines ‘building’.

41According to settled case-law, the meaning and scope of terms for which EU law provides no definition must be determined by considering their usual meaning in everyday language, while also taking into account the context in which they occur and the purposes of the rules of which they are part (judgment of 31 January 2013, McDonagh, C‑12/11, EU:C:2013:43, paragraph 28).

42As regards the usual meaning in everyday language of the term ‘building’, it must be held that that term refers in particular to a structure of a certain size that, as a rule, is built with walls and a roof and is generally used by persons to stay in, to carry out activities in or to store objects in.

43As to the context in which the concept of ‘building’ is used in CN heading 940600, it should be borne in mind that note 4 to Chapter 94 of the CN states, in essence, that, ‘for the purposes of heading 9406, the expression “prefabricated buildings” means buildings which are finished in the factory or put up as elements, presented together, to be assembled on site, such as housing or worksite accommodation, offices, schools, shops, sheds, garages or similar buildings’. Thus, while that list is illustrative, the fact remains that that note sets out, without exception, structures which facilitate human activity and which persons can enter and move around in whilst upright, notably in order to carry out activities in them.

44Consequently, given the usual meaning of the term ‘building’ in everyday language, and the context in which it is used as well as the objectives recalled in paragraph 35 of the present judgment, the concept of ‘building’ in CN heading 940600 in the expression ‘prefabricated buildings’ must be understood as covering a structure which persons can enter in an upright position and in which they can move around whilst upright, notably in order to carry out their activities there.

45In that regard, it should also be noted that it is not essential, for the purpose of enabling such use, that the structure in question should form a fully enclosed space. It is apparent from note 4 to Chapter 94 of the CN, which is set out in paragraph 43 of the present judgment, that ‘prefabricated buildings’, for the purposes of heading 9406, includes sheds. While sheds have roofs and walls, they do not necessarily have four walls, nor do they necessarily form an enclosed space.

46It should, moreover, be recalled that, according to the settled case-law of the Court, while the conclusions of the Customs Code Committee do not have legally binding force, they are nevertheless 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 regarded as a useful aid in its interpretation (see, to that effect, judgments of 15 February 1977, Dittmeyer, 69/76 and 70/76, EU:C:1977:25, paragraph 4, and of 10 September 2020, BMW, C‑509/19, EU:C:2020:694, paragraph 21 and the case-law cited). As the Advocate General also noted, in essence, in point 26 of his Opinion, at its 227th meeting the Customs Code Committee found that a ‘prefabricated building’ for the purposes of CN heading 940600 does not necessarily need to have four walls but must have a roof and some walls.

47In the light of the foregoing considerations, the answer to the questions raised is that CN heading 940600 must be interpreted as meaning that the concept of ‘prefabricated building’ included therein does not cover a product made of plastic which is used to protect animals from the weather, known as a ‘calf hutch’, which has a roof and walls but which does not necessarily form a space that is fully enclosed on all sides and the dimensions of which are such that a person of average height cannot enter it in an upright position and carry out activities inside it whilst upright.

Costs

48Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the referring 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 (Tenth Chamber) hereby rules: Heading 940600 of the Combined Nomenclature in Annex I to Council Regulation (EEC) No 2658/87 of 23 July 1987 on the tariff and statistical nomenclature and on the Common Customs Tariff, as amended by Commission Implementing Regulation (EU) No 1101/2014 of 16 October 2014,must be interpreted as meaning that the concept of ‘prefabricated building’ included therein does not cover a product made of plastic which is used to protect animals from the weather, known as a ‘calf hutch’, which has a roof and walls but which does not necessarily form a space that is fully enclosed on all sides and the dimensions of which are such that a person of average height cannot enter it in an upright position and carry out activities inside it whilst upright.