JUDGMENT OF 26. 1. 1977 - CASE 49/76 GESELLSCHAFT FÜR ÜBERSEEHANDEL v HANDELSKAMMER HAMBURG

In Case 49/76 Reference to the Court under Article 177 of the EEC Treaty by the Verwaltungsgericht Hamburg for a preliminary ruling in the action pending before that court between

THE COURT composed of: H. Kutscher, President, P. Pescatore, President of Chamber, J. Mertens de Wilmars, M. Sørensen, Lord Mackenzie Stuart, A. O'Keeffe and G. Bosco, Judges, Advocate-General: J.-P. Warner Registrar: A. Van Houtte

gives the following

JUDGMENT

Facts

I — Facts and procedure

II — Written observations submitted under Article 20 of the Protocol on the Statute of the Court of Justice of the EEC

A — Observations submitted by the Gesellschaft für Überseehandel

B — Written observations submitted by the Handelskammer, Hamburg

C — Written observations submitted by the Commission of the EEC

III — Oral procedure

Law

Costs

I —. Facts and procedure

1. For several years, the GESELLSCHAFT FÜR ÜBERSEEHANDEL mbH (Company for Overseas Trade Limited) (hereinafter referred to as the Company) has imported casein, in the form of pieces from the size of a pea to the size of a hazelnut, from the Soviet Union and from Poland. In its establishment in Hamburg it grinds the imported product to different degrees of fineness, sometimes according to the preferences of its customers (screen sizes 30, 60 and 90). The product is then sorted and packed. The casein thus treated is sold to the different consumers. It is used in the human and animal food industry, in the manufacture of glues, colours and other materials capable of being applied in the form of a coating.

2. In June 1972, the Handelskammer for the first time withdrew its undertaking, but on 21 July 1972 it again undertook to continue to supply certificates of origin, on the ground that the operations carried out by the Company could be considered as the operations carried out by the Company could be considered as the last … process … economically justified within the meaning of Article 5 of Regulation No 802/68. It was however stated in the undertaking that it would be reconsidered should new factors, such as a decision of the Community or German authorities acting in pursuance of their powers, later arise so as to justify a different interpretation of the provisions of the aforesaid regulation.

3. A copy of the order for reference reached the Court on 8 June 1976.

II —. Written observations submitted under Article 20 of the Protocol on the Statute of the Court of Justice of the EEC

A —. Observations submitted by the Gesellschaft für Überseehandel

(a). whether the treating of the raw product by the Company constitutes a substantial process or operation,

(b). resulting in the manufacture of a new product or representing an important stage of manufacture.

(a). As to the first point, it appears from the text of Article 5 of Regulation No 802/68 that the word substantial is, in semantic terms, similar to the words economically justified. Therefore its meaning should be assessed with regard to the economic justification for the operation or process. An economically justified operation or process can, in cases of doubt, also be considered as substantial.

(b). As for the second point, the very fact, mentioned above, that the grinding of the casein is essential if the product is to be used shows that the activities under discussion represent an important stage of manufacture, within the meaning of Article 5 of Regulation No 802/68. It is not necessary, for this purpose, for ground casein to be regarded as a new product as compared with raw casein. When an original product is transformed by a process comprising several stages, each stage of operation constitutes a stage of manufacture at the same time. In so far as an operation upon a product is, at a given stage, of a substantial nature, that stage of manufacture is important.

B —. Written observations submitted by the Handelskammer, Hamburg

C —. Written observations submitted by the Commission of the EEC

(a). be substantial;

(b). be economically justified;

(c). have been carried out in an undertaking equipped for the purpose;

(d). have resulted in the manufacture of a new product or represent an important stage of manufacture.

III —. Oral procedure

1. By order of 28 May 1976, which reached the Court on 8 June 1976, the Verwaltungsgericht Hamburg has referred to the Court for a preliminary ruling under Article 177 of the EEC Treaty a question on the interpretation of Article 5 of Regulation No 802/68 of the Council of 27 June 1968 on the common definition of the concept of the origin of goods (OJ English Special Edition, 1968, p. 165).

2. The question has arisen in a dispute concerning the refusal of the Handelskammer, Hamburg, to issue to the Gesellschaft für Überseehandel certificates stating for the purposes of Regulation No 802/68 that the Federal Republic of Germany is the country of origin of the casein treated by the said undertaking.

3. Article 5 of Regulation No 802/68 provides:

4. Although the Court has no jurisdiction under Article 177 of the EEC Treaty to apply the provision of Community law to actual cases, it may nevertheless furnish the national court with the interpretative criteria necessary to enable it to dispose of the dispute.

5. According to the last recital in the preamble to Regulation No 802/68 and to Article 1 of that regulation, a common definition of the concept of the origin of goods constitutes an indispensable means of ensuring the uniform application of the Common Customs Tariff, of quantitative restrictions and of all other measures adopted, in relation to the importation or exportation of goods, by the Community or by the Member States. For those purposes, Articles 4 and 5 of the regulation base such a definition on objective criteria, making it possible to ensure the uniform application in all the Member States of the concept of the origin of goods and thus to avoid deflections of trade and abuses. In particular, there can be seen in Article 6 of the regulation the intention to prevent the origin of goods in the production of which two or more countries are concerned from being determined by way of a non-substantial process or operation in such a manner as to defeat the purposes of Article 1 or to circumvent the measures adopted by the Member States in relation to importation or exportation. In these circumstances, it would not seem sufficient to seek criteria defining the origin of goods in the tariff classification of the processed products, for the Common Customs Tariff has been conceived to fulfil special purposes and not in relation to the determination of the origin of products. On the contrary, in order to meet the purposes and requirements of Regulation No 802/68, the determination of the origin of goods must be based on a real and objective distinction between raw material and processed product, depending fundamentally on the specific material qualities of each of those products.

6. Therefore, the last process or operation referred to in Article 5 of the regulation is only substantial for the purposes of that provision if the product resulting therefrom has its own properties and a composition of its own, which it did not possess before that process or operation.

7. The grinding of a raw material such as raw casein to various degrees of fineness cannot be considered as a process or operation for the purposes of Article 5 of Regulation No 802/68, because the only effect of doing so is to change the consistency of the product and its presentation for the purposes of its later use; it does not bring about a significant qualitative change in the raw material.

8. In its opinions expressed at its meetings of 17 and 18 December 1975 and of 22 to 24 June 1976, the Committee on Origin set up under Article 12 of Regulation No 802/68 has found that the grinding to different degrees of fineness, the sorting and packaging of casein do not constitute activities involving a process or operation conferring on the product resulting from those activities a particular origin for the purposes of the said regulation.

9. It is therefore to be concluded that the cleaning and grinding of a raw material, such as raw casein imported from a third country into a Member State, together with the grading and packaging of the product obtained, do not constitute a substantial process or operation for the purposes of Article 5 of Regulation No 802/68, and do not confer a Community origin on the said product, according to that regulation.

10. The costs incurred by the Commission of the European Communities, which has submitted observations to the Court, are not recoverable.

On those grounds, THE COURT in answer to the question referred to it by the Verwaltungsgericht Hamburg by order of 28 May 1976, hereby rules: