JUDGMENT OF 15. 12. 1977 —CASE 60/77 FUSS v OBERFINANZDIREKTION MUNCHEN

In Case 60/77 Reference to the Court under Article 177 of the EEC Treaty by the Bundesfinanzhof (Federal Finance Court) for a preliminary ruling in the action pending before that court between

THE COURT (First Chamber) composed of: G. Bosco, President of Chamber, J. Mertens de Wilmars and A. O'Keeffe, Judges, Advocate-General: J.-P. Warner Registrar: A. Van Houtte

gives the following

JUDGMENT

Facts and issues

I — Facts and written procedure

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

III — Oral procedure

Decision

Costs

I —. Facts and written procedure

1. The main action is concerned with the tariff classification of goods described as ultrasonic movement detectors, designated Advisor III and Advisor VI. Their purpose is to detect movements within a given area and to transmit this information by means of an electric cable to an external alarm signalling device (alarm unit). The cable and alarm signalling device are not the subject of the tariff classification.

2. On 12 May 1975 the Oberfinanzdirektion München issued two binding customs tariff notifications to Fritz Fuss KG, electronics factory, (hereinafter referred to as Fuss) in respect of those articles.

3. In the view of the Bundesfinanzhof, before which the undertaking concerned brought the question at issue, the settlement of the case depends on the interpretation of the Common Customs Tariff. By order dated 19 April 1977, received at the Court on 12 May 1977, the Bundesfinanzhof stayed the proceedings and referred the following question to the Court for a preliminary ruling:

4. In accordance with Article 20 of the Protocol on the Statute of the Court of Justice of the EEC written observations were submitted by Fritz Fuss KG, represented by Heinz Stehle, and the Commission of the European Communities, represented by its Legal Adviser, Manfred Beschel.

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

(a). Fuss states first of all:

(b). The Commission observes first of all that the answer to be given to the Bundesfinanzhof should not be limited to interpreting Note 2 to Section XVI of the Common Customs Tariff, since the interpretation of that note does not allow the problems of Community law raised by the court making the reference to be dealt with comprehensively. For that purpose it is appropriate also to consider Rule A 2 (a) of the General Rules for the interpretation of the nomenclature, which provides that: Any reference … to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as imported, the incomplete or unfinished article has the essential character of the complete or finished article (OJ L 295, 1974, p. 11).

(A). Mechanical devices … whose function can be performed distinctly from and independently of any other machine or appliance.

(B). Mechanical devices which cannot perform their function unless they are mounted on another machine or appliance, or are incorporated in a more complex entity, provided that this function:

1. The expression parts of machines (or of appliances) contained in Note 2 to Section XVI of the Common Customs Tariff does not imply that such articles must be parts of a permanently assembled unit. The said note therefore also applies in the case of objectively recognizable parts of electric sound or visual signalling apparatus of heading 85.17 of the Common Customs Tariff which consists of separate appliances connected to one another simply by electric cables, subject nevertheless to the proviso that such parts are not to be considered as incomplete articles within the meaning of Interpretative Rule 2 (a) and to be classified accordingly.

2. Parts of electric sound or visual signalling apparatus of heading 85.17, the function of which is to detect by means of the application of particular technical methods (ultrasonics) movements in particular areas and to pass this information over cable to an external alarm signalling device do not have an independent function vis-a-vis the signalling apparatus as a whole and . cannot therefore be classified under heading 85.22 C of the Common Customs Tariff.

III —. Oral procedure

1. By order dated 19 April 1977, received at the Court on 12 May 1977, the Bundesfinanzhof referred the following question to the Court for a preliminary ruling under Article 177 of the EEC Treaty:

2. This question has been raised in an action on the tariff classification of articles which were described as ultrasonic movement detectors Advisor III and Advisor VI whose function is to detect movement in particular areas and to transmit this information by means of electric impulses through electric cables to an alarm unit (sound or visual alarm signalling device). By two official tariff classification opinions dated 12 May 1975 the customs authorities classified those articles under subheading 85.22 C of Section XVI, Chapter 85, of the Common Customs Tariff (Electrical appliances and apparatus, having individual functions, not falling within any other heading of this chapter: … Other). The plaintiff in the main action contests that classification and alleges that the articles in question fall under heading 85.17 of the same section and chapter: Electric sound or visual signalling apparatus (such as … burglar and fire alarms), other than those of heading No 85.09 or 85.16.

3. Note 2 to Section XVI of the Common Customs Tariff mentions parts of machines and Note 3 composite machines consisting of … machines fitted together …. Note 5 provides that the expression machine means any machine, apparatus or appliance of a kind falling within Section XVI.

4. The Bundesfinanzhof makes it clear in its question that the latter relates to the classification of individual electrical appliances which together are necessary component parts of an electric sound or visual signalling apparatus. The answer to that question requires consideration of whether articles of the kind in question are parts of machines or composite machines within the meaning of the abovementioned Note 2 and 3.

5. Note 3 reads: Unless the headings otherwise require, composite machines consisting of two or more machines fitted together to form a whole and other machines adapted for the purpose of performing two or more complementary or alternative functions are to be classified as if consisting only of that component or as being that machine which performs the principal function. According to the Explanatory Notes to the Brussels Nomenclature relating to that note, for the purposes of the said tariff headings, machines of different kinds are taken to be fitted together to form a whole when incorporated one in the other or mounted one on the other or, generally speaking, where the machines are firmly fixed together and thus form a physical unit. The Explanatory Notes moreover state that the expression composite machines for the purposes of Note 3 does not cover machines or appliances consisting of separate components which are designed to contribute together to a single clearly defined function, including inter aliaburglar alarms. It appears from those Explanatory Notes that where separate component parts are joined together and designed to form a functional unit, such as a burglar alarm, they are to be regarded as parts of machines within the meaning of Note 2 to Section XVI of the Common Customs Tariff and to be classified according to the rules contained in letters (a), (b) and (c) of that note. It is a condition of classification under letter (a) of that note that the parts of machines in question are goods of a kind described in any of the headings of Chapters 84 and 85. Letter (b) of the note relates to parts if suitable for use solely or principally with a particular kind of machine, or with a number of machines falling within the same heading. It is not a condition of tariff classification according to that provision that the parts in question should include all the component parts which normally go to make up the complete appliance. Rule 2 (a) of the Rules for the interpretation of the nomenclature of the Common Customs Tariff provides: Any reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as imported, the incomplete or unfinished article has the essential character of the complete or finished article. The necessary component parts of an appliance covered by a tariff heading, which form a functional unit and when fitted together have the essential character of the complete article, are therefore covered by the expression parts within the meaning of Note 2 to Section XVI of the Common Customs Tariff and are to be classified according to the criteria set out at letter (b) of that note.

6. The question referred must therefore be answered to the effect that Note 2 in conjunction with Note 5 to Section XVI of the Common Customs Tariff must be interpreted as meaning that individual electrical appliances which are suitable for use solely or principally with an electric sound or visual signalling apparatus within the meaning of tariff heading 85.17 are parts within the meaning of that note and are to be classified accordingly under tariff heading 85.17 even when imported without the cables linking the various parts and without the acoustic or visual alarm signalling device.

7. The costs incurred by the Commission of the European Communities, which has submitted observations to the Court, are not recoverable and as these proceedings are, in so far as the parties to the main action are concerned, in the nature of a step in the action pending before the national court, the decision as to costs is a matter for that court.

On those grounds, THE COURT (First Chamber) in answer to the question referred to it by the Bundesfinanzhof by order dated 19 April 1977, hereby rules: