JUDGMENT OF 20. 3. 1980 — JOINED CASES 87, 112 AND 113/79 BAGUSAT v HAUPTZOLLAMT BERLINPACKHOF

In Joined Cases 87, 112 and 113/79 REFERENCE to the Court under Article 177 of the EEC Treaty by the Seventh Senate of the Bundesfinanzhof [Federal Finance Court] for a preliminary ruling in the actions pending before that court between

THE COURT (Third Chamber) composed of: H. Kutscher, President, J. Menens de Wilmars and Lord Mackenzie Stuart, Judges, Advocate General: G. Reischl Registrar: H. A. Rühi, Principal Administrator

gives the following

JUDGMENT

Facts and Issues

I — Facts and procedure

II — Written observations submitted to the Court

Ill — Oral procedure

Decision

Costs

I —. Facts and procedure

1. Tariff headings 08.11 and 20.06 of the Common Customs Tariff (CCT) read as follows:

2. The firm Bagusat KG, the plaintiff in the main action in Case 87/79, imports cherries from Yugoslavia for use in the chocolate industry. On 9 September 1974 it sought from the customs office of Berlin-Packhof customs clearance for release into free circulation of 30 casks of cherries imported from Yugoslavia. So as to preserve them during transportation the cherries were put up in a flavoured mixture of alcohol and water. The casks contained 70% fruit and 30% juice, the latter itself containing 12% alcohol.

3. The Einkaufsgesellschafi der Deutschen Konservenindustrie mbH, the plaintiff in the main action in Cases 112 and 113/79, released a consignment of cherries into free circulation through the German customs office in November 1974 (Case 112/79) and in September 1974 (Case 113/79). Those cherries were imported from Yugoslavia in casks and so as to preserve them during transportation had been put up in a mixture of alcohol and water with an alcohol content of 15.9% by weight (Case 112/79) and of 12.5 to 16.3% by weight (Case 113/79).

4. The order making the reference in Case 87/79 was received at the Court Registry on 31 May 1979. The orders making the references in Cases 112 and 113/79 were received at the Registry on 25 July 1979.

II —. Written observations submitted to the Court

A —. According to Bagusat, the appellant in the main action in Case 87/79, the judgment given by the Court of Justice in Case 37/75 does not contain any answer to the question asked by the Bundesfinanzhof. It claims that the Court did not in fact formulate any view regarding the words provisionally preserved (heading 08.11) and otherwise prepared or preserved (heading 20.06). The present request for a preliminary ruling is solely concerned with defining the classification criteria for subheading 20.06 B I and heading 08.11. The question of the validity of Regulation No 1709/74 is not relevant for the purposes of the present proceedings.

B —. The appellant in the main action in Cases 112 and 113/79 points out that until Regulation No 1709/74 entered into force, the cherries in question were classified under heading 08.11 in accordance with the judgment of the Bundesfinanzhof of 16 January 1973 referred to above. According to the appellant, Regulation No 1709/74, contrary to what the Court decided in Case 37/75, is not valid. It could, however, be considered as valid if its scope were limited to cherries put up in a solution of water and ethyl alcohol having an alcohol content higher than a certain limit. This is what the appellant will maintain.

C —. According to the Commission the answer to the questions asked are without any doubt to be found in the text of Article 1 of Regulation No 1709/74, the validity of which the Court recognized in Case 37/75. Nothing in the orders of the Bundesfinanzhof leads one to believe that it wishes the validity of Regulation No 1709/74 to be examined again. The Commission therefore refers to the observations submitted by it in Case 37/75.

Ill —. Oral procedure

1. By three separate orders of 24 April and 26 June 1979 received at the Court on 31 May and 25 July 1979, the Bundesfinanzhof referred questions to the Court under Article 177 of the EEC Treaty for a preliminary ruling upon the interpretation of subheading 20.06 B I of the Common Customs Tariff.

2. These questions are referred to the Court in the context of three disputes between two undertakings, Bagusat KG (Case 87/79) and Einkaufsgesellschaft der Deutschen Konservenindustrie mbH (Cases 112 and 113/79) and the German customs administration on whether cherries immersed in a mixture of water and alcohol in order to preserve them provisionally during transport to the Community and until the time they are used, after draining, in the chocolate industry in the Community, are to be classified under tariff subheading 20.06 B I.

3. The subject-matter of tariff subheading 20.06 B I has been defined by Regulation No 1709/74 of the Commission of 2 July 1974 (Official Journal No L 80, p. 15) the first article of which provides that:

4. The main action in Case 87/79 has already been the subject-matter of a judgment of the Court under article 177: the judgment of 11 November 1975 in Case 37/75, Bagusat v Hauptzollamt Berlin-Packhof, [1975] ECR 1339, delivered following a request for a preliminary ruling by the Finanzgericht [Finance Court] Berlin.

5. In that judgment the Court held that Regulation No 1709/74 was valid and consequently ruled that under that regulation cherries put up in a mixture of water and ethyl alcohol must be classified under subheading 20.06 B I of the Common Customs Tariff.

6. Following that judgment the Finanzgericht Berlin dismissed the action brought by Bagusat against the classification decision of the customs authorities. Bagusat argued before the Bundesfinanzhof, to which it had appealed on a point of law, that the preliminary ruling delivered by the Court in Case 37/75 had not removed all the doubt about the application of subheading 20.06 B I to the disputed imports and consequently requested that a fresh request for a preliminary ruling be addressed to the Court. The Bundesfinanzhof subsequently referred to the Court the following question in Case 87/79:

7. Since the subject-matter of subheading 20.06 B I, as regards the fruit concerned in the disputes in the main actions, has been defined by Regulation No 1709/74, the questions referred to the Court are really asking whether goods having the characteristics referred to by the court making the reference come within the scope of Regulation No 1709/74 and, if so, whether Regulation No 1709/74 is valid to the extent to which it classifies such goods under subheading 20.06 B I.

8. The applicants in the main action contended that Regulation No 1709/74 was not meant to cover cherries put up in a mixture of water and ethyl alcohol whose alcoholic strength is barely sufficient to ensure their provisional preservation. However that interpretation cannot be reconciled with the general words used by Article 1 of Regulation No 1709/74 which classifies under heading 20.06 B I cherries put up in a mixture of water and ethyl alcohol, without making any distinction as to the alcoholic strength of the mixture. Furthermore it follows from the statement of the grounds on which the regulation is based and in particular from the third and sixth recitals in the preamble thereto that the authors intended precisely to classify under subheading 20.06 B I cherries which are provisionally preserved in a mixture of water and ethyl alcohol for use, inter alia, in the manufacture of chocolate products. It therefore follows that goods having the characteristics referred to by the court making the reference must, by virtue of Article 1 of Regulation No 1709/74, be classified under subheading 20.06 B I.

9. The question remains whether, as the appellants in the main actions contend, in making provision for this classification, Regulation No 1709/74 is incompatible with the Common Customs Tariff and is therefore invalid.

10. It should first of all be called to mind that in its Regulation No 97/69 on measures to be taken for the application of the customs tariff (Official Journal, English Special Edition, 1969 (I), p. 12) the Council conferred upon the Commission, acting in cooperation with the customs experts of the Member States, a wide power of discretion in defining the subject-matter of tariff headings coming into consideration for classification. The question which arises is therefore whether Regulation No 1709/74 has exceeded the limits imposed by the terms of the Common Customs Tariff.

11. Whilst it is true, as the appellants in the main actions point out, that Note 1 (a) in Chapter 20 of the Common Customs Tariff states that the chapter does not include fruit prepared or preserved by processes listed in Chapter 8, it still follows from the wording of heading 08.11, the only heading in that chapter which can come into consideration as regards the classification of the goods, that it covers provisionally preserved fruit, provided, however, that in that state it is unsuitable for immediate consumption.

12. It follows that fruit provisionally preserved cannot come under heading 08.11 if it appears that the preservation process used has not resulted in making it unsuitable for immediate consumption in that state. Whether or not the goods at issue are to undergo subsequent processing is irrelevant for the purposes of defining the scope of headings 08.11 and 20.06. It follows from this that fruit preserved in a mixture of water and alcohol must be classified under subheading 20.06 B I if it is not unsuitable for immediate consumption in that state.

13. Following the advice of the Committee on Common Customs Tariff Nomenclature, the Commission took the view that cherries put up in a mixture of water and ethyl alcohol are not thereby rendered unsuitable for immediate consumption in that state.

14. The applicants in the main action have not disclosed any factor enabling it to be thought that the classification made by the Commission in Regulation No 1709/74 is manifestly incorrect.

15. In fact, even though, as the applicants in the main action maintain with the assistance of experts' reports, the goods at issue are not, in the view of consumers at the present time, considered to be appetizing and though it is not usual to consume them as they are, that does not signify that they are thereby unsuitable for consumption as long as they may be consumed in that state without risk to health. It is true that the applicants in the main actions in Cases 112 and 113/79 argued that the degree of impurity of alcohol in which the goods they import are put up is higher than that accepted by German regulations on the subject; but none of the applicants went as far as to argue that the consumption in that state of the goods at issue, which are intended to be used in the food industry, represents a special risk to health. By providing that the goods referred to by the three questions of the Bundesfinanzhof come under subheading 20.06 B I, the Commission has not therefore misinterpreted the provisions of the Common Customs Tariff, having particular regard to the wording of heading 08.11 in the different languages.

16. The reply to the questions referred to the Court should therefore be that fruit put up in a mixture of water and alcohol, which is not unsuitable in that state for immediate consumption, must be classified under subheading 20.06 B I of the Common Customs Tariff. The proceedings in these cases have disclosed no factor of such a kind as to affect the validity of Regulation No 1709/74 of the Commission, which makes provision for such a tariff classification of cherries put up in a mixture of water and ethyl alcohol as fruit suitable in that state for immediate consumption.

17. The costs incurred by the Commission of the European Communities, which has submitted observations to the Court, are not recoverable. 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 on costs is a matter for that court.

On those grounds, THE COURT (Third Chamber), in answer to the questions referred to it by the Bundesfinanzhof by separate orders of 24 April and 26 June 1979, hereby rules: