JUDGMENT OF 16. 2. 1984 — CASE 46/83 GERLACH v INSPECTEUR DER INVOERRECHTEN EN ACCIJNZEN

REFERENCE to the Court under Article 177 of the EEC Treaty by the Tariefcommissie [Administrative Court of Last Instance in revenue matters], Amsterdam, for a preliminary ruling in the proceedings pending before that court between

THE COURT (First Chamber) composed of: T. Koopmans, President of Chamber, A. O'Keeffe and G. Bosco, Judges, Advocate General: G. Reischl Registrar: J. A. Pompe, Deputy Registrar

gives the following

JUDGMENT

Facts and issues

I — Facts and written procedure

The relevant provisions of the Corninoti Customs Tariff

II — Written observations submitted to the Court

III — Oral procedure

The preliminary questions

Decision

Costs

I —. Facts and written procedure

A. Fish-liver oil:

A. In immediate packings of a net capacity of 1 kg or less

B. Other.

A. Acyclic:

(a). at the time of the application for authorization, a brief description of the plant to be used for the proposed treatments;

(b). the nature of the proposed treatments ;

(c). the description and quantity of the products to be used;

(d). in cases where Additional Notes 5 (n) and 6 to Chapter 27 of the Common Customs Tariff apply, the description, quantity and tariff classification of the products obtained.

1. This Chapter does not cover:

1. Except where the context otherwise required, the headings of this Chapter are to be taken to apply only to :

1. Under which heading of the Common Customs Tariff should a completely hydrogenated animal oil which is manufactured from fish liver and is at the same time an acyclic hydrocarbon compound be classified?

2. If a product of the kind referred to in Question 1 is to be classified under subheading 29.01 A of the Common Customs Tariff, does subheading I or II apply where, although the product is intended to be used otherwise than as a power or heating fuel, no authorization within the meaning of Commission Regulation (EEC) No 1775/77 of 28 July 1977 has been obtained?

II —. Written observations submitted to the Court

III —. Oral procedure

(a). according to Chapter 29, Note la, of the Common Customs Tariff, that chapter applies only to separate chemically defined organic compounds;

(b). as regards purity, Note 6 to Chapter 29 of the Explanatory Notes to the Customs Tariff of the European Communities requires a minimum level of 95% for substances like those in the present case (saturated acyclic hydrocarbons);

(c). in the most favourable case, fish-liver oil can contain only 81% squalene (saturated acyclic hydrocarbon).

I. For use as power or heating fuels

II. For other purposes (a).

1. By order of 16 March 1983, which was received at the Court on 24 March 1983, the Tariefcommissie, Amsterdam, referred to the Court, pursuant to Article 177 of the EEC Treaty, two preliminary questions relating to the interpretation of tariff heading 29.01 A of the Common Customs Tariff and of Commission Regulation No 1775/77 of 28 July 1977 determining the conditions under which certain petroleum products are eligible on importation for a favourable tariff arrangement by reason of their end-use (Official Journal, L 195, p. 5).

2. On 8 August 1980, Gerlach & Co. BV, the plaintiff in the main action, declared the importation for home use of goods, made in and coming from Spain, which it described as fish-liver oil, tariff subheading 15.04 A II. The customs authorities first accepted that classification, under which no import duty is payable.

3. On the basis of samples, the official concerned considered that the imported goods should be classified under subheading 29.01 A I as acyclic hydrocarbons which, being of Spanish origin, were liable, at the time of importation, to a 6.7% ad valorem duty.

4. An objection by the company to the decision to classify the goods under subheading 29.01 A I was rejected and the company then brought an action before the Tariefcommissie, claiming that the acyclic hydrocarbon compounds falling within that subheading must be derived from mineral hydrocarbons. In this case the product was of animal origin and should therefore be classified in subheading 15.04 A II.

5. The Inspector of Customs and Excise, Amsterdam, the defendant in the main action, contended that the product no longer displayed, at the time of importation, the outward characteristics of fish oil and that as a result of the processing which it had undergone, had become a chemically defined compound, namely an acyclic hydrocarbon covered by subheading 29.01 A. Even though the goods were probably not intended to be used as power or heating fuels within the meaning of subheading 29.01 A I, they should be classified under that subheading because the importing company had not sought the authorization allowing the more favourable classification under subheading 29.01 A II, namely, as an acyclic hydrocarbon, intended for other purposes.

6. Considering that the decision in the main action depended upon the interpretation of Community law, the Tariefcommissie referred the following questions to the Court:

7. In the order referring these questions to the court, the Tariefcommissie considers that not only should headings and subheadings 15.04 and 29.01 A, put forward by the parties, be taken into account, but also heading 15.12.

8. The first question therefore asks under which of these three headings the goods in question should be classified.

9. Heading 15.04 covers fats and oils, of fish and marine mammals, whether or not refined. According to the Explanatory Notes to the Customs Cooperation Council's Nomenclature, that heading covers oils and fats derived from fish and marine mammals which are extracted from the body or liver of the fish or from fish waste, and which usually have a characteristic fishy smell and a disagreeable taste. Their natural colour may vary from yellow to reddish-brown. When refined fats and oils derived from fish or marine mammals have been hydrogenated, solidified or hardened by any process, they are classified under heading 15.12. That heading covers animal or vegetable oils and fats, wholly or partly hydrogenated, or solidified or hardened by any other process, whether or not refined, but not further prepared.

10. In its order for reference, the Tarief commissie found that the product in question was transparent, colourless and odourless and that it must be regarded as completely hydrogenated. That fact is sufficient to conclude that the goods cannot be covered by heading 15.04.

11. Neither can the goods in question be classified under heading 15,12, since they must have been prepared in order to become a colourless and odourless product and that only products which have been hydrogenated but not further prepared are covered by heading 15,12.

12. Heading 20.01 is formulated in the following terms:

13. The reply to the first question must therefore be that a completely hydrogenated animal oil, manufactured from fish liver, which is at the same time an acyclic hydrocarbon, must be classified under subheading 29.01 A of the Common Customs Tariff.

14. In its second question, the Tariefcommissie enquires if a product classified under subheading 29.01 A falls under subheading 29.01 A I or subheading 29.01 A II when it is intended to be used otherwise than as a power or heating fuel, but where no authorization within the meaning of Commission Regulation (EEC) No 1775/77 has been obtained.

15. Subheading 29.01 A is divided into two subheadings as follows:

16. Such conditions were determined by the Commission in Regulation No 1775/77 (Official Journal, L 195, p. 5) which states that Commission Regulation No 1535/77 of 4 July 1977 determined the conditions under which certain goods were eligible upon importation for a favourable tariff arrangement by reason of their end-use. Article 3 of the latter regulation provides that the benefit of the favourable tariff arrangement is conditional upon the grant of a written authorization by the competent authorities. The Tariefcommissie found that the plaintiff in the main action did not obtain such an authorization.

17. The obligation to obtain a written authorization from the competent authorities is designed to facilitate the task of the customs authorities and to avoid fraud. In the interest of legal certainty and the smooth functioning of the administration, the procedure provided for in the Community rules must be followed.

18. Consequently, the reply to the second question must be that a product cannot be classified under subheading 29.01 AII where an authorization within the meaning of Regulation No 1775/77 has not been obtained.

19. As a result, the product referred to in the second question cannot be classified under subheading 29.01 A II, and must be classified under subheading 29.01 AI.

20. The costs incurred by the Government of the Kingdom of Belgium and by the Commission of the European Communities, which have submitted observations to the Court, are not recoverable. As the 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 (First Chamber) in answer to the questions referred to it by the Tariefcommissie, Amsterdam, by order of 16 March 1983, hereby rules:

1 A completely hydrogenated animal oil, manufactured from fish liver, which is at the same time an acyclic hydrocarbon, must be classified under subheading 29.01 A of the Common Customs Tariff.

2 In the absence of the authorization provided for by Commission Regulation No 1775/77 of 4 July 1977 (Official Journal, L 195, p. 5), such a product must be classified under subheading 29.01 A I.