Opinion of Mr Advocate General Mischo

Mr President,

Members of the Court,

Pursuant to Article 177 of the Treaty establishing the European Economic Community the Bundesfinanzhof [Federal Finance Court] has asked the Court for a preliminary ruling on the interpretation and validity of Council Regulations Nos 1162/79 and 1481/80 temporarily suspending the autonomous common customs tariff duties on certain industrial products in so far as those regulations concern yarn wholly of polyglycollic acid classified under subheading ex 51.01 A of the Common Customs Tariff.

Between January and September 1980 Ethicon GmbH, the plaintiff in the main proceedings, imported yarn called Polyglactin 910 composed as to 90% of polyglycollic acid and as to 10% of lactic acid or lactid. That yarn is intended for the manufacture in the Community of braid for surgical sutures.

When the yarn was cleared through customs, the Hauptzollamt Itzehoe [Principal Customs Office, Itzehoe], the defendant in the main proceedings, classified it under subheading 51.01 A of the Common Customs Tariff and charged customs duty at the rate of 9%.

The plaintiff appealed against the demands for payment of customs duty taking the view that it must be granted the customs duty exemption for yarn wholly of polyglycollic acid falling within that tariff subheading.

The relevant customs duties had first been suspended pursuant to Article 28 of the EEC Treaty by Council Regulation No 2990/74 of 26 November 1974, which entered into force on 1 January 1975.

It was later periodically extended. In the period in which the yarn for which the plaintiff seeks exemption from customs duty was imported, the regulations mentioned above were in force (No 1162/79 from 1 July 1979 to 30 June 1980 and No 1481/80 from 1 July 1980 to 30 June 1981).

Following representations by the plaintiff in the main proceedings, the Council, by Regulation No 2196/80 of 11 November 1980, which entered into force on 13 November 1980, also suspended customs duties on the product imported by the plaintiff.

That suspension of duties, which was in addition to the suspension of duties on yarn wholly of polyglycollic acid, was worded as follows :

As from 1 July 1981 the wording of that suspension of duties was changed to read as follows :

A footnote states that control of the use for this special purpose is to be carried out pursuant to the relevant Community provisions.

It seems established that the two products have identical properties and that they are used for the manufacture of surgical sutures. The fact that the product imported by Ethicon also incorporates lactic acid has to do with patents. However, the question of patents is irrelevant in this case.

The Finanzgericht dismissed the application on the ground that the relevant suspension of duties covered yarn wholly of polyglycollic acid falling within Common Customs Tariff subheading 51.01 A and not the products at issue, which were not covered until after the suspension of duties provided for by Regulation No 2916/80, mentioned above, came into force on 13 November 1980.

In an appeal on a point of law lodged by the plaintiff against that judgment the Bundesfinanzhof referred the following questions to the Court:

What consequences ensue from the invalidity of the suspension of customs duties referred to in Question 1 ?

The facts of this case clearly bear much resemblance to Case 227/84, Texas Instruments Deutschhnd GmbH v Hauptzollamt München-Mitte, in which the Court delivered judgment on 14 November 1985 ([1985] ECR 3639).

In the Texas Instruments case a suspension of customs duties originally granted by a Council regulation on electronic memories (EPROMS) with certain external dimensions was later extended to electronic memories of the same type but having larger external dimensions. The court making the reference asked the Court whether the first regulation suspending customs duties was contrary to the general principle of equal treatment because it made exemption from customs duties dependent on the dimensions of the housing. The Court ruled that it was not contrary to that principle.

In the present case, however, the legal approach in the order for reference is not quite the same, since the main question raised by the Bundesfinanzhof is the question of the wide interpretation of the regulations concerned.

The question of their validity is raised only as an alternative issue.

Without a thorough examination it is not therefore possible to suggest that this case should be decided on the basis of the judgment in the Texas Instruments case.

I — Interpretation of Regulations Nos 1162/79 and 1481/80 (Question 1)

The plaintiff in the main proceedings argues that in adopting within a relatively short period Regulation No 2916/80 in order to extend a suspension of Common Customs Tariff duties to Polyglactin 910 and in amending by Regulation No 1533/81 (Official Journal 1981, L 155, p. 1 and p. 4) the definition of the product exempted from customs duties by adding the words for the manufacture of surgical sutures, the Council implied that its intention from the outset, that is from 1975, was to suspend customs duties not only on yarn wholly of polyglycollic acid, which was expressly mentioned, but also on all synthetic yarn for the manufacture of surgical sutures, even if it contained less than 100% polyglycollic acid. In other words, the Council had in view the product's use and not its chemical composition. The plaintiff suggests that that aim is also clear from a reading of the preambles to the regulations in question which refer to the need to meet the needs of user industries in the Community.

Finally, the plaintiff and the Bundesfinanzhof refer to the judgment of the Court in Case 292/82 (Firma E. Merck v Hauptzollamt Hamburg-Jonas [1983] ECR 3781) in which the Court held that in interpreting a provision of Community law it is necessary to consider not only its wording but also the context in which it occurs and the objective of the rules of which it is part.

It is suggested that it is therefore permissible to construe the regulations at issue in a manner contrary to their wording but taking account of their aims.

What view is to he taken of those arguments?

1. It must be observed first of all that the text of the regulation suspending customs duties on yarn wholly of polyglycollic acid is quite clear. It clearly covers only yarn composed as to 100% of polyglycollic acid. The plaintiff itself admits that a literal interpretation of that regulation cannot lead to any other result.

2. No argument for interpreting Regulations Nos 1162/79 and 1481/80 widely can be derived from their preambles or from the preambles to Regulations Nos 2916/80 and 1533/81.

3. As regards the argument that the suspension of duty enacted in 1974 should be interpreted with reference to Regulations Nos 2916/80 and 1533/81, which also suspended duty on the product imported by the plaintiff in the main proceedings, the following points must be made.

4. Although the plaintiff in the main proceedings does not formally request that Regulation No 2916/80 should be applied retroactively, its application, if granted, would in fact lead to that result.

5. It remains to be seen whether the decision of the Court in Case 292/82, Merck v Hauptzollamt Hamburg-Jonas, may cast doubt on the argument set out above.

II — The validity of Regulations Nos 1162/79 and 1481/80 (Question 2)

Should the Court answer Question 1 in the negative the Bundesfinanzhof would then like to know whether the suspension of customs duties referred to in Question 1 is invalid for infringing the prohibition of discrimination on the ground that it applies solely to yarn wholly of polyglycollic acid but not to yarn consisting as to 90% of polyglycollic acid and as to 10% of lactid.

In its judgment in the Texas Instruments case the Court held that although Article 28 leaves the Council considerable discretion, it is for the Court to ascertain whether or not the manner in which the Council has carried out the duties thereby entrusted to it constitute a misuse of power or gives rise to discrimination.

I do not believe that there has been a misuse of power or discrimination in this case.

1. Although it may be argued that before 13 November 1980 yarn without lactid and yarn with lactid were treated differently for a few months, that difference of treatment must be regarded as a normal consequence of the fact that the Council takes action in such matters only on the initiative of traders and manufacturers if such initiatives are taken up by a Member State or the Commission.

2. Clearly, it may also happen that in cases such as this case or the Texas Instruments case the Council subsequently learns of the existence of a product which is not covered by the exemption but which can be used for the same purpose.

3. Thirdly, it must be emphasized that the regulations in question, Nos 1162/79 and 1481/80, exempted a product, yarn wholly of polyglycollic acid, and not a trader from customs duty.

4. Finally, it must again be pointed out that Regulations Nos 1162/79 and 1481/80 merely extended an exemption from customs duties granted for the first time in tempore non suspecte, namely five years before Ethicon's product was imported into the Community.

III — The consequences which would ensue from the invalidity of the suspension of customs duties (Question 3)

Since Question 2 has been answered in the negative, there is no need, in my view, to answer Question 3.

Costs

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

To sum up, I propose that the questions submitted by the Bundesfinanzhof should be answered as follows:

1 Translated from the French.

2 OJ 1979 L 147, p. 1.

3 OJ 1980 L 148, p. 1.

4 OJ 1974 L 319, pp. 6 and 7.

5 OJ 1980 L 304, p. 1.

6 Reguládon No 1533/81, OJ 1981 L 155, p. 1.