Report for the Hearing delivered in Case 37/88

I — Legal background, facts and procedure

1. Article 30(3) of Regulation No 1371/81 is worded as follows:

2. During the period from August 1981 to August 1984, the plaintiff in the main proceedings completed customs formalities for the export to the Netherlands of several consignments of wheat flour, which it declared as goods falling under subheading 11.01 A of the Common Customs Tariff. According to the information given in the control copies, the exported products were a mixture of wheat flour and wheat bran. It is not disputed that the percentage of wheat bran represented 10-20% in weight and the wheat flour less than 90% of the weight of the product.

3. Samples were taken from some consignments. The Zolltechnische Prüfungsund Lehranstalt (Customs Laboratory and Training College), Berlin, analysed those samples on the basis of their ash content and rate of passage through a sieve and found that the product consisted of wheat flour falling under subheading 11.01 A of the Common Customs Tariff, since the product complied with the technical criteria contained in Note 2 to Chapter 11 of the Common Customs Tariff (starch content greater than or equal to 45% by weight calculated on the dry product, an ash content of 2.5% or less on the dry product and a rate of passage of 80% or more through a sieve with an aperture of 315 micrometers).

4. The applicant claimed in all cases payment of monetary compensatory amounts at the rates fixed for the export of wheat flour falling under subheading 11.01 A of the Common Customs Tariff, which the defendant at first granted.

5. Following subsequent checks, however, the defendant came to the conclusion that, on the basis of Article 30(3) of Regulation No 1371/81, monetary compensatory amounts ought to have been granted only at the lower rates fixed for wheat bran falling under subheading 23.02 A II of the Common Customs Tariff. Accordingly, by decision of 7 December 1984, it altered the decisions in respect of wheat flour with a bran content of more than 10% by weight and demanded repayment of DM 130303.58, being the amount overpaid.

6. For consignments exponed after 22 November 1983 the defendant straight away fixed the monetary compensatory amounts at the rates applicable for wheat bran falling under subheading 23.02 A II of the Common Customs Tariff and rejected applications for payment of monetary compensatory amounts at the higher rate fixed for wheat flour.

7. Since the applicant was unsuccessful in the precontentious procedure, it lodged an appeal with the Finanzgericht (Finance Court) Hamburg seeking a declaration that the abovementioned decision of 7 December 1984, and the decisions granting monetary compensatory amounts at the rates applicable for bran, were void.

8. The national court is inclined to the view that the product in issue is a mixture within the meaning of Rule 3(b) of the General Rules for the interpretation of the nomenclature of the Common Customs Tariff and Article 30(3) of Regulation No 1371/81. In view of the fact that monetary compensatory amounts fixed for wheat flour are at least three times higher than those applicable for wheat bran, the national court considers that it would not be justified in applying the monetary compensatory amounts provided for wheat flour to a mixture which may contain up to 20% bran. Moreover, it has reservations as to the applicability of Article 30(3) of Regulation No 1371/81 because that provision does not mention Chapter 23, under which bran falls.

9. Since it considered that the dispute involved an interpretation of the Community rules in question, the Finanzgericht Hamburg decided, by order of 30 October 1987, to stay the proceedings until the Court of Justice of the European Communities had given a preliminary ruling under Article 177 of the EEC Treaty on the following questions:

10. The order of the Finanzgericht Hamburg was received at the Court on 2 February 1988.

11. By order of 30 June 1988, which was received at the Court on 11 July 1988, the Finanzgericht Hamburg withdrew the second question, since the defendant had in the mean time set aside the abovementioned decision of 7 December 1984 and, consequently, the main proceedings had lost their purpose to that extent. The Court has therefore only to reply to the first question.

12. In accordance with Article 20 of the Protocol of Statute of the Court of Justice of the EEC, written observations were submitted on 22 April 1988 by Rheinkrone-Kraftfutterwerk Gebr. Hübers GmbH & Co. KG, the applicant in the main proceedings, represented by Fritz Modest, Rechtsanwalt, Hamburg, and on 16 May 1988 by the Commission of the European Communities, represented by its Legal Adviser Dierk Booss, acting as Agent, assisted by Jean Imbach, a lawyer.

13. Upon hearing the Report of the Judge-Rapporteur and the views of the Advocate General, the Court decided to open the oral procedure without any preparatory inquiry.

14. In accordance with Article 95(1) and (2) of the Rules of Procedure, the Court, by decision of 1 February 1989, assigned the case to the Fourth Chamber.

II — Written observations submitted to the Court

15. The applicant in the main proceedings considers that the mixtures in question are not covered by Article 30(3) of Regulation No 1371/81. In support of this submission, it advances the following arguments.

16. The product is a mixture falling within Chapters 11 and 23 of the Common Customs Tariff. The wording of Article 30(3) of Regulation No 1371/81 mentions only mixtures falling within Chapter 2, 10 or 11 of the Common Customs Tariff, and not mixtures including amongst others products falling within Chapters 2, 10 or 11 of the Common Customs Tariff.

17. The applicant in the main proceedings asserts that it cannot be inferred from the object or the purpose of Article 30(3) that this provision is also to be applied to mixtures having ingredients falling within a chapter other than Chapters 2, 10 or 11 of the Common Customs Tariff, since the statement of the reasons on which the regulation is based provides indication to that effect.

18. A different interpretation would be in contradiction with the rules laid down for the duties applicable in the case of mixtures falling within Chapter 10 (cereals) of the Common Customs Tariff, which are framed in terms identical or similar to those contained in Article 30(3) of Regulation No 1371/81. It is clear from the Additional Notesto that chapter that the rules in question apply solely to mixtures made up of two or more cereals covered by Chapter 10, and not to mixtures composed of cereals and products falling under other chapters. There is no reason why it should be otherwise as regards the grant of monetary compensatory amounts on the exportation of cereals and cereal products.

19. In any event, wheat flour produced by mixing white wheat flour (falling under subheading 11.01 A of the Common Customs Tariff) and wheat bran (falling under subheading 23.02 A of the Common Customs Tariff) does not constitute a mixture. As the Court held in its judgment of 1 July 1982 in Case 145/81 Hauptzollamt Hamburg Jonas v Wünsche [1982] ECR 2493, the decisive criterion for the classification of goods for customs purposes must in general be sought in their objective characteristics and properties. White wheat flour and wheat bran consist of the same components and differ only in the amount of starch and ash content. Bran loses its identity when, owing to mixing, the starch content of the finished product exceeds 45% and the ash content falls below 2.5% of the weight.

20. If the Finanzgericht Hamburg considers that Article 30(3) of Regulation No 1371/81 is intended to prevent traders from enriching themselves, that is not so in the case of millers producing wheat flour (having, as in the present case, an ash content of 1.6% of the weight) using white flour (having an ash content of 0.6% by weight) and wheat bran (having a starch content of less than 28% by weight). Since the demand for wheat flour having an ash content of 1.6% by weight is only occasional, it is easier for a miller to produce that kind of flour by mixing white wheat flour with bran, that is to say by conducting a two-stage operation, than to alter the technical manufacturing process in order to produce from the beginning that kind of flour by a uniform method of milling. Yet the costs incurred by the miller are by definition higher in the former case although in both cases the monetary compensatory amount granted is the same.

21. The Commission prefaces its observations by remarking that although under the terms of Article 9(1)(a) of Regulation No 1371/81 the provisions relating to the application of the Common Customs Tariff apply in principle in the field of monetary compensatory amounts as regards the tariff classification of products, that does not remove the necessity, in the context of monetary compensation, of also taking into consideration certain specific provisions as regards the amount of compensation to be granted. That is clear from Article 9(1)(b) of that regulation, which provides that it is necessary to include, amongst the information necessary for determining the monetary compensatory amount, in addition to the heading or subheading of the Common Customs Tariff and the quantity of the products, the (specific) nomenclature used for monetary compensatory amounts and, in so far as it is necessary for determining the monetary compensatory amount, particulars of the composition of the products. The provisions appearing under Title V of Regulation No 1371/81, including Article 30, are special provisions and therefore prevail over the general provisions of the regulation.

22. The expression mixtures is defined neither in Regulation No 1371/81 nor in the General Rules for the interpretation of the Common Customs Tariff. According to normal linguistic usage, a mixture is a homogeneous product obtained from different raw materials. Since flour and bran are two different components, the product obtained from those two components is a homogeneous mixture similar to flour.

23. As regards the question whether it falls within Chapter 11 of the Common Customs Tariff, there can be no doubt that the mixture in question satisfies the technical criteria appearing in Note 2 to Chapter 11 and therefore is covered exclusively by this chapter. Given that the national court arrived at the same conclusion, the Commission does not see why it raises the question whether the concept of mixtures within the meaning of Article 30(3) also covers a product whose components are partly constituted by items falling within other chapters of the Common Customs Tariff. In the Commission's view, bran complying with the criteria laid down in Note 2 to Chapter 11 is not a product falling within Chapter 23.

24. The finding that the definition of mixtures within the meaning of Article 30(3) of Regulation No 1371/81 follows the provisions of the Common Customs Tariff does not mean that monetary compensatory amounts always correspond to the headings of the Common Customs Tariff. If it were so, Article 30(3) would be deprived of meaning since the classification rules of the Common Customs Tariff contain detailed provisions for the determination of customs duties and levies applicable to mixtures.

25. The imposition of stricter conditions for the grant of monetary compensatory amounts applicable to mixtures is justified by the difference between the objectives pursued by the law relating to monetary compensatory amounts and those pursued by customs law. In particular, such stricter conditions are intended to make it more difficult to create products by mixing which do not correspond to a market need, with the intention of exporting them to another country of the Community and receiving considerable monetary compensatory amounts, then separating the components and re-importing the low-value component which attracts low monetary compensatory amounts (so-called carousel transactions). Although that is not the case in these proceedings, the risk of this type of operation justifies the existence of the provisions of Article 30(3) of Regulation No 1371/81.

1 Language of the case: German.