Report for the Hearing in Joined Cases C-354/88, C-355/88 and C-356/88
I — Facts and procedure
1. Relevant provisions
Article 15(1) of Regulation (EEC) No 2759/75 of the Council of 29 October 1975 on the common organization of the market in pigmeat (Official Journal 1975 L 282, p. 1), provides that, to the extent necessary to enable the products covered by that common organization of the market to be exported on the basis of quotations or prices for those products on the world market, the difference between those quotations or prices and prices within the Community may be covered by an export refund.
Under Article 17(1) of that regulation, the general rules for the interpretation of the Common Customs Tariff and the special rules for its application are to apply to the tariff classification of products covered by that regulation and the tariff nomenclature resulting from its application is to form part of the Common Customs Tariff.
Article 2 of Commission Regulation (EEC) No 3602/82 of 21 December 1982 fixing coefficients for calculating levies on pigmeat products other than pig carcasses, amending the Annex to Council Regulation (EEC) No 950/68 on the Common Customs Tariff and repealing Regulation (EEC) No 747/79 (Official Journal 1982 L 376, p. 23) redefined a number of products in that sector, which, as provided for in Article 17(1) of Regulation No 2759/75, resulted in certain amendments to the nomenclature and to the special rules for the application of the Common Customs Tariff.
Those amendments, which are the subject of Article 3 of Regulation No 3602/82 which came into force on 1 February 1983, made it necessary to make corresponding changes to the list of products which give an entitlement to a refund. That was done by Commission Regulation (EEC) No 263/83 of 28 January 1983 (Official Journal 1983 L 30, p. 72), which also came into force on 1 February 1983. In accordance with the annex to Regulation No 263/83, refunds are to be paid inter alia on products falling within tariff subheadings 02.01 A III (a) 3 (fore-ends or shoulders; parts thereof) and 02.01 A III (a) 4 (loins and parts thereof), but not on products falling within subheading 02.01 A III (a) 6 (bb) (other).
Under the first subparagraph of Article 2(2) of Regulation No 3602/82, the parts of cuts of inter alia the fore-end, shoulder and loin fall within the same subheadings as the entire cuts only if they contain the muscle tissue and the bones in natural proportion to the entire cuts.
Under the terms of Additional Note No 2 to Chapter 2 of the Common Customs Tariff, which is derived from the first subparagraph of Article 2(2) of Regulation No 3602/82 and was inserted by Article 3 of that regulation, and by virtue of the amendment to subheading 02.01 A III (a) made by Article 3, those parts of the fore-end, shoulder or loin which do not contain muscle tissue and bones in natural proportion to the entire cuts and which until 1 February 1983 fell within the same tariff subheading as the entire cuts, fall, after that date, within tariff subheading 02.01 A III (a) 6 (bb) and for that reason do not give any entitlement to a refund.
2. Background to the dispute
The plaintiffs in the main proceedings in the three cases exported a number of consignments of pigmeat to non-member countries between the beginning of February 1983 and the end of March 1986.
For the purposes of the payment of export refunds, those products were declared as falling under tariff subheadings 02.01 A III (a) 3 (fore-ends or shoulders; parts thereof) and 02.01 A III (a) 4 (loins and parts thereof).
The customs authorities, however, took the view that the consignments in question ought to be classified under tariff subheading 02.01 A III (a) 6 (bb). They rejected a number of requests seeking payment of refunds and, in some cases, monetary compensatory amounts, and took steps to recover those sums which had already been paid.
The plaintiffs in the main proceedings appealed against those decisions to the College van Beroep voor het Bedrijfsleven, which ordered an expert report to be drawn up on a number of issues, including the concept of the natural proportion of muscle tissue to bone in parts of pigmeat taken from the fore-end or shoulder and from the loin and the possibility of determining objectively the actual proportion of muscle tissue to bone in the ribs which made up the consignments at issue.
The answer from the experts was that there was no normal method for cutting the parts in question which was uniform throughout the Community, that the natural proportion of muscle tissue to bone could not be expressed as a generally valid percentage in view of the many sources of variation, and that it was also impossible to state what tolerance must be allowed for in that regard.
The experts' answers led the national court to doubt whether it would be possible to derive a uniform standard, applicable throughout the Community, from the concept of the natural proportion to the entire cuts referred to in Additional Note No 2 to Chapter 2 of the Customs Tariff, introduced by Regulation No 3602/82, in order to determine the permissible ratio of muscle tissue to bone of parts of pigmeat taken from the fore-end or shoulder and loin, within the meaning given to those cuts by Article 2 of that regulation, for the purpose of classifying them under the same tariff subheading as the entire cut.
3. Questions referred for a preliminary ruling
As it considered that the proceedings involved an examination of the validity and the interpretation of the Community rules in question, the College van Beroep voor het Bedrijfsleven, by an order of 16 September 1988, decided to stay the proceedings under Article 177 of the EEC Treaty until the Court of Justice had given a preliminary ruling on the following questions, which are identical for each of the three cases:
4. Procedure before the Court of Justice
The three orders for reference were lodged at the Court Registry on 12 December 1988.
In accordance with Article 20 of the Protocol on the Statute of the Court of Justice of the European Communities, written observations were submitted:
in Case C-355/88, on 31 March 1989, by Sleegers Vleeswarenfabriek BV, plaintiff in the main proceedings, represented by Mr Wertenbroek, of the Eindhoven Bar;
in Case C-356/88, on 31 March 1989, by Kühne en Heitz BV, plaintiff in the main proceedings, represented by Messrs Braakman and Glazener, of the Rotterdam Bar; and
in the three cases, on 3 April 1989, by the Produktschap voor Vee and Vlees, defendant in the main proceedings, and on 4 April 1989, by the Commission of the European Communities, represented by its Legal Adviser, Robert Caspar Fischer, acting as Agent.
By order of 17 January 1990, the Court decided to join the three cases for the purposes of the oral procedure and the judgment.
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 and to assign the cases to the First Chamber.
II — Summary of the written observations submitted to the Court
Sleegers Vleeswarenfabriek Vlijmen BV, plaintiff in the main proceedings in Case C-355/88, takes the view that the first subparagraph of Article 2(2) of Regulation No 3602/82 is invalid, since it is impossible to define with absolute precision the criterion of the natural proportion of muscle tissue to bone referred to in that provision.
It claims that the proportion in entire cuts is never the same as in parts thereof. For that reason, only two solutions are possible: either to assume that when a cut satisfies a Community standard, parts of that cut are always to be classified under the same tariff subheading, provided that a standard method of cutting has been used, or always to classify the parts under a different tariff subheading to that of the entire cut, irrespective of whether or not an entitlement to a refund thereby arises.
Sleegers Vleeswarenfabriek Vlijmen BV also points to the differences between Member States as to cutting methods and argues that it is therefore impossible to base oneself on the normal cutting method in each State, since that would be contrary to the uniform application of Community law.
It also relies on the influence which sex, species, age and feeding methods may have on the proportion of muscle tissue to bone and draws the conclusion that there will always be differences in the Community which the provision in question, far from removing, reinforces yet further.
In view of the answer which it suggests should be given to the first question, Sleegers Vleeswarenfabriek Vlijmen BV considers it unnecessary to reply to the second one.
Kühne en Heitz BV, the plaintiff in the main proceedings in Case C-356/88, points out first of all that any system which requires a comparison to be made between the proportion of muscle tissue to bone in parts to the natural proportion in the entire cut cannot function in practice, as it is impossible for parts to contain muscle tissue and bone in the same proportions as the entire cut. Such a system would have to be based on a general rule regarding the natural proportion of muscle tissue to bone, something which it is impossible to define.
It states that the requirement under the first subparagraph of Anicie 2(2) of Regulation No 3602/82 that parts of cuts must contain muscle tissue and bone in natural proportion to the entire cuts must be interpreted as meaning that the natural balance in the proportion of muscle tissue to bone in the parts may never be altered. The determining factor, therefore, is not the natural proportions in the entire cuts, but rather those in the parts of those cuts.
In its opinion, such an interpretation implies that parts wili satisfy the condition imposed by the aforementioned provision if they contain muscle tissue and bone in the same proportions as parts which have not yet been separated. That would mean, with regard to parts of the shoulder, that those cannot be boned after separation from the shoulder, and, with regard to chuck back ribs, that the muscle tissue situated between the ribs cannot be removed after they have been cut from the shoulder.
Kühne en Heitz BV also points out that only the interpretation which it proposes would have the effect of granting the same refund for a cut exported in parts and for a cut exported whole.
Finally, only that interpretation affords a practical and uniform criterion, since differences in the methods of separating cuts, in the species, age, sex and breeding and feeding methods of the pig do not affect the application of the first subparagraph of Article 2(2) of Regulation No 3602/82.
However, if that interpretation should be rejected and it is necessary to compare the proportion of muscle tissue to bone in parts with the proportion in the entire cut, Kühne en Heitz BV considers that the abovementioned provision ought to be declared invalid as contrary to the principles of legal certainty, equality and proportionality.
The defendant in the main proceedings in the three cases has submitted observations only in the event that the first question should be answered in the affirmative.
It believes that the first subparagraph of Article 2(2) of Regulation No 3602/82 requires a comparison to be made between the proportion of muscle tissue to bone in the parts of the cut and that in the entire cut; only in those cases where the proportions are identical may the parts be classified under the same tariff subheading as the entire cut.
The defendant points out that the proportion of muscle tissue to bone in the parts declared for export in the present cases were below the natural proportions in the entire cuts. Since the entire cuts from which the exported parts had been derived were obviously no longer extant, the natural proportions for entire cuts had been determined at a national level on the basis of cuts which would be most favourable to interested parties and which were obtained using the cutting method generally employed in the Netherlands in the commercial meat-processing industry, using standard breeds of pig of an age and a slaughter live-weight normal in that State.
Even if a comparison had been made between the parts which were exported and the notional entire cuts, unusual in the
Netherlands, containing a maximum proportion of bone, taking pigs whose breed and age were most favourable to the interested party, the same result would have been obtained, according to the defendant.
The Commission first of all notes that the questions referred for a preliminary ruling concern not so much the validity of the first subparagraph of Article 2(2) of Regulation No 3602/82 — which relates primarily to import levies — as the validity of Additional Note No 2 to Chapter 2 of the Customs Tariff, introduced by Article 3 of that regulation, which applies in respect of both import levies and export refunds in the pigmeat sector.
The Commission points out that the system set up by that Additional Note cannot, despite its flexibility, be in any way considered arbitrary and consequently invalid. While the criterion of muscle tissue and bones in natural proportion to the entire cuts introduced by the note in question obviously cannot be expressed as a universally valid percentage, it does fall between objective upper and lower limits. The parts derived from the entire cut can be classified under the same tariff subheading as the entire cut only if their proportion of muscle tissue to bone lies between the upper and lower limits of the natural proportion of muscle tissue to bone of the entire cut. Parts whose proportions are outside those limits must be classified under the subheading reserved for other unboned pigmeat, which does not qualify for a refund.
According to the Commission, the limits referred to above must be calculated on the basis of the natural proportions for entire cuts which are similar to those from which the parts were derived, taken from a normal slaughter pig, in the different possible combinations of fore-ends, shoulders or loins, as those expressions are defined in Additional Note No 2 to Chapter 2 of the Customs Tariff. That note lists the various usual descriptions in the Community for entire cuts of pigmeat.
The competent national authorities can therefore, by basing their figures generally on slaughter pigs and cuts to be found on their own national market, determine with sufficient precision the upper and lower limits of the proportions of muscle tissue to bone corresponding to the specifications of the entire cuts as defined by Community legislation, a fact which removes one of the main sources of potential variations. However, according to the Commission, even if some differences were still to remain in the proportions of muscle tissue to bone determined in different Member States in respect of the same presentation of a specific cut, those differences ought to be accepted according to the judgment of the Court in Case 327/82 Ekro BV Vee- en Vleeshandel [1984] ECR 107, according to which, in the absence of more precise details in Community legislation concerning certain factors, the competent national authorities must assess those factors in accordance with the positions and practices existing within their own market and, if necessary, in the region or economic sector concerned.
1 Language of the case: Dutch.