Report for the Hearing in Case C-265/89

I — The facts

A — Relevant legislation

1. For the purposes of this case the following are the relevant headings of the Common Customs Tariff, as set out in the annex to Council Regulation (EEC) No 3618/86 of 24 November 1986 amending Regulation (EEC) No 3331/85 amending Regulation (EEC) No 950/68 on the Common Customs Tariff (Official Journal 1986 L 345, p. 1):

2. By Regulation (EEC) No 1388/85 of 24 May 1985 classifying goods under subheading 12.04 A of the Common Customs Tariff (Official Journal 1985 L 140, p. 7) the Commission defined the respective scope of subheadings 12.04 A and 23.03 B I by reference to a fixed limit for sucrose content of 10%. Article 1 of that regulation provides as follows:

B — Background to the dispute

3. Gebr. Vismans Nederland BV (hereinafter referred to as Vismans), whose registered office is in Amsterdam, imported into the Netherlands sliced sugar beet consisting of the residue of the sugarextraction process, commonly known as beet pulp. The slices had been dried, compressed and pelletized using a binding agent. The goods are used as animal feed or as raw material for animal feed.

4. According to the national court, the goods imported by Vismans have the following objective characteristics:

5. At the time of their importation the goods were classified under subheading 23.03 B I of the Tariff. After various analyses the sucrose content was found to be 12%, with the result that the goods were classified under subheading 12.04 A. Consequently, Vismans was asked to pay HFL 414024 by way of agricultural levies.

C — The preliminary questions

6. The Tariefcommissie considered that the dispute raised questions concerning the interpretation and validity of a provision of Community law; consequently, by a decision of 11 August 1989 it stayed the proceedings before it and requested the Court of Justice, pursuant to Article 177 of the EEC Treaty, to give a preliminary ruling on the following questions:

7. In the order for reference the Tariefcommissie, referring to the objective characteristics of the goods, states that in previous decisions it has classified beet pulp pellets under subheading 23.03 B I of the Tariff even where their sucrose content exceeded 10%. The Tariefcommissie's view is based, first, on the fact that the extraction of sugar has been so complete that further extraction would be uneconomic and that the goods have been pressed into pellets and, secondly, on the fact that the goods in question have undergone more extensive processing than the types of processing referred to in subheading 12.04 A. If none the less the term partly de-sugared sugar beet contained in Article 1 of Regulation No 1388/85 must be understood as including goods such as those imported by Vismans, the Tariefcommissie questions the validity of the regulation.

II — The procedure

8. The order for reference was registered at the Registry of the Court on 23 August 1989.

9. Pursuant to Article 20 of the Protocol on the Statute of the Court of Justice of the European Communities, written observations were submitted by:

10. On hearing the Repon of the Judge-Rapporteur and the views of the Advocate General, the Court decided to open the oral procedure without any preparatory inquiry.

11. By a decision of 14 March 1990 the Court decided, pursuant to Anicie 95(1) and (2) of the Rules of Procedure, to assign the case to the Second Chamber.

III — Summary of the written observations submitted to the Court

12. Vismans shares the Tariefcommissie's view that the imported goods fall under tariff Heading 23.03.

13. Vismans states further that, since Regulation No 1388/85 is merely intended to distinguish between products classified under subheadings 12.04 A and 23.03 B I, it may not run counter to the wording of the subheadings.

14. Vismans claims that the wording of tariff Headings 12.04 and 23.03 does not allow a specific sucrose content to be adopted as a criterion for distinguishing between the two headings. From a technical viewpoint it is not necessary to lay down a specific limit, since it is easy to establish that the goods in question consist of pulp whose remaining sugar content cannot be extracted economically. If the criterion of sucrose content were adopted, the limit should be much higher than 10%, since it is not disputed that beet pulp may have a sucrose content of up to 15 or 16%.

15. Vismans states that the high levy applicable to products falling under tariff Heading 12.04 was introduced in order to protect production of sugar beet within the EEC and with the objective of ensuring efficient and economically justified sugar production. Such a levy is necessary only for sugar beet whose sugar content can be extracted economically. By imposing an extremely high levy on products covered by tariff Heading 12.04 and no levy on products falling under subheading 23.03 B I, the Community legislature intended that products from which further sugar extraction would be uneconomic should be classified under tariff subheading 23.03 B I. In view of the value on the world market and on the European community market of residual products such as those in question in this case, there can be no question of their falling under tariff Heading 12.04.

16. Vismans therefore concludes that the answer to be given to the first question put by the Tariefcommissie is that the goods in question are not to be regarded as partly de-sugared sugar beet for the purposes of Article 1 of Regulation No 1388/85.

17. With regard to the Tariefcommissie's second question, Vismans concludes that Regulation No 1388/85 is contrary to the terms of the Customs Cooperation Council nomenclature and Regulation No 97/69, in so far as it prevents beet pulp (that is to say the residue from the process of extracting sugar from sugar beet) from which further sugar extraction would be uneconomic from being classified under tariff subheading 23.03 B I where the sucrose content of the beet exceeds 10%.

18. The Commission observes that the difference between sugar beet (whether sliced or unsliced) and beet pulp (residual sliced beet), within the meaning of subheadings 12.04 A and 23.03 B I, is indicated neither in the Tariff nor in the Customs Cooperation Council nomenclature. The question arises whether partly de-sugared sugar beet should be considered sugar beet or beet pulp. In Regulation No 1388/85 the Commission laid down the criterion of a sugar content of 10%. If the sliced beet contains more than 10% sugar, it must be classified under Heading 12.04. If its sugar content is 10% or less, it is beet pulp covered by Heading 23.03.

19. In the Commission's view, that criterion is justified by the fact that it is economically feasible to extract all but 6 to 7% of the sugar content of the beet. Since the binder used for pressing the residual slices itself contains sugar, the Commission took the view that a criterion of 10% was justified.

20. The Commission considers that the criterion of 10% is a valid, objective and suitable basis for distinguishing between sugar beet and beet pulp. The essential characteristic of sugar beet is its sugar content. It is therefore logical and objectively justified to base the distinction between sugar beet and beet pulp on the criterion of sugar content. That criterion is based on the fact that it is not in general economically feasible to reduce the sugar content below 6 to 7%. If the tariff classification were based on the ordinary meaning of the term beet pulp, the declarant would himself be able to decide whether Heading 12.04 or 23.03 applied. This would be contrary to the objective character of the Common Customs Tariff.

21. The Commission proposes that the Court should reply as follows to the questions put by the Tariefcommissie:

IV — Replies of the parties to the questions put by the Court

22. The Court requested Vismans and the Commission to reply to the following question:

23. Vismans gives a negative reply to the first question and observes, with regard to the second question, that the fact that the goods in question have been pelletized has no bearing on the reply to the first question. Those replies are based on information obtained from the importer of the goods in question, Feedimpex BV, in Etten-Leur, and from an independent expert, namely N. J. van Geijn, Head of the Chemical Analysis Department of Suiker Unie Research, the central laboratory of the main producer of sugar beet in the Netherlands.

24. The Commission replies that it is technically possible to extract all the sugar from sugar beet. In general, extraction of all but 6 to 7% of the sugar content of sugar beet should be economic. When the sucrose from the binder is added, the pellets then have a sugar content of approximately 10%. As a general rule, it is not economically feasible to extract sugar from pellets which contain less than 10% sucrose. If that percentage were between 10 and 15%, sugar extraction might certainly be economic depending on the level of world sugar prices.

1 Language of the case: Dutch.