Report for the Hearing in Case C-246/90

I — Legislation

1. Since the Community market in Morello cherries was exposed to serious disturbances owing to the low level of prices at which those cherries were imported into the Community from nonmember countries, protective measures were introduced by Commission Regulation (EEC) No 1626/85 of 14 June 1985 on protective measures applicable to imports of certain Morello cherries (OJ 1985 L 156, p. 13), as amended by Commission Regulation (EEC) No 1712/85 of 21 June 1985 amending the German, Greek, English, French, Italian and Dutch versions of Regulation (EEC) No 1626/85 of 14 June 1985 on protective measures applicable to imports of certain Morello cherries (OJ 1985 L 163, p. 46).

2. Article 1(1) and (2) of Regulation No 1626/85 refers to the Common Customs Tariff in order to define Morello cherries. These provisions read as follows:

3. The Common Customs Tariff (CCT) to the headings of which Article 1(1) refers was at the material time Council Regulation (EEC) No 3400/84 of 27 November 1984 amending Regulation (EEC) No 950/68 on the Common Customs Tariff (OJ 1984 L 320, p. 1).

4. Additional Notes 2, 3 and 5 to Chapter 20 of the CCT are worded as follows:

5. According to the explanatory notes of the Customs Cooperation Council nomenclature (the explanatory notes) on heading 20.06, that heading covers inter alia:

6. In addition, heading 17.02 of the CCT covers:

7. According to the explanatory notes on heading 17.02 B, Sugar syrups, that part of the heading covers

8. A definition of the expression sugar syrup is also given in Commission Regulation (EEC) No 1599/84 of 5 June 1984 laying down detailed rules for the application of the system of production aid for products processed from fruit and vegetables (OJ 1984 L152, p. 16). According to Article l(2)(p), for the purposes of the production aid system sugar syrup means:

II — Facts and proceedings before the national court

9. According to the order for reference, between 29 July and 3 September 1985 Parma Handelsgesellschaft mbH (Parma) imported from Yugoslavia eight consignments of stewed Morello cherries (Dunstsauerkirschen), for which it applied to Hauptzollamt (principal customs office) Bad Reichenhall — Zollamt Autobahn for admission into free circulation. Some of the customs declarations described the goods as fruit otherwise prepared or preserved, not containing added alcohol or sugar, own sugar content between 9% and 13%, in immediate packings of a net capacity of 1 kg or more. In the case of the other import transactions, the goods were described as fruit, not containing added sugar.

10. The principal customs office took the view that the goods were Morello cherries in syrup for which the minimum price had not been respected and, by decision of 18 September 1985 and a decision of 17 July 1989 on a complaint from Parma, fixed countervailing charges pursuant to Regulation No 1626/85, cited above.

11. In an action brought in the Finanzgericht (Finance Court) München, Parma argued essentially that it had not imported Morello cherries in syrup but only Morello cherries in water. It maintained that Morello cherries in syrup, within the meaning of Regulation No 1626/85, could only be Morello cherries to which sugar syrup had been added as a preservative. Moreover, the minimum price ought to have been worked out on the basis of the weight of the Morello cherries alone, since the weight of the water was not part of the cherries' net weight, but formed part of the packing.

12. The Finanzgericht took the view that the outcome of the dispute depended on whether the goods imported by Parma constituted Morello cherries in syrup within the meaning of Regulation No 1626/85 and on whether, in order to calculate the minimum price, not only the weight of the Morello cherries had to be taken into account, but also the weight of the liquid in which they were contained. Consequently, by order of 10 July 1990 it stayed the proceedings and referred the following questions to the Court for a preliminary ruling:

13. As far as the first question is concerned, the Finanzgericht is inclined to take the view in the grounds of its order that although the ordinary meaning of the term syrup differs from that used in connection with the CCT, it is possible to describe as Morello cherry syrup a liquid obtained by heating Morello cherries in water which has a sugar content in excess of 9%. The Finanzgericht reaches this conclusion on the basis of the finding that neither Regulation No 1626/85 as amended by Regulation No 1712/85 nor the CCT define what is to be understood by Morello cherries in syrup. It bases its reasoning on the following matters:

14. According to the Finanzgericht, in order for the liquid to fall within the tariff concept of syrup, it is irrelevant that the liquid is to be used solely for the purposes of the pasteurization and preservation of the Morello cherries and is discarded by the user. If a product has at the time of importation — which is the relevant time — the properties of a Morello cherry syrup, the reasons for which the syrup was manufactured and the use to which it is to be put after the product has been imported are irrelevant.

15. As regards the second question, the Finanzgericht considers that in so far as the net weight which is to be used to calculate the minimum price is not defined in Regulation No 1626/85, there are numerous indicia which support the argument that the net weight of Morello cherries in syrup in immediate packings is the weight of the Morello cherries including the syrup.

16. Although it points out that it is difficult wholly to discount Parma's argument to the effect that the amount of the minimum prices fixed by Regulation No 1626/85 apparently takes no account of the amount of infused liquid contained in Morello cherry conserves, the Finanzgericht takes the view that the juice of the Morello cherries passes out of the fruit by diffusion, and that through the preservation process the Morello cherries lose, in terms of value and weight, the equivalent of the juice which passes out of the cherries and mixes with the water. The resulting syrup is not solely a medium for pasteurization and preservation, but a foodstuff of high nutritional value, which distinguishes Morello cherries from other goods for which the water in which they are contained is not in itself a foodstuff of high nutritional value, but merely a preserving agent (conserved sausages, mozzarella cheese).

17. According to the Finanzgericht, that difference also emerges from reading Commission Regulation (EEC) No 67/86 of 15 January 1986 on protective measures applicable to imports of provisionally preserved raspberries (OJ 1986 L 12, p. 13), of which Article 2(3), in defining the fob price, takes account, not of the net weight of the imported goods, but of the quantity of products contained in a consignment, since the fruit in question is provisionally preserved by sulphur dioxide gas, in brine, in sulphur water or in other substances used for provisional preservation, and is unsuitable in that state for consumption.

III — Procedure before the Court

18. The national court's order was received at the Court Registry on 13 August 1990.

19. Written observations were submitted pursuant to Article 20 of the Protocol on the Statute of the Court of Justice of the European Communities by Parma, represented by Hinrich Glashoff and Herbert Kühle, tax advisers, and by the Commission of the European Communities, represented by René Barents, Legal Adviser, assisted by Roberto Hayder, an official of the Federal Ministry for Economic Affairs of the Federal Republic of Germany, seconded to the Commission's Legal Service under the scheme for exchanges with national officials.

20. On 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, pursuant to Article 95(1) and (2) of the Rules of Procedure, to refer the case to the Fourth Chamber. However, the Court asked the Commission to answer a number of questions; it complied with that request within the stipulated time.

IV — Written observations submitted to the Court

The first question

21. Parma and the Commission agree in limine that the meaning of the national court's first question is not whether the Morello cherries in question fall within subheading 20.06 B II a) and b) of the CCT, but whether the Morello cherries, which are contained in a liquid obtained by heating them in water which hence has a sugar content in excess of 9% are to be regarded as Morello cherries in syrup for the purposes of Regulation No 1626/85.

22. Parma considers that the term syrup can be used only to designate a liquid to which sugar has been added and whose sugar content is higher than that of the conserved fruit. Consequently, in its view Morello cherries conserved in water to which in fact no sugar has been added do not constitute Morello cherries in syrup within the meaning of Regulation No 1626/85, not even where the covering liquid, by virtue of the laws of diffusion, has a natural sugar content of more than 9%, owing to the mixture of cellular juice and water.

23. In the first place, Parma relies on the wording of Article 1(1) of Regulation No 1626/85. It observes that of all the products falling within CCT heading No 20.06, only Morello cherries in syrup coming under subheading 20.06 B II a) 8 (ex 8) are subject to the minimum price rules. According to Parma, CCT subheading 20.06 B II a) 8 covers, in a general manner and without introducing any subdivision whatsoever, other fruits containing added sugar, whereas, by specifically mentioning Morello cherries in syrup, Article 1(1) of Regulation No 1626/85 is intended to distinguish, within the category of Morello cherries containing added sugar, Morello cherries in syrup, which alone are subject to the minimum price rules.

24. Consequently, in Parma's view, the concept of Morello cherries in syrup within the meaning of Regulation No 1626/85 cannot be identical to the concept of Morello cherries containing added sugar. The difference between the two products lies in the fact that sugar is actually added to Morello cherries in syrup. It cannot be right to consider that any covering liquid with a sugar content in excess of 9% has to be considered a syrup, since, if so, the words in syrup in Article 1(1) of Regulation No 1626/85 would be totally incomprehensible.

25. Secondly, Parma argues that the fact that the legislator also laid down for frozen Morello cherries falling within CCT subheading 08.10 D a minimum price without taking account of the natural sugar content of Morello cherries means that the legislator did not seek to draw a distinction on the basis of differences in natural sugar content, which do not warrant fixing different levels of minimum prices. In Parma's view, the fact that Morello cherries are placed in water and their subsequent pasteurization simply constitutes a manner of preserving the fruit other than freezing. Morello cherries preserved in a covering liquid would therefore be discriminated against, depending on their natural content of fructose, compared with frozen fruit, which cannot be justified.

26. Moreover, in Parma's view, the natural sugar content of the liquid consisting of a mixture of cellular juice and water varies depending on the duration of the transport and storage of the preserved Morello cherries. The diffusion process starts immediatelyafter the product in question has been pasteurized. Where the product is dispatched shortly after harvesting and pasteurization, the sugar content of the covering liquid will normally be lower than 9%. If, on the other hand, the Morello cherries are dispatched later, the sugar content may certainly exceed 9%. Parma maintains, however, the need to protect Community producers cannot depend on the time during which the Morello cherries were stored and transported.

27. Thirdly, Parma argues that even the addition of sugar to the fruit has not as such prompted the legislator to fix a higher minimum price for frozen Morello cherries. On the contrary, according to Regulation No 1626/85 the same minimum import price (originally 48.20 ecus per 100 kg net weight) is applied to Morello cherries not containing added sugar falling within CCT heading 08.10 D as is applied to Morello cherries containing added sugar falling within heading 20.03. To fix a considerably higher minimum price of 60.80 ecus per 100 kg of fruit in the case of Morello cherries in syrup is comprehensible only if the legislator started out from the premise that that product has a markedly higher value, which is not true of the products imported by Parma, as it goes on to explain.

28. Fourthly, Parma observes that Morello cherries may be preserved in three ways: (a) by freezing; (b) by pasteurization in water; and (c) by preservation in syrup. Of all those types of preservation, only preservation in syrup, which contains a large proportion of added sugar, actually results in a product of higher quality. This, however, is not the case with Morello cherries in suspension in a covering liquid where the total amount of sugar in suspension in the water and still contained in the fruit corresponds in any event to the quantity of sugar naturally contained in the fruit, without the addition of sugar. In Parma's view, such a liquid is not a foodstuff of high nutritional value, because it is used to pasteurize the Morello cherries and protect them from dehydration and shock during transportation and storage, and is discarded by the ultimate consumer. Moreover, Parma points out that the value of the Morello cherries, which, it maintains, are alone used by the ultimate consumer, declines over time, because the Morello cherries lose their substance into the liquid in which they are contained.

29. Parma suggests that the answer to the first question should be as follows:

30. According to the Commission, it is not possible to speak of syrup only when it is added to the Morello cherries, but also when the Morello cherries themselves are responsible for the sugar in the water in which they are contained and a syrup ensues as a result.

31. In support of that view, the Commission observes that, in so far as Article 1(1) of Regulation No 1626/85 does not define the term syrup, the interpretation must be based on the context, that is say, the CCT, the explanatory notes of the Customs Cooperation Council and Regulation No 1599/84, cited above.

32. In the Commission's view, Article 1(1) of Regulation No 1626/85 is aimed at CCT heading No 20.06 and refers expressly to fruit otherwise prepared or preserved, whether or not containing added sugar or spirit; the word or indicates that there need not necessarily be any added sugar. The Commission points out that according to the explanatory notes of the Customs Cooperation Council, CCT heading 20.06 covers inter alia fruit in syrup; but the Commission adds that those notes do not specify what is to be understood by syrup.

33. In the Commission's opinion, since syrup within the meaning of that tariff heading is a sugar syrup, reference should be made to the heading which covers sugar syrups, namely CCT heading 17.02: sugar syrups, not containing added flavouring or colouring matter (21.07 F Flavoured or coloured sugar syrups). The Commission cites the explanatory note of the Customs Cooperation Council relating to CCT heading 17.02 B — Sugar syrups — which covers syrups of all sugars (... other than aqueous solutions of chemically pure sugars of heading 29.43) provided they do not contain added flavouring or colouring matter. According to the Commission this vague form of words, in so far as it refers to syrups of all sugars, does not indicate why there should be an exception made for Morello cherry sugars.

34. The Commission further maintains that it also follows from the explanatory notes of the Customs Cooperation Council relating to CCT heading 17.02 B — Sugar syrups — that sugar syrups cover, not only the goods mentioned in Part A of the explanatory notes — Other sugars — or in heading 17.01 (whether or not containing added flavouring or colouring matter) in the form of syrup, but also the sugars falling within Chapter 17, aqueous solutions and juices and syrups obtained during the extraction of sugars (including impurities). The Commission also states that the explanatory notes of the Customs Cooperation Council on CCT heading 17.02 also suggest that the sugar used for the manufacture of sugar syrups within the meaning of CCT heading 17.02 may also be Morello cherry sugar, and that even sugars falling within Chapter 17 which are present in the water and juices obtained in the course of the extraction of sugar may constitute sugar syrups within the meaning of CCT heading 17.02.

35. According to the Commission, the conclusion which it has reached is also borne out by the following considerations: according to Additional Note 2 to Chapter 20 of the CCT the content of the various sugars of the products classified within Chapter 20 is the value determined using the method prescribed in Annex III to Council Regulation (EEC) No 516/77 of 14 March 1977 on the common organization of the market in products processed from fruit and vegetables (OJ 1977 L 73, p. 1), the operational method for effecting that determination being described in paragraph V of Annex III. According to the Commission, in order to effect that determination, the whole of the product must be taken and hence, in this case, the Morello cherries with the liquid and not just the liquid alone.

36. The Commission further observes that, according to Additional Note 3 to Chapter 20 of the CCT, products classified under heading 20.06 are to be considered as containing added sugar when the sugar content thereof exceeds by weight the percentages given hereunder, according to the kind of fruit concerned: — pineapples and grapes: 13%; — other fruits, including mixtures of fruit: 9%. The Commission considers that Morello cherries fall into the latter category. It also explains that the limit value of 9% (percentage by weight) is to be understood as follows: up to 9%, it is considered that the percentage corresponds to the natural sugar content of the fruit. But the quantity of sugar in excess of 9% cannot be regarded solely as added sugar. It may also be sugar which is naturally contained in the fruit and has dissolved in the liquid, as in the case of the consignments of goods at issue in this case.

37. According to the Commission, it also follows from Additional Note 5 to Chapter 20 of the CCT, that the legislator proceeded similarly in the case of CCT heading 20.07. The sugar content of the various types of juices referred to therein is reduced by fixed figures which correspond, the Commission maintains, to the natural sugar content of the fruit. However, in the Commission's view, if the natural sugar content of the fruit is greater, that additional fraction is regarded as being added sugar.

38. Lastly, the Commission argues that its conclusion is also consistent with the definition of sugar syrup set out in Regulation No 1599/84, cited above.

39. The Commission proposes that the first question should be answered as follows:

The second question

40. Parma does not consider that the liquid in which the Morello cherries are immersed should be regarded as packing. It is a product in its own right of no commercial value, which serves solely to transmit the heat to the fruit during the process of cooking the cherries and during pasteurization and to protect the cherries during storage and transportation. In Parma's view, the weight of that liquid therefore does not form part of the net weight of the Morello cherries.

41. Parma proposes that the Court's answer to the second question should be that the weight of the liquid does not form part of the net weight of the Morello cherries.

42. For its part, the Commission considers that account must also be taken of the weight of the syrup in calculating the minimum price, since Article 1(1) of Regulation No 1626/85 provides that on import into the Community of the products covered by that provision a minimum import price per unit of weight is to be respected. In this case, it is not just a question of Morello cherries, but of Morello cherries in syrup. In the Commission's view, the text is clear and unambiguous.

43. The Commission adds that, under the general rules for the interpretation of the nomenclature of the Common Customs Tariff (A, 1), classification is to be legally determined according to the terms of the headings and any relevant Section or Chapter Notes. It also cites general rule C 2(b), which refers inter alia to weight as a criterion for defining certain headings or subheadings. According to that rule, net weight or simply weight without qualification means the weight of the goods themselves without packing of any kind. The term packing means any external or internal containers, holders, wrappers or support other than transport devices. Moreover, the Commission points out that the trade usage is not to calculate the quantity of drained fruit, but the quantity of fruit together with the syrup.

44. The Commission therefore proposes that the second question should be answered as follows:

V — Answers to questions put by the Court

45. The Commission was asked to answer the following questions:

46. In answer to the first question put by the Court, the Commission states that in the 1985/86 marketing year the minimum price level for Morello cherries in syrup that was fixed was 10 to 12% higher than the prices initially agreed with Yugoslavia for the 1984/85 marketing year, which, in the Commission's opinion, had proved too low relative to the sales prices anticipated by Community producers, and had, moreover, not been respected. According to the Commission, the minimum prices fixed must secure sufficient protection for the comparable Community product while taking account of:

47. The Commission also stated that, in the case of imports of preserved Morello cherries (which fall within CCT heading ex 20.06 in the regulation), it would have been possible in principle to take processing costs fully into account (which would have increased the minimum price), but in view of the very low import prices actually obtained and of the minimum prices initially agreed with Yugoslavia for the 1984/85 marketing year, the minimum prices fixed for the net goods, ignoring the cost of processing, were never attained.

48. According to the Commission, each minimum price fixed is expressed in ecus per 100 kg of net product and corresponds to the minimum price obtained by Community producers, plus any production aid for products processed from fruit and vegetables which is granted to Community processors for the corresponding goods. The countervailing charge due offsets the difference between the import price actually obtained and the minimum price fixed for each product. For the scale of the charge, the Commission refers to the annex to Regulation No 1626/85.

49. In answer to the second question put by the Court, the Commission states that Regulation No 1626/85 fixes a minimum price not only for Morello cherries in syrup, but also for unprocessed Morello cherries falling within CCT heading ex 20.06 B. II c) 1 and 2 which appear at the end of the extract from the CCT heading set out in the regulation.

50. As regards hypothesis (a) in the Court's second question, the Commission stresses that it took account of the varying prices on the market in Morello cherries in syrup [CCT heading ex 20.06 B. II a) and b)], that is to say Morello cherries containing added sugar — the minimum price extends from 60.80 to 67.10 ecus/100 kg net — and unprocessed Morello cherries [CCT heading ex 20.06 B. II c)], that is to say Morello cherries not containing added sugar — the minimum price extends from 53.70 to 58.70 ecus/100 kg net.

51. As regards the Court's second hypothesis (b), the Commission states that it is correct. It states that by Morello cherries in syrup the legislator was referring to Morello cherries in syrup which are to be classified under CCT headings ex 20.06 B. II a) ex 8 and b) ex 8. The expressions Morello cherries or Morello cherries in syrup are related thereto and therefore covered, as is the case with the Morello cherries in syrup referred to in Article 1 of Regulation No 1599/84 (cited above). According to the Commission, the products referred to in Regulation No 1599/84 benefit from production aid and hence Morello cherries in syrup also. The sugar syrup also defined in Article 1 of that regulation is measured according to the sugar content of the liquid (water) added to the Morello cherries. The sugar content regarded as the natural sugar content is fixed at 9% (percentage by weight). If the sugar content of the liquid is over 9%, sugar syrup within the meaning of that regulation is involved, regardless as to whether sugar has been added to the liquid or whether the sugar comes from the Morello cherries. In the Commission's view, this explains why the same implementing criteria must be applied as for Regulation No 1626/85,

52. Summing up, the Commission considers that the answer should be that in the case of Morello cherries not containing added sugar the minimum price was fixed at a lower level in view of their low commercial value. That price has to be applied only if the sugar content regarded as natural (9%) is not exceeded.

1 Language of the case: German.