Report for the Hearing in Case C-318/90
I — Legal background
1. The version of the Common Customs Tariff (CCT) applicable at the material time for the main proceedings was that introduced by Council Regulation (EEC) No 3300/81 of 16 November 1981 amending Regulation (EEC) No 950/68 on the Common Customs Tariff (OJ 1981 L 335, p. 1).
2. CCT heading 05.15, which was part of Chapter 5 entitled Products of animal origin, not elsewhere specified or included, described the corresponding products as follows:
3. According to note 1(a) of Chapter 5 of the CCT:
4. CCT heading 38.16, in chapter 38 entitled Miscellaneous chemical products, described the corresponding products as follows:
5. Rule 2(a) of the Rules for the Interpretation of the Nomenclature of the CCT states that:
6. According to the Explanatory Notes of the Customs Cooperation Council (CCC) nomenclature on heading 38.16, that heading covers various preparations in which bacteria, moulds, yeasts and other microorganisms required for medical purposes or for other scientific purposes or in industry can find nourishment and multiply.
7. The Explanatory Notes state that the preparations in question are prepared inter alia from fresh blood or blood serum. Other ingredients may also be added to them. The notes also explain that they are usually in liquid form (broths), pastes or powders but may also be in tablets or granule form, and are sterilized and put up in sealed glass bottles, tubes, ampoules or tins.
8. A later document, Council Regulation (EEC) No 1945/86 of 18 June 1986 temporarily suspending the autonomous Common Customs Tariff duties on a number of industrial products (OJ 1986 L 174, p. 1), which was adopted after the facts giving rise to the main proceedings, indicated heading 38.16 alongside the description unsterile blood serum obtained from the blood of a bovine foetus or non-immunized newlyborn calf, in connection with the suspension of the autonomous CCT duties.
II — Facts and procedure before the national court
9. The order for reference states that in 1982 Boehringer Mannheim GmbH (Boehringer) applied for the release into free circulation of deep-frozen goods declared as fötales Kälberserum (calf foetus serum). Pursuant to that application, the Hauptzollamt Principal Customs Office Mannheim (the Hauptzollamt) cleared the goods, classifying them under CCT subheading 05.15 B as animal products not elsewhere specified or included, exempt from customs duty.
10. Following an inspection carried out in the context of the monitoring of import flows, the Hauptzollamt took a different view and classified the goods under CCT heading 38.16, prepared culture media for development of microorganisms, and consequently charged back customs duty of DM 47810.95.
11. Boehringer challenged the Hauptzollamt's decision in the appropriate Finanzgericht (Finance Court), which, relying on an expert report it had ordered, essentially upheld Boehringer's complaint. It held that the goods ought to be classified under CCT subheading 05.15 B and that the differing classification of unsterile serum under Regulation No 1945/86, adopted after the import, was not relevant.
12. According to the expert report, which was approved by the Finanzgericht, unsterile serum was a different product from sterile serum, in that unsterile serum was completely unsuitable for any microbiological or cellular biology purposes whatever, given that it was not possible to prevent the growth of microbes or their toxic metabolites by the addition of antibiotics or similar products. Unsterile serum was therefore not used for the production of microbe cultures, but was a specific product. It followed that the imported goods by their nature did not constitute prepared culture media for development of microorganisms referred to in CCT heading 38.16.
13. In its appeal to the Bundesfinanzhof (Federal Finance Court) on a point of law, the Hauptzollamt argued that although it did not necessarily have to be demonstrated that the goods in question were suitable as culture media in their actual state, abandonment of the criterion of use in the actual state (criterion of immediacy), properly understood, did however mean that it did not matter if the goods still had to be processed (in this case sterilized) before becoming fit for use. It referred to Rule 2(a) of the Rules for the Interpretation of the Nomenclature of the CCT, which provides that any reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished. The Hauptzollamt also pointed out that Regulation No 1945/86, cited above, had classified the goods in question under CCT heading 38.16.
14. Boehringer, on the other hand, argued that Rule 2(a) of the Rules for the Interpretation of the Nomenclature of the CCT was irrelevant, since unsterile serum did not have the essential characteristics of the finished product as it was not suitable, even indirectly, for use as prepared culture media for development of microorganisms. Moreover, the suspension by Regulation No 1945/86 of the customs duties applicable to unsterile serum under heading 38.16 did not constitute clarification of the point. The fact that that heading was chosen for unsterile serum in the context of suspension of customs duties was, in Boehringer's opinion, a technical error of law.
15. The Bundesfinanzhof considered that the outcome of the case depended on the interpretation of the CCT in its 1982 version, and by order of 25 September 1990 it stayed the proceedings and referred the following question to the Court of Justice:
16. In the grounds for its decision, the Bundesfinanzhof considers that deep-frozen unsterile calf foetus serum can only be classified under heading 05.15 or heading 38.16 of the CCT.
17. According to the Bundesfinanzhof, the goods should not be classified under CCT heading 38.16 since, according to the Finanzgericht's findings of fact, those goods do not constitute a culture medium for the development of microorganisms, as culture by definition implies the intentional development of certain microbe cultures which are specifically intended to be obtained, to the exclusion of uncontrolled microorganisms. Unsterile serum is not suitable for this.
18. The Bundesfinanzhof considers that it is also not possible to use Rule 2(a) of the Rules for the Interpretation of the Nomenclature of the CCT to classify the imported unsterile serum under heading 38.16 as an unfinished article, since according to the CCC explanatory notes that rule is in principle not applicable to products in sections I to VI of the CCT, which include the serum in any event.
19. Furthermore, with respect to the question whether unfinished goods can be regarded as included in the finished product within the meaning of CCT heading 05.15, the Bundesfinanzhof considers that it is questionable whether unsterile serum possesses the essential characteristics of the finished product (prepared culture media): the Finanzgericht found that unsterile serum is a distinct product in marketing terms and can be used in other ways.
20. Finally, the Bundesfinanzhof expresses doubt as to the interpretation in Regulation No 1945/86, according to which unsterile blood serum obtained from the blood of a bovine foetus or non-immunized newlyborn calf is a product falling under heading 38.16. According to the Bundesfinanzhof, it is possible that that interpretation was not based on a detailed consideration of the question of tariff classification, that not being the purpose of the provision, since the autonomous CCT duties were to be suspended in any case.
21. The Bundesfinanzhof inclines to the view that deep-frozen unsterile calf foetus serum should be classified under CCT heading 05.15, a view which is not contradicted by note 1(a) to Chapter 5 of the CCT, since the serum is not edible.
III — Procedure before the Court
22. The order for reference was received at the Court Registry on 22 October 1990.
23. Pursuant to Article 20 of the Protocol on the Statute of the Court of Justice, written observations were submitted by the Commission of the European Communities, represented by René Barents, Legal Adviser, acting as Agent.
24. 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; pursuant to Article 95(1) and (2) of the Rules of Procedure, it assigned the case to the Fourth Chamber.
IV — Written observations submitted to the Court
25. The Commission observes that CCT headings 05.15 and 38.16, referred to in the first part of the national court's question, are the only ones which can usefully be taken into consideration for the classification of unsterile calf serum. It considers that in view of the way the headings in question are systematically related, subheading 05.15 B should not be considered unless heading 38.16 can be ruled out, given that that subheading is a fallback position for when no other heading can be used for classification of a product. Consequently, in the Commission's opinion, if the answer to the first part of the question referred is that one of the headings mentioned is applicable, the second part of the question is devoid of purpose.
26. The Commission refers to the Explanatory Notes of the CCC nomenclature (see paragraph 7 above) and argues that the fact that sterilization is mentioned there does not mean in the context that that is an essential characteristic, since the explanatory notes also refer to culture media which consist of living embryo. In the Commission's opinion, in accordance with the wording of heading 38.16, the culture media must, however, be prepared for the purpose of development of microorganisms.
27. The Commission considers that if the Finanzgericht's findings of fact are taken as a basis, the conclusion follows that the goods at issue in the main proceedings do not fall under CCT heading 38.16, since at the time of their release into free circulation they could not constitute genuine culture media for development of microorganisms. Moreover, the fact that Regulation No 1945/86 regards unsterile serum as coming under heading 38.16 cannot be relevant, as even if that entry may have indicative value, it is not binding for the classification of the goods, inasmuch as the objective of Regulation No 1945/86 is not the classification of goods in the CCT.
28. However, in the Commission's opinion, the above findings do not permit the conclusion that unsterile serum is not suitable for the development of microorganisms. On the contrary, it follows from the expert's report that unsterile serum encourages the uncontrolled proliferation of all microbes present in a cellulous culture, in other words both the desired and the undesirable microbes.
29. The Commission considers that this distinction is of importance for the related question whether, if unsterile serum cannot be classified under heading 38.16 as a finished product, it nevertheless comes under that heading as an incomplete or unfinished article, in accordance with the first sentence of Rule 2(a) of the Rules for the Interpretation of the Nomenclature of the CCT. A distinction should be drawn in this respect between two aspects:
30. On the question whether Rule 2(a) applies in the present case, the Commission is in agreement with the Bundesfinanzhof which stated, referring to paragraph VII of the CCC nomenclature explanatory notes, that Rule 2(a) is not in general applicable to products in Sections I to VI of the CCT (products of animal, vegetable and mineral origin), to which serum belongs in any event, given that the products in those sections in principle cannot be regarded as incomplete or unfinished.
31. The Commission observes that it too adopted that point of view in its observations submitted in Case 295/81 International Fkvors and Fragrances [1982] ECR 3239, which related to the interpretation of the second sentence of Rule 2(a) of the general rules, concerning the interpretation of that provision for the purposes of classification of imported concentrate and flavour concentrate of morello cherries and blackcurrants.
32. The Commission observes in that judgment that the Court nevertheless gave an interpretation of Rule 2(a) with respect to those products, although the only possible classification of them was under the headings in sections I to VI (that is, Chapters 1 to 38) of the CCT. In the Commission's opinion, the statement in paragraph VII of the Explanatory Notes that the contested rule does not generally apply to goods in Sections I to VI was only a secondary reason for the Court's decision.
33. The Commission considers that in the light of that judgment it is not possible in the present case to exclude a priori the application of general rule 2(a). Indeed, it considers that the first sentence of Rule 2(a) could be applied exceptionally in the present case, in that there can be only one possible use for unsterile serum as an unfinished article. According to the information obtained by the Commission, that is indeed the case.
34. On the question whether unsterile serum already has the character of the finished article, the Commission observes that, as unsterile serum also contains all the necessary ingredients for use as a nutritive liquid (for development of microorganisms) — since all that it lacks before sterilization is a processing operation to render it usable for that purpose — it already has the essential character of the finished article, that is, sterile serum, and should be classified under heading 38.16 as unfinished prepared culture media for development of microorganisms. Consequently, it is unnecessary, in the Commission's opinion, to fall back on subheading 05.15 B.
35. Moreover, in this connection, the Commission is inclined to give an affirmative answer to the question whether an unfinished product may be regarded as included under another heading, within the meaning of that subheading, since the classification of an article is above all a self-contained operation, even if the general rules of interpretation are taken into account.
1 Language of the case: German.