Report for the Hearing in Case C-248/92
I — Facts and procedure
1 Legal framework
Heading 7211 and subheadings 72112100 and 721122 of Annex I to Commission Regulation (EEC) No 3174/88 of 21 September 1988 amending Annex I to Council Regulation (EEC) No 2658/87 on the tariff and statistical nomenclature and on the Common Customs Tariff (OJ 1988 L 298, p. 1) refer to the following products:
2 The main proceedings
The parties disagree as to the classification for customs purposes of a consignment of steel products imported into the Community from Poland in February 1989.
In the simplified declaration, the plaintiff, Jepsen Stahl GmbH (hereinafter Jepsen Stahl), described the goods, which had been manufactured in a universal rolling mill, as follows:
and placed them under sub-heading 72112100 of the Combined Nomenclature (hereinafter the CN).
In the course of an inspection of the goods the port customs authorities stated the following:
Despite that finding, Jepsen Stahl declared the goods in the regularizing general entry in the same terms as in the simplified declaration and itself calculated the import duties on the basis of a rate of 4.4%.
By a notice of alteration of duty dated 24 April 1989 the Hauptzollamt Emmerich (hereinafter the Hauptzollamt) sought post-clearance payment of the corresponding import duty from Jepsen Stahl, on the ground that the goods belonged under subheading 72112290, to which a rate of 5.3% was applicable. Because the tariff classification had been altered, Jepsen Stahl was also required to apply for import authorization for the steel goods in question. Jepsen Stahl lodged an objection against that decision; the objection was rejected by the Hauptzollamt by a decision of 3 November 1989.
Jepsen Stahl disagreed with the tariff classification applied by the Hauptzollamt Emmerich and brought an action before the Finanzgericht Düsseldorf against the notice of alteration of duty and the rejection of its objection.
Jepsen Stahl considers that in view of their manufacturing process the imported goods are flat-rolled products rolled on four faces (known as wide flats). In that regard it relies, first of all, on the purpose of the goods. Furthermore, the fact that the edges of the steel plates are slightly rounded does not prevent their being classified under subheading 72112100. The rough rolled edges are inevitable and typical of goods rolled in a universal mill.
According to the Hauptzollamt, the classification of goods for tariff purposes depends in principle on their objective characteristics at the material time. The manufacturing process constitutes a criterion for classification only where the common customs tariff expressly so provides; furthermore, it must be possible to ascertain that process from the product concerned, that is, purely on the basis of the result of the process. The steel products in question were not rolled on four faces, and only products with sharp edges could be regarded as wide flats. The Hauptzollamt relies on the explanatory notes to heading 7211 (it refers to the notes published by the German Finance Ministry, which are identical to those set out above), and Euronorms 91-81 and 79-82.
3 The question referred to the Court
Since it considered that the point at issue depended on the interpretation of the characteristic of having been rolled on four faces where the goods had been rolled in a universal mill, the Finanzgericht Düsseldorf took the view that the dispute raised problems of the interpretation of Community law and decided to refer the following question to the Court for a preliminary ruling:
4 Procedure
The order of the Finanzgericht Düsseldorf was lodged at the Court Registry on 27 April 1992.
Pursuant to Article 20 of the Protocol on the Statute of the Court of Justice of the EEC, written observations were submitted on 28 August 1992 by the defendant, represented by Christian Schulz-Loerbroks, Regicrungsdirektor, Oberfinanzdirektion Düsseldorf, acting as Agent, and on 17 September 1992 by the Commission of the European Communities, represented by Richard Wainwright, Legal Adviser, and A. Bardcnhcwcr, of its Legal Service, assisted by Hans-Jürgen Rabe, acting as Agents.
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. By decision of 8 March 1993 the case was assigned to the Fourth Chamber.
II — Summary of the written observations submitted to the Court
According to the defendant, the Explanatory Notes to the Harmonized System on headings 72.08 and 72.11 give specific form to heading 72.11 when they state that wide flats are also covered by that heading. Wide flats are defined in Euronorm 91-81 — as well as in the Explanatory Notes. Euronorm 91-81 provides a precise description of the appearance required of a wide flat. In order to be classified under subheading 72112100 it is not sufficient that a product has been rolled on four faces in a universal mill. The clarification of the Customs Tariff provided by the Explanatory Notes and the Euronorms runs counter to the argument advanced by the Finanzgericht.
The English version of subheading 7211 2100 must also be taken into account:
That wording shows that what matters is the result of the process and not the process actually carried out.
The Commission observes that, according to the case-law of the Court, in the interest of legal certainty and ease of verification, the decisive criterion for the classification of goods for customs purposes is in general to be sought in their objective characteristics and properties as defined in the wording of the relevant heading of the Common Customs Tariff and the notes to the sections or chapters (Case 36/71 Henck ν Hauptzollamt Emden [1972] ECR 187). Manufacturing processes of a product are decisive only when the relevant subheading expressly so provides (Case 40/88 Weber ν Milchwerke Paderborn-Rimbeck [1989] ECR 1395). It is in this context that the fundamental importance of the objective characteristics and properties of the product must be considered as criteria for classification. It follows that the presence of these objective characteristics is decisive where the manufacturing process may be ascertained from the product in question.
By the formula rolled on four faces subheading 72112100 refers expressly to the manufacturing process of the steel products. It is therefore a decisive criterion for classification.
According to the Explanatory Notes to the Harmonized System (10th and 11th paragraphs of the notes to heading 72.08 in conjunction with the first and second paragraphs of the notes to heading 72.11), subheading 72112100 also covers products rolled on four faces in a universal mill. Although universal mills are no longer used in industrial countries, they are still used in Poland. Products manufactured in this way have always been rolled on four faces. Because the place of manufacture of the goods and also the manufacturing process which is necessarily used there are known, it is permissible to conclude in this case that the product was in fact rolled on four faces within the meaning of subheading 72112100 and that the criterion for classification at issue was therefore satisfied.
Neither subheading 72112100 nor the Explanatory Notes to heading 7211 provide that the presence of the criterion at issue in this case depends on sharp edges within the meaning of the Euronorms. The formula used does not state precisely what is meant by sharp edges. A universal mill operates in such a way that the lateral faces are rounded, the so-called rough rolled edges, which are the typical and practically inevitable characteristic of a product rolled on four faces in a universal mill. The objective characteristics of the imported product do not therefore prevent its being classified under subheading 72112100. The Euronorms to which the Hauptzollamt refers concern the more modern manufacturing techniques used in the Community: they cannot constitute a criterion in this case.
The Commission suggests that the question should be answered as follows:
1 Language of the case: German.