C-40/69

JUDGMENT OF 18. 2. 1970 — CASE 40/69

3. Article 1 of. Regulation No 22 of the not falling within any heading of the Council of the EC of 4 April 1962 which Tariff must be classified under the enumerates some of the goods included heading appropriate to the goods to in the Common Customs Tariff does not which they are most akin. The question empower the national authorities of whether goods are akin one to another is Member States to issue binding rules of to be decided on the basis not only of interpretation for the application of their physical characteristics but also those descriptions. of their use and commercial value. In the absence of special circumstances 4. In accordance with a general rule of the commercial value of goods is their classification for tariff purposes, goods market price.

In Case 40/69

Reference to the Court under Article 177 of the Treaty establishing the European Economic Community by the Bundesfinanzhof (Federal Finance Court), Munich, for a preliminary ruling in the action pending before it between

Hauptzollamt Hamburg-Oberelbe

and

gives the following

HAUPTZOLLAMT HAMBURG ν BOLLMANN

JUDGMENT

Issues of fact and of law

Regulations Nos 77/62 and 136/62. companying the declaration the goods were In addition it found that the solution of the described as 'turkey rumps'. dispute whether turkey rumps are subject The Customs Office of Hamburg — Veddel to the rate of levy applicable to poultry considered that the goods in question came cuts or to the rate applicable to edible offals under heading 02.02-C of the tariff of levies calls for the interpretation of certain pro and by an informal decision charged the visions in these regulations. levy payable under this heading. It therefore decided by an order of 30 July However by a communication of 15 May 1969 to stay the proceedings and to refer 1963 amending the levy the Customs Office to the Court of Justice under the first and notified Bollmann that, in accordance with third paragraphs of Article 177 of the EEC instructions which it had received con Treaty the following questions : cerning the tariff of levies and which were '(1) Is Article 14 of Regulation No 22 of the

Hauptzollamt (Principal Customs Office), may be effectively implemented as Hamburg-Oberelbe. from 1 July 1962, to be understood as As its complaint was dismissed by a decision meaning that Member States are en of 11 November 1963, Bollmann appealed titled and required to specify more on 10 December 1963 against the decision closely by means of national legal to dismiss the complaint to the Finanzge measures which goods are subject to

JUDGMENT OF 18. 2. 1970 — CASE 40/69

(3) Should question two be answered in reserved to Member States or whether it was the negative: Are turkey rumps to be already vested exclusively in the Community classified as backs (parts of backs) or remains to be settled. other poultry cuts within the meaning This power in the matter of tariffs com­ of Article 2 of Regulation No 77 of prises the right to give binding explanations 23 July 1962 of the Commission of the and interpretations of the various headings European Economic Community (as of a customs tariff. During the period under amended by Article 1 of Regulation consideration the Government of the No 136 of 31 October 1962 of the Federal Republic of Germany often exer­ Commission of the European Econo­ cised this right in connexion with the com­ mic Community) or are they edible mon organization of agricultural markets. offals within the meaning of Article 3 Therefore the question raised by the of this regulation?' Bundesfinanzhof has an importance ex­ tending beyond this case. The decision which the Court is to make will have wide 2. The order for reference in this case was repercussions, because: lodged at the Court Registry on 3 September 1969. — the solution found by the Court must be The Bollmann undertaking, the Govern­ applied not only to the common organi­ ment of the Federal Republic of Germany zation of the market in poultry but also and the Commission of the European to the other common market organiza­ Communities lodged their written observa­ tions ; tions in accordance with Article 20 of the Protocol on the Statute of the Court of — the exercise by the German Government Justice annexed to the EEC Treaty and of powers relating to tariffs in the field presented their oral submissions at the of market organizations in agricultural hearing on 15 January 1970. products has given rise to a whole series The Advocate-General delivered his opinion of disputes concerning the tariff classi­ at the hearing on 29 January 1970. fication of particular products, which have to be settled on a uniform basis ;

disparities, in the second case the effect of the Council and the Commission. of using the powers in this way is to On the other hand Community regulations undermine this standardization to such do not anywhere contain similar provisions an extent as to destroy it completely. in favour of Member States. In particular, so far as the principle laid down in Articles Bollmann then defines its position with 14 and 1 of Regulation No 22/62 is con­ regard to the decision which has to be taken. cerned, which is found in other regulations, It argues that once common organizations it is necessary to note the following: of agricultural markets were established powers relating to tariffs passed exclusively — Article 14 simply imposes upon Member to the Community institutions. States the obligation to adapt their It must be noted on this point that the internal law to the provisions of the regulations made in this context by the regulation and in no way authorizes them Community between 1962 and 1967 have to adopt new legislative provisions. It already brought about, sector by sector, the could not be otherwise because of the tariff union of the Community established very nature of the regulation which, in in a general way by Regulation No 950/68 accordance with the second paragraph of the Council which laid down the principle of Article 189 of the EEC Treaty are of this transfer of powers. In particular those 'directly applicable in all Member States' regulations which were adopted in 1967 only and are 'self-executing'. This certainly anticipate, each in its own sector, the list does not preclude the possibility that in of products of the common customs tariff certain cases a specific regulation may in its definitive form. However it is possible require the adoption by Member States in the case of all these regulations to state : of internal measures for the purpose of its application but these measures must — that the Council alone has the right to be restricted to the limits fixed by the amend the list of products subject to the regulation itself. market organization, from which it may For the purpose of the application and be concluded that the Community has operation of agricultural regulations exclusive jurisdiction and powers in Member States cannot be allowed to tariff matters; interpret and define the lists of products referred to in these regulations. This in­ — that for the purposes of the tariff terpretation and definition are provided classification of the said products the for by the general tariff provisions of the same rules apply as are applicable for Common Customs Tariff and by the the interpretation and implementation particular provisions laid down in each of the Common Customs Tariff. regulation.

legislature in Article 177 of the Treaty. The portance of the questions referred by the questions of the extent of a tariff heading Bundesfinanzhof, calls attention to the fact and whether a particular product comes that in Regulation No 22/62 and also in the within one market organization or another entire system of the common market are questions of the interpretation of the organizations power to adopt legislative and relevant agricultural regulations and conse­ administrative measures is shared between quently of Community law. This interpre­ the Community and the Member States. tation is within the exclusive jurisdiction of Regulation No 22/62 lays down the funda­ the Community and more precisely of the mental principles upon which the organiza­ Court of Justice. tion of the market in poultry meat is based In conclusion it follows from the foregoing and provides for the necessary criteria for that, as a result of the entry into force of the determination of the levies. But Member Regulation No 22/62, all powers relating States have to apply and implement this to the tariff applicable to the goods men­ regulation and are required by virtue not tioned by this text have been transferred to only of Article 14 of this regulation but also the Community. The effect of this transfer of Article 5 of the EEC Treaty to take all is that the rules of law adopted by Member necessary measures for this purpose. States for the purpose of explaining or in­ The question whether Member States can terpreting the tariff headings contained in within these bounds also establish the this regulation are therefore inapplicable to distinction between and interpret the the extent to which they have been adopted descriptions of the products referred to in after its entry into force. this regulation can only be determined in With regard to the pre-existing national accordance with its content. To the extent

this adaptation is carried out they remain However Regulation No 22/62 refers in applicable. Those provisions, however, Article 1 to the Common Customs Tariff which have not been adopted and which in the description of the various products prove to be incompatible with Community subject to the levy. But this reference does law, can no longer be applied by virtue of not provide a sufficiently accurate classifi­ the principle lex posterior derogat legi priori. cation of each product. For this purpose Therefore the provisions adopted by the supplementary classification and definitions German authorities to define tariff heading by Member States proved to be necessary. 02.02, which were in force before Regulation The Commission, the Council and Member No 22/62, are only applicable subject to this States proceeded therefore on the basis of reservation. It is true that the question the principle that it is in the first instance whether they conform to Community law the task of the Member States to define and falls within the exclusive jurisdiction of the clarify in particular cases the description national court and not within that of the of products. Such a system moreover is in Court of Justice under Article 177. Never­ keeping with the development of the theless the Court of Justice can indirectly Community which for practical reasons play a part in deciding this issue by making could not exercise immediately and fully all use of its exclusive jurisdiction to interpret its legislative powers. Community law against which these pro­ The German Government concludes that visions must be tested. the correct interpretation of Article 14 of Bollmann concludes its argument by stating Regulation No 22/62 read in conjunction that for these reasons the first two questions with Article 1 thereof is that Member States, must be answered in the negative. in the absence of any corresponding rules laid down by the Community, are entitled and are obliged to clarify and define at a 2. The Government of the Federal Republic later date by internal measures the des­ of Germany, after emphasizing the im- criptions of the products subject to the levy.

3. The Commission of the European Com number of measures having general appli munities, after first calling attention to the cation and they leave to Member States the state of the existing legal provisions appli task and duty of taking, in conformity with cable, at the date when the disputed pro Article 5 of the EEC Treaty, the principal ducts were imported, to the imposition of measures necessary for the establishment the levies, defines its position on the ques of the common organizations of the markets. tions raised by the Bundesfinanzhof by Article 14 of Regulation No 22/62 falls pointing out that in general Community law exactly within this context.

product. This applies not only to the former structure of the market. national provisions derogating from these The need to adapt national organizations regulations but also to the supplementary at the right time to the new system estab rules of interpretation under national law lished by a common organization of the to the extent to which their object is, in the market was much more apparent in those event of difficulties arising in defining the cases where wide powers to take decisions limits of the descriptions of products, to had been granted to Member States than in classify with one of the headings deter cases such as that of the system established mining the applicable levy. by Regulation No 22/62, where in practice The descriptions of products in the said there was virtually no scope for independent regulations are in fact independent concepts action to be initiated by Member States.

principle such a system of rules denies to pretation and the substantive definition of the Member States the power to invoke the limits of these concepts must be a matter independent rules for the interpretation of for Community law and are in the final the Community descriptions of products resort the responsibility of the Court of employed by Regulation No 77/62 with the Justice. object of classifying them according to their Regulation No 22/62 as well as the other own criteria under a particular heading for regulations made at the same time which the purpose of applying the levies to them. establish the common organizations of the Article 14 of Regulation No 22/62 can only markets only confirm this requirement. confirm that this is so. They are based on the principle that it is The question may nevertheless be asked the task of the Community to adopt a whether Member States can adopt measures

which, without calling in question the takes precedence over such national pro uniform interpretation of Community visions. Their content is limited by the descriptions of goods, are limited to facili wording and purpose of the Community tating their application by the competent descriptions of the goods for which an authorities. interpretation is necessary and they cannot On this point there is no doubt that Member call in question the uniform and independent States, in order to facilitate the application interpretation of Community law. of the Community system by national authorities, could regroup under a single tariff levy all the agricultural products which the common organizations of markets in В — The third question force at that time had made subject to the levy, provided that the Community had not 1. The Bollmann undertaking states first already done so. Such a tariff like any of all that, if an attempt is made to extract customs tariff can only describe the numer from the wording of this question the main ous goods referred to in a very general way problem which the German court had in by enumerating their distinctive features mind, the conclusion may be reached that according to their class and type. The need the question is : What are the meaning and to guarantee legal certainty and to deter extent of the expressions 'spines' and in mine or to predict different import duties particular 'poultry cuts' on the one hand makes it imperative that this nomenclature and 'edible offals' on the other hand be interpreted and that it be completed by referred to in Articles 2 and 3 of Regulation the necessary clarification in the form of No 77/62 (as amended by Regulation more detailed subdivisions or by reliable No 136/62). If the third question is given

. . edible offals thereof On the other hand Regulation No 22/72 and . . .', is divided in Regulation No 77/62 into its implementing provisions are part of the two categories; 'poultry cuts' and 'edible first measures which replaced national offals', to each of which a different con import duties by a uniform system of levies. version factor applies. To begin with the national authorities were Regulation No 136/62 also divided 'poultry not familiar with the new system and cuts' into two sub-headings 'backs and binding directions on the correct way of necks' and 'all other poultry cuts', to the applying it were therefore necessary. first of which a lower conversion factor was The Commission's conclusion is that the applied than the one applied to the second. answer to the first two questions must be Finally Regulation No 79/66 (Article 2) that the national legislature in each Member subsequently divided the category 'poultry State was authorized to adopt provisions cuts' into several sub-categories of which the intended to clarify the generalized des last one includes, inter alia, 'rumps'.

HAUPTZOLLAMT HAMBURG ν BOLLMANN

It was only after the by reason ofthe conversion factor applicable entry into force of the levy applicable to to them must in practice be regarded as slaughtered turkeys that turkey rumps 'edible offals'. appeared as a separate product on the Therefore it must be assumed that the German market. They are separated from expression 'edible offals' referred to in backs at the request of the importer to save Regulation No 77/62, as amended by import duty. Regulation No 136/62, must be construed It is impossible to find any rules based on as covering by-products the value of which trade customs defining what the ratio in does not in any case exceed that of 'backs weight must be between the rump and the and necks'. back.

In the absence of any such distinction the diffe ence between the said categories must be 3. The Commission of the European Com based on their respective values. These munities points out first that 'turkey rumps' values can in turn only be determined by are not 'edible offals' but are to be classified ascertaining how the categories are rated as 'poultry cuts'. In support of this first in the trade which classifies 'turkey rumps' conclusion it makes the following sub because of their low commercial value in missions : the category 'edible offals'. Bollmann's conclusion is that the expression — In order to classify the disputed goods 'edible offals' within the meaning of Article the expressions 'offals' and 'poultry cuts' 1 of Regulation No 22/62 and Article 3 of must be given their normal meaning.

JUDGMENT OF 18. 2. 1970 — CASE 40/69

— However in the Community if the normal — On the other hand, even if this rule were methods used to slaughter poultry and assumed to prevail over current commer­ prepare it are taken into account, turkey cial practice, it would not alone solve rumps are not separate parts. Normally the problem of the classification of the they remain attached to the backs which disputed products. In such a case it are marketed as 'backs and necks' and would be necessary to. invoke Article 8 are only separated if they are ordered as of Regulation No 77/62 and, in applica­ separate products. There is usually no tion of the second paragraph, to classify such demand for them, except from the turkey rumps precisely in the category pharmaceutical industry, and most of it of 'poultry cuts'. is met from imports from third countries. In this case turkey rumps become a The Commission then examines the ques­ special product: when turkeys are tion whether within this category, the slaughtered they are not regarded as disputed goods are to be classified as coming offals but are separated and marketed as under 'backs and necks' or Other cuts of such. poultry'. It submits on this point:

HAUPTZOLLAMT HAMBURG ν BOLLMANN

Grounds of judgment

1 By an order of 30 July 1969 which reached the Court on 3 September 1969 the Bundesfinanzhof (Federal Finance Court) of the Federal Republic of Germany referred to the Court of Justice under Article 177 of the Treaty establishing the European Economic Community several questions on the interpretation of Regulation No 22 of the Council of the EEC of 4 April 1962 (OJ No 30, 1962 and Regulation No 77 of the Commission of the EEC of 23 July 1962 (OJ No 66,1962) as amended by Regulation No 136 of the Commission of the EEC (OJ No 113,1962).

The first question

2 In its first question the Bundesfinanzhof asks the Court whether the correct inter­ pretation of Article 14 of Regulation No 22/62 is that Member States are entitled and obliged to take internal legislative measures to specify which products are subject to the levy by virtue of Article 1 of that regulation and to differentiate between them.

3 According to Article 14 of Regulation No 22/62 'Member States shall take all steps to adapt their laws, regulations, and administrtaive provisions in such a way that the provisions of the present regulation, unless hereby otherwise provided, may be effectively implemented as from 1 July 1962'.

some of the goods included in the Common Customs Tariff is to be construed as meaning that national legislatures may interpret the terms by which these goods are described, since the terms by which goods in a customs tariff are described of necessity require interpretation'.

8 As the description of the goods referred to in the regulations establishing a common organization of a market is part of Community law its interpretation can only be settled in accordance with Community procedures. Moreover the common organizations of the markets in agriculture, such as the one which it is the aim of Regulation No 22/62 to establish progressively, can only achieve their objectives if the provisions adopted for their realization are applied in a uniform manner in all Member States. The descriptions of goods covered by these organizations must therefore have exactly the same range in all Member States.

9 Such a requirement would be placed in jeopardy if, whenever there was a difficulty in the classification of any goods for tariff purposes, each Member State could determine the range covered by the descriptions in question by way of interpreta­ tion. Although it is true that in the event of any difficulty in the classification of any goods the national administration may be led to take implementing measures and clarify in the particular case the doubts raised by the description of the goods, it can only do so if it complies with the provisions of Community law and subject to the reservation that the national authorities cannot issue binding rules of inter­ pretation.

14 This fact is confirmed by implication in Regulation No 79/66 of the Commission of the EEC of 29 June 1966 (OJ No 118, 1966), which classifies turkey rumps under 'backs and necks' but applies to them a conversion factor which in Regulation No 77/62 is nearer to the one applied to 'edible offals' (Article 3) then to those applied to 'backs and necks' and 'all other cuts of poultry' (Article 2 as amended by Regulation No 136/62).

15 Therefore the expression 'edible offals' within the meaning of Article 3 of Regulation No 77/62 must be interpreted so as to include products having similar commercial value such as the disputed product.

Costs

16-17 The costs incurred by the Commission of the European Communities and the Government of the Federal Republic of Germany which have submitted their observations to the Court are not recoverable and as the proceedings are, in so far as the parties to the main action are concerned, a step in the action pending before the Bundesfinanzhof of the Federal Republic of Germany the decision as to costs is a matter for that court.

On those grounds,

Upon reading the pleadings; Upon hearing the report of the Judge-Rapporteur; Upon hearing the observations of the defendant in the main action, the Govern­ ment of the Federal Republic of Germany and the Commission of the European Communities ; Upon hearing the opinion of the Advocate-General; Having regard to the Treaty establishing the European Economic Community, especially Articles 38 to 47 and Article 177; Having regard to Regulation No 22 of the Council of the EEC of 4 April 1962; Having regard to Regulations Nos 77 of 23 July 1962 and 136 of 31 October 1962 of the Commission of the EEC; Having regard to Regulation No 79 of the Commission of the EEC, of 29 June 1966; Having regard to Regulation No 950 of the Council of the EEC, of 28 June 1968;

3. According to Article 3 of Regulation No 77 of the Commission of the European Economic Community of 23 July 1962 the expression 'edible offals' must be interpreted so as to include products having a similar commer­ cial value such as 'turkey rumps'.

Lecourt Monaco Pescatore

Donner Trabucchi Strauß Mertens de Wilmars

Delivered in open court in Luxembourg on 18 February 1970.

A. Van Houtte R. Lecourt

Registrar President