C-72/69

1. The interpretation of one tariff heading No 19, read in conjunction with heading in relation to another must, in a case of No 11.06 of the Common Customs doubt, take into account both the func­ Tariff, mentioned in the annex to that tion of the customs tariff in regard to the regulation, refers to all farinaceous sub­ necessities of the systems of organization stances obtained from manioc roots, of the markets and its purely customs irrespective of the treatment which those function. roots may have undergone, where the product has a starch content in excess of 2. The expression 'manioc flours' within 40%. the meaning ofArticle 1 (d) of Regulation

In Case 72/69

Reference to the Court under Article 177 of the EEC Treaty by the Bundesfinanzhof for a preliminary ruling on the interpretation of certain provisions of Regulation No 19 of the Council of 4 April 1962 and of the Annex thereto, in the action pending before that court between

Hauptzollamt Bremen — Freihafen

and

1 — Language of the Case: German. 2 — CMLR.

gives the following

JUDGMENT

Issues of fact and of law

I — Facts and procedure trash and other sugar waste; brewery and distiller waste ; residuesfrom the manufacture The facts and procedure may be summarized ofstarch and similar residues). as follows: 3. It was stated in the customs declaration 1. By Regulation No 19 of the Council of the goods had been rendered unfit for 4 April 1962 (OJ 1962, p. 933) on the pro­ human consumption and contained, ac­ gressive establishment of a common organ­ cording to the terms of the contract, 65 % ization of the market in cereals, in particular starch, including soluble carbohydrates. Articles 1 and 14 in conjunction with the Annex to the said regulation, imports from 4. Relying on a circular from the Federal third countries of manioc flour and meal Minister for Finance of 29 December 1965 under heading 11.06 of the Common according to which tapioca residues (resi­ Customs Tariff (flour and meal of sago and dues from the manufacture of starch) can of manioc, arrowroot, salep and other roots only be classified under heading 23.03 if and tubers falling within heading 07.06) are their starch content, in relation to the dry made subject to a system of levies. material, does not exceed 55 % and other­ wise should be classified under heading 2. On 20 May 1966 the Bremer Handels­ 11.06 as manioc flour, the customs office gesellschaft applied for customs clearance applied the rate applicable to the latter for 524 sacks declared to contain 'Thailand heading and required payment of a levy of tapioca waste flour' and sought to have the DM 2129.67, whereas if the goods had been goods classified under heading 23.03 of the classified under heading 23.03 they would German Customs Tariff in force in 1966, have been free of any import duty or levy. which corresponded to the Common Customs Tariff (sugar beet pulp, sugar cane 5. In an action brought by the Bremer

Handelsgesellschaft the Finanzgericht Bre Article 20 of the Protocol on the Statute of men (Bremen Finance Court) held that the the Court of Justice of the EEC. goods in question did not fall under heading Upon hearing the report of the Judge- 11.06. The Hauptzollamt Bremen-Freihafen Rapporteur and the views of the Advocate- appealed to the Bundesfinanzhof (Federal General the Court decided not to hold any Finance Court) where the Seventh Senate preparatory inquiry. decided that the case relate to the imposition The oral observations of the praties were of a levy on manioc flour and held that the heard on 21 April 1970. solution depended on the interpretation of The Advocate-General delivered his opi the expression 'manioc flour' in Article 1 (d) nion at the hearing on 12 May 1970. of Regulation No 19 of the Council of the EEC of 4 April 1962. Therefore, by an order of 21 October 1969 it II — Observations submitted under decided to stay the proceedings and to refer Article 20 of the Protocol on the following question to the Court of the Statute of the Court of Justice for a preliminary ruling in accordan

It starch, or should the maximum or follows directly from the wording of minimum content of other constituent heading 11.06—taking into account the elements such as raw fibres, sugar or place which that heading occupies in the proteins be taken into consideration?' Common Customs Tariff and the reference which it has to heading 07.06—that what 6. After the goods had been given customs must be concerned are roots and tubers clearance a decree of the Federal Minister under heading 07.06 which have been pro of Finance of 27 June 1966 (Bundesgesetz cessed solely by grinding. blatt, II, 5 July 1966, p. 509) implementing a By grinding is meant the mechanical crush decision of the government experts of the ing of the raw product after cleaning and Member States in the Working Party on sifting, to the exclusion of operations in the Customs Nomenclature specified that only course of which the product undergoes products whose starch content in relation to chemical or physical treatment which alters dry material did not exceed 40% could be its nature. More particularly, it does not considered residues from the manufacture cover heat-treatment or washing if this of starch: results in a new and more refined commer cial product.

European Communities submitted their product. written observations in accordance with The same criterion makes it possible to

JUDGMENT OF 18. 6. 1970 — CASE 72/69

— with the exception of the Federal Gov­ 1. After giving detailed technical informa­ ernment, no other Member State follow­ tion on the production and starch content of ed this recommendation, or adopted manioc flours, the German Government such a criterion for the classification of points out that the description 'manioc tapioca products under the two tariff flour' in international trade indicates any headings in question; flour extracted from manioc tubers irre­ — besides, the Commission itself has in the spective of the method of manufacture and meantime observed that this criterion is that the starch content of these products not correct as is clear from the draft varies considerably according to their regulation of 8 January 1969 on trade in respective qualities. feedstuff's. 2. Tariff heading 11.06 makes no reference 4. Further, the starch content considered in to the manufacturing process. It cannot be isolation is not a sufficient criterion for clas- denied that manioc flour can be obtained by

HAUPTZOLLAMT BREMEN ν BREMER HANDELSGESELLSCHAFT

quality or the manufacturing process used. dues from the production of starch from Consequently tariff heading No 11.06 which it is impossible to extract any more covers all goods which, in contrast with starch in commercially and economically residues from the manufacture of starch significant quantities. In order to guarantee within the meaning of tariff heading No a uniform tariff structure and the imple 23.03, do not mainly contain other con mentation of the common organization of stituent elements than starch. There is no the markets it was vital to establish a certain difficulty in including residues of tapioca starch content as a standard quantity. manufacture with a high starch content Having compared the submissions of all the since they are merely ground manioc roots Member States this quantity has only been from which some but by no means all of the fixed at about the 40% recognized by the natural separable starches have been Commission. removed by means of an additional decanta

4. Finally the Government of the Federal to any process to alter their nature, apart Republic of Germany states that in its view from grinding and which clearly fall under 'manioc flours' within the meaning of heading 11.06. Article 1 of Regulation No 19/62 are dis According to the usual interpretation 'of tinguished from the 'residues' referred to by these explanatory notes the abovemention tariff heading No 23.03 solely by reason of ed text is merely a list giving examples of the

JUDGMENT OF 18. 6. 1970 — CASE 72/69

2. In any case even on the basis of a restrict knowledge existing in the Community and ive interpretation of the concept of 'flour' also, although to a lesser extent, in respect the fundamental principles of the Common of all the manioc flours whose starch content Customs Tariff do not permit tapioca resi makes them suitable for cattle fodder. dues to be classified otherwise than under This protection was quantitatively neces tariff heading 11.06. Resort to such prin sary as the statistics produced clearly show a ciples for the interpretation of the descrip substantial drop in the imports of products tions of the goods contained in Regulation traditionally classified under heading 11.06 No 19/62 is quite permissible: the distinc in comparison with imports of tapioca waste tion between the tariff headings in question which were at first exempt from the levy. should indeed be made according to the rules for the interpretation of the Common 4. For all these reasons the distinction Customs Tariff even if in this particular case between tapioca waste under heading 11.06 distinction has to be made between products and the residues under heading 23.03 must which are subject to the organization of be based on the starch content which deter markets and some products which are not so mines the value and intended use of the subject, as Regulation No 19/62 adopted product. without alteration the tariff headings of the A limit of 40% of starch in relation to dry Common Customs Tariff for the purpose of material appears sufficient: the product defining its sphere of application. would then consist mainly of components However, by virtue of the rules of inter other than starch and in view of its reduced pretation which may be deduced from the nutritive value it could not compete with Common Customs Tariff and also from the Community food products, in particular explanatory notes to the Brussels Nomen

3. In addition the classification under all products made from manioc tubers heading 11.06 of residues from the manu which contain more than 40% of starch in facture of tapioca with a high starch content relation to dry matter without its being is the only one which corresponds equally to necessary to take account of the maximum the specific objective of protection pursued or minimum contents of other components by the levy system provided for by Regula such as raw fibres, sugar or proteins. tion No 19.

4 The interpretation of one tariff heading in relation to another must, in a case of doubt, take into account both the function of the customs tariff in regard to the necessities of the systems of organization of the markets and its purely customs function. Although Regulation No 19/62 included non-cereal products under heading 11.06 — and, inter alia, manioc flours — in the system of the organization of the market in cereals, this was because precisely by reason of their high starch content these products compete on the common market with cereal products and, in particular, after denaturing, with feeding-stuffs.

JUDGMENT OF 18. 6. 1970 — CASE 72/69

5 There is no doubt that 'starch residues' under heading 23.03 are also sold as fodder but because of their lesser starch content they are not capable of being marketed under the same description as the products under heading 11.06 so that they do not compete with local production in the same way as the said products. However, as regards manioc, it has become apparent that in certain countries the extraction methods leave a product the starch content of which is still comparable to that of manioc flours and which, after milling, is marketed under the description. This fact shows that, in regard to the objectives of the levy prescribed in the present case, it is only in terms of the starch content, so far as manioc is concerned, that the line must be drawn between the 'residues of starch manufacture' and flours.

6 Moreover, the plaintiff in the main action maintains that the description 'flours' within the meaning of heading 11.06 must be reserved for manioc products obtained by the simple grating of the dried roots to the exclusion of all other treatment. It bases its argument on the title to Chapter 11 — in which heading 11.06 appears — which mentions, inter alia, 'Products of the milling industry', on the wording of the explanatory notes on the Brussels Nomenclature concerning the said heading as well as on the fact that the flours under heading 11.06 must derive from the vegetable raw materials mentioned under heading 07.07 (manioc roots ... other tubers having a high starch content) which would exclude roots from which the starch has already been extracted.

which does not exceed 40 %. The plaintiff in the main action on the other hand states that residues with a starch content under 40% do not exist and that, even after treatment by modern processes, manioc roots still have a starch content in excess of 60 %, particularly by reason of the peculiarities of their fibrous structure.

9 If, even with modern methods, it is possible to extract from manioc roots only relatively small quantities of starch so that the new material remaining still contains 60% or more of starch, then it must be concluded that this material cannot be regarded as a residue — that is to say, according to the terms of the explanatory notes to heading 23.03 — waste from starch manufacture within the meaning of that heading, but that it still constitutes a product the high starch content of which must lead to its falling under heading 07.06 (manioc roots) and the simple grating of which provides a product marketed as manioc flour.

10 The level of starch which is decisive is therefore that at which the roots which

have been treated previously cease to constitute such a product. On the other hand in order to ensure the functioning of the Common Market and in particular the organizations of the agricultural markets this level must be fixed in a uniform manner for the whole Community.

11 A circular from the Federal Minister of Finance of 29 December 1965 had fixed

this limit at 55%. During the year 1966, when the Committee on Common Customs Tariff Nomenclature set up by Regulation No 97/69 of the Council of 16 January 1969 (OJ Special Edition 1969, p. 12) was not yet operative, a group of officials from the Member States presided over by a representative of the Commission was of the unanimous opinion that only products which, after being subjected to treatment designed to extract starch, contained no more than 40% of that product, could be regarded as residues from the manufacture of starch from manioc and placed under heading 23.03. The result of this discussion was communicated by the Commission's departments to the Permanent Representatives of the Member States, and in particular to the Representative of the Federal Government by letter dated 13 May 1966.

Costs

15 The costs incurred by the Commission of the European Communities and by the Government of the Federal Republic of Germany, which have submitted obser­ vations to the Court, are not recoverable, and as these 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 on 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 plaintiff in the main action, the Government 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, 177 and 189; Having regard to Regulation No 19 of the Council of the European Economic Community of 4 April 1962; Having regard to Regulations of the Council of the European Communities Nos 950 of 28 June 1968 and 2451 of 8 December 1969;

HAUPTZOLLAMT BREMEN v BREMER HANDELSGESELLSCHAFT

Having regard to Regulation No 97 of the Council of the European Communities of 16 January 1969: Having regard to the Protocol on the Statute of the Court of Justice of the EEC, especially Article 20; Having regard to the Rules of Procedure of the Court of Justice of the European Communities,

A.Van Houtte R. Lecourt

Registrar President

OPINION OF MR ADVOCATE-GENERAL ROEMER DELIVERED ON 12 MAY 19701

Mr President, matter, that is, the interpretation of tariff Members of the Court, heading 11.06 A of the Common Customs Tariff ('manioc flour'). The products under The two cases on which I am now stating this heading are subject to the common my views have partly the same subject- organization of the market in cereals and its

1 — Translated from the German.