C-14/70

1. Since the individual tariff headings must 2. In the absence of relevant Community have the same scope in all Member provisions, the explanatory notes and States, their interpretation can only be the classifications opinions provided for fixed if the powers vested in the Com­ by the Convention on Nomenclature for munity are respected. Consequently, the Classification of Goods in Customs even in the absence of an express Tariffs are an authoritative source for Community interpretation, the effect of the purposes of the interpretation of the a binding interpretation cannot be headings to the Common Customs attributed to the explanatory notes of the Tariff. national authorities relating to the headings of the Common Customs Tariff.

In Case 14/70

Reference to the Court under Article 177 of the EEC Treaty by the Bundesfinanzhof for a preliminary ruling in the action pending before that court between

Deutsche Bakels GmbH

and

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

Registrar: A. Van Houtte

gives the following

JUDGMENT

Issues of fact and of law

Summary of facts and of procedure the other hand, Classification Opinions sent out by the Nomenclature Committee of the The facts and procedure may be summar­ same Council. The Explanatory Notes ized as follows: define the sphere of application of a given The Convention on the Nomenclature for heading of the nomenclature, while the the Classification of Goods in Customs Classification Opinions relate to a specific Tariffs of 15 December 1950, known as product and establish its exact classification. the 'Brussels Nomenclature', places each On 24 October 1968, Deutsche Bakels of the contracting parties under an obliga­ GmbH (hereinafter referred to as 'the tion to establish its customs tariff in plaintiff') received from the Oberfinanz­ conformity with the nomenclature. Since direktion (Regional Finance Office) a all the Member States of the EEC were binding customs tariff notification (ver­ parties to this Convention, the Common bindliche Zolltarifauskunft) relating to a Customs Tariff was also based on the product described under the name of Brussels Nomenclature. 'Voltem' as a baking emulsifier, consisting In order to resolve the problems posed by as to 51.35% of sucrose and for the rest the interpretation of the various headings of approximately three parts fat in the form of the nomenclature, the Convention and of triglycerides and two parts diacetyl- the annexes thereto provide, on the one tartaric-acid-ester. In a proportion to flour hand, for Explanatory Notes composed by of two to three per cent, this product acts as the Customs Cooperation Council and on an emulsifier and stabilizer in the manu-

facture of bread and pastry products, in as a vehicle to facilitate determination of order to obtain an even fermentation of the quantities, as a general rule come under dough, an increase in the volume of the heading 38.19 rather than heading 21.07. finished product, and, in the case of bread, The plaintiff maintains that the sugar a finer texture. The Oberfinanzdirektion content of Voltem only acts as an agent classified this product under heading designed to facilitate determination of 21.07/F-I-e-1 of the Common Customs quantities or even to make this possible. Tariff.<apnote>1</apnote> Since it is only used in a small proportion This classification implies that the product of 1 to 2% and since it serves other purposes is subject to customs duty of 17%, <apnote>2</apnote> making than nutrition or influencing taste, Voltem up one of the two components (the other comes under heading 38.19. Moreover this being a variable component) of the levy was the heading in which Voltem had provided for by Article 10 of Regulation generally been classified in those countries No 160/66EEC of the Council of 27 October whose customs tariff is based on the Brussels 1966, establishing the trade arrangements Nomenclature. The German customs offices for certain goods resulting from the pro­ had adopted the same practice before the cessing of agricultural products (OJ of amendment made to the German ex­ 28.10.1966, p. 3361) (replaced by Article 5 planatory notes to heading 21.07 by the of Regulation (EEC) No 1059/69 of the Order of 22 June 1967 relating to the Council of 28 May 1969 laying down the Explanatory Notes to the German Customs trade arrangements applicable to certain Tariff of 1967 (Bundesgesetzblatt II 1967, goods resulting from the processing of p. 1935). This amendment was based on a agricultural products, OJ L141 of 12.6. Classification Opinion relating to heading 1969, p. 1). 21.07 issued by the Brussels Nomenclature Contrary to the wishes of the plaintiff the Committee which classified two auxiliary Oberfinanzdirektion refused to classify the products for pastry and breadmaking under product under heading 38.19 of the tariff,<apnote>3</apnote> this heading, because of their composition. giving the reason that Voltem is made up The plaintiff maintains that Voltem does nutritive material (sugar and fat). not correspond to the products referred to In its direct application (Sprungklage) to this in this notice of classification either by the Bundesfinanzhof (Federal Finance its composition or by its intended use. Court), the plaintiff relied principally on The Oberfinanzdirektion asks for the direct the Explanatory Notes to the Brussels appeal to be dismissed for the following Nomenclature relating to heading 21.07. In reasons.

JUDGMENT OF 8. 12. 1970 — CASE 14/70

ruling: 1970. The plaintiff, the German Government and '1. If explanatory notes at the Community the Commission of the European Com level have not yet been issued for the munities submitted written observations in headings of the Common Customs accordance with Article 20 of the Protocol Tariff, can explanatory notes issued by on the Statute of the Court of Justice of the the national authorities be recognized EEC. as a binding interpretation of these Upon hearing the report oí the Judge- tariff headings? Rapporteur and the views of the Advocate- General, the Court decided to open the

at the hearing on 17 November 1970. The plaintiff was represented by Mr 3. If Question 2 is answered in the negative : Schürmann of the Frankfurt am Main Bar. how is the distinction to be made The German Government was represented between 'food preparations' under by Messrs Morawitz, Cludius and Karbe. heading 21.07 and 'chemical prepara The Commission of the European Com tions' under heading 38.19 of the munities was represented by its Legal Common Customs Tariff?

BAKELS ν OBERFINANZDIREKTION MÜNCHEN

1 — The first question (b) Observations of the German Govern­ ment

Convention. Community adopted the Brussels Nomen On the other hand they certainly have the clature necessarily implies an undertaking value of an expert opinion on the scope on its part to guarantee the uniform of the various headings of the Nomencla application of the Nomenclature and thus ture. Therefore they may also be taken into to conform to these explanatory notes and consideration in interpreting the Common the classification opinions. Therefore in Customs Tariff which also follows the answer to this question the German Brussels Nomenclature. Government suggests that in the absence However in the view of the Commission, of explanatory rules or directives from the this statement is subject to two qualifica Community with binding force, the main

mercial and technical developments. In this to conform to the explanatory notes and respect the Commission further observes classification opinions issued by the Cus that the consequences of such overtaking toms Cooperation Council. are sometimes in fact corrected by means In addition, it recalls that the question does of a classification opinion, which exactly not relate to the mandatory nature (Ver serves the purpose of adaptation to such bindlichkeit) of the Explanatory Notes to developments. the Brussels Nomenclature, but that the

concept of 'food preparations' itself, that the determining factors are the content of The German Government produces a nutritive substances and the use as a food. classification opinion, whereby the Nomen­ On the other hand the fact that the Brussels clature Committee had classified under explanatory notes exclude preparations heading 21.07 additives for bread making, which are partially nutritive from heading whose composition contains a substantial 21.07 because of the purpose of their percentage of chemical products, and states incorporation and of the 'small' proportions that this notice was confirmed by the required in use, gives rise to ambiguity. It Customs Cooperation Council at its is not impossible that a preparation such as meeting of 6 to 9 June 1967. Voltem should be incorporated in certain In the German Government's view the products not only, and perhaps not even, following criteria should be excluded in as an emulsifier, but also because of its fat distinguishing between the headings 21.07 and sucrose content. and 38.19 relating to additives for bakery The classification of Voltem under heading and fine bakery; 38.19 would permit the processing industry to avoid the high prices of these substances — the question whether the additive is in the Common Market. added as a stabilizer or as an emulsifier Moreover the bodies concerned with the or else to improve the taste of the Brussels Nomenclature had reached the product, since both objectives overlap same conclusion themselves. On the one as any improvement in the preparation hand, the Customs Cooperation Council is of such a product tends finally to improve in the course of preparing an amendment its taste as well; to its explanatory notes on this subject and on the other hand, its Nomenclature — the question in what quantity the Committee has departed from the explana­ preparation is intended to be incorpor­ tory notes and classified preparations ated in the product, since this quantity comparable to Voltem under heading 21.07 depends as much on the product as on rather than under heading 38.19. the additive; In addition, application of the General Rules for the Interpretation of the Nomen­ — the question whether the substances clature of the Common Customs Tariff, in making up the preparation are 'for particular Rules 3 (c) and 5,<apnote>1</apnote> would also human consumption' since these sub­ result in heading 21.07 being applicable. stances are always of this nature,

whether they are 'natural substances' — since the preparation of diacetyl-tartaric- (sugar, flour, etc.) or 'chemical sub­ acid-ester is very expensive, it would not stances' (monoglycerides and diglycer­ be worthwhile to produce it if indeed ides, sorbitol, etc.). monoglycerides and diglycerides, the preparation of which is much less Finally then, the only suitable criterion for expensive, could be wholly substituted classification under one heading or the for it; other is the predominant percentage of either typically nutritive or chemical — in fact, it is the diacetyl-tartaric-acid- components. Such was the conclusion of ester which gives Voltem the properties both the Nomenclature Committee (classi­ of an emulsifier and stabilizer, as the fication opinion mentioned above) and of other components of Voltem serve only the Commission (Regulation (EEC) No as vehicles to facilitate determination 107/70). of quantities. As regards the classification of Voltem the German Government, in the oral pro­ The plaintiff maintains that Voltem should ceedings, adopted the arguments presented be classified on the basis of the General by the Oberfinanzdirektion before the Rules for the Interpretation of the Nomen­ Bundesfinanzhof. clature of the Common Customs Tariff, in particular Rule 3 (b). Therefore the sub­ stance which gives Voltem its essential (c) Observations of the plaintiff character must be determined. Although it is possible in this respect to take as the The plaintiff states that the Oberfinanz­ essential element either the use, or the direktion was wrong to assimilate Diacetyl- composition, or again the financial value tartaric-acid-ester to monoglycerides and of the various components, the Customs diglycerides. In support of this view it relies Cooperation Council adopted as its criterion in particular on the following arguments: the normal use of the product. On the other hand, it is not possible to do as the Com­ — the respective chemical formulae are mission does, that is to rely solely on a given clearly different; percentage of nutritive material in a product in order to decide that the essential use — hydrolysis of diacetyl-tartaric-acid-ester of the product is as a foodstuff. As regards produces, apart from fatty acids and the purposes for which the product is used, glycerol (products from the hydrolysis the plaintiff further makes the distinction of monoglycerides and diglycerides), between (a) the intended use, (b) the considerable quantities of other sub­ possible use and (c) the actual use of stances which are not for human Voltem. The Commission and the German consumption; Government are mainly anxious about the possible use. The plaintiff states, however, — German legislation on foodstuffs regards that their fears are without foundation, diacetyl-tartaric-acid-ester as an artificial because the end product may be rendered chemical product and therefore restricts inedible if even slightly larger quantities its use; of Voltem are added.

3 The Council issued pursuant to Articles 28 and 111 of the EEC Treaty Regulation No 950/68 concerning the Common Customs Tariff, which contains the customs tariff as an annex. The interpretation of the headings of this tariff can only be fixed if the powers vested in the Community are respected. For it follows from the very nature of the Common Customs Tariff that the individual tariff headings must have the same scope in all the Member States. This requirement would be jeopardized if, where there are difficulties in classifying a product for tariff purposes, each Member State were itself able to fix this scope by way of interpretation.

4 Although, where there are difficulties in classifying a product, the national ad­ ministration may find it advisable to take implementing measures and to elucidate thereby the doubts raised by the description of a product, it may only do so by observing Community law, without the national authorities' being to issue rules of interpretation haying binding effect.

5 Accordingly, the first question put by the Bundesfinanzhof must be answered to the effect that even in the absence of an express Community interpretation, the effect of a binding interpretation cannot be attributed to the explanatory notes of the national authorities relating to the headings of the Common Customs Tariff.

The second question

6 In the event of a negative answer to the first question, the Bundesfinanzhof asks the Court to rule whether, where explanatory notes have not yet been isssued by the Community for headings to the Common Customs Tariff, the Explanatory Notes to the Brussels Nomenclature of 1955 on these headings are authoritative.

11 Accordingly the aims and the structure of the Common Customs Tariff imply that in the absence of relevant Community provisions the abovementioned explanatory notes and classification opinions should be regarded as an authoritative source for the purposes of the interpretation of the tariff headings contained in Regulation (EEC) No 950/68. The second question put by the Bundesfinanzhof must therefore be answered in the affirmative.

The third question

12 The third question is put solely in the event of a negative answer to the second question and therefore need not be examined.

JUDGMENT OF 8. 12. 1970 — CASE 14/70

Costs

13 The costs incurred by the Government of the Federal Republic of Germany and the Commission of the European Communities which submitted observations to the Court are not recoverable.

2. In the absence of relevant provisions issued by the Community the explanatory notes and classification opinions provided for by the Convention on Nomen-

BAKELS ν OBERFINANZDIREKTION MÜNCHEN

clature for the Classification of Goods in Customs Tariffs are an authorative

source for the purposes of the interpretation of the headings to the Common Customs Tariff. ­

Lecourt Donner Trabucchi

Monaco Mertens de Wilmars Pescatore Kutscher

Mr President, products of the chemical or allied industries, Members of the Court, not elsewhere specified or included'. With this tariff classification the products in The national proceedings from which the question would have been subject solely questions with which I have to deal today to the import duty prescribed in the Com­ have arisen concern the correctness of a mon Customs Tariff which covers food binding customs tariff notification issued preparations not elsewhere specified or to the plaintiff company by the Oberfinanz­ included containing sugar, dairy products, direktion Munich on 24 October 1968. The cereals or cereal-based products. In this classification relates to a product described case, according to Article 10 of Regulation as 'Voltem' baking emulsifier, consisting as No 160/66 of the Council of 27 October 1966 to 51.35% of sucrose and in addition of (OJ 1966, p. 336) laying down the trade approximately three parts fat in the form arrangements applicable to certain goods of triglycerides and two parts diacetyl- resulting from the processing of agricultural tartaric-acid-ester. This product is used in products, as amended by Regulations the manufacture of bakery products, in Nos 61/67 and 80/67 (OJ 1967, pp. 837 and a quantity usually of about 2% to 3% in 1593) a higher level than the normal rate relation to flour. It is used as an emulsifier of duty was payable on imports from third and stabilizer to ensure dough with a stable countries as 'food preparations, etc.' come yeast, a greater volume of bakery product within the scope of application of this and a finer porosity and crumb in bread. regulation. As you know, such levies serve The classification at issue related to tariff inter alia to cover 'the incidence of the heading 38.19 of the Common Customs difference between the prices' of the Tariff the products of which are described processed base products 'in the importing as 'chemical products and preparations of Member State and the prices prevailing for the chemical or allied industries (including imports from third States'. those consisting of natural products), not Faced with these alternatives the Ober­ elsewhere specified or included, residual finanzdirektion Munich decided, in its