C-86/76

JUDGMENT OF THE COURT (FIRST CHAMBER) OF 23 MARCH 1977 1

Gervais-Danone AG

v Hauptzollamt München-Mitte (preliminary ruling requested by the Bundesfinanzhof)

Case 86/76

Common Customs Tariff — Description of goods — Food preparations consisting mainly of milkfats — Tariff heading 21.07

Within the framework of the Common by tariff heading 21.07 and therefore Customs Tariff, food preparations cannot come under heading 15.13. consisting mainly of milkfats are covered

— and, if appropriate, on the validity of Regulation No 496/69 of the Commission of 18 March 1969 (OJ, English Special Edition 1969 (I), p. 109) on the classification of goods under subheadings 21.07 F VIII and IX of the Common Customs Tariff,

1 — Language of the Case: German.

JUDGMENT OF 23. 3. 1977 - CASE 86/76

THE COURT (First Chamber)

composed of: A. M. Donner, President of Chamber, J. Mertens de Wilmars and G. Bosco, Judges,

Advocate-General: J.-P. Warner Registrar: A. Van Houtte

In the customs declarations the importer Before the customs formalities pertaining described the goods as 'imitation lard', to the last consignment imported were giving the following composition: completed, Regulation No 469/69 of the — for the first two imports, Commission of 18 March 1969 (OJ, 85 % pure butyric fat (99-5 %) English Special Edition 1969 (I), p. 109) 10 % refined suet of bovine animals entered into force. That regulation 5 % sesame oil; excluded imitation lard containing 65 % — for the other imports, or more by weight of milkfats from tariff 85 % butyric fat heading 15.13, and provided for its 5 % curd classification under tariff heading 21.07 5 % skimmed milk powder ('Food preparations not elsewhere 5 % refined suet of bovine animals. specified or included'). Article 1 of the regulation provides more precisely that The competent customs authorities the said goods shall fall within cleared the goods into free circulation subheading 21.07 F,

GERVAIS-DANONE v HAUPTZOLLAMT MÜNCHEN-MITTE

— VIII, if they contain 65 % or more or

July 1976 the Bundesfinanzhof decided mitted under Article 20 of to suspend the proceedings and refer the the Protocol on the Statute following questions to the Court of of the Court of Justice Justice under Article 177 of the EEC Treaty: A — Observations submitted by Ger­ 1. Before the entry into force of vais-Danone Regulation No 496/69 of 18 March 1969 was tariff heading 15.13 of the Relying upon an expert's report Common Customs Tariff to produced as Annex I to its observations, be interpreted as meaning that Gervais-Danone first of all points out mixtures of fats consisting of that the products referred to in the (a) 85 % butyric fat (99-5 %) present case were not merely mixtures of 10 % refined suet various fats with a preponderant 5 % sesame oil percentage of butter; they were also

JUDGMENT OF 23. 3. 1977 - CASE 86/76

Such change is are better suited to cooking than pure permissible only if the tariff heading itself is amended. However, such simple fats, such as butyric fat or lard. These cooking properties are greatly amendment is superfluous within the enhanced when fats have subsequently framework of the common organization been processed by texturation or of a market. Indeed, such organization emulsification. has other means at its disposal to prevent disturbances on the market and to avoid distortions of competition, without Even if, in relation to other mixtures, having to amend a tariff heading: it can mixtures of fats based mainly on butyric call upon the appropriate system of levies fat do not manifest structural differences

1965-1966, p. 221). After setting out these considerations, Supposing that a prepared edible fat, Gervais-Danone goes on to point out, as mostly consisting of milkfats, had regards the law, that pursuant to Articles provoked disturbances on the market, the II a and II b of the Brussels Convention Council could have eased those of 15 December 1950, the Common difficulties by amending Article 2 (1) of Customs Tariff adopted heading 15.13 the said regulation and instituting levies without any amendment from the or refunds, but in no case could it have wording used since 1955 by the Customs attempted to attain the same result by Cooperation Council of Brussels in its changing the classification of certain

GERVAIS-DANONE v HAUPTZOLLAMT MÜNCHEN-MITTE

Although it is true that the wording of not 'oils') and from comparison with the that recital is not absolutely clear, none preceding tariff headings, in particular the less it cannot be inferred therefrom heading 15.07 concerning 'vegetable oils', that although the Commission is bound that heading 15.13 refers essentially to by the wording of a tariff heading, it can solid or hydrogenated prepared edible however, by means of closer definition, fats, as opposed to fluid oils. amend the content and the scope thereof. Such a practice is forbidden in After stating what is understood by the the internal legal orders of the Member terms 'margarine' and 'imitation lard', States, including the Federal Republic of which appear in heading 15.13, Germany, which on the contrary Gervais-Danone maintains that, taking acknowledges the general legal principle into account the words 'other … fats', according to which the interpretation of the expression 'other prepared edible a legal instrument is not bound to the fats', which is also contained in that literal meaning, but to the actual heading, refers to mixtures of fats of any intention and express purposes of that kind (such as imitation lard) and to instrument. emulsified fats (such as margarine).

JUDGMENT OF 23. 3. 1977 - CASE 86/76

and may be used in the same way as the — that the solution adopted in other emulsified fats falling within tariff Regulation No 496/69 does not heading 15.13. The same is true of correspond to the practice hitherto mixtures of solid fats whose followed by the Member States, or by preponderant ingredient is butyric fat. several of them, in particular the From the point of view of the Customs Federal Republic of Germany, which Cooperation Council, it would have been classified under heading 15.13 a illogical, at the time of the establishment mixture or an emulsion of butyric fat of the Nomenclature, to exclude from mainly composed of milkfats. During that heading an emulsion or a mixture of the discussions concerning Re­ fats based on butyric fat. Moreover, that gulation No 496/69, the members of Council did not do so, and the Council the German delegation on the of the European Communities eventually Nomenclature Committee firmly adopted heading 15.13 as drawn up and defended the argument that such interpreted by the Customs Cooperation mixtures or emulsions containing Council. more than 65 % by weight of fats in addition to other fats (lard, suet etc. The grounds stated by the Commission …) fall within tariff heading 15.13. in its Regulations Nos 496/69 and This could be verified if the Court 663/69 as the basis thereof do not stand were to examine Annex II to the

— that the classification of a single relating to heading 15.13 ('… these product under different chapters is mixtures … may contain added found in the CCT also in the case of lecithin, starch … or vitamins. They products of the milling industry, may also contain butter or lard'), it which fall within either Chapter 11 infers therefrom by an argument a or Chapter 23 according to their contrario sensu in the second and starch content; third recitals of the preamble to — that in its Regulation No 496/69, the Regulation No 663/69, that butter is Commission contradicts itself, since clearly allowed only as an additive in it classifies under heading 21.07 only margarine, imitation lard and other products containing 65 % or more by edible fats, and then only to the weight of milkfats. This implies in extent to which such addition is effect that, according to the same required to improve the products, regulation, a mixture of fats without causing them to lose their containing 64 % of milkfats whose essential characteristics. If the prime ingredient is still a milkfat Customs Cooperation Council had would continue to fall within tariff really intended to give to the heading 15.13; abovementioned addition the scope

GERVAIS-DANONE v HAUPTZOLLAMT MÜNCHEN-MITTE

'Before the entry into force of Regulation Therefore the two regulations cannot No 496/69 of 18 March 1969, tariff both be valid. Indeed, supposing that heading 15.13 of the Common Customs they were both valid, it would be Tariff was to be interpreted as covering impossible to know under which heading mixtures and emulsions of fats consisting to classify mixtures and emulsions of fats of containing more than 10 % but less than (a) 85 % pure butyric fat (99-5 %) 65 % of milkfats. If, under Regulation 10 % refined suet No 496/69, those products fell within 5 % sesame oil (hydrogenated) heading 15.13, they could not be or classified under that heading pursuant to (b) 85 % butyric fat Regulation No 663/69: for this reason, 5 % curd they do not fall within either heading 5 % skimmed milk powder 15.13 or heading 21.07. 5 % suet of bovine animals. In fact, Regulations Nos 496/69 and 2. As to the second question, relating to 663/69 are both void, since they do not the validity of Regulation No 496/69, confine themselves to annotating tariff Gervais-Danone considers it necessary to heading 15.13, but amend its content and examine that regulation in conjunction its scope. Indeed they purport to fix, by with Regulation No 663/69. way of 'annotations', the percentage of one product which another product must Regulation No 496/69 stipulates that contain in order to be able to be mixtures and emulsions of fats classified under one or the other tariff containing 65 % or more by weight of heading. However, such content is fixed milkfats shall fall within tariff in a contradictory way in the two subheading 21.07 F (and no longer regulations, since either the limit of within heading 15.13). On the other 10 % on the content by weight of hand, Regulation No 663/69 specifies milkfats is correct, and consequently the that such mixtures and emulsions shall limit of 65 % is mistaken, or the 65 % continue to be classified under heading limit is correct and consequently the 15.13 only if their milkfat content does 10 % limit is mistaken. This shows that not exceed 10 % by weight. the determination of the percentage of

issue. The Explanatory Notes to the annotating tariff headings 15.13 and Brussels Nomenclature themselves 21.07 of the Common Customs excluded neither mixtures nor emulsions Tariff it amends them and

of fats based on milkfats, nor did they consequently is not covered by the define delimitation criteria expressed as enabling provisions of Regulation percentages. On the other hand, the No 97/69 of 16 January 1969; practice previously followed in one or (b) In the alternative more of the Member States was in Although Regulation No 496/69 of accordance with the interpretation of 18 March 1969 is valid, it cannot be tariff heading 15.13 adopted by those applied retroactively, either directly Notes, which is different from the or indirectly, by the Member States, interpretation applied by Regulation No because the wording of the Brussels 496/69. Finally, both Regulation No Explanatory Notes also allows of an 496/69 and Regulation No 663/69 interpretation according to which unlawfully amended the text of tariff mixtures and emulsions of fats

heading 15.13 by supplementing it with containing more than 64 % of the determination of the said milkfats were to be classified under

percentages, and thereby contravened tariff heading 15.13.' Regulation No 97/69. B — Observations submitted by the Moreover, even supposing that the Court Commission of the European can accept that Regulation No 496/69 is Communities valid, account must be taken of the 1. The first question principle of 'legal certainty', as the Court itself has already acknowledged in its The Commission points out that the case-law. Despite the argument followed tariff headings to be considered for the

According to the Explanatory Notes to Since the products to which each of the Brussels Nomenclature relating to these headings relates are covered by a heading 04.03, that heading covers common organization of the market, 'resolidified butter (beurre fondu), account must be taken in defining those dehydrated butter, butterfat, ghee (a kind headings both of the function which the of butter made from buffalo's milk) and CCT fulfils within the framework of the rancid butter' (cf. the annex to the organization of the markets and of its written observations). As to resolidified function purely for customs purposes. butter, it emerges from the Explanatory Notes to the CCT concerning heading (a) The interpretation of the Common 04.03 that, apart from resolidified butter Customs Tariff Nomenclature properly so-called, that description covers other similar kinds of dehydrated butter. Tariff heading 21.07 groups together such 'food preparations' as are not If the butter or the resolidified butter specified or included under other contains other added substances, the headings of the Common Customs product thus obtained is still butter

heading. Granted, tariff heading 15.13 suet of bovine animals and 5 % of mentions 'imitation lard', but tariff sesame oil seems to exclude the classification as such depends only on possibility of speaking of the addition of the nature and objective composition of very small quantities of foreign the product, not on the description substances. On the other hand, the which the importer applies to it. addition of negligible quantities of tasteless and odourless suet of bovine On the other hand, the said products are animals and sesame oil does not confer also not 'included' under tariff heading upon the resolidified butter any 04.03 or 15.13. particular qualities, characteristics or opportunities for utilization in excess of Indeed, tariff heading 04.03 isolates those of the normal product. 'butter' from the heading 'Dairy produce'

JUDGMENT OF 23. 3. 1977 - CASE 86/76

Therefore other hand, the total stated content of the expression 'other prepared edible fats' curd and milk powder probably in tariff heading 15.13 should not be represents more than the addition of interpreted a priori as having any other 'very small quantities' within the meaning than that which it has in all meaning of the Notes Explicatives du other parts of Chapter 15, namely that of Tarif Douanier Commun relating to animal or vegetable fats not specified in heading 04.03. the said chapter, excluding milkfat and preparations thereof.

Doubtless within the meaning of Chapter 15. milkfats added to another fat can be found in the mixtures under heading Heading 15.13 isolates two specific 15.13, but such milkfats are added only mixtures of fats from the other products in very small quantities and must in no in that chapter: 'margarine' and case be the only or principal fat 'imitation lard'. The products in dispute constituent. These considerations are in constitute neither one nor the other of accordance with the Explanatory Notes these products. As to the content of the to the Brussels Nomenclature, which term 'imitation lard', the descriptions specify that heading 15.13 covers 'solid 'imitation lard' and 'simili-saindoux', edible preparations', generally consisting used in the original versions of the of mixtures of Brussels Nomenclature, leave no doubt — different animal fats and oils, about the fact that they refer exclusively — different vegetable fats and oils, or to mixtures of fats based on lard. — animal and vegetable fats and oils, Moreover, according to German which may have been previously legislation, the word 'Kunstspeisefett' hydrogenated. Even if it is admitted that

GERVAIS-DANONE v HAUPTZOLLAMT MÜNCHEN-MITTE

however be considered as such in the (b) Classification considered from the terminology of the Common Customs point of view of the common Tariff and in particular of Chapter 15 organization of the markets thereof, since under heading 04.03 it comes within the 'dairy produce' of The Commission points out that Chapter 4. There are no grounds for Regulation No 13/64 for the first time thinking that the Brussels Explanatory made milk and the milk products Notes intended to give the expression referred to in Chapter 4 of the Common 'animal fats' a meaning other than that Customs Tariff subject to a common which it has in the nomenclature. organization of the market, the operation of which is currently governed by Furthermore, the general considerations Regulation No 804/68 (OJ English placed at the head of Chapter 15 Special Edition 1968 (I), p. 176). It soon became clear that the definition of the expressly exclude from that chapter butter within the meaning of heading ambit of those regulations, as it results 04.03. Certainly, the Explanatory Notes from the nomenclature of Chapter 4, was to the Brussels Nomenclature do not an obstacle, because it allowed a certain

JUDGMENT OF 23. 3. 1977 — CASE 86/76

In 1966, all uncertainty as to the the disposal from stock of certain fundamental definition of headings 21.07 quantities of 'concentrated butter for use and 15.13 within the framework of the in cooking', to which the product Common Customs Tariff nomenclature designated by the national court by the had been eliminated. This definition of letter (a) is by its nature very close. the ambit of Regulations Nos 160/66 and 136/66 proceeds clearly from the On the other hand, Regulation No aforesaid interpretation of the Common 1354/68 (JO 1968, L 217, p. 6) Customs Tariff. It is only in this way that authorized the disposal of stocks of the existing difference between the butter provided that the buyer gave an import system applied to products under undertaking to export that butter after heading 21.07 and that applied to processing it into semi-finished products products under heading 15.13 can be falling within subheadings 18.06 D II (c) understood. That difference would be and 21.07 F II to 21.07 F IX. The rendered meaningless if preparations addition of amounts of curd and milk based on butter, in particular those powder to the product designated by the containing 85 % or more of milkfats, fell national court by the letter (b) is in principle within heading 15.13. sufficient for the mixture thus obtained to be considered as a food preparation Moreover, that heading was bound under within the meaning of heading 21.07. the General Agreement on Tariffs and Trade (GATT) during the years 1960-1961, and in the course of the In the light of these observations, the negotiations which then took place it was Commission proposes that the first never contemplated that preparations question should be answered as follows: based on milkfats could be added to margarine and imitation lard. 'Before the entry into force of Regulation No 496/69 of 18 March 1969 tariff (c) The measures taken within the heading 15.13 of the Common Customs framework of an organization of Tariff was to be interpreted as meaning the market that mixtures of fats consisting of (a) 85 % pure butyric fat (99.5 %) The measures taken within the 10 % refined suet framework of the common organization 5 % sesame oil of the market in milk and milk products or

Moreover, the Commission considers it adoption of explanatory notes and of apposite in the present case to recall tariff classification opinions suffice to certain principles which it has already guarantee a uniform application of put forward in Case 37/75, Bagusat the tariff. [1975] ECR 1339: — The fact that a regulation concerning — The fact that a classification different tariff classification does not from that laid down is conceivable correspond to the interpretation according to the wording of the tariff given to the tariff in certain Member is not sufficient for it to be States cannot justify the conclusion considered as an unacceptable that such a regulation is void: in that amendment to the tariff not justified case the regulation should not be by Regulation No 97/69. annulled, but the tariff classification — In order to fulfil their function and as applied by the Member States in safeguard the principle of legal question should be revised. certainty, regulations on tariff classification cannot be declared void Taking these observations into account, unless the decision which they the Commission contends that contain is clearly contrary to the 'Regulation No 496/69 is valid'. letter, the structure and the rules of tariff classification, is clearly arbitrary and wrong and can no longer be III — Oral procedure justified by means of substantive arguments. Gervais-Danone and the Commission of — Legal certainty is not the only the European Communities presented purpose of the regulations concerning oral observations at the hearing on 10 classification: they are also intended February 1977. to ensure a uniform interpretation and application of the Common In reply to the assertion by the Customs Tariff in all the Member Commission in its written observations States. For this reason, those that it is not possible to detect with regulations are applicable principally sufficient certainty by means of analysis in those cases in which the the presence in the mixture of the small competent authorities of the Member quantities of suet referred to in this case, States adopt divergent positions with Gervais-Danone produced an expert's regard to tariff classification and in report establishing that the presence in which uniformity of interpretation the mixture of a suet content of 10 % or can be ensured only by a rule of 5 % can be detected by analysis with a Community law binding upon all sufficient degree of certainty. those authorities; when there are no divergences between the national The Advocate-General delivered his administrative authorities, the opinion at the hearing on 9 March 1977.

3 The importer of the goods challenges this classification on the grounds that Regulation No 496/69 (which entered into force before the customs formalities pertaining to the last consignment imported were completed) amends, moreover with retroactive effect, the ambit of tariff headings 15.13 and 21.07, is therefore contrary to the letter and the spirit of those headings, and hence exceeds the authority conferred upon the Commission by the basic Regulation No 97/69 of the Council of 16 January 1969 (OJ, English Special Edition 1969 (I), p. 12).

The Commission maintains that Regulation No 496/69 merely interprets the tariff heading in question with binding effect, by clarifying the content and scope which that heading had even before the regulation entered into force.

4 In its first question, the national court asks whether, before the entry into force of Regulation No 496/69, tariff heading 15.13 of the Common Customs Tariff was to be interpreted as applying to food preparations consisting of the following:

— for the first two consignments: 85 % pure butyric fat (99 .5 %) 10 % refined suet

5 % sesame oil

GERVAIS-DANONE v HAUPTZOLLAMT MÜNCHEN-MITTE

Furthermore, the text of the Notes Explicatives du Tarif Douanier Commun relating to that heading specifies that food preparations based on 'butterfat' come under heading 21.07.

In listing the products included in heading 21.07, those Notes confirm, in particular under letter D II, that the fats of which the food preparations referred to in that heading consist are 'milkfats'.

7 In view of this information the products referred to in the question, however the importer may describe them, cannot, by virtue of the fat of which they mainly consist, be considered as food preparations coming under heading 15.13, which covers other fats, either vegetable or animal, such as margarine or imitation lard.

Although the Explanatory Notes to the Brussels Nomenclature do not preclude the inclusion of mixtures of animal fats under heading 15.13, it

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follows from the very wording of those Notes that this can only be so in the case of mixtures of which milkfat, in particular butyric fat, does not constitute the main ingredient.

On the other hand, Article 2 of Regulation No 136/66 of the Council of 22 September 1966 (Official Journal, English Special Edition 1965-1966, p. 221), which established a common organization of the market in oils and fats other than those obtained from milk, extends the ambit of that organization to the prepared edible fats of tariff heading 15.13.

This delimitation of the respective ambits of the aforesaid Regulations Nos 136/66 and 160/66 confirms that, within the framework of the Common Customs Tariff, food preparations consisting mainly of milkfats are covered by tariff heading 21.07 and therefore cannot come under heading 15.13.

GERVAIS-DANONE v HAUPTZOLLAMT MÜNCHEN-MITTE

9 For these reasons, the answer to the first question must be that even before the entry into force of Regulation No 496/69 of the Commission of 18 March 1969, tariff heading 15.13 of the Common Customs Tariff was to be interpreted as not applying to mixtures of fats consisting of:

85 % pure butyric fat (99.5 %) 10 % refined suet

5 % sesame oil

As these proceedings are, in so far as the parties to the main action are concerned, in the nature of a step in the action pending before the national court, the decision on costs is a matter for that court.

On those grounds,

THE COURT (First Chamber),

in answer to the question referred to it by the Bundesfinanzhof by order of 27 July 1976, hereby rules:

Even before the entry into force of Regulation No 496/69 of the Commission of 18 March 1969, tariff heading 15.13 of the Common Customs Tariff was to be interpreted as not applying to mixtures of fats consisting of:

OPINION OF MR WARNER —CASE 86/76

Delivered in open court in Luxembourg on 23 March 1977.

A. Van Houtte A. M. Donner

Registrar President of the First Chamber

OPINION OF MR ADVOCATE-GENERAL WARNER DELIVERED ON 9 MARCH 1977

My Lords, the customs entries submitted on behalf of the appellant the goods were, in each This case comes to the Court by way of a case, described as 'imitation lard'. The reference for a preliminary ruling by the Bundesfinanzhof, in its Order for Bundesfinanzhof. The appellant in the Reference, describes them, more proceedings before that Court is neutrally, as 'mixtures of fats'. Gervais-Danone AG. The respondent is the Hauptzollamt Mϋnchen-Mitte. In the case of the first two importations in the series, the composition of the The question at issue between the parties goods was stated in the invoices is as to the classification under the accompanying the customs entries to be: Common Customs Tariff (the 'CCT') of 85 % butterfat, 10 % refined suet and certain goods which were imported by 5 % sesame oil. In the case of the other the appellant from Switzerland into the importations it was stated to be: 85 % Federal Republic of Germany in a series butterfat, 5 % curd, 5 % skimmed milk of importations taking place between 20 powder and 5 % refined beef suet. In December 1968 and 22 March 1969. In every case the goods were entered under