C-60/77
ECLI:EU:C:1977:213
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JUDGMENT OF THE COURT (FIRST CHAMBER) OF 15 DECEMBER 1977 1
Fritz Fuss KG, electronics factory v Oberfinanzdirektion München
(preliminary ruling requested by the Bundesfinanzhof)
Case 60/77
Common Customs Tariff — Description of goods — Individual electrical appliances — Nature of parts' — Classification under tariff heading 85.17
Note 2 in conjunction with Note 5 to meaning of tariff heading 85.17 are Section XVI of the Common Customs 'parts' within the meaning of that note Tariff must be interpreted as meaning and are to be classified accordingly under that individual electrical appliances tariff heading 85.17 even when imported which are suitable for use solely or without the cables linking the various principally with an electric sound or parts and without the acoustic or visual visual signalling apparatus within the alarm signalling device.
In Case 60/77
Reference to the Court under Article 177 of the EEC Treaty by the Bundesfinanzhof (Federal Finance Court) for a preliminary ruling in the action pending before that court between
Fritz Fuss KG, electronics factory, Albstadt-Ebingen,
and
OBERFINANZDIREKTION (Regional Finance Office) MÜNCHEN
on the interpretation of the Common Customs Tariff for the purpose of the tariff classification of certain electrical appliances,
1 — Language of the Case: German.
JUDGMENT OF 15. 12. 1977 —CASE 60/77
THE COURT (First Chamber)
composed of: G. Bosco, President of Chamber, J. Mertens de Wilmars and A. O'Keeffe, Judges,
Advocate-General: J.-P. Warner Registrar: A. Van Houtte
gives the following
JUDGMENT
Facts and issues
The facts, the procedure and the In the metal or plastic cabinet of the observations submitted under Article 20 control unit there is an ultra-sonic of the Protocol on the Statute of the transmitter, an ultrasonic receiver (in the Court of Justice of the EEC may be Advisor VI there is in addition an summarized as follows: amplifier), a signal processing circuit (electronic analyser) and an alarm relay output connexion. The secondary sets I — Facts and written procedure contain only transmitters and receivers. The analysis of the signals is effected by the electronics contained in the master 1. The main action is concerned with set. Advisor VI comprises in addition two the tariff classification of goods described cable control units which monitor the as 'ultrasonic movement detectors, connecting cables for breaks and short designated Advisor III and Advisor VI'. circuits. Their purpose is to detect movements within a given area and to transmit this When there is movement in the information by means of an electric cable monitored area the waves detected by the to an external alarm signalling device ultrasonic receivers in the appliances (alarm unit). The cable and alarm register variations due to the so-called signalling device are not the subject of Doppler effect as against the waves the tariff classification. transmitted by the ultrasonic transmitter. Those variations are transformed into The construction and manner of electric signals and transmitted through functioning of 'Advisor III' and 'Advisor cables to the control unit where they are VI' are basically similar. The latter is analysed and, in the event of an alarm, intended for monitoring larger areas and passed on by means of the alarm relay is therefore more expensive. Both alarm output to an external alarm signalling units, as constructed, consist of a master device. set and various secondary sets (Advisor III has up to 3 and Advisor VI has up to 2. On 12 May 1975 the Oberfinanz- 20). direktion München issued two binding
FUSS v OBERFINANZDIREKTION MÜNCHEN
customs tariff notifications to Fritz Fuss themselves give a sound or visual alarm. KG, electronics factory, (hereinafter It further contended that Note 2 (a) to referred to as 'Fuss') in respect of those Section XVI of the Common Customs articles. Tariff does not apply in the present case. That note presupposes the existence Because of their function and their of parts of 'permanently assembled' construction, both ultrasonic movement constructional units, whereas the alarm detectors were classified by the installations for which the Advisors are Oberfinanzdirektion under tariff sub intended consist of several appliances heading 85.22 C ('electrical appliances which are linked to one another only by and apparatus, having individual electrical connexions to form 'functional functions, not falling within any other units'. For the classification of accoustic heading of this chapter .
. . Other'), which component parts of such functional units provides for a rate of duty of 13 % the Brussels Explanatory Notes to (autonomous) or 8 % (conventional). Section XVI of the Brussels Nomen clature contain a 'special provision' By an objection lodged against those according to which component parts notifications on 6 June 1975 Fuss sought imported separately fall to be classified the classification of both Advisors under under their appropriate headings. tariff heading 85.17 ('electric sound or visual signalling apparatus [such as .
. . Classification of the Advisors under burglar . . . alarms]') which bears a rate of heading 85.17 would therefore be duty of 15 % (autonomous) or 6 % possible only if by reason of their (conventional). In support it stated that characteristics they were articles covered the Advisors are not independent by that heading, to which that heading appliances, having individual functions, was appropriate. That is not so in the but parts of an alarm installation. They present case. were developed exclusively for use in alarm installations and there is no other 3. In the view of the Bundesfinanzhof, possible use for them. As a result the before which the undertaking concerned products in question should be classified brought the question at issue, the under tariff heading 85.17. Classification settlement of the case depends on the under that heading accords not only interpretation of the Common Customs with the practice of the European Tariff.
By order dated 19 April 1977, Communities but also with the received at the Court on 12 May 1977, Explanatory Notes to the Brussels the Bundesfinanzhof stayed the pro Nomenclature, according to which the ceedings and referred the following articles in question fall within heading question to the Court for a preliminary 85.17 as being 'parts of the goods of the ruling: present heading. 'Is Note 2 in conjunction with Note 5 to Classification under heading 85.22 is not Section XVI of the Common Customs possible since that heading covers only Tariff to be interpreted to the effect that electrical appliances and apparatus parts of appliances or parts within the having individual functions. meaning of the first-mentioned Note should be regarded as including By decision dated 1 September 1975 the individual electrical appliances which Oberfinanzdirektion dismissed the together are necessary component parts objection. It accepted that the Advisors of an electric sound or visual signalling are necessary component parts of alarm apparatus under tariff heading 85.17 of installations but also stated that they the Common Customs Tariff but which have individual functions as devices for cannot be classified under that tariff activating alarms even if they do not heading because they are to be classified
JUDGMENT OF 15. 12. 1977 —CASE 60/77
without the cables linking the individual Advocate-General the Court made an electrical appliances and without the order in accordance with Article 95 of acoustic or optical alarm devices or does the Rules of Procedure that the case be Note 2 only refer to parts of a assigned to the First Chamber and that permanently assembled unit? the oral procedure be opened without any preparatory inquiry. In the order making the reference the Bundesfinanzhof states in particular: — For the purposes of tariff II — Written observations sub classification it is above all relevant to mitted under Article 20 of ascertain whether the electrical the Statute of the Court of
appliances here at issue which are Justice of the EEC necessary for the installation of an electric signalling device may be (a) Fuss states first of all: regarded as parts of appliances within — It is not contested that alarm the meaning of Note 2 to Section installations as such fall under XVI of the Common Customs Tariff. heading 85.17 of the Common — In the present instance, however, Customs Tariff; doubt may be felt as to the — The (complete) alarm installations applicability of Note 2 because an manufactured and sold by it fall electric signalling appliance of the typically within the category of kind in question is a composite appliances and apparatus listed and machine within the meaning of Note described in the note to tariff heading 3 to Section XVI, made up of several 85.17; electrical appliances, its individual — That heading applies not only to components being linked together complete alarm installations but also only by means of electric cables, and to parts of such. not parts of a permanently assembled unit. In view of these observations Fuss then
— With regard to such composite states that the Advisors in question are machines or appliances consisting of parts of appliances which do not have functional units, the Brussels individual functions and which can
Explanatory Notes do not refer to function and be used only in connexion parts but to separate component parts with a central alarm generator and an which are to be classified under tariff alarm signalling device. The Advisors heading 85.17 only if all the have been constructed solely for that component parts of those units are special purpose; they are of no use nor imported together. Component parts can they subsequently have any use for imported separately, on the other other installations or apparatus. No other hand, are to be classified under their possible future use has so far become appropriate headings. apparent.
4. In accordance with Article 20 of the Further, it is clear that tariff heading Protocol on the Statute of the Court of 85.22 covers only appliances which have Justice of the EEC written observations an individual function. Since the were submitted by Fritz Fuss KG, Advisors do not have an individual represented by Heinz Stehle, and the function they cannot be classified under Commission of the European Com heading 85.22. munities, represented by its Legal Adviser, Manfred Beschel. From the point of view of the structure of the Common Customs Tariff it would Upon hearing the report of the also be illogical to classify parts of alarm Judge-Rapporteur and the views of the installations not under the special
FUSS v OBERFINANZDIREKTION MUNCHEN
provision existing for such apparatus but With regard to the observation that under heading 85.22, which is a general where the said provision applies 'in residuary heading covering only such principle' the goods should necessarily appliances as cannot be classified be classified under tariff heading 85.17 in elsewhere. application of Note 2 (b) to Section XVI, the Bundesfinanzhof is obviously taking The proposed classification moreover the view that the question of accords with the practice of the other classification 'under their appropriate Member States of the Community and in headings' (the central issue in the main particular Belgium. The authorities of action) no longer arises in so far as Note those Member States certainly would not 2 applies to parts of the kind in question. classify goods under heading 85.17 if the provisions of the Common Customs This view is not well founded, For proper Tariff did not allow for such a possibility. clarification to be given to the national court with regard to the content and A different classification comes into scope of Community law it is therefore question only in borderline cases or cases necessary also to give an opinion on the
of doubt. If, in spite of everything, the interpretation on the other possibilities other States have opted for heading 85.17 for classification afforded by letters (a) to it is not reasonable to proceed otherwise (c) of Note 2 and their relationship inter se. with the imports in question; the resulting competitive disadvantage for the German economy should not be Subject to this, the Commission states disregarded. This, however, is not a that with regard to the classification of an borderline or doubtful case. article according to its physical state the Common Customs Tariff provides for
three possibilities: (b) The Commission observes first of all — The complete article is covered as that the answer to be given to the such by the wording of a heading or Bundesfinanzhof should not be limited subheading, in conjunction, where to interpreting Note 2 to Section XVI of appropriate, with rules or principles the Common Customs Tariff, since the of interpretation; interpretation of that note does not allow — The incomplete or unfinished article, the problems of Community law raised which nevertheless already possesses by the court making the reference to be the essential characteristics of a dealt with comprehensively. For that complete or finished article, is to be purpose it is appropriate also to consider classified pursuant to Note 2 (a) in Rule A 2 (a) of the General Rules for the the same way as the complete or interpretation of the nomenclature, finished article; which provides that: 'Any reference .
. . to — Component and replacement parts of an article shall be taken to include a articles are governed by the section or reference to that article incomplete or chapter notes of the Common unfinished, provided that, as imported, Customs Tariff, which provide special the incomplete or unfinished article has classification rules such as Note 2 to the essential character of the complete or Section XVI. finished article' (OJ L 295, 1974, p. 11). When therefore the Bundesfinanzhof Secondly, the Bundesfinanzhof refers to states that the articles in question cannot Note 2 to Section XVI of the Common be classified under tariff heading 85.17 Customs Tariff without considering since 'they cannot function fully as further which of the classification rules electric signalling appliances because of referred to there under (a) to (c) it the absence of the cables linking the considers relevant. individual appliances and of the actual
JUDGMENT OF 15. 12. 1977 —CASE 60/77
alarm device' this does not exclude installation which consists of loosely (by application of Rule A 2 (a) of the General means of cable) connected individual Rules and thus classification under tariff appliances is to be classified under tariff heading 85.17. That depends on whether heading 85.17. the control unit together with the secondary sets have the essential Although various provisions of the characteristics of an alarm installation Common Customs Tariff give the functioning according to ultrasonic impression that a machine (or appliance) principles. That possibility is not ex may be classified under a heading cluded simply because without cable and specially provided for it only if it alarm device the installation is not represents a 'physical unit' neither the capable of functioning. Even if an article objectives of the Common Customs cannot (yet) completely carry out its Tariff nor the wording of the Brussels intended function, it is possible that its Nomenclature justify a view which construction gives it the essential restricts the concept of a machine (or characteristics of a complete article. This appliance) to physically 'permanently may be assumed if: assembled' units. — It is clearly apparent from the objectively ascertainable condition of From the wording of the headings of the article in question which Chapters 84 and 85 the characteristics of (complete) article is to be produced; the articles falling thereunder depends and on two basic requirements. The articles — The parts which are missing are of in question must: secondary importance to the whole (for example, if they are only of small Have certain technical characteristics of value in relation to the 'whole'). construction fulfilling the conceptual conditions of a machine (or appliance); Of course, it is for the national court to and
judge whether the abovementioned conditions are satisfied in a particular Be suitable, according to objective case. criteria, for one of the uses listed in the particular tariff headings. The Bundesfinanzhof has assumed that in the present case a classification of the These basic requirements correspond not article in question under tariff heading only to the general principle of customs 85.17 is not possible pursuant to Rule A classification according to which the 2 (a) of the General Rules and has classification of articles should be then referred the question on the undertaken on the basis of objective interpretation of Note 2 to Section XVI criteria linked to their inherent
for a preliminary ruling to ascertain how characteristics but also to a reasonable the article in question is to be classified economic philosophy which is also at the as 'parts' within the meaning of the said basis of the Brussels Explanatory Notes note. to Note 3 to Section XVI in so far as they concern 'functional units'. In the Commission's view the word 'parts' used in that note covers all parts of The introduction of the concept of a the articles listed in Section XVI of the 'functional unit' does not exclude the Common Customs Tariff and thus also application either of the general individual electric appliances of the kind classification Rule 2 (a) or of Note 2 to in question. Section XVI. In the one case it is conceivable that even a 'functional unit' The decisive question to be resolved is could be incomplete within the meaning whether a complete burglar alarm of General Rule 2 (a). The sole
FUSS v OBERFINANZDIREKTION MUNCHEN
requirement is that the functional heading is therefore related to the connexion is apparent from the question whether the products at issue component parts so that the 'essential have or do not have an 'individual characteristics' of the complete article function'. may be said to be present. Where, on the other hand, the articles to be classified First, the fact that an appliance is vital are objectively identifiable as 'parts' of a for the general function of a larger functional unit covered by a particular functional unit does not necessarily heading of the Common Customs Tariff mean that the individual appliance has there is nothing to prevent the no independent function. Conversely, the application of Note 2 to Section XVI. functional independence of the appliance cannot be inferred from the fact that it That note does not conflict with the performs an (incomplete) part of the classification rules with relation to general function. 'functional units' contained in the Explanatory Notes to the Brussels Secondly, the Explanatory Notes to Nomenclature. According to those rules heading 85.22 of the Common Customs individual appliances which are not Tariff do not give much help in objectively identifiable as 'parts' of a answering the question raised. Only the functional unit, are to be classified 'in Explanatory Notes to the Brussels their own appropriate headings'. If the Nomenclature in respect of heading individual appliances may be described 84.59 give a general description of the as 'component parts of a functional unit', articles in question on the basis of in principle Note 2 applies. That note particular criteria. explains how classification should be undertaken and mentions to this end According to those Notes the following three possibilities listed under letters (a), are to be regarded as having individual (b) and (c). If it is applicable, an answer functions:
still has to be given to the question '(A) Mechanical devices ... whose whether the machines in question, function can be performed distinctly according to the wording of letter (a), are from and independently of any 'goods of a kind described in any of the other machine or appliance. headings of Chapters 84 and 85' and accordingly to be classified 'in their (B) Mechanical devices which cannot respective headings', or whether the perform their function unless they machines are covered by letters (b) or (c) are mounted on another machine or of the note. appliance, or are incorporated in a more complex entity, provided that If, as the Oberfinanzdirektion believes, this function: the Advisors fulfil the conditions for (i) is distinct from that which is classification under subheading 85.22 C, performed by the machine or Note 2 would be relevant. appliance whereon they are to be mounted, or by the entity However, heading 85.22, especially when wherein they are to be compared with heading 85.28, makes incorporated, and clear that the articles falling under it are (ii) does not play an integral and 'independent' electrical appliances and inseparable part in the operation apparatus; thus the criterion for of such machine, appliance or classification is the 'individual function' entity.' of the said article (cf. also the Explanatory Notes to the Brussels Articles of the kind in question here Nomenclature). The problem of the have no independent function in relation classification of the Advisors under that to the complete alarm system. Their
JUDGMENT OF 15. 12. 1977 - CASE 60/77
function cannot be clearly distinguished note therefore also applies in the case from that of the alarm system itself; on of objectively recognizable parts of the other hand, it is necessarily part of electric sound or visual signalling the function of the system. Therefore, in apparatus of heading 85.17 of the the absence of an individual function of Common Customs Tariff which their own, articles of the kind in question consists of separate appliances do not fall within subheading 85.22 C. connected to one another simply by electric cables, subject nevertheless to This result accords, moreover, with the proviso that such parts are not to subheading 85.17-90 of the Nomen be considered as incomplete articles clature of Goods for External Trade within the meaning of Interpretative Statistics of the Community (Nimexe) Rule 2 (a) and to be classified (Regulation No 1445/72 of the Council accordingly. 2. Parts of electric sound or visual of 24 April ; 1972, JO L 161, p. 1), in which 'parts' for electric sound or visual signalling apparatus of heading 85.17, signalling apparatus of heading 85.17 are the function of which is to detect by listed. It is true that the Nimexe is a legal means of the application of particular measure of the Community independent technical methods (ultrasonics) of the Common Customs Tariff, but it movements in particular areas and to reproduces the headings and subheadings pass this information over cable to an of the Common Customs Tariff and external alarm signalling device do incorporates 'statistical subdivisions' not have an independent function thereof. Therefore those subdivisions vis-a-vis the signalling apparatus as a should have some authority for the whole and cannot therefore be interpretation of the Common Customs classified under heading 85.22 C of Tariff. the Common Customs Tariff.'
To summarize its observations, the Commission proposes that the question III — Oral procedure referred for a preliminary ruling should be answered as follows: The Commission of the European '1. The expression 'parts of machines' (or Communities made oral observations at of appliances) contained in Note 2 to the hearing on 20 October 1977. Section XVI of the Common Customs Tariff does not imply that The Advocate-General delivered his
such articles must be parts of a opinion at the hearing on 1 December permanently assembled unit. The said 1977.
Decision
1 By order dated 19 April 1977, received at the Court on 12 May 1977, the Bundesfinanzhof referred the following question to the Court for a preliminary ruling under Article 177 of the EEC Treaty:
'Is Note 2 in conjunction with Note 5 to Section XVI of the Common Customs Tariff to be interpreted to the effect that parts of appliances or parts
FUSS v OBERFINANZDIREKTION MUNCHEN
within the meaning of the first-mentioned Note should be regarded as including individual electrical appliances which together are necessary component parts of an electric sound or visual signalling apparatus under tariff heading 85.17 of the Common Customs Tariff but which cannot be classified under that tariff heading because they are to be classified without the cables linking the individual electrical appliances and without the acoustic or optical alarm devices or does Note 2 only refer to parts of a permanently assembled unit?'
2 This question has been raised in an action on the tariff classification of articles which were described as 'ultrasonic movement detectors Advisor III
and Advisor VI' whose function is to detect movement in particular areas and to transmit this information by means of electric impulses through electric cables to an alarm unit (sound or visual alarm signalling device). By two official tariff classification opinions dated 12 May 1975 the customs authorities classified those articles under subheading 85.22 C of Section XVI, Chapter 85, of the Common Customs Tariff ('Electrical appliances and apparatus, having individual functions, not falling within any other heading of this chapter: ... Other'). The plaintiff in the main action contests that classification and alleges that the articles in question fall under heading 85.17 of the same section and chapter: 'Electric sound or visual signalling apparatus (such as ... burglar and fire alarms), other than those of heading No 85.09 or 85.16.'
3 Note 2 to Section XVI of the Common Customs Tariff mentions 'parts of machines' and Note 3 'composite machines consisting of ... machines fitted together ...'. Note 5 provides that the expression 'machine' means any machine, apparatus or appliance of a kind falling within Section XVI.
4 The Bundesfinanzhof makes it clear in its question that the latter relates to the classification of 'individual electrical appliances which together are necessary component parts of an electric sound or visual signalling apparatus'. The answer to that question requires consideration of whether articles of the kind in question are 'parts of machines' or 'composite machines' within the meaning of the abovementioned Note 2 and 3.
5 Note 3 reads: 'Unless the headings otherwise require, composite machines consisting of two or more machines fitted together to form a whole and other machines adapted for the purpose of performing two or more complementary
JUDGMENT OF 15. 12. 1977 - CASE 60/77
or alternative functions are to be classified as if consisting only of that component or as being that machine which performs the principal function'. According to the Explanatory Notes to the Brussels Nomenclature relating to that note, for the purposes of the said tariff headings, 'machines of different kinds are taken to be fitted together to form a whole when incorporated one in the other or mounted one on the other' or, generally speaking, where the machines are firmly fixed together and thus form a physical unit. The Explanatory Notes moreover state that the expression 'composite machines' for the purposes of Note 3 does not cover machines or appliances consisting 'of separate components which are designed to contribute together to a single clearly defined function', including inter alia 'burglar alarms'. It appears from those Explanatory Notes that where separate component parts are joined together and designed to form a functional unit, such as a burglar alarm, they are to be regarded as 'parts of machines' within the meaning of Note 2 to Section XVI of the Common Customs Tariff and to be classified according to the rules contained in letters (a), (b) and (c) of that note. It is a condition of classification under letter (a) of that note that the parts of machines in question are goods of a kind described in any of the headings of Chapters 84 and 85. Letter (b) of the note relates to parts 'if suitable for use solely or principally with a particular kind of machine, or with a number of machines falling within the same heading'. It is not a condition of tariff classification according to that provision that the parts in question should include all the component parts which normally go to make up the complete appliance. Rule 2 (a) of the Rules for the interpretation of the nomenclature of the Common Customs Tariff provides: 'Any reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as imported, the incomplete or unfinished article has the essential character of the complete or finished article'. The necessary component parts of an appliance covered by a tariff heading, which form a functional unit and when fitted together have the essential character of the complete article, are therefore covered by the expression 'parts' within the meaning of Note 2 to Section XVI of the Common Customs Tariff and are to be classified according to the criteria set out at letter (b) of that note.
6 The question referred must therefore be answered to the effect that Note 2 in conjunction with Note 5 to Section XVI of the Common Customs Tariff must be interpreted as meaning that individual electrical appliances which are suitable for use solely or principally with an electric sound or visual signalling apparatus within the meaning of tariff heading 85.17 are 'parts' within the meaning of that note and are to be classified accordingly under tariff heading 85.17 even when imported without the cables linking the various parts and without the acoustic or visual alarm signalling device.
FUSS v OBERFINANZDIREKTION MUNCHEN
Costs
7 The costs incurred by the Commission of the European Communities, which has submitted observations to the Court, are not recoverable and 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 as to 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 dated 19 April 1977, hereby rules:
Note 2 in conjunction with Note 5 to Section XVI of the Common Customs Tariff must be interpreted as meaning that individual electrical appliances which are suitable for use solely or principally with an electric sound or visual signalling apparatus within the meaning of tariff heading 85.17 are 'parts' within the meaning of that note and are to be classified accordingly under tariff heading 85.17 even when imported without the cables linking the various parts and without the acoustic or visual alarm signalling device.
Bosco Mertens de Wilmars O'Keeffe
Delivered in open court in Luxembourg on 15 December 1977.
A. Van Houtte G. Bosco
Registrar President of the First Chamber