C-111/77

1. The exemption from the customs 2. Tariff subheading 78.01 A of the tariff provided for in respect of Common Customs Tariff also products coming within tariff sub­ includes melted down lead scrap in heading 78.01 В (lead waste and the form of bars for type-casting scrap) may only be claimed provided machines, even if they are unusable that the importer submits his goods as such, and broken bars for type­ for customs inspection in a form casting machines. which enables it to be recognized on visual inspection that they are in fact waste or scrap.

In Case 111/77

REFERENCE to the Court under Article 177 of the EEC Treaty by the Finanzgericht (Finance Court) Hamburg for a preliminary ruling in the action pending before that court between

Bleiindustrie KG, formerly Jung & Lindig, having its registered office in Hamburg

and

Hauptzollamt (Principal Customs Office) Hamburg-Waltershof

gives the following

JUDGMENT

Facts and Issues

The facts of the case, the procedure and 100 kilograms net weight and a the observations submitted under Article maximum of 1.32 units of account. By a 20 of the Protocol on the Statute of the provisional notice of assessment of 9 Court of Justice of the EEC may be May 1974, replaced by a definitive summarized as follows: notice of assessment of 29 May, and by a notice of assessment of 21 June 1974, the customs office claimed from I — Facts and written procedure Bleiindustrie payment of the duty thereon. Bleiindustrie KG, formerly Jung & On 27 June and 22 July 1974 Metaal­ Lindig, having its registered office in handel J. A. Magnus B. V., having its Hamburg, applied on 8 May 1974 to registered office in Amsterdam (the the Zollamt (Customs Office) Netherlands), the supplier of the goods, Hamburg-Veddel for customs clearance lodged an objection to these notices of into free circulation in respect of 10 000 assessment. The objection was based on kilograms of bars made from a the fact that, because of their lead-based alloy and imported from composition, the goods came under Denmark and on 19 June 1974 in tariff heading 78.01 B (lead waste and respect of 23 289 kilograms of the same scrap) and were free of duty. product imported from the United States. As a result of a letter from the Haupt­ The customs office classified these zoliamt (Principal Customs Office) Hamburg-Waltershof, the objection goods under tariff subheading 78.01 A lodged by Metaalhandel J. A. Magnus II (unwrought lead) in respect of which B. V. was taken up by Bleiindustrie. the Common Customs Tariff provided for a rate of duty of 4.5 % with a The latter claimed in particular, so far minimum of 1.1 units of account per as the goods imported in June 1974

were concerned, that they were bars Bleiindustrie appealed to the Finanz­ composed of scrap type containing gericht (Finance Court) Hamburg, and approximately 4 °/o tin, 12 % antimony the latter, by order of its IVth Senate of and 84 % lead from printing works 25 August 1977, decided to stay the which, as a waste product, were no proceedings under Article 177 of the longer usable there. Bars for type­ EEC Treaty until the Court of Justice casting machines are used several times had given a preliminary ruling on the by repeated melting of the used type following questions: into new bars from which fresh type is cast; after being used several times, the 1. Does tariff subheading 78.01 A also alloy of which they are composed include melted down lead scrap in contains harmful impurities which can the form of bars for type-casting only be removed by refining. This case machines which are no longer usable? involves an alloy whose lead, tin and antimony content is altered. The goods 2. Does tariff subheading 78.01 A also imported in May 1974 were broken bars include broken bars for type-casting for type-casting machines composed of machines or must they be classified an alloy containing no impurities and under tariff subheading 78.01 Β or unusable as such for printing. The heading 78.02? material would have to have been re­ melted without refining by the manufac­ In the grounds of its order, the Finanz­ turing undertaking or sold as waste. gericht observes, with regard to the first The waste type, though often taking the question, that it is necessary to know same form as the new product, does not whether type which has become lose its character as lead waste because unusable has lost its character as lead it is melted or re-melted into a new scrap within the meaning of tariff form. heading 78.01 Β by being melted down The Hauptzollamt Hamburg-Wal­ in large printing concerns in connexion tershof dismissed the objection by with the printing process into bars for decision of 7 May 1976. type-casting machines which have been It considered that the re-melting of discarded as being no longer usable and scrap type causes it to lose its character imported in that form and with those as waste; the lead alloy obtained from characteristics. The casting or re-casting such products must be classified for the of that type could form unwrought lead purposes of the application of the duty within the meaning of tariff subheading under the common Customs Tariff 78.01 A.

The product might also be classified Tariff heading 78.01 refers to a certain under subheading 78.01 A or heading material considered as such, lead, 78.02 since its material composition and which, apart from the simple manufac characteristics have not changed as a turing process, has undergone no result of the breakage and it is still treatment; the lead "waste and scrap" usable at least for melting down. also appear under this heading because, The order of the Finanzgericht having lost their original functions, Hamburg was entered in the Court those goods constitute no more than

By order of 14 December 1977, the acteristics. Court in application of Article 95 (1) of the Rules of Procedure, decided to refer If a product fulfils the requirements for the case to the Second Chamber. classification under tariff heading 78.02, it automatically becomes impossible to classify it under tariff subheading 78.01 II — Written observations sub A The only question which might then mitted to the Court arise would be whether a product which comes under tariff heading 78.02 and The Commission points out that the which has become unusable through interpretation of the Common Customs breakage or wear must be classified as Tariff sought by the Finanzgericht scrap under tariff subheading 78.01 B. It Hamburg relates to various types of is therefore necessary first to examine goods: on the one hand, bars for type whether bars for type-casting machines casting machines manufactured by re produced from used type may be melting used type which is unsuitable classified under tariff heading 78.02; if for transformation into new type not, it is necessary to ascertain whether because of the impurities which it bars containing impurities or broken contains, and on the other, broken bars bars must be considered as unwrought for type-casting machines which do not lead or as lead scrap. contain impurities but which can no longer be used for the manufacture of (b) "Wrought bars, roads, angles, type because they are in pieces. shapes and sections, of lead" appear in particular under tariff heading 78.02; (a) So far as the method to be according to Note 1 (b) to Chapter 78, followed for the purpose of interpreting only cast products of a certain volume tariff headings 78.01 A II, 78.01 B and "which have been subsequently 78.02 is concerned, it is necessary to machined (otherwise than by simple refer to the structure of Chapter 78 of trimming or de-scaling)" come under the Common Customs Tariff. that tariff heading.

BLEIINDUSTRIE v HAUPTZOLLAMT HAMBURG- WALTERSHOF

they are lead products. To come within product must be fit only for the tariff subheading 78.01 B, the articles recovery of metal or for use in the must, moreover, have an additional manufacture of chemicals. feature from the point of view of customs classification: they must be However, cast bars for type-casting machines cannot be considered as "old scrap within the meaning of the Common Customs Tariff. Such articles metal" merely because of their outward cannot be classified as unwrought lead. appearance: in fan they constitute a new product manufactured for well

scrap. In the same way, the physical therefore metal which has been characteristics which have been laid recovered and not "for recovery". down ("lead") do not pose any In these circumstances, it is of little particular problem: according to Note 3 importance whether, having regard to (b) to Section XV, an alloy of base its degree of purity, the recovered metal metals — in the present case a lead may be re-used directly for the manu based alloy — not falling within a facture of new type. specific tariff subheading "is to be classified as an alloy of the metal which (f) If, quite apart from their degree of predominates by weight over each of purity, whole bars for type-casting the other metals" and, according to machines may not be considered as Note 4, "Unless the context otherwise scrap nor therefore be classified under requires, any reference in the Tariff to a tariff subheading 78.01 B, it only base metal is to be taken to include a remains to examine whether they may reference to alloys which, by virtue of be classified under tariff subheading Note 3 above, are to be classified as 78.01 A II ("other unwrought lead"). alloys of that metal".

JUDGMENT OF 9. 3. 1978 — CASE 111/77

This interpretation takes due account of (h) The question referred to the Court the need to implement a system of classi­ of Justice may therefore be answered as fication for customs purposes which is follows: practical and legally logical. If, at the date on which it is classified for customs Bars for type-casting machines obtained by re-melting used type and pieces of purposes, a product displays per se such bars must be classified under tariff certain characteristics which may be subheading 78.01 A II of the Common objectively ascertained and which are Customs Tariff without regard to their considered to be significant with regard possible uses. to the provisions of the Common Customs Tariff, those characteristics are determining for the purposes of the customs classification. III — Oral procedure

The bars for type-casting machines Bleiindustrie, the plaintiff in the main produced by re-melting unusable type action, represented by its duly auth­ therefore come within tariff subheading orized agent, Jörg Leistikow, and the 78.01 A II of the Common Customs Commission, represented by its Legal Tariff as "unwrought lead" in so far as Adviser, Manfred Beschel, delivered

BLEIINDUSTRIE v HAUPTZOLLAMT HAMBURG-WALTERSHOF

oral argument and answered questions produced in the Community, tin is put by the Court (Second Chamber) at exempt from customs duties on impor­ the hearing on 19 January 1978. tation.

2 It follows from the file that the main action concerns the classification for customs purposes of two consignments of printing lead imported by the plaintiff in the main action, one in the form of bars for type-casting machines obtained by the melting of used type and the other consisting in bars for type-casting machines composed of material ready for use but which had become unusable as the result of breakage. The two consignments were classified by the Customs Office under tariff heading 78.01 A II of the Common Customs Tariff as "unwrought lead". The

JUDGMENT OF 9. 3. 1978 — CASE 111/77

plaintiff in the main action lodged a complaint against that classification and requested that the goods should be classified under tariff subheading 78.01 B, which was free of duty, as "lead waste and scrap". That objection was dismissed by the Principal Customs Office and the applicant then lodged an application before the Finanzgericht Hamburg. In order to settle that dispute the court referred to the Court of Justice two questions aimed at obtaining a precise definition of the concepts of "unwrought lead" and "lead waste and scrap" so as to draw the dividing line between subheadings A and B of tariff heading 78.01 and to delimit the latter in relation to heading 78.02.

3 The headings in question are worded as follows:

78.01 Unwrought lead (including argentiferous lead); lead waste and scrap:

A. unwrought: ...

the Explanatory Notes that unwrought lead coming within tariff subheading 78.01 A generally takes the form of blocks, ingots or pigs whilst tariff headings 78.02 to 78.06 concern lead which has, in addition to casting, been worked to a greater or lesser degree.

6 The expression "waste and scrap", according to Note 6 preceding Section XV in the Common Customs Tariff itself, relates in particular to "waste and scrap metal fit only for the recovery of metal". According to the commentary contained in the Explanatory Notes on tariff heading 73.03, the provisions of which are declared to be applicable mutatis mutandis to lead scrap and waste by Note 2 to tariff heading 78.01, "the process generally used for the recovery of metal is re-melting". The same idea becomes apparent from the notes entitled "General" in the Explanatory Notes to Chapter 78 which indicate that lead is obtained either by extraction from ore or "by re-melting lead waste and scrap". It thus appears that it is in fact the re-melting of the lead waste or scrap which marks the beginning of the recovery cycle of the metal. It is appropriate to observe in this connexion that the re-melted metal must be classified under tariff heading 78.01 A even if it still contains impurities characteristic of previous use, because the presence of impurities does not have the effect of preventing a product from being classified as unwrought lead, as has been stated above.

7 It follows that the exemption from the customs tariff provided for in respect of products coming within subheading 78.01 B may only be claimed provided that the importer submits his goods for customs inspection in a form which enables it to be recognized on visual inspection that they are in fact waste or scrap. This solution is not only in accordance with the requirement of simplicity of inspection, because it avoids metallographic analyses, but also serves to prevent the risk of frauds consisting in importing duty-free, by means of the exemption laid down for waste and scrap, metal which has been refined to a greater or lesser degree when it was re-melted.

11 It is therefore necessary to reply to the second question that, subject to the appraisal of the questions of fact determining the original classification of the goods in question, tariff heading 78.01 A also includes broken bars for type-casting machines.

Costs

12 The costs incurred by the Commission of the European Communities, which submitted observations to the Court, are not recoverable. Since the proceedings are, so far as the parties to the main action are concerned, a step in the action pending before the Finanzgericht Hamburg, the decision on costs is a matter for that court

BLEIINDUSTRIE v HAUPTZOLLAMT HAMBURG-WALTERSHOF

On those grounds,

THE COURT (Second Chamber)

Registrar President of the Second Chamber

OPINION OF MR ADVOCATE GENERAL CAPOTORTI DELIVERED ON 16 FEBRUARY 1978 <apnote>1</apnote>

Mr President, on lead. The question is essentially to Members of the Court, find a criterion for defining the concept of unwrought lead as against lead scrap. 1. The problems which have given rise I shall first of all summarize the facts. In to the present proceedings for a pre­ May 1974 Bleiindustrie of Hamburg liminary ruling relate to the interpre­ imported from Denmark a consignment tation of the Common Customs Tariff of metal bars obtained by the melting of and in particular to Chapter 78 thereof waste type-metal composed of approx-

1 — Translated (ram the Italian.