C-5/78

THE COURT (Second Chamber)

composed of: M. Sørensen, President of Chamber, P. Pescatore and Lord Mackenzie Stuart, Judges,

Advocate General: F. Capotorti Registrar: A. Van Houtte

gives the following

JUDGMENT

Facts and Issues

the goods came under tariff subheading proceedings until the Court of Justice 23.07 B I a 3 of the Common Customs had delivered a preliminary ruling on Tariff (preparations of a kind used in the following questions : animal feeding, containing starch and 1. Is the "milk product content" which containing not less than 50% but less results from the application of Article than 75% by weight of milk products). 11 (1) of Regulation (EEC) No The customs office, however, classified 823/68 of the Council of 28 June the product under tariff subheading 1968 and of Article 1 of Regulation 23.07 B I a 4, finding a milk product (EEC) No 1216/68 of the Com­ content of more than 75 %. It made its mission of 9 August 1968 decisive finding in application of Article 11 (1) with regard to the amount of the of Regulation No 823/68 of the monetary compensatory amounts Council of 28 June 1968 determining which it was necessary to impose the groups of products and the special during the period from January to provisions for calculating levies on milk March 1975 on compound feeding­ and milk products (Official Journal, stuffs coming under tariff sub­ English Special Edition 1968 (I), p. headings 23.07 B I a 3 or 23.07 199), which provides that the milk' B I a 4 of the Common Customs product content of products falling Tariff which were imported from the within tariff subheading ex 23.07 B are Netherlands into the Federal to be determined by applying a Republic of Germany? coefficient of 2 to the lactose content 2. If Question 1 is answered in the per 100 kg of the product in question, negative: and in application of Regulation No 1216/68 of the Commission of 9 August Is the "actual" milk product content decisive? 1968 laying down the method for determining the lactose content of 3. If Question 2 is answered in the affir­ compound feeding-stuffs imported from mative: third countries (Official Journal, Does it follow from Community law English Special Edition 1968 (II), which method is to be used for p. 421). determining the actual milk product Accordingly, the customs office at content? Oeding levied monetary compensatory 4. Within the context of the system of amounts in respect of the imports monetary compensatory amounts, is carried out in January 1975 at the rate the tariff classification made by the of DM 169.90 per 1 000 kg net weight exporting Member State of the and of the imports carried out in March European Communities binding upon 1975 at the rate of DM 149.40 (instead the importing Member State? of DM 127.40 and 112.110 res­ pectively). The order of the Finanzgericht Münster The objections lodged by Milchfutter was received at the Registry of the against that decision were rejected by Court on 5 January 1978. the Hauptzollamt (Principal Customs In accordance with Article 20 of the Office) Gronau on 25 August 1975. Protocol on the Statute of the Court of On 19 September 1975 Milchfutter Justice of the EEC written observations brought proceedings before the Finanz­ were submitted by the Commission of gericht (Finance Court) Münster which, the European Communities on 9 March by order of its Fourth Chamber of 29 1978 and by Milchfutter GmbH & Co. September 1977, decided, pursuant to KG, the plaintiff in the main action, on Article 177 of the EEC Treaty, to stay 15 March.

action that the goods in question have a system of the customs tariff: a product milk product content of less than 75%. falling within tariff subheading ex 23.07 The question is whether that actual B is classified for tariff purposes content is irrelevant and whether the according to its actual milk product notional content calculated in appli­ content, while Regulation No 823/68 establishes as the criterion the notional cation of Article 11 of Regulation No 823/68 is alone decisive. content and thus takes as the basis for the calculation of the levy for third (a) In the plaintiff's view the answer to countries the highest possible milk the question whether the milk product product content, in order to ensure that content which results from the the Community market is sufficiently application of Article 11 (1) of Regu­ protected. lation No 823/68 and of Article 1 of For the determination of refunds in Regulation No 1216/68 determines the application of Regulation No 876/68 of rate of the monetary compensatory the Council of 28 June 1968 laying amounts applicable in intra-Community down general rules for granting export trade is in the negative. refunds on milk and milk products and Article 11 of Regulation No 823/68 criteria for fixing the amount of such relates only to levies. Regulation No refunds (Official Journal, English 823/68 is based on Article 14 (6) of Special Edition 1968 (I), p. 234) the Commission takes account of the actual Regulation No 804/68 of the Council of 27 June 1968 on the common organi­ milk product content. zation of the market in milk and milk The special rules relating to levies are products (Official Journal, English not relevant for tariff classification Special Edition 1968 (I), p. 176); the under the general rules for the interpre­ enabling provision is contained in Tide tation of the Common Customs Tariff. III which is solely concerned with trade Although Article 19 of Regulation No with third countries. 804/68 provides that the classification

of products covered by the common lation of the compensation at the organization of the market in milk and frontier should therefore be carried out milk products is to be governed by the not on the basis of the highest possible rules laid down for the application of milk product content but at most on the the Common Customs Tariff, that classi basis of the actual content. This is parti fication applies only for the levying of cularly true where the method of calcu customs duties; it merely serves as an lating the lactose content of feeding indication for the imposition of levies. stuffs containing milk powder in sub stitution for other protein laid down in The same principles are applicable for Regulation No 823/68 inevitably leads the calculation of monetary com to incorrect results in cases where the

In that way the compensatory amounts cannot be in principle that the tariff classification of conformity with the objective of a product by the customs authorities is monetary compensatory amounts. to be carried out irrespective of its Article 11 of Regulation No 823/68 is origin is not infringed. The tariff classi solely intended to apply to the calcu fication is undertaken according to the lation of the levy; monetary objective characteristics and nature of compensatory amounts are to be limited the product; a derogation may certainly to the amounts strictly necessary to be made in special circumstances, such compensate the incidence of monetary as a particular calculation of the levy, measures on the prices of basic products but in each case the special circum covered by intervention arrangements. stances are of an exceptional nature and Feeding-stuffs containing milk powder are only relevant in the context for in substitution for other protein are which they were expressly provided.

JUDGMENT OF 4. 7. 1978 — CASE 5/78

of calculation. The system of monetary compensation which in itself is already levying of compensation at the frontier the German customs authorities took as contrary to the principle of uniform prices should be confined to the actual a basis tariff subheading 23.07 B I a 4, milk product content. for which a considerably higher compensation is laid down in the (b) The second question should be relevant provisions. The Commission is answered in the affirmative. The Court aware of these difficulties: it modified of Justice has ruled that in the interests Regulation No 1380/75 by Regulation of legal certainty and of administrative No 1556/77 of 11 July 1977 (Official procedures the decisive criteria for the Journal L 173, p. 10), which in classification of products in the particular requires the persons con Common Customs Tariff are to be their cerned to submit, when all the customs formalities for clearance into free circu objective properties and characteristics, subject to any special indications or lation are completed, all information circumstances which imply that other necessary for the calculation of the

technology. In the present instance the Member Sute and the fact that it

The Commission of the European The tariff classification of a particular Communities first observes that its Regu­ product for the purpose of the lation No 539/75 of 28 February 1975 imposition of compensatory charges is fixing the monetary compensatory the responsibility of the customs auth­ amounts and certain rates for their orities of the importing Member Sute. application (Official Journal L 57, p. 2), They cannot undertake that classi­ which was in force at the time of the fication on the basis of a product other importation in question in the main than that which is actually submitted to action, does not use an autonomous them for the completion of import nomenclature but is based on the formalities; they must differentiate product descriptions of the Common between animal feeding-stuffs on the Customs Tariff, which coincide with basis of their objectively discernible those of the nomenclature for levies. characteristics and composition. The With regard to the levying of monetary distinction required by the wording of compensatory amounts in trade with the customs tariff must remain third countries the provisions applicable practicable for the national authorities are those relating to the imposition of in the implementation of their customs duties or levies in accordance supervisory functions and it should not with Article 6 of Regulation No require unreasonable equipment or 1463/73 of the Commission of 30 May expense. 1973 laying down detailed rules for the The control of manufacture of application of monetary compensatory amounts (Official Journal L 146, p. 1) compound feeding-stuffs carried out abroad in the manufacturer's under­ and Article 6 of Regulation No 1380/­ 75. taking is not sufficient to satisfy those objectives: it can serve as evidence only (a) The distinction drawn in the tariff if it can be shown that the products classification of the different compound imported and the products subject to feeding-stuffs under tariff heading 23.07 the control are identical; that is only is an attempt to reconcile contradictory rarely the case. administrative and economic re­ If the analysis of the imported quirements with the particular nature of compound feeding-stuffs carried out by those products and the limited the customs authorities on the basis of possibilities offered by techniques of the samples taken by them resolves the analysis for determining that nature. problem of whether the products subject In the context of the common price to the control and the products rules applicable to agricultural products imported are identical, the fact would it is impossible not to base the tariff remain that it is impossible to carry out classification on the percentage of milk a quantitative analysis of those samples products used in the manufacture of the such as to enable the exact percentage compound feeding-stuff in question: of the various milk products contained apart from cereal products, the most therein to be determined with sufficient relevant factor in the value and price of certainty.

For the system of levies imposed at the this field it is not really possible to time of importation on products coming calculate the milk product content other from third countries the problem has than by applying the provisions of Regu been resolved to the effect that where lation No 823/68. A priori, monetary the nomenclature of the customs tariff compensation in intra-Community trade draws a distinction on the basis of the cannot be subject to other standards: milk product content by weight the responsibility for the correct classi customs authorities can apply that fication of products cannot be distinction by fixing the decisive content withdrawn from the competent customs by weight, which is obtained by a authorities and in order to determine standard post clearance calculation, the milk product content they must, in based on the lactose content of the so far as they are able, have regard to animal feeding-stuff which can be ascer

Therefore in 1975 it was not contrary to lation of the charges payable. Community law for the German No express provision has been adopted customs authorities to determine the to differentiate in the same way between milk product content of an animal the different animal feeding-stuffs under feeding-stuff under tariff subheading tariff subheading 23.07 B I a for the 23.07 B I a by applying a standard purposes of monetary compensation. weighting to the lactose content in For reasons of legal certainty and the order to calculate the monetary uniform application of the law their compensation in trade with the tariff classification as regards monetary Netherlands.

regard to levies. The regulations laying product in the same way when it is down the monetary compensatory imported from a third country and amounts use the same nomenclature as when it is imported from other Member is used for levies. The two systems are States, but also that the customs auth set in motion by importation into a orities of the various Member States Member Sute. In respect of imports should classify the same product in a from third countries, levies are uniform manner on importation and on increased or reduced by monetary exportation.

MILCHFUTTER v HAUPTZOLLAMT GRONAU

classification made in another Member In the view of Milchfutter account must Sute as binding. At present each be taken, with regard to the dispute in Member Sute retains the power to the main action, of the judgment of the determine itself the correct tariff classi­ Court of Justice of 3 May 1978 in Case fication of products imported into its 131/77 (Milac), where it was ruled that territory or exported therefrom. Article 1 of Regulation No 539/75 is invalid in so far as it fixes compensatory amounts in respect of trade in powdered III — Oral procedure whey; it follows, at the least, that the higher lactose content of powdered Milchfutter, the plaintiff in the main whey cannot be taken into action, represented by Dietrich Ehle, consideration for the tariff classification Advocate of the Cologne Bar, and the of compound feeding-stuffs containing Commission, represented by its Legal milk powder. Adviser, Peter Kalbe, presented oral argument at the hearing on 11 May The Advocate General delivered his 1978. opinion at the hearing on 15 June 1978.

Decision

1 By an order of 29 September 1977 which was received at the Court on 5 January 1978 the Finanzgericht Münster referred to the Court for a pre­ liminary ruling, pursuant to Article 177 of the EEC Treaty, questions relating in particular to the interpretation of Regulation No 823/68' of the Council of 28 June 1968 determining the groups of products and the special provisions for calculating levies on milk and milk products (Official Journal, English Special Edition 1968 (I), p. 199) and Regulation No 1216/68 of the Commission of 9 August 1968 laying down the method for determining the lactose content of compound feeding-stuffs imported from third countries (Official Journal, English Special Edition 1968 (II), p. 421) in connexion with the application of subheadings B I a 3 and B I a 4 of tariff heading 23.07 of the Common Customs Tariff.

5 In order to resolve that problem the Finanzgericht asked four questions worded as follows:

1. Is the "milk product content" which results from the application of Article 11 (1) of Regulation (EEC) No 823/68 of the Council of 28 June 1968 and of Article 1 of Regulation (EEC) No 1216/68 of the Commission of 9 August 1968 decisive with regard to the amount of the monetary compensatory amounts which it was necessary to impose during the period from January to March 1975 on compound feeding­ stuffs coming under tariff subheadings 23.07 B I a 3 or 23.07 B I a 4 of the Common Customs Tariff which were imported from the Netherlands into the Federal Republic of Germany?

2. If Question 1 is answered in the negative: Is the "actual" milk product content decisive?

3. If Question 2 is answered in the affirmative: Does it follow from Community law which method is to be used for determining the actual milk product content?

4. Within the context of the system of monetary compensatory amounts, is the tariff classification made by the exporting Member State of the European Communities binding upon the importing Member State?

MILCHFUTTER v HAUPTZOLLAMT GRONAU

The second paragraph of that article states that those provisions are to apply to "products covered by intervention arrangements under the common organization of agricultural markets" and to "products whose price depends on the price of the products referred to .. and which are governed by the common organization of markets".

8 Those provisions thus involve a general reference to the rules relating to the common organization of agricultural markets as regards the determination of the "products" subject to the system of monetary compensatory amounts.

Therefore the rules governing the determination of the products subject to the system of compensatory amounts are to be sought in the provisions of the regulations on the organization of the various agricultural markets and, in the present instance, in the provisions concerning the organization of the market for milk, given that the products in question are designated according to the headings and subheadings of the Common Customs Tariff to which reference is made both by the agricultural regulations and by the regulations fixing the monetary compensatory amounts, such as Commission Regulation No 539/75 (Official Journal L 57, p. 2), which was applicable at the time of the facts underlying the main action.

JUDGMENT OF 4. 7. 1978 — CASE 5/78

9 In view of that general reference no exception can be made in respect of the application, to a particular product, of a specific rule relating to clas­ sification, such as that contained in Article 11 of Regulation No 823/68, or of Regulation No 1216/68 of the Commission.

In those circumstances that regulation was not required to restate the provisions of Article 1 of Regulation No 974/71 with regard to the determi­ nation of the products subject to monetary compensatory amounts and their classification in the headings of the Common Customs Tariff.

Thus it appears that the purpose of Article 6 of Regulation No 1463/73 on which the plaintiff in the main action relies is merely to link the payment of monetary compensatory amounts to the other operations carried out in trade with third countries at the frontier pursuant to the customs tariff and the agricultural rules, while Articles 7 to 15 provide, in respect of intra- Community trade, a certain number of specific provisions of a financial or administrative nature which have no bearing on the classification of goods for the purpose of the application of monetary compensatory amounts.

MILCHFUTTER v HAUPTZOLLAMT GRONAU

Consequently, no argument may be derived from an alleged insufficiency in Regulation No 1463/73 as, by virtue of the reference by Article 1 of the basic Regulation No 974/71 to the common organizations of the market and the reference by the latter to the headings of the Common Customs Tariff, a complete legal framework is established which enables the classi­ fication of goods for the purposes of the application of monetary compensatory amounts to be determined.

12 Support may be found for these conclusions in the fact that, in the absence of any express provision, it would be inappropriate for the headings of the Common Customs Tariff to be applied in different ways to the same product depending on whether they are used for the classification thereof in connexion with the levying of customs duties, the application of the system of the common organizations of the market or the application of the system of monetary compensatory amounts.

16 On the basis of Community law as applicable at the time of the dispute there was no obligation on the relevant authorities of one Member State to accept a tariff classification decision made in respect of a given product in another Member State.

In those circumstances the customs authorities of the importing country were free to determine the classification of a product if they considered that in the exporting country the classification of the product was not in conformity with the relevant Community provisions.

17 The answer to the fourth question should therefore be that within the context of the system of monetary compensatory amounts, the tariff classi­ fication made by the exporting Member State was not binding upon the importing Member State at the time of the dispute.

Costs

18 The costs incurred by the Commission of the European Communities, which has submitted observations to the Court, are not recoverable.

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 Finanz­ gericht Münster, the decision on costs is a matter for that court.

Sørensen Pescatore Mackenzie Stuart

Delivered in open court in Luxembourg on 4 July 1978.

A. Van Houtte M. Sørensen

Registrar President of the Second Chamber

OPINION OF MR ADVOCATE GENERAL CAPOTORTI DELIVERED ON 15 JUNE 1978 <apnote>1</apnote>

Mr President, March 1975 the German undertaking Members of the Court, Milchfutter imported into the Federal Republic of Germany from the 1. The present case concerns the Netherlands several consignments of question whether a standard criterion calf fodder consisting of feeding-stuffs laid down by the Council for the calcu­ containing milk powder in substitution lation of the amounts of the levy on agri­ for other protein. When applying for cultural products from third countries is customs clearance in the Federal applicable for the purposes of the Republic of Germany the undertaking determination of the monetary declared that the feeding-stuffs fell compensatory amounts in intra- under tariff subheading 23.07 Β I a of Community trade. Is it permissible for the Common Customs Tariff, and the national customs authorities to specifically under No 3 of that sub­ apply that criterion by analogy, even heading (products containing not less though the resultant amounts may be than 50% but less than 75% by weight greater than those necessary to of milk products). That was in fact the compensate the incidence of currency classification made by the customs auth­ fluctuations on the prices of the basic orities of the Netherlands for the products which in fact make up the purposes of calculating the monetary product? compensatory amounts on exportation. The facts giving rise to the question are The German customs authorities, on the very simple. Between January and other hand, held that Article 11 of Regu-