C-158/78

Hauptzollamt [Principal Customs Office] Bochum,

on the validity and temporal application of Commission Regulation (EEC) No 1669/77 of 25 July 1977 on the classification of goods under Common Customs Tariff subheading 02.02 B I and on the interpretation of certain subheadings of the Common Customs Tariff,

THE COURT (First Chamber)

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

Advocate General : H. Mayras Registrar: A. Van Houtte

gives the following

The facts, the procedure and the written fication of goods under Common observations submitted under Article 20 Customs Tariff subheading 02.02 BI of the Protocol on the Statute of the (Official Journal L 186 of 1977, p. 23) Court of Justice of the EEC may be which entered into force on 16 August summarized as follows: 1977, that is, a date subsequent to that of the imports in question and the contested corrective assessment. I — Facts and written procedure Article 1 of that regulation is worded as follows: 1. The point at issue in the present case is whether certain poultry meat should "Raw, frozen poultry-meat in particular be classified in the Common Customs turkey meat, obtained by scraping Tariff as "boned or boneless poultry cuts poultry bones from which the prime cuts (excluding offals)" or as "edible offals". have been removed or in any other way (for example, in the reduction of larger On 2 March, 4 March and 13 April 1977 cuts to smaller size) and consisting of the commercial agency Biegi GmbH of small, irregularly shaped pieces, Frankfurt am Main (hereinafter referred sometimes with fibrous, gristly and fatty to as "Biegi") applied to the Zollamt tissue attached thereto and individually [Customs Office] Gelsenkirchen for weighing from 5 to 40 grams approxi­ customs clearance into free circulation of mately, shall be classified in the three consignments of frozen turkey Common Customs Tariff under: meat imported into the Federal Republic 02.02 Dead poultry (that is to say, of Germany from the United States. The fowls, ducks, geese, turkeys and importer claimed that the goods should guinea fowls) and edible offals be classified under subheading 02.02 C of the Common Customs Tariff as thereof (except liver), fresh, chilled or frozen: poultry "offals". B. Poultry cuts (excluding offals): The customs administration first applied 1. Boned or boneless." that tariff classification and charged the sum of DM 3 276.90 by way of levies and monetary compensatory amounts. 2. The objection lodged by Biegi Following an examination of a sample of against the said corrective assessment the goods, however, it classified the was rejected by the Hauptzollamt product in question under tariff sub­ Bochum and Biegi subsequently heading 02.02 BI as "Poultry cuts submitted an application to the Finanz- (excluding offals): Boned or boneless" and, by corrective assessment of 16 May 1977, it imposed the sum of DM 22 457.70 by way of impon duties and taxes.

gericht Münster which, by order of 27 did pieces of turkey meat without April 1978, stayed the proceedings and bones, of irregular shape, individually referred the following questions to the weighing approximately 20 grams, Court of Justice for a preliminary ruling with certain pieces however weighing pursuant to Article 177 of the EEC up to 60 grams, 10 to 15% of which Treaty: consist of fat, skin and fibrous tissue and the remainder of which is muscle 1. Is Commission Regulation (EEC) No with a small proportion of veins and 1669/77 of 25 July 1977 on the classi­ glands, obtained by scraping poultry fication of goods under Common bones from which the prime cuts have Customs Tariff subheading 02.02 B I been removed and which are only (Official Journal L 186, p. 23) invalid suitable for the production of sausage because it does not specify the content and pies with the addition of other of tariff subheadings 02.02 BI and 02.02 C but amends them and types of meat and the market price of which in the first half of 1977 was therefore goes beyond the powers DM 4.40 to 4.80 per kilogram fall conferred by Regulation (EEC) No within tariff subheading 02.02 B I or 97/69 of the Council of 16 January 02.02 C of the Common Customs 1969 on measures to be taken for Tariff? uniform application of the nomenclature of the Common 4. What answer is to be given to Customs Tariff (Official Journal, Questions 1 to 3 with regard to the English Special Edition 1969 (I), tariff classification for the purposes of p.12)? the imposition of levies and monetary compensation?" 2. If Question 1 is answered in the negative: 3. The order referring the questions to Does Regulation (EEC) No 1669/77 the Court was received at the Registry have retroactive effect in the sense on 26 July 1978. that courts and authorities in the In accordance with Article 20 of the Member States are to apply it to Protocol on the Statute of the Court of imports carried out before its entry Justice of the EEC written observations into force? were submitted by the plaintiff, P. Biegi 3. If Question 1 is answered in the affir­ Handelsagentur GmbH, represented by mative or if Question 2 is answered in Dietrich Ehle und H. Kerst, and by the the negative: Commission of the European Communities, represented by its Legal According to what criteria was the Adviser, Peter Kalbe. distinction to be drawn between tariff subheading 02.02 B I — "Poultry cuts Upon hearing the report of the Judge- (excluding offals) boned or boneless" Rapporteur and the views of the Advocate General the Court decided to — and subheading 02.02 C — "Offals" — before the entry into assign the case to the First Chamber, in force of Regulation (EEC) No 1669/77? Were the shape, size, weight and quality of the goods, the way in which they were produced, the use to which they were to be put and/or their commercial value the decisive factors?

accordance with Article 95 of the Rules and glands and are thus meat of very of Procedure, and to open the oral little value which no longer has a real procedure without any preparatory structure and which cannot be sold in its inquiry. unprocessed state to the consumer in trays or some other form in small pre­ packed quantities: they can be used only II — Written observations as meat for processing (manufacture of submitted pursuant to sausages or pies …). Article 20 of the Protocol Biegi gives further information relating on the Statute of the Court to the formation of the market price for of Justice of the EEC "pieces" in which the labour costs — in contrast to those for boned poultry cuts 1. Biegi first sets out the factual and — are substantially higher than the value legal considerations underlying the case. of the goods and states that in classifying It observes in particular that the tariff the products in question as "boneless classification under subheading 02.02 C poultry cuts" the Hauptzollamt Bochum which it seeks, is founded on: failed to take account of the basic — The case-law of the Bundesfinanzhof principle of the Common Customs Tariff [Federal Finance Court] which, that the tariff classification of a product before the entry into force of the depends not only on its composition Common Customs Tariff, ruled that ("substance") but also on the use to products such as those in question which it is to be put ("purpose"). are "edible offals" as the meat, which The German regulation relating to cate­ the plaintiff describes as gories of products however specifies parti­ "Knochenputz" [bone scrapings] is cularly clearly what is meant by "poultry removed from the carcass and cuts": the lower thigh, the upper thigh, separated from the tendons only after the whole leg, the breast and the wings. the turkeys have been boned and Of the above parts those which are therefore the prime cuts of meat have without bones constitute the "boneless been removed. The pieces of meat poultry cuts". On the other hand the obtained in this way, which are in regulation does not refer to "carcasses" part of inferior quality, cannot be or "skeletons" as poultry cuts so that given a value higher than that of those products are not included as pieces of meat and offals…; poultry cuts and cannot be included — German administrative practice as there even if they are "boned or boneless". applied by the Oberfinanzdirektion München [Regional Finance Office Munich], which, on the basis of a service instruction of 1 March 1968, took the view inter alia that pieces of meat removed from a turkey carcass ("turkey pieces") must now be classified under tariff subheading 02.02 C.

Biegi finally observes that the term preamble to the regulation that those "boned or boneless poultry meat" provisions are only to specify the content indicates precisely that the "bone" has of the headings or subheadings of the been removed from the pieces of meat Common Customs Tariff without whilst "pieces" are obtained by the amending the text thereof; it also shows inverse method, by removing the the narrow framework within which the remaining pieces of meat from a carcass: Commission must remain when it the process consists of the removal of specifies the content of a tariff sub meat rather than the removal of bones. heading. The judgment of the Court of 11 November 1975 in Case 37/75 With regard next to the substance of the questions raised Biegi makes the (Bagusat v Hauptzollamt Berlin-Packhof following observations in particular: [1975] 2 ECR 1339) does not affect that conclusion.

It by "the need to promote trade between does not even take the trouble to define Member States and third countries". It in a more detailed manner the term must not abuse its power of elucidation "offals" in order to determine, on the to adopt, through the Common Customs basis of the definition of that word, Tariff, decisions relating to commercial whether meat scraped from the carcass policy in the context of the Common falls within that subheading: that in itself Agricultural Policy and the common constitutes a serious formal defect in organizations of the markets. Regulation No 1669/77.

It is also clear from the recitals in the

under tariff subheading 02.02 B I. Such a retroactive effect without serious course does not amount to specifying the inconveniences arising with regard to content of tariff subheadings 02.02 C vested rights acquired under a different and 02.02 B I but a reclassification which tariff classification at least in certain goes beyond the powers conferred by Member States. Article 3 of Regulation No 97/69. The case-law of the Court of Justice against the retroactivity of regulations — In the penultimate recital in the adopted by the Commission in the preamble to Regulation No 1669/77, context of its powers under Regulation furthermore, the Commission is guilty of No 97/69 is based on the desire to two inexactitudes. First "small pieces safeguard the principle of legal certainty which result from the cutting up of and the principle of the protection of the larger cuts" do not "undoubtedly", as legitimate expectation of traders, and the the Commission states, fall within sub­ need to ensure, for the future, uniform heading 02.02 B I. In fact that sub­ tariff classification throughout the heading covers boned or boneless poultry Community. meat, for example meat from the breast or the thighs of turkeys, that is to say The two said principles would, however, poultry meat which has retained its be seriously disregarded if explanatory structure. Secondly both from the point regulations on the tariff adopted by the of view of the quality and the possible Commission in the context of Regulation No 97/69 also had retroactive effect uses, there is a considerable difference between the parts of meat from "prime with regard to already established situations. The resultant difficulties cuts" and those obtained by scraping the carcass or those which contain fibrous, would be not only of a legal nature, at gristly and fatty tissue. It is not possible both national and Community level, but for such a difference to be "bridged also of a political nature. over" for the purposes of the customs tariff by means of "specification" by the — Furthermore, in the present instance Commission in particular when, by such retroactivity is inadmissible for the means of such a "specification" the further reason that it is provided in Ar­ Commission suddenly classifies "edible ticle 2 of Regulation No 1669/77 that offal" in a tariff heading which entails a the regulation is to enter into force on roughly 700% higher levy and leads to the 21st day following its publication. In unacceptable losses on past imports and that way the regulation thus lays down, the cessation of future imports. at least indirectly, a transitional system to enable existing contracts to be performed Even if it is assumed that the Commission has a wide discretion it cannot reasonably be held that the Council wished to confer such powers on the Commission by means of Regulation No 97/69.

(c) Third question — In view of the above the pieces of poultry meat as described in the order of — A first criterion for drawing a the German court should therefore be distinction between the tariff sub­ classified under subheading 02.02 C headings is contained in the wording covering "offals". Nevertheless it is for itself of the descriptions of the goods. the national court to make the final The wording of subheading 02.02 B decision on that classification in reliance refers to "Poultry cuts (excluding on criteria, such as those set out above, offals)" which may be "boned or laid down by the Court of Justice. boneless" (I) or "unboned (bone-in)" (II). As regards the latter it is clear from (d) Fourth question the list contained under entries (a) to (e) — The case-law of the Court does not that the products covered thereby are poultry cuts which may be identified and support the application of different described by objective characteristics and criteria depending on whether the tariff the meat of which retains its original classification is for the imposition of structure. The determinative factor in customs duties or of charges under the this respect is the quality of the product, common organization of the markets. determined having regard to the way in which the product has been obtained, its shape, its size and weight. What cannot be regarded as a special poultry cut and is none the less edible should therefore be classified as "offals" within the meaning of subheading 02.02 C. In that case they are not pieces of meat which have retained their original structure but pieces of meat of varying origins and of inferior quality.

organization of the markets are to be — According to the Commission the drawn from Regulation No 1669/77 "legislative" nature of this regulation is itself. Regulation No 2777/75 introduced levies with a twofold clear from the fact that its entry into force deprived the national authorities of purpose: to take account both of the the power which they had held until that incidence on feeding costs of the time, to interpret the nomenclature difference between prices for feed grain independently in its application to within the Community and on the world individual cases, and imposed a legal market, and of the need to protect the obligation for them to comply with the Community processing industry. prescribed result. Sufficient account is taken of those two objectives by reason of the fact that the — Furthermore, having regard to the lowest levy is imposed on offals and, for fact that the tariff classification is always example, on backs, necks, rumps and made pursuant to the provisions applying wing tips. Sufficient account is thereby at the time of the importation the Court taken of the need to protect the common has excluded the possibility that a regu­ market in poultry. Classification of the lation such as the one in question may offals in question under tariff subheading also have binding effects with regard to 02.02 B I, to which the highest levy is the classification of goods imported applicable, with the result that imports of offal, the commercial value of which is in principle low, would cease, would be an abuse and contrary to the objectives of Articles 39 and 110 and of Article 29 of the Treaty. Regulation No 2777/75 authorized the Commission at most to impose a higher levy on offals taking account of the average ratio between market values (Article 5) but in the course of the period in question the necessary conditions for this were apparently not satisfied.

before its entry into force. The Finanz­ customs departments. In this respect no gericht Münster is therefore not legally account was taken of economic or obliged to comply with this regulation in commercial considerations, particularly the main proceedings. as the customs authorities had already for a long time acted in accordance with — None the less, whilst it is true that the provisions of Regulation No the Finanzgericht should classify the 1669/77. products in question in reliance on the general methods and principles relating (b) Tariff classification of "turkey pieces" to the application of the Common The Commission first recalls that the Customs Tariff, the fact remains that the tariff classification of "turkey pieces" has "content" of Regulation No 1669/77 always given rise to difficulties in the constitutes an authorized commentary, context of the system of levies in the issued by the institution which drew up common organization of the market in and formulated the tariff subheadings in poultry-meat. question. It is for that reason that, even if it does not have binding force, the said Having regard to the lower rate of levy regulation remains an extremely valuable on imports of offal as compared with means of interpreting the customs tariff that on poultry cuts it is often more correctly so that the Finanzgericht advantageous to declare poultry-meat as cannot dispense with it any more than "offals" in particular as the terms with the other official explanatory "meat" and "offals" have not yet been documents and it cannot dispense with given a legal definition. an evaluative assessment of it on the The relevant explanatory notes merely ground that it has no retroactive effect. list, by way of example, and without The question whether that regulation claiming to be exhaustive, certain typical interpreted the customs tariff correctly is offals; that does not enable a definitive unrelated to the question whether the answer to be given to the question of the interpretation set out therein is retro­ classification of meat scraps obtained active. after the parts with value have been removed. — It is also not possible to infer from Furthermore, the judgment of the Bun­ the adoption of Regulation No 1669/77 desfinanzhof of 1967 according to which that all turkey cuts imported prior to it the skeleton left after boning together should necessarily and automatically be with the scraps of meat and fibrous, classified not as "poultry cuts" but as gristly and fatty tissue adhering to it "offals". Provisions adopted pursuant to "abfalle" [literally "falls off"] and Regulation No 97/69, such as those of accordingly all the "bone scrapings" Regulation No 1669/77, cannot and do not seek to amend the scope of existing tariff provisions. They merely provide a commentary on the tariff subheadings in question and establish definite and binding criteria for the correct classi­ fication of the products in question.

which can still be scraped off must be After thus defining the context of the regarded as "Schlachtabfall" [offal from problem to be resolved the Commission slaughtering] for the purposes of the goes on to set out the factors on which tariff, unfortunately rather had the effect the solution adopted by Regulation No of increasing the problems which Regu­ 1669/77 is based. lation No 1669/77 seeks to resolve. — First it may be inferred from the Having said that, the Commission wording and the structure of tariff observes that Regulation No 1669/77 heading 02.02 that the distinction represents the result of several years' between "poultry cuts" and "offals" work on the part of the Committee on must be based on the objective charac­ Common Customs Tariff Nomenclature teristics and the appearance of the goods established within the Commission. That at the time of importation. The wording committee found in fact that several of of the customs tariff makes no provision the factors relied on for tariff classi­ for different classification of the same fication were inadequate. On the one product depending on the method of hand the wording of the tariff drew a production or the use. distinction between poultry cuts and poultry offals according to the objective — Furthermore, the term "Poultry cuts: characteristics of the products at the time Boned or boneless" may be compared of importation but not according to the with that of "meat" used in tariff way in which the products were obtained heading 02.01, "Meat and edible offals by boning, removal or scraping. On the …", as has in fact been done in the other it has become evident that it is relevant explanatory notes. unpractical to regard as "poultry cuts" Muscular tissue from turkeys, detached all that is sold in the Community under from the bones, whether by removal, that description and to treat what is left boning or scraping therefore certainly as scraps on slaughtering as "offal". The falls under "Poultry cuts: Boned or habits of consumers, the assessment of boneless" within the meaning of tariff the value, the use and the marketing of subheading 02.02 B I. The Explanatory the various poultry cuts are not Notes to the Customs Co-operation sufficiently similar in the nine Member Council Nomenclature point out fur­ States of the Community to be used as thermore that the quality of "meat" (that criteria for a uniform interpretation of is to say "poultry cuts") within the the customs tariff. meaning of the customs tariff does not depend on the size of the pieces offered Furthermore, from the tariff point of for sale: meat, even minced, is still meat. view account should have been taken of Similarly, the question what part of the the fact that the wording of subheading animal the meat comes from is irrelevant 02.02 B refers to certain parts of poultry not as "offal" but as independent cuts, such as for example wing tips or rumps which, objectively, might quite well be regarded as offal. With regard, finally, to the commercial value of the products, that too fails to constitute a sufficient criterion for the tariff classification as a product may be regarded differently in the different regions of the Community, which would lead to differences in price.

Decision

1 By order of 27 April 1978, which was received at the Court Registry on 26 July 1978, the Finanzgericht Münster referred to the Court of Justice for a preliminary ruling under Article 177 of the EEC Treaty a number of questions concerning the validity and temporal application of Commission Regulation (EEC) No 1669/77 of 25 July 1977 on the classification of goods under Common Customs Tariff subheading 02.02 B I (Official Journal L 186

BIEGI v HAUPTZOLLAMT BOCHUM

of 1977, p. 23), and concerning the interpretation of certain subheadings of the Common Customs Tariff.

These questions were raised in the context of a dispute between an importer and the German customs authorities concerning the classification in the Common Customs Tariff of boned or boneless poultry meat.

The importer classified the goods in question as "offals" within the meaning of tariff subheading 02.02 C but the customs authorities on the other hand take the view that the goods constitute "Poultry cuts (excluding offals): Boned or boneless" and must therefore be classified within subheading 02.02 B I.

JUDGMENT OF 28. 3. 1979 — CASE 158/78

4 In order to resolve that dispute the Finanzgericht Münster raised the following questions:

"1. Is Commission Regulation (EEC) No 1669/77 of 25 July 1977 on the classification of goods under Common Customs Tariff subheading 02.02 B I (Official Journal L 186, p. 23) invalid because it does not specify the content of tariff subheadings 02.02 BI and 02.02 C but amends them and therefore goes beyond the powers conferred by Regu­ lation (EEC) No 97/69 of the Council of 16 January 1969 on measures to be taken for uniform application of the nomenclature of the Common Customs Tariff (Official Journal, English Special Edition 1969 (I), p. 12)?

2. If Question 1 is answered in the negative:

Does Regulation (EEC) No 1669/77 have retroactive effect in the sense that courts and authorities in the Member States are to apply it to imports carried out before its entry into force?

3. If Question 1 is answered in the affirmative or if Question 2 is answered in the negative : According to what criteria was the distinction to be drawn between tariff subheading 02.02 B I — "Poultry cuts (excluding offals) boned or boneless" — and subheading 02.02 C — "Offals" — before the entry into force of Regulation (EEC) No 1669/77? Were the shape, size, weight and quality of the goods, the way in which they were produced, the use to which they were to be put and/or their commercial value the decisive factors?

The second recital in the preamble to that regulation explains that those provisions should specify the content of the headings or subheadings of the Common Customs Tariff without amending the text thereof.

From the third recital in the preamble and Article 4 it appears that the provisions thus adopted by the Commission concern the measures which may be necessary for classifying certain goods in the tariff and similarly their inclusion under a given heading or subheading.

To that end the regulation set up a Committee on Common Customs Tariff Nomenclature and stated, in the third recital, that the provisions concerning those measures relate to a particularly technical field and close co-operation is required between the Member States and the Commission when drawing them up.

6 It is clear from those rules that in this field the Council has conferred on the Commission, acting in co-operation with the customs experts of the Member States, a wide discretion as to the choice between two or more tariff headings in which a given product might be classified.

7 Article 1 of Regulation No 1669/77 does not amend the text of the Common Customs Tariff but specifies the content of a tariff subheading with regard to a given product.

It is necessary to examine whether, although it repeats without amendment the text of subheading 02.02 B I, Regulation No 1669/77 has nevertheless not had the effect of making a substantive amendment to the tariff.

Administrative practice with regard to tariff classification or commercial practice current in a Member State cannot make up for the absence of such a regulation as the Common Customs Tariff nomenclature must be applied on the basis of objective criteria which are uniform throughout the Community.

9 It is precisely in cases such as the present one where the tariff does not lay down an exhaustive list of products falling within one or other subheading but merely gives examples of generic definitions that the Commission, in co­ operation with the national experts, has the power to adopt a regulation determining the types of products covered by it.

Furthermore, nothing put forward by the plaintiff in the main action serves to show that the Commission has gone beyond the limits of the discretion conferred on it in the context of Regulation No 97/69 of the Council.

10 The answer to the national court must therefore be that consideration of the question raised has disclosed no factor of such a kind as to affect the validity of Commission Regulation No 1669/77 of 25 July 1977.

BIEGI v HAUPTZOLLAMT BOCHUM

Second question

On the other hand tariff subheading 02.02 BI refers to "Poultry cuts (excluding offals): Boned or boneless" without providing any restriction as to the products which may be covered.

13 By stating that that tariff subheading "covers poultry meat without bones regardless of the part of the carcass from which it comes" the Explanatory Notes to the Customs Tariff relating to it show that the subheading has a general scope and covers all cut poultry meat resulting from boning, irrespective of the manner in which it was obtained or its commercial value.

JUDGMENT OF 28. 3. 1979 — CASE 158/78

The Explanatory Notes of the Customs Co-operation Council which state that "fat adhering to [cut] meat is treated as forming part of the meat" mean that the presence in the boned or boneless pieces of a certain percentage of fat does not affect their classification as "boned or boneless meat".

14 Having regard to the wide scope which the interpretative rules set out above attribute to the concept of boned or boneless meat within subheading 02.02 B I, the manner in which the product is presented, the way in which it was produced, the use to which it is to be put and its commercial value cannot be decisive criteria for its tariff classification.

Similarly, neither the size nor the weight of the pieces which make up the product are decisive for that classification as the Notes of the Customs Co­ operation Council do not exclude the possibility of "meat" being presented in the form of "minced" meat.

Fourth question

18 As regards the fourth question, in the absence of express provisions it would be inappropriate for the headings of the Common Customs Tariff to be applied differently for one and the same product depending on whether the classification is for the imposition of customs duties, the application of the rules of common organizations of the market or of the system of monetary compensatory amounts.

Furthermore, Regulation (EEC) No 2777/75 of the Council of 29 October 1975 on the common organization of the market in poultry meat (Official Journal L 282 of 1975, p. 77) provides in Article 11 (1) that "the general rules for the interpretation of the Common Customs Tariff and the special rules for its application shall apply to the tariff classification of products covered by this regulation".

Article 3 of that regulation provides that a levy is to be charged on imports of products subject to that common organization including those falling within tariff heading 02.02.

19 For those reasons the answer should be that the criteria for the tariff classi­ fication of products coming under Common Customs Tariff heading 02.02 are, for the purposes also of the imposition of the levy and the application of monetary compensatory amounts, those which result from the rules of interpretation and application of the tariff and its nomenclature.

Costs

1. Consideration of the first question raised has disclosed no factor of such a kind as to affect the validity of Commission Regulation No 1669/77 of 25 July 1977.

2. Commission Regulation No 1669/77 of 25 July 1977 is not binding on national courts which have to define the tariff classification of goods imported before its entry into force.

3. Boned or boneless poultry cuts come under Common Customs Tariff subheading 02.02 B I, and regardless of the manner in which they are presented, the way in which they were produced, the use to which they are to be put and/or their commercial value, they do not constitute offals within the meaning of subheading 02.02 C so long as they essentially consist of muscle or fragments of muscle comprising only a small proportion of tendons, fat and fibrous tissue.

4. The criteria for the tariff classification of products coming under Common Customs Tariff heading 02.02 are, for the purposes also of the imposition of the levy and the application of monetary amounts, those which result from the rules of interpretation and application of the tariff and its nomenclature.

Mertens de Wilmars Donner Bosco

Delivered in open court in Luxembourg on 28 March 1979.