C-11/79

Inspecteur der Invoerrechten en Accijnzen (Inspector of Customs and Excise), Rotterdam,

on the interpretation of subheading 84.15-B and heading 84.12 of the Common Customs Tariff.

THE COURT (First Chamber),

composed of: J. Mertens de Wilmars, President of Chamber, A. O'Keeffe and T. Koopmans, Judges,

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

gives the following

At the beginning of 1976 Cleton en Co., The Inspector of Customs and Excise, the plaintiff in the main action, declared Rotterdam, the defendant in the main to the customs administration in Rotterdam a number of mechanical action, after checking, classified the appliances under tariff heading 84.12 appliances from non-member countries (air-conditioning machines, self- under subheading 84.15-B of the contained, comprising a motor-driven Common Customs Tariff. fan and elements for changing the temperature and humidity of air). Such a The tariff subheading in question is part classification makes the imported of heading 84.15 (which belongs to appliances subject to a conventional rate Chapter 84 of the Common Customs of duty of 8%. Tariff: Boilers, machinery and mechanical appliances; parts thereof) and reads as follows: On 10 November 1976 Cleton brought an action disputing that decision before "84.15: Refrigerators and refrigerating the Tariefcommissie (Administrative equipment (electrical and other): Court of Last Instance in Revenue Matters); Amsterdam, claiming in A. Evaporators and condensers, particular that the purpose of the excluding those for domestic appliances in question coincides with the refrigerators object referred to in subheading 84.15-B (Refrigerators and refrigerating equip­ B. Other..." ment (electrical and other)) namely, refrigeration and/or freezing, whilst heading 84.12 (air-conditioning ma­ At that time such classification implied a chines) refers to machinery having a conventional rate of duty of 5%. The quite different purpose, namely air- imported appliances, which in the conditioning. invoices were referred to as "Thermo King Transport Refrigeration Units", are used for cooling and most frequently According to the Inspector it follows also for heating the load compartments from an explanatory note of the Customs of lorries and containers. They consist of Co-operation Council (Brussels Con-

be interpreted as meaning that the words 'air-conditioning' in con­ or a cold-water coil or a refrigerator unit junction with the words 'changing evaporator (either of which changes both the temperature and humidity of air' the temperature and, by condensation, also include the maintenance by the humidity of the air); mechanical or other means of a pre­ selected temperature, coupled with a or ..." change in the humidity which is not intended and cannot be regulated? The Inspector referred also to a letter from the Staatssecretaris von Financiën" If the answer to the first question is in the affirmative: [Secretary of State for Finance] of 5 April 1977 informing the appellant that the Committee on Common Customs Tariff Nomenclature of the European 2. Should heading 84.12 of the Tariff Communities had issued a classification be interpreted as meaning that the opinion of 2 February 1977 classifying words 'air-conditioning' should be understood to include the main­ under heading 84.12 appliances of the Thermo King make, type Super N.W.D., tenance by mechanical or other for cooling/heating the load compart­ means of only a pre-selected ments of lorries. The Inspector lowering of the temperature, coupled concluded from this that appliances with a change in the humidity which is not intended and cannot be whose purpose is solely to modify the temperature of closed spaces but which regulated? at the same time, because of the change If the answer to the first question is of temperature, bring about a change in the negative: in the humidity of the air, should be considered as "air-conditioning machines" within the meaning of 3. What is then to be understood under heading 84.12. the term 'humidity' used in heading 84.12? Is the term to be understood However, in his written observations the as meaning relative humidity or Inspector points out that the absolute humidity?" Tariefcommissie was mistaken in attri­ buting the classification opinion in question to the Committee on Common Customs Tariff Nomenclature. It In pursuance of Article 20 of the emanated in fact from the Benelux auth­ Protocol on the Statute of the Court of orities. Justice of the EEC, the defendant in the main action and the Commission of the The Tariefcommissie, Amsterdam, took European Communities submitted the view that the proceedings raised written observations. questions concerning the interpretation of Community law and therefore by a judgment of 12 December 1978, received On hearing the report of the Judge- at the Court Registry on 22 January Rapporteur and the views of the

First and second questions A — Observations of the defendant in the main action (Inspector of Customs The Commission states that it will and Excise) attempt to reply to the questions which have been submitted not only on the basis of an interpretation related to the The Inspector of Customs and Excise wording of the Common Customs Tariff points out that the classification opinion referred to in the letter from the but also of an analysis of the provisions capable of being used as instruments for Secretary of State for Finance of 5 April such an interpretation. 1977, to which reference is made in the order of the Tariefcommissie referring the matter to the Court of Justice (pp. 8 (a) In the Commission's view ap­ and 9) did not emanate, as is stated in pliances coming under heading 84.15 are the order, from the Committee on such as are intended solely for re­ Common Customs Tariff Nomenclature, frigeration and/or freezing. If, in but from the Benelux authorities. addition to producing low temperatures, an appliance fulfils a further function According to that classification opinion consideration should be given to the (Benelux), the following come under question whether it does not come under heading 84.12: another heading. In considering heading 84.12 the Commission stresses two "An air-conditioning machine for the factors: a motor-driven fan and a device load compartment of a lorry (in which for changing the temperature, which is for example perishable foodstuffs are also capable of changing the humidity. transported) or for other closed spaces which consists of a sheet steel box in 1 — The Community Explanatory Note reads as follows: which or on which are attached a motor- "84.12 — Air-conditioning machines, self-contained, driven fan and a refrigeration unit comprising a motor-driven fan and elements for changing the temperature and humidity of air. (compressor, condenser and evaporator). Air-conditioning machines which are not equipped with a device for selecting the degree of humidity of air are included in this heading, provided that the By virtue of its reversible action the machines comply with the criteria in the Explanatory machine can both cool and heat the load Notes to the CCC Nomenclature, heading No 84.12. compartment, whilst through the This heading therefore covers 'cooling/heating units for trailers' which cool or heat the load compartments presence of the evaporator, the humidity of lorries as well as change the humidity of the air by of the air may be changed." condensation."

On 7 November 1977 the Committee on Common Customs Tariff Nomenclature With regard to the question whether the change of temperature must consist adopted the following Explanatory Note solely of cooling or whether there must in relation to heading 84.12: be also a possibility of heating, in the "Air-conditioning machines which are Commission's view there is no doubt that not equipped with a device for selecting an appliance which is intended both to the degree of humidity of air are refrigerate and to heat and which fur­ included in this heading, provided that thermore is covered by the definition the machines comply with the criteria in given with regard to heading 84.12 the Explanatory Notes to the CCC comes under that heading. However, Nomenclature, heading No 84.12. appliances which cannot heat but only refrigerate must also come under that This heading therefore covers 'cooling/ heading because they correspond to the heating units for trailers' which cool or concept of "air-conditioning". heat the load compartments of lorries as well as change the humidity of the air by condensation."

In any event, in this case, application From this the Commission deduces that should be made of the rule set out in the appliances in question come under Title I of the first pan of the Annex to heading 84.12. Regulation No 950/68 of 28 June 1968 (Journal Officiel L 172, p. 1) on the The Explanatory Notes to heading Common Customs Tariff and more 84.12, adopted in 1969 by the Customs specifically in Chapter A: General Rules Co-operation Council, contain in for the interpretation of the Nomen­ particular the following passages: clature of the Common Customs Tariff, Rule 3 (a). Under that rule, goods which "The heading applies only to machines are classifiable under two or more which are:

From the structural point of view the air- evaporator of a machine intended to conditioning machines of the present produce low temperatures, which at heading must therefore incorporate, in the same time changes the addition to the motor-driven fan or temperature and, by condensation, blower for circulating the air, at least the the humidity of the air. following elements: 2. In this respect it is of no importance that the change of temperature is obtained by an appliance intended or a cold water coil or a refrigerator unit for refrigeration and heating or by evaporator (either of which changes both an appliance intended solely for the temperature and, by condensation, refrigeration." the humidity of the air);

or.. ."

III — Oral procedure It emerges from the above document that machines coming under heading 84.12: At the hearing on 21 June 1979 the — Need not necessarily refrigerate and plaintiff in the main action, represented heat but that one of the two elements by W. Rycken, of the Brussels Bar, and is sufficient; the Commission of the European Communities, represented by its Agent, — Sometimes include a single element, M. Beschel, assisted by A. Haagsma, for example the evaporator of a presented oral argument. Their refrigerating machine, which at the comments concerned mainly the same time changes the temperature technical features of the machines and, by condensation, the humidity concerned. In reply to the question of the air. whether "a simple refrigerator coming

JUDGMENT OF 4. 10. 1979 — CASE 11/79

3 The plaintiff in the main action declared the machines under subheading B of tariff heading 84.15 which reads as follows: "Refrigerators and refrigerating equipment (electrical and other): A. Evaporators and condensers, excluding

CLETON v INSPECTEUR DER INVOERRECHTEN EN ACCIJNZEN

those for domestic refrigerators; B. Other ...", and gives rise to a conventional rate of duty of 5%. The competent inspector amended the declaration, however, and classified the machines under heading 84.12: "Air- conditioning machines, self-contained, comprising a motor-driven fan and elements for changing the temperature and humidity of air". This heading gives rise to a conventional rate of duty of 8%.

4 The plaintiff in the main action disputed this classification, claiming that the machines were designed purely to regulate the temperature inside the compartments and not the degree of humidity of the air. It is true, it adds, that owing to the laws of physics any change in temperature in the surrounding atmosphere alters the degree of humidity of the air, but so far as the machines in question are concerned this is an unsought effect, which is even considered undesirable, and which the machines in question are not capable of regulating.

5 In order to settle the dispute the national court has referred three questions to the Court.

In the first question it asks:

6 The Netherlands customs authorities argue that the question whether the machines in question are specially designed to have this humidifying or de- humidifying effect or, on the contrary, this is merely a result of changes in temperature, has no bearing on their classification. In both cases, the relevant tariff heading is heading 84.12. They base this view on the wording of both the Explanatory Notes of the Customs Co-operation Council relating to heading 84.12 (1975 version) and the Explanatory Notes to the Common Customs Tariff of the European Communities relating to that heading and published in the 12th amending supplement (1 July 1978) to those notes. The competent inspector also drew the attention of the national court to the wording of the minutes of a meeting of the Tariff Commission of the Benelux Economic Union of 20 and 21 December 1966 according to which the machines in question should be classified under heading 84.12, but it is now agreed that this is not decisive although it does give an indication of the practice which has been followed by the customs authorities since 1966.

7 The Commission takes the same view as the Netherlands authorities as regards the conclusions to be drawn from the Explanatory Notes of the Customs Co-operation Council and those of the Common Customs Tariff of the European Communities. It also emphasizes the necessity of establishing simple objective criteria for distinguishing between one customs heading and another. This requirement means that subjective criteria such as whether a machine was designed to produce a particular effect or not, must be avoided in favour of objective criteria which are readily verifiable, such as the fact that a given effect is in fact produced by a machine, whether or not it is intended.

10 It is true that it is stated in the same Explanatory Note that the elements for humidifying or drying the air may or may not, according to the circum­ stances, be separate from those for heating or cooling it. "Certain types incorporate only a single unit which changes both the temperature and, by condensation, the humidity of the air. These air-conditioning machines cool and dry (by condensation of water vapour on a cold coil) the air of the room in which they are installed ...". This explanation need not, however, alter the interpretation set out above, for the wording reveals that even if the unit in question is the only one, it must in every case include a special element, for example a cold coil, which is intended in particular to condense the water vapour.

JUDGMENT OF 4. 10. 1979 — CASE 11/79

11 The Commission also refers to "the Explanatory Notes to the Customs Tariff of the European Communities" relating to heading 84.12, which were drawn up in 1977 and read as follows:

"Air-conditioning machines, self-contained, comprising a motor-driven fan and elements for changing the temperature and humidity of air.

Air-conditioning machines which are not equipped with a device for selecting the degree of humidity of air are included in this heading, provided that the machines comply with the criteria in the Explanatory Notes to the CCC Nomenclature, heading No 84.12.

This heading therefore covers "cooling/heating units for trailers" which cool or heat the load compartments of lorries as well as change the humidity of the air by condensation".

13 However, this question does not need to be answered in order to give a reply to the national court. It is expressly stated in the notice which precedes the Explanatory Notes to the Customs Tariff of the European Communities that they are not intended to replace the Explanatory Notes of the Customs Co­ operation Council but only to supplement them. Consequently, the note in question must be interpreted in the light of the one which has been commented on above. It follows from both notes that a single device which serves to regulate both the temperature and the degree of humidity comes under heading 84.12 provided that it does enable them both to be regulated. For heading 84.12 to apply it is not necessary to have a special device for regulating the degree of humidity of the air provided that the single device includes an element which at least makes it possible, if necessary, to adjust the degree of humidity which results automatically from the temperature sought and obtained.

CLETON v INSPECTEUR DER INVOERRECHTEN EN ACCIJNZEN

14 The foregoing observations also show that the argument put forward by the Commission based on the need to classify goods under the Common Customs Tariff on the basis of their objective characteristics, in the interests of legal certainty and administrative convenience, must be rejected. That principle of interpretation, the importance of which has been acknowledged by the Court, is not called in question by the interpretation which has been adopted because the latter implies that in order to fall within the sphere of heading 84.12 — even if the apparatus does not have separate devices for regulating temperature and humidity — it must at least have an element making it possible to adjust the degree of humidity of the air, resulting auto­ matically from the temperature which the apparatus is intended to establish.

19 It would appear from this explanation that the term "relative humidity" referred to by the national court corresponds to that of the degree of humidity. That being so, the expression "for changing the temperature and humidity of air" in heading 84.12 means changing the relative humidity.

Costs

2: The costs incurred by the Commission of the European Communities which has submitted observations to the Court are not recoverable. As the proceedings are, in so far as the parties to the main action are concerned, in the nature of a step in the proceedings 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 questions referred to it by the Tariefcommissie, Amsterdam, by a judgment of 12 December 1978, received at the Court on 22 January 1979, hereby rules:

A. Van Houtte J. Mertens de Wilmars Registrar President of the First Chamber

OPINION OF MR ADVOCATE GENERAL WARNER DELIVERED ON 13 SEPTEMBER 1979

My Lords, Invoerrechten en Accijnzen te Rotterdam") as to the classification under the Common Customs Tariff, the This case comes to the Court by way of "CCT", of certain goods imported by a reference for a preliminary ruling by Cleton into the Netherlands in March the Tariefcommissie of the Netherlands. and April 1976. There is pending before that tribunal an appeal by J. Cleton en Co. B.V., of Rotterdam, which I shall call for Those goods were machines, described short "Cleton", against a decision of the in the invoices as "Thermo-King Inspector of Customs and Excise transport refrigeration Units", which are at Rotterdam ("Inspecteur der used to cool and often also to heat the