C-54/79

THE COURT

composed of: A. O'Keeffe, President of the First Chamber, Acting as President, A. Touffait (President of the Second Chamber), P. Pescatore, Lord Mackenzie Stuart, G. Bosco, T. Koopmans and O. Due, Judges,

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

gives the following

JUDGMENT

Facts and Issues

"Footwear with outer soles of other classified as 'Footwear with outer soles materials." of rubber* under heading 64.02 of the Common Customs Tariff?" The duty under this heading on goods from Spain is 2.8%. The Hauptzollamt Frankfurt am Main-Ost (hereinafter 3. The order referring the matter to the referred to as "the Hauptzollamt") Court was registered at the Court however classified the said goods under Registry on 9 April 1979. In accordance subheading 64.02 B involving as regards with Article 20 of the Protocol on the Spain a duty of 12% and worded thus: Statute of the Court of Justice of the EEC written observations were submitted by Hako-Schuh, represented by E. "64.02 Footwear with outer soles of Leierseder of the Munich Bar, by the leather or composition leather; footwear Government of the French Republic, (other than footwear falling within represented by P. Achard, Secretary heading No 64.01) with outer soles of General of the Interministerial rubber or artificial plastic material: Committee for Questions of European Economic Co-operation, acting as Agent, the Government of the Italian A. . . . Republic, represented by A. Maresca, Ambassador, acting as Agent, assisted by B. Other." A. Marzano, Avvocato dello Stato, and the Commission of the European Communities, represented by Manfred Beschel, a Member of the Legal 2. The objection which Hako-Schuh Department of the Commission, acting made against this classification was as Agent. After hearing the report of the rejected by the Hauptzollamt and the Judge-Rapporteur and the views of the matter then came before the Hessisches Advocate General the Court decided to Finanzgericht. open the oral procedure without any preparatory inquiry. The Finanzgericht took the view that the rubber reinforcements of parts of the outer hempen sole should not be taken into account for purposes of tariff classi- II — W r i t t e n o b s e r v a t i o n s u n d e r fication of the goods where it is not an A r t i c l e 20 of t h e P r o t o c o l essential and substantial part of the outer on t h e S t a t u t e of t h e C o u r t sole. The court had doubts "whether of J u s t i c e of t h e E E C footwear with an outer sole of hemp having only certain parts of the area of that sole . . . reinforced with rubber is to be considered footwear with outer soles Hako-Schuh refers to the observations of rubber". Because of these doubts the which it made during the main action court stayed the proceedings and and reiterates the application for expert referred the following question to the evidence it made then. In the obser- Court of Justice for a preliminary ruling vations submitted to the Court of Justice under Article 177 of the EEC Treaty: it therefore confines itself to setting out very briefly its basic arguments which are as follows: "Can footwear with outer soles of hemp, approximately half the area of which is The whole manufacture, including the provided with a rubber reinforcement, be way the sole is made, determines the

This solution moreover accords with an opinion which the Committee on Common Customs Tariff Nomenclature The French Government observes, first, gave in 1976 when called upon to that according to the Common Customs consider the question of classification of Tariff footwear with outer soles of certain samples of footwear, which rubber or plastic fall under sub-heading classified footwear with fabric uppers 64.02 B. Espadrilles the outer sole of and outer soles partly or wholly covered which consists mainly of an artificial with rubber under subheading 64.02 B; covering fall under sub-heading 64.02 B on the other hand footwear with outer while only espadrilles the outer sole of rope soles merely reinforced with rubber which consists of rope fall under heading were classified under heading 64.04. 64.04. This view is confirmed by the Explanatory Notes to the Common Customs Tariff which while not being legally binding are nevertheless an important aid to interpreting the tariff. Although in the present case rubber does not cover the whole of the under part of the footwear, nevertheless all parts which touch the ground are so covered; the rubber is the real "outer sole" and is Although the question put to the Court more vital and important than the layer mentions footwear with "approximately of rope (which is coverd precisely in half" the outer sole reinforced with those parts which cannot serve as the rubber, it appears from the order that the "outer sole"). rubber coating covers almost 6 0 % of the sole of the espadrilles in question and that the main parts of the sole are completely made of rubber. Since, contrary to the case of traditional espa- drilles, the rope in such sandals is only of The stoutness and durability of the secondary and inessential importance, footwear are ultimately ensured by the classification under subheading 64.02 B rubber just like footwear with soles is justified. entirely of rubber. If a lower rate of duty were levied on these espadrilles than that provided in subheading 64.02 B this would gravely affect the Community manufacturers of footwear with soles The Government of the Italian Republic entirely of rubber, who would face takes the view that on the basis of the competition from a product of inferior

It is therefore necessary to apply Rule In turn the Committee on Common A 3 of the General Rules for the In- Customs Tariff Nomenclature, which terpretation of the Common Customs was called on to consider the question of Tariff. According to Rule A 3 (a) it is tariff classification of footwear with necessary first to consider whether one outer soles partly reinforced with rubber, of the relevant headings is more specific listed certain particulars in this respect in than the other. In so far as heading 64.02 the Explanatory Notes to subheading requires the outer soles to be of a 64.02 B and heading 64.04. specific material (rubber or artificial plastic material) it may be regarded as Regarding subheading 64.02 B it stated: more specific than heading 64.04 which refers generally to "other materials". The latter heading covers moreover all "This subheading includes footwear of materials not expressly included in the espadrille type having outer soles of headings 64.02 and 64.03. This is rope at the toe, the heel, the middle part nevertheless not convincing because and all round the edge, with rubber or headings 64.02 and 64.04 equally stress artificial plastic material . . . the material composition of the outer sole and refer to three classes of material which, as classes, have the same tariff The subheading also covers footwear of significance. This is supported by the this type having outer soles of rope Explanatory Notes to the C C C N covered at the heel and most of the fore- (Customs Co-operation Council part of the sole with rubber or artificial Nomenclature) to the effect that if two plastic material . . . "

Regarding heading 64.04 is stated: giving the sole its essential character. "This heading covers footwear of the The fact that the rubber does not espadrille type having outer soles of appreciably alter the characteristic rope, even if the toe and the heel or the appearance of the espadrilles is irrelevant toe, the heel and the middle part are for purposes of customs classification. covered with rubber or artificial plastic In view of the foregoing considerations material . . . the Commission therefore proposes that the question put by the Hessisches Some footwear of this type must, Finanzgericht should be answered as however, be classified under subheading follows: 64.02 B. Such is the case, in particular, with footwear having outer soles covered "Footwear with outer soles of hemp, at the toe, the heel, the middle part and approximately half the surface of which all round the edge, or at the heel and is reinforced with rubber, is to be most of the fore-part of the sole, with classified under heading 64.02 of the rubber or artificial plastic material Common Customs Tariff" (see Explanatory Notes to subheading 64.02 B)." III — Oral procedure The Committee thus made great efforts to give a balanced and differentiated The Government of the French Republic, answer to a question which is not easy. represented by Philippe Moreau The criterion adopted is primarily Defarges, Conseiller des Affaires quantitative (classification depends on Etrangères in the Legal Affairs Direc- whether the rubber reinforcement covers torate of the Ministry for Foreign more or less than the half of the outer Affairs, the Government of the Italian sole) but at the same time qualitative, Republic, represented by Arturo because a very extensive rubber Marzano, Sostituto Avvocato dello reinforcement alters the qualities of the Stato, and the Commission of the footwear giving it better adhesion to the European Communities, represented by ground and more durability. Since the Manfred Beschel, a Member of the Legal essential character of the sole is Department, presented oral argument at determined both quantitatively and the hearing on 29 November 1979. qualitatively by the rubber reinforcement The Advocate General delivered his and by the effect which it produces, the opinion at the sitting on 15 January rubber must be regarded as the material 1980.

4 As regards "mixtures" such as those in the present case, Rule A 3 (b) of the Rules for the Interpretation of the Nomenclature of the Common Customs Tariff provides that composite goods consisting of different materials which cannot be classified by reference to Rule 3 (a), which relates to the criterion of the most specific heading, "shall be classified as if they consisted of the material . . . which gives the goods their essential character, in so far as this criterion is applicable". In the interests of legal certainty it is the objective characteristics and properties of products which, as a general rule, provide the decisive criterion for their classification

JUDGMENT OF 26. 2. 1980 — CASE 54/79

s In the present case it is apparent from tariff headings 64.02, 64.03 and 64.04 that the distinction between products falling under one or the other heading depends basically only on the characteristics of the outer sole, that is to say the part of the footwear in direct contact with the ground. In accordance with this criterion of classification, the Explanatory Notes to the Common Customs Tariff provide as regards footwear of subheading 64.02 B:

"This subheading includes footwear of the espadrille type having outer soles of rope covered at the toe, the heel, the middle part and all round the edge, with rubber or artificial plastic material . . .

The subheading also covers footwear of this type having outer soles of rope covered at the heel and most of the fore-part of the sole with rubber or artificial plastic material

The same Explanatory Notes state as regards footwear of heading 64.04:

the outer sole and moreover extends to the parts of the sole in direct contact with the ground. With these particulars the Notes in question thus confirm that the distinction between products of heading 64.02 and those of heading 64.04 is essentially based on the characteristics of the outer sole and that, in accordance with that criterion, the classification of footwear with rope outer series reinforced with rubber depends upon the extent and area covered by such reinforcement on the parts of the outer sole in direct contact with the ground. When the rubber reinforcement covers the surface of the outer sole to such an extent that the parts of the sole most subject to wear have a strength and durability comparable to that of a rubber sole, the reinforcement gives the sole to which it is applied characteristics and a function similar to that of a rubber sole and result in such a "mixture" being assimilated, for tariff purposes, to footwear of heading 64.02 of the Common Customs Tariff.

7 The national court refers in its question to footwear of the espadrille type having a fabric upper and hempen rope outer sole which has a coating of rubber at the toe, joint and heel which covers 5 7 % of the total surface leaving 4 3 % uncovered. Having regard to its extent in relation to the surface of the sole in direct contact with the ground, such rubber reinforcement gives the outer sole the characteristics and function of a rubber sole. Because of this it justifies assimilating the said footwear, for customs purposes, to "footwear with outer soles of rubber" within the meaning of heading 64.02.

THE COURT

in answer to the question put by the Hessisches Finanzgericht by an order of 13 March 1979 hereby rules:

Footwear with outer soles of hempen rope, 57% of the surface of which is reinforced with rubber at the toe, joint and heel, must be classified as footwear with outer soles of rubber under heading 64.02 of the Common Customs Tariff and, having regard to the material of which the uppers are made, under subheading B of that heading.

O'Keeffe Touffait Pescatore

Mackenzie Stuart Bosco Koopmans Due

Delivered in open court in Luxembourg on 26 February 1980.