C-114/80

OBERFINANZDIREKTION [Principal Finance Office] HAMBURG,

on the interpretation of headings 21.06 and 22.02 of the Common Customs Tariff,

T H E C O U R T (Second Chamber)

composed of: P. Pescatore, President of Chamber, A. Touffait and O. Due, Judges,

Advocate General: G. Reischl Registrar: A. Van Houtte

gives the following

Office, Munich] under Article 23 of the customs duty at a rate of 20% or German Zollgesetz [Customs Law] of 14 conventional duty at a rate of 15%. June 1961, for a "verbindliche Zollta- rifauskunft" (a binding customs tariff On 28 June 1978 Ritter lodged an ruling) for a product described as "whole objection against that ruling at the yeast, liquid brewer's yeast" (Voll-Hefe, Oberfinanzdirektion Hamburg. flüssige Bierhefe).

The duty fixed the natural water content of brewer's for that subheading is 10% for the yeast. The protein, fat and carbohydrate autonomous duty and 8% for the content of the product are respectively conventional duty. 9%, 1% and 7.5%. According to the information on the wrapping, the By a decision dated 6 December 1978 product is a food supplement which the Oberfinanzdirektion Hamburg contains vitamins of the B-complex dismissed the objection; it considered which are beneficial to the metabolism, that the product should be assigned to enables working capacity to be main- Chapter 22 of the Common Customs tained and [promotes] a healthy Tariff. Ritter appealed against that

qualities. The specific function of the Justice under Article 177 of the EEC citrus-fruit juice in the manufacturing Treaty on the following questions : process is to serve as catalyst and stabilizer for the yeast cells. " 1 . Is the expression 'other non- alcoholic beverages' within the meaning of tariff heading 22.02 of The request was transmitted by the the Common Customs Tariff to be Oberfinanzdirektion München to the interpreted as including a product Oberfinanzdirektion Hamburg, which, which is composed of brewer's yeast, after samples had been examined by the water and 3.9% natural citrus-fruit Zolltechnische Prüfungs- und Lehranstalt juice, is liquid and suitable for [Customs Laboratory and Training consumption as a beverage and is College] Hamburg, issued a binding intended to be taken several times customs tariff ruling on 14 June 1978 daily in small quantities for the assigning the product to subheading improvement of health? 22.02 A of the Common Customs Tariff ("Lemonade, flavoured spa waters and 2. If Question 1 is answered in the flavoured aerated waters, and other non- negative: Is tariff heading 21.06 to alcoholic beverages, not including fruit be interpreted, in conjunction with and vegetable juices falling with heading General Rule 3 (b) for the In-

JUDGMENT OF 26. 3. 1981 — CASE 114/80

The order of the Bundesgerichtshof was and made suitable for dispatch, any lodged at the Court Registry on 2 May remaining beer being drained off when 1980. the yeast is compressed. The moisture content thus lost is replaced by the Ritter company by mixing the yeast with In accordance with Article 20 of the natural lemon juice to which water has Protocol on the Statute of the Court of been added. The percentage of lemon Justice of the EEC written observations juice added to the yeast is 3.9%; the were submitted on 8 July 1980 by the yeast is then pasteurized at a temperature Commission of the European above 60° thus enabling it to be Communities, represented by Manfred preserved. The addition of natural lemon Beschel, a member of its Legal juice makes it possible, without having Department, and on 9 July 1980 by Dr recourse to chemical additives, to prevent Ritter GmbH, the plaintiff in the main the bursting or plasmolysis of the yeast action, represented by Fritz Modest, cells, so that they retain their natural Rechtsanwalt Hamburg. gas- and plasma-filled form, in which the vacuoles and the volutine granules may be seen clearly. The active substances On hearing the report of the Judge- Rapporteur and the views of the contained in the yeast cell are thus Advocate General the Court decided to preserved owing to the attainment of a open the oral procedure without any suitable p H ; in addition, as the fruit juice preparatory inquiry. contains ascorbic acid, it cleanses the cells detaching the yeast gum which may be adhering to them and the resinous By an order dated 16 September 1980, components of the hops which they may made pursuant to Article 95 (1) and (2) still contain. The finished product is of the Rules of Procedure, the Court whole yeast, free of bacteria, with decided to assign the case to the Second natural keeping qualities and containing Chamber. a minimum added amount of lemon juice. The lemon juice also tones down the natural flavour of the yeast, which the consumer often finds disagreeable. II — W r i t t e n o b s e r v a t i o n s sub- mitted to the Court Tariff classification of the disputed product

the essential components of the basic Chapter 22 such tonic preparations are product and their proportions being to be classified under the latter. altered substantially from the levels of such components which the product in It should be noted on that point that the question has in its natural state. product in dispute is not a tonic, and that in any event the Explanatory Notes The product manufactured and marketed concerning tonics are inaccurate; they by the plaintiff company is whole yeast, are not binding and are not matched by not merely within the meaning of the the tariff headings in question. Only term in food laws, but equally within the tonics such as Schweppes tonic water fall meaning of the law relating to the within heading 22.02 of the Common Common Customs Tariff, and it should Customs Tariff. be classified in tariff heading 21.06. (f) The replies to the questions put by (b) General Rule 3 (b) for the Interpret- the Bundesfinanzhof should be as ation of the Common Customs Tariff follows : Nomenclature, concerning goods which appear to be classifiable under two or (1) A product which is composed of more headings, does not apply in this brewer's yeast with the addition of instance: that rule would not enter into 3.9% natural lemon juice, without account unless the amount of natural the essential components of the lemon juice added were so great that it brewer's yeast itself being thereby was no longer possible to consider that modified, or the proportions thereof the finished product contained, even substantially modified, falls within approximately, the essential components heading 21.06, and not heading of the basic product, in this instance 22.02, of the Common Customs yeast, in proportions not differing sub- Tariff. stantially from the proportions of those components contained by the product in (2) Alternatively, if the Court does not question in its natural state. accept classification in heading 21.06: a product composed of (c) If the disputed product cannot be brewer's yeast, to which is added, classified in tariff heading 21.06 owing to apart from water, 3.9% natural the addition of 3.9% or lemon juice, it lemon juice, is to be considered as a should be considered as a food food preparation to be classified in preparation within the meaning of heading 21.07 of the Common heading 21.07. Customs Tariff.

(a) In the case of a liquid product, which may be drunk as it is and which is (b) The disputed product cannot be intended to be drunk, what must be classified in heading 21.06. decided in this case is whether a product having such characteristics must, in order to be considered as a beverage within the meaning of heading 22.02 of the Common Customs Tariff, have, in addition, always and necessarily the The addition of citrus-fruit juice and the purpose of quenching thirst. The answer manufacturing method adopted has to that question should be in the made of the yeast a new product having negative. its own characteristics and intended for a specific purpose: water and citrus-fruit juice have been added to the compressed brewer's yeast and the mixture obtained heated to a temperature in excess of 60° Subheading 22.09 C indicates that for preservation purposes. That product alcoholic drinks belong equally to the could not have been manufactured in its category of "beverages"; such beverages, final form without such additions and however, including rum, gin, whisky and without the heat treatment; moreover, its vodka, are certainly not intended to smell and taste would have made it quench thirst. Similarly, a whole range of unsuitable, or at least less suitable, for vegetable juices, such as celery juice or human consumption and it would not sauerkraut juice, are not intended to have been in the liquid, potable form quench thirst but fulfil other functions, essential for the purpose for which it is such as providing vitamins. Even if in intended. Such a product is already common usage the expression non- outside the scope of the wording of alcoholic "beverages" is taken to mean heading 21.06 which, according to primarily thirst-quenching liquids, that General Rule 1 for the Interpretation of does not exclude the possibility that the Common Customs Tariff, legally other "beverages" may exist. determines the classification. General Rules 2 (b) and 3 (b) cannot, consequently, be applied : they apply only when several headings come into consideration within the framework laid It is therefore logical that the test used in down by the wording of the heading in the Explanatory Notes on heading 21.07 question. The Explanatory Notes to the and those relating to headings 22.02 and Customs Cooperation Council 30.03 of the Common Customs Tariff is Nomenclature on General Rule 2 (b) whether or not a product intended for state expressly, moreover, that that rule human consumption may be drunk as it "does not, however, widen the heading is, irrespective of the quantity, frequency so as to cover goods which cannot be and purpose of its consumption. In that regarded, as required under Rule 1, as respect the Explanatory Notes are in answering the description in the conformity with the principle of legal heading...".

2 It appears from the file on the case that the plaintiff in the main action requested a binding customs tariff ruling from the revenue authorities for a product called "whole yeast" and described in the order making the reference in the following terms: "The product is composed of (inactive) brewer's yeast, water and 3.9% natural citrus-fruit juice. It is liquid and suitable for direct consumption as a beverage. According to the wording on the wrapping it serves as a food supplement, helps to maintain working capacity and gives the skin a healthy complexion. From one to three table- spoonfuls must be taken three times a day."

JUDGMENT OF 26. 3. 1981 — CASE 114/80

3 The revenue authorities are of the opinion that the product in question should be classified as a "beverage" under heading 22.02 because it is a product suitable for direct consumption as a beverage, regardless of its composition, mode of consumption and the purpose for which it is drunk. The plaintiff on the other hand contends that the product in question, the main ingredient of which is brewer's yeast, should be classified as a yeast under heading 21.06.

4 The Bundesfinanzhof considers that a decision depends on the interpretation of the word "beverages" in heading 22.02, according to whether that term is to be understood as including all liquids intended for human consumption, or only those products intended to quench thirst which the word is commonly used to denote. In the latter case a liquid such as that in question which is intended to be taken for health reasons should not be classified as a "beverage".

RITTER v OBERFINANZDIREKTION HAMBURG

7 In conformity with the structure of the Common Customs Tariff the expression " o t h e r . . . beverages" in heading 22.02 is to be understood as a generic concept embracing all liquids intended for human consumption, in so far as they are not included in any other specific classification.

8 The scope of that concept must be determined on the basis of criteria which are both objective and verifiable. It is not permissible, therefore, to make its scope dependent on purely subjective, variable factors such as the manner in which the product is taken or the purpose for which it is consumed, to quench thirst, for example, to improve health, or for some other purpose. Within the meaning of that heading therefore, "beverages" must be understood to signify any liquid suitable and intended for human consumption regardless of the quantity in which it is absorbed, or the special purposes for which various kinds of liquids may be consumed.

9 The classification of a product as a beverage within the meaning of heading 22.02 cannot, moreover, depend on the basic ingredients used. The distinguishing characteristic in the tariff heading in question is the fact that the products in question are liquids arid are intended for human consumption. Although the product in question is made basically from yeast, which falls under heading 21.06, the decisive characteristic as far as classi- fication in the tariff is concerned is its liquid state, chiefly obtained by adding water, and not the basic ingredient employed.

10 That reasoning is supported by the actual wording of the heading in question which, after referring to "beverages" in general, expressly excludes fruit and vegetable juices which are included in heading 20.07 in Chapter 20, covering "Preparations of vegetables, fruit or other parts of plants". That indicates that without that express exception the juices in question would be classified in the chapter on beverages, and not in that covering the relevant basic ingredients.

On those grounds,

T H E C O U R T (Second Chamber)

in answer to the questions referred to it by the Bundesfinanzhof by order dated 1 April 1980, hereby rules:

The concept of "other non-alcoholic beverages" in heading 22.02 of the Common Customs Tariff must be interpreted as including a product composed of brewer's yeast, water and 3.9 % natural citrus-fruit juice,

RITTER v OBERFINANZDIREKTION HAMBURG

put up in liquid form and potable, and intended to be taken several times daily in small quantities for the improvement of health.

1 — Translated from the German.