C-159/80

on the interpretation of Article 5 (1) of Regulation No 141/64 of the Council of 21 October 1964 on the rules applying to processed products derived from rice and other cereals (Journal Officiel 1964, p. 2666 1),

THE COURT (First Chamber)

composed of: T. Koopmans, President of Chamber, A. O'Keeffe and G. Bosco, Judges,

Advocate General: F. Capotorti Registrar: J. A. Pompe, Deputy Registrar

gives the following

JUDGMENT

June and 18 August 1965 authorization 102/100 (rolled grains) instead of for four refunds in respect of "sorghum 180/100 (flakes). flakes with an ash-content of 2 % or less by weight on the dry product". The Wünsche appealed against that decision authorized refunds were granted in the to the Hessisches Finanzgericht [Finance form of licences for the levy-free impor Court, Hesse]. It maintained that for a tation of 180 kg of sorghum for every processed cereal-based product to be 100 kg of sorghum flakes exported. considered flaked it was sufficient at the time if the kernels had been steamed and Within the periods allowed it, Wünsche rolled out. In addition to that, the goods exported several shipments of a product in question had undergone the first which it described as "sorghum flakes stages of a process for stripping the with an ash-content of 2 % or less by kernels of their outer cover.

Sorghum falls under "Other cereals". The Bundesanstalt für landwirtschaft- liche Marktordnung [Federal Office for the Organization of Agricultural Article 5 of Regulation No 141/64 of the Markets, hereinafter referred to as "the Council of 21 October 1964 on the rules Federal Office"], the defendant in the applying to processed products derived main action, at first granted the from rice and other cereals (Journal application for a refund. However, the Officiel 1964, p. 2666 1) employs the Zolltechnische Prüfungs- und Lehranstalt descriptions of goods in Regulation N o [Customs Laboratory and Training 19 and introduces an additional College], Hamburg, found inter alia, that distinction based on the ash-content, as in individual export consignments the follows : brownish outer husk of the sorghum kernels was still wholly intact and no "Article 5 traces of polishing could be found and that the goods were therefore not hulled, (1) In respect of certain products under and the defendant therefore decided on Common Customs Tariff N o ex 11.02, 8 December 1976 to revoke its earlier namely, decision granting the refund, stating as the reason that the product exported was Groats, meal: worked cereal grains, not flakes, but merely rolled grains. On pearled, crushed, rolled (including that ground it accorded a refund on the basis of a processing coefficient of 1 — Translator's note: There is no authentic English version of this regulation.

A. For groats and meal : "(a) Do 'flakes of sorghum' [Flocken von Sorghum] (Article 1, Point (d), (a) . . . of Regulation (EEC) No 19 in conjunction with the annex thereto) (b) . . . of the type referred to in Article 5 (1) Β (b) of Regulation (EEC) No (c) . . . 141/64 ([having an ash-content of] 2% or less by weight on the dry (d) . . . product) differ from sorghum flakes [Sorghumflocken] of the type re­ ferred to in Article 5 (1) B (c) of B. For flakes: Regulation (EEC) No 141/64 merely by their ash-content or (a) of barley or oats : should flaked sorghum [having an ash content of] 2% or less by weight also be hulled? (b) of other cereals : (b) In the context of Question (a) was — 180 kg where the ash-content it possible for the Explanatory is 2% or less by weight on the Notes to the Customs Cooperation dry product; Council Nomenclature, which made the character of 'flaked' dependent (c) — 102 kg in other cases; on hulling (Explanatory Note No 62 to tariff heading No 11.02), to C. For hulled cereals : be used as an aid to interpretation in relation to exports in the year 1965?

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The last question that the floury kernel was 'gener was answered to the effect that after ali/ visible? Did 'generally' mean: hulling "generally the floury kernel" for the most part (more than 50%) should be "visible". If the adverb or almost entirely (more than "generally" is to be interpreted as 75%)? meaning that, at least in the case of "naked" cereal such as wheat or (d) (By way of a complement to the sorghum, in order for it to be considered above or — if Questions (a) to (c) as hulled the pericarp must for the most are answered in the negative — part (more than 50%), if not almost

15 of Regulation (EEC) N o 141/64, according to which refunds The court was in doubt as to whether — for processed products were to be at least as regards the year in which the calculated on the basis of the levy goods were exported (1965) — the use applicable in respect of the basic products required for their manu solely of the Explanatory Notes to facture?" the Customs Cooperation Council Nomenclature with regard to the EEC regulations and the national provisions The order making the reference was adopted on the basis of them, which lodged at the Court Registry on 9 July were applicable at the time with respect 1980. to the granting of refunds, could still be In the grounds of the order making the regarded as using them as "an aid to reference the Finanzgericht relied on the interpretation". In the opinion of the following considerations : court there can be no question of an aid to interpretation unless the wording of If as the basis of its decision in respect of the provisions which apply is open to exports in 1965 the court making the different constructions; that is not the reference must follow the judgment of case where an attempt is being made to the Court of Justice of the European restrict the wording of such provisions. Communities of 8 April 1976 in Case According to the General Rules for the 106/75, the complaint must be dismissed: Interpretation of the Common Customs The reason is that in that decision Tariff Nomenclature, tariff headings reference was made by the Court to the or subheadings must be construed Explanatory Notes to the Customs specifically in accordance with, in the Cooperation Council Nomenclature in first place, the terms of the headings, relation to flaked cereal in general, then the Section or Chapter Notes and, considering that the notes constituted finally, according to the General Rules "an aid to interpretation" of the themselves. If, therefore, Article 1 (d)

and Article 20 (2) of Regulation N o 19 made between edible flakes and flakes of the Council in conjunction with the for animal feed. The fact is that even annex to that regulation relied on the highly nutritious wheat flakes or oat Tariff, in this case subheading 11.02, for flakes destined for human consumption the grant of refunds as well, whilst for are manufactured from the whole grain, the levy (and mutatis mutandis the only the fine hairs adhering to the refund) Article 5 of Regulation No pericarp being removed in the case of 141/64 of the Council merely retained oats. Moreover, according to the experts' for the concept of flaked grain of sub- report all that is necessary to produce heading 11.02 a distinction based on "flakes" is that the grains have been whether there was more or less ash in subjected to heat-treatment and rolled the dry product, then there was no out. The Explanatory Notes of the longer any "heading which provides the Customs Cooperation Council, however, most specific description" within the consider hulling to be necessary, heat- meaning of General Rule 3 (a) for the treatment being merely regarded as Interpretation of the Nomenclature of harmless. In view of the prevailing the Common Customs Tariff. In any opinion in the national trade the German case even the ordinary meaning of the court considered that it was bound to words shows that "flakes" do not always look to the Explanatory Notes in case have to be produced from hulled cereal. they reflected the trade definition Were it otherwise, it would not have accepted in the other EEC Member been sufficient for Regulation N o States. The fact is that the relevant trade 141/64 to refer to the ash-content alone circles within the Federal Republic of as the criterion; the draftsmen ought to Germany were not aware of the Notes as have added (flakes) "of hulled grain". such; in 1965, they existed only in The fact that the requirement of hulling English and French. in the case of sorghum could not be established merely by limiting the ash- content may be seen in the experts' report, according to which unhulled sorghum has an ash-content of between 4. Written observations were submitted 1.48% and 2.77% on the dry weight, in accordance with Article 20 of the giving an average of 1.94%. According Protocol on the Statute of the Court of to that report the hulling reduces the ash- Justice of the EEC by Wünsche, the content by only 0.03%. If, in addition, plaintiff in the main action, represented 2 5 % of the germ is removed from the by F. Modest of the Hamburg Bar, and grain the ash-content would be reduced by the Federal Office, represented by by 0.27%. Still according to the report, A. Stockburger of the Frankfurt Bar. goods with a high ash-content, properly hulled, may have more than 2 % ash- content by weight on the dry product, On hearing the report of the Judge- whereas goods of good or even average Rapporteur and the views of the quality which have not been hulled may Advocate General, the Court decided to have an ash-content lower than that open the oral procedure without any percentage. preparatory inquiry.

It may also be seen from those rules that Wünsche commences with an explanation as far as the authors of the regulations of the physical structure of cereals: each are concerned, flakes of barley may have variety has an outer skin ("hull" or an ash-content greater than 2%. "bract"; "Hülse" or "Spelze" in However, the experts' report reveals German) and an inner skin known as the that, subject to a few exceptions, flakes "pericarp". Unlike the outer skin (herei- with an ash-content higher than 2 % are nafter referred to as "the hull"), the made from cereals of which only the hull pericarp contains important nutritive has been stripped or removed by hulling. substances which lie in the layer of In order to determine whether a type aleuron cells. For that reason it would be of flake falls within the sphere of pointless to remove the nutritious parts application of the rules it is therefore not of the grain and then make flakes out of necessary to know whether parts of the what remains. Sorghum belongs to the pericarp have been removed or not. category of cereals known as "naked" cereals, which may be hulled merely by threshing or winnowing. Note (3) in the Explanatory Notes to the Customs Cooperation Council Nomenclature on tariff subheading 11.02 refers to two distinct products made Wünsche refers to two experts' reports from cereals: which show that sorghum flakes are made from unhulled sorghum and that when sorghum is processed into flakes (a) in the first place, grains which have the effect is not the same as on other had their pericarp wholly or partially cereals. removed by hulling or some other process, and

grain. Here the Explanatory Notes draw the term "husk" [pellicule] is used to attention to the Explanatory Note on mean both the outer skin (the hull or tariff subheading 10.03, which states that bract) and the inner skin (the pericarp). barley is excluded from that tariff sub- heading when the hulls have been removed by a milling process which sometimes also removes part of the From that it concludes that the judgment pericarp. This latter state thus concerns of 8 April 1976 (Case 106/75 Merkur ν only barley and oats, which are marketed Hauptzollamt Hamburg-Jonas [1976] as so-called "bracteiferous" cereals and ECR 531) must be so understood that which do not fall under tariff sub- paragraph 5 thereof — which states that headings 10.03 and 10.04 unless they barley grains subjected to hulling lose have retained their bracts. part of their husk — must mean that the grains lose to a large extent, that is to say most of, their husk or bract.

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Accordingly, Wünsche suggests that the As to the fourth question, Wünsche Court reply to the second question in the suggests that the reply, in so far as one is following manner: required, should be as follows:

JUDGMENT OF 16. 7. 1981 — CASE 159/80

applicable not only to barley but to all Regulation N o 141/64 of an express flakes made from cereal grains. The provision to the effect that flakes must be Bundesfinanzhof [Federal Finance manufactured from hulled cereal would Court] has declared its support for that certainly have been helpful. Evidently, ruling by the Court. In its judgment of however, the Council thought such a 17 October 1978 (No VII R 119/75) the clarification unnecessary, considering Bundesfinanzhof ruled out the possibility that the term "flakes" had been taken of granting a refund for a product from the provisions in the Common which, although described as "sorghum Customs Tariff and that it should flakes", had not undergone the hulling therefore be interpreted in accordance process required under the Explanatory with the provisions of that tariff. Notes on tariff subheading 11.02.

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3. In the case of sorghum, therefore, The Commission said that in its view the hulling means that the grains must question was a general one on the have had the pericarp, including the interpretation of the Common Customs aleuron cells, removed in such a Tariff. The Court had stated that the manner as to reveal the greater part, Explanatory Notes might be used as an that is to say more than 7 5 % , of the aid to interpretation. floury kernel".

Second, Case 106/75 concerned not III — Oral procedure "naked" cereals but only cereals of the bracteiferous variety.

Oral argument was presented at the sitting on 26 March 1981 by Wünsche, The Commission observed first that the the plaintiff in the main action, wordings of subheading 11.02 of the represented by F. Modest; by the Bun- Common Customs Tariff in force at the desanstalt für landwirtschaftliche Markt- time of the facts in question, of the ordnung [Federal Office for the Organ- Nomenclature of the Customs Cooper- ization of Agricultural Markets], the ation Council and of the Explanatory defendant in the main action, Notes to the subheading were identical represented by A. Stockburger; and by to the texts on which the Court ruled in the Commission of the European Case 106/75. Therefore the interpret- Communities, represented by M. Beschel ation which was given in the judgment in of the Commission's Legal Department, Case 106/75 must also apply in this case. acting as Agent.

JUDGMENT OF 16. 7. 1981 — CASE 159/80

from which the pericarp has been cereal of the bracteiferous variety and partially removed or, in the case of naked cereal. bracteiferous cereals, grain from which In conclusion the Commission suggested the bracts have been removed inasmuch that the Court's reply to the questions as the latter continue to adhere to the should be as follows: kernel. "The term 'flakes of sorghum' within the A distinction was therefore to be made meaning of Article 5 (1) B (b) of Regu- between naked cereals, from which the lation (EEC) No 141/64 of the Council pericarp was removed, and bracteiferous implies that the goods have been cereals, from which both the bracts and subjected to a milling process whereby part of the pericarp were removed. The more than 50% of the pericarp has relevant regulations had taken account clearly been removed". of such technical details by fixing different rates of refund, for the amount The Advocate General delivered his of working involved differed as between opinion at the sitting on 4 June 1981.

Decision

1 By order of 25 June 1980 which was received at the Court on 9 July 1980 the Hessisches Finanzgericht [Finance Court, Hesse] referred to the Court for a preliminary ruling under Article 177 of the EEC Treaty a number of questions concerning the interpretation of Regulation N o 19 of the Council of 4 April 1962 on the progressive establishment of a common organization of the markets in cereals (Journal Officiel 1962, p. 933 1) and Regulation N o 141/64 of the Council of 21 October 1964 on the rules applying to processed products derived from rice and other cereals (Journal Officiel 1964, p. 2666 l).

5 In order to be able to resolve the problems thus raised as to the interpret­ ation of Community rules the Finanzgericht referred the following four questions to the Court of Justice :

"(a) Do 'flakes of sorghum' [Flocken von Sorghum] (Article 1, Point (d), of Regulation (EEC) No 19 in conjunction with the annex thereto) of the type referred to in Article 5 (1) Β (b) of Regulation (EEC) No 141/64 ([having an ash-content of] 2% or less by weight on the dry product) differ from sorghum flakes [Sorghumflocken] of the type referred to in Article 5 (1) Β (c) of Regulation (EEC) No 141/64 merely by their ash- content or should flaked sorghum [having an ash-content of] 2% or less by weight also be hulled?

(b) In the context of Question (a) was it possible for the Explanatory Notes to the Customs Cooperation Council Nomenclature, which made the character of 'flaked' dependent on hulling (Explanatory Note No 62 to tariff heading No 11.02), to be used as an aid to interpretation in relation to exports in the year 1965?

(c) Did the term 'hulling' as used in Note 2 to tariff heading No 11.02 mean, even in relation to sorghum which is a so-called naked cereal [Nacktgetreide] that the pericarp including the aleuron cells should have been removed in such a way that the floury kernel was 'generally'

JUDGMENT OF 16. 7. 1981 — CASE 159/80

visible? Did 'generally' mean: for the most part (more than 50%) or almost entirely (more than 75%)?

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9 The national court is uncertain whether to follow those decisions for three reasons.

10 In the first place, it notes in the grounds of its order that no interpretation is required if the terms of a piece of legislation are sufficiently clear and precise. Article 5 (1) Β (b) does not make the application of a processing coefficient of 180/100 to flakes of cereals other than barley and oats subject to any conditions other than that their ash-content must not exceed 2%.

1 1 "Whilst the provision in question applies to flakes of sorghum having an ash- content of not more than 2% by weight, it contains no definition of the concept "flakes". That concept may be defined only by referring to the words used both in the Common Customs Tariff and in the annex to Regu­ lation No 19, as well as in Article 5 of Regulation No 141/64, to describe other products processed from cereals, such as kibbled, rolled, pearled or hulled cereal.

12 In the second place, the Finanzgericht has reservations about relying on the Explanatory Notes to the Customs Cooperation Council Nomenclature which were not known at the time to those concerned of the Federal Republic of Germany and which, moreover, were available only in English and French.

1 3 However, it is permissible for the national court to have recourse in inter­ preting the wording of provisions of Community law to commentaries orig­ inating within the Customs Cooperation Council, whose work has constituted an important factor in establishing and implementing the Common Customs Tariff. It must be noted, furthermore, that the Explana­ tory Notes had been published at the time of the facts in question and that they were available to those concerned.

17 It follows from the foregoing that the term "flakes" as used in Article 5 (1) Β (b) of Regulation No 141/64 is to be understood as implying that the product thus designated is made from hulled grain.

18 The first question and the first limb of the third question ask in effect if that applies also in the case of sorghum flakes, sorghum being a so-called "naked" cereal from which the bracts may be removed merely by threshing or winnowing, which is not so in the case of bracteiferous cereals, the bracts of which adhere strongly to the grain even after threshing or winnowing.

19 The process of hulling is explained in Explanatory Note (3) on subheading 11.02 of the Customs Cooperation Council Nomenclature, according to

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which hulled grain must have had the pericarp wholly or partially removed. Although the Note makes special reference to the bracteiferous varieties of barley it does not draw a distinction between naked cereals and bracteiferous cereals.

20 The exporter, who is the plaintiff in the main action, has contended that such an interpretation is not acceptable in the case of sorghum because removing the pericarp would be detrimental to the nutritive value of the product.

are produced from hulled sorghum grains. The grain is hulled when part or the whole of the pericarp is removed so that in most cases the floury kernel becomes partially visible on the outside of the grain.

26 That interpretation is borne out, moreover, by the general logic of Article 5 of Regulation No 141/64. There can be no reason for applying a processing coefficient of 180/100, a rate justified by the amount of the basic product lost in the course of processing it into flakes, to sorghum .grain which has merely been subjected to steam-treatment and rolling.

27 In these circumstances the fourth question put by the national court is redundant.

Costs

28 The costs incurred by the Commission of the European Communities, which submitted observations to the Court, are not recoverable. As this case is, in so far as the parties to the main proceedings 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,

Delivered in open court in Luxembourg on 16 July 1981.

A. Van Houtte T. Koopmans Registrar President of the First Chamber

OPINION OF MR ADVOCATE GENERAL CAPOTORTI DELIVERED ON 4 JUNE 1981 1

Mr President, which operates in the Federal Republic Members of the Court, of Germany and deals in cereals, exported sorghum flakes and obtained 1. The main purpose of this reference refunds in the form of licences for the for a preliminary ruling is to obtain an duty-free importation of 180 kg of interpretation or the concept of flaked sorghum for every 100 kg of flakes. The cereal, other than barley and oats, as Federal Office for the Organization used in the Community rules under the of Agricultural Markets [Bundesanstalt system of levies and refunds for products für landwirtschaftliche Marktordnung] processed from cereals and rice (Article 5 granted the refunds but subsequently (1) Β (b) of Regulation No 141/64 of the revoked them by decision of 8 December Council of 21 October 1964, Journal 1966 on the ground that the goods Officiel 1964, p. 2666 2)· exported were not flakes but rolled cereal; and it restricted its authorization I shall briefly summarize the facts. to the importation of sorghum free of Between 21 June and 18 August 1964 levy in the amount of 102 kg for every Ludwig Wünsche & Co, a company 100 kg of rolled cereal. Wünsche

1 — Translated from the Iulian. 2 — Translator's note: There is no authentic English text of this regulation.