C-50/81

J U D G M E N T OF T H E C O U R T (FIRST C H A M B E R ) 27 MAY 1982 '

Paul Kaders GmbH v Hauptzollamt Hamburg-Ericus (reference for a preliminary ruling from the Bundesfinanzhof) (Common Customs Tariff — Vegetable extracts and resinoids)

Case 50/81

Common Customs Tariff— Tariff headings — "Essential oils and resinoids" within the meaning of heading 33.01 — Piperine — Exclusion

"Essential oils and resinoids" of products character of the product, do not fall which contain, in addition to odoriferous within heading 33.01 of the Common substances, a far higher proportion of Customs Tariff. In particular, a product other plant substances, such as such as pipeline is not among the chlorophyll, tannins, bitter principles or odoriferous substances which fall within other flavouring substances, carbo- the said tariff heading, since its essential hvd rates and other extractive matter characteristics are determined largely by which help to determine the typical taste and not by smell.

InCase5C/81

on the interpretation of tariff heading 13.03 (vegetable extracts) and tariff subheading 33.01 C (resinoids) of the Common Customs Tariff laid down in Council Regulation N o 2723/76 of 8 November 1976 (Official Journal 1976, L 314),

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

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

Advocate General: P. VerLoren van Themaat Registrar: H . A. Rühi, Principal Administrator

gives the following

JUDGMENT

tariff subheading 33.01 C and made a teristics of resinoids or oleoresins. It retroactive levy of customs duty. found that it indisputably contained 20% Tariff heading 13.03 covers vegetable essential oil of pepper and other sub- saps and extracts apart from the products stances which could be extracted from listed in Notes (a) to (ij) to Chapter 13. pepper, especially piperine. Under Note (h) to that Chapter, a vegetable extract falls under tariff In its appeal on a point of law to the heading 33.01, not tariff heading 13.03, Bundesfinanzhof, the plaintiff claimed if it constitutes essential oils, concretes, that the product was a vegetable extract absolutes and resinoids. and that unless it could be considered as The plaintiff's objection and subsequent essential oil or resinoid it had to be action before the Finanzgericht [Finance classified under tariff heading 13.03. Court] Hamburg were unsuccessful. According to the plaintiff, essential oils under tariff heading 33.01 were products The Finanzgericht took the view that in which the presence of fragrant sub- the imported extract of pepper was stances constituted an essential charac- indisputably a vegetable extract which, teristic. The essential oils contained in however, according to Note (h) to the imported extract of pepper did not Chapter 13 of the Common Customs make it a resinoid, since it was not Tariff did not fall within tariff heading extracted on account of its negligible 13.03, if it displayed the characteristics odoriferous constituents (essential oils) of resinoids under tariff heading 33.01. or used for that reason as a fragrant According to the Explanatory Notes to substance in the perfume industry.

Resinoids were tariff headings 13.03 and 33.01, the often called oleoresins. In the Annex to decisive factor for the purpose of tariff the Explanatory Notes to Chapter 33 of classification was not from which plant the Customs Co-operation Council the vegetable extract was obtained, but Nomenclature, the list of resinoids also only how great a proportion of included inter alia resinoids of pepper. odoriferous substances (essential oils) were contained therein. As a result, it In accordance with those considerations, was not significant that in the Annex to resinoids or oleoresins were generally the Explanatory Notes to the Customs described in the literature on the subject Co-operation Council Nomenclature as vegetable extracts which were used as (Chapter 33) ginger was also mentioned, spices in the manufacture of food-stuffs. since it was indisputable that oil of In the Federal Republic of Germany, pepper was also extracted from the they were also known as extracts of ginger root and used as a fragrant spices and were used for the same substance in the perfume industry. purpose as natural spices, but brought However, oil of ginger had nothing in out the fragrance of the extracted common with the extract of pepper substance more fully. which contained all the typical The Finanzgericht considered that the constituent substances of pepper and was imponed product exhibited the charac- used as a spice.

The plaintiff also stated that the Expla- and might therefore be applied retro- natory Notes to the Customs Tariff, to actively. which the Finanzgericht referred, were not adopted until 4 April 1978. At the The Bundesfinanzhof considers that the time of the import in question, in May replv to the question concerning the 1977, they did not exist. As a result, it lawfulness of the contested notice of was impossible for the Finanzgericht to assessment depends on the interpretation refer to them retroactively in order to of the concepts of "vegetable extracts" interpret the Customs Tariff. That also and "resinoids" contained in the applied to the Explanatory Notes t J the Customs Tariff. Common Customs Tariff on tariff By an order of 10 February 1981, the

Is pipendine, resins, cellulose etc.) and was a product described as "Extract of black remarkable in so far as it contained in a pepper decolorized" [sic] consisting of highly concentrated form all the fragrant 16 or 20 °/o essential oils, 40 or 46 % constituents of the natural spice, whose piperine and 38 or 40 % other extracts fragrance it reproduced more fully than to be regarded as vegetable extract could the oil present in the raw material. coming within tariff heading 13.03 or, By its method of extraction, its proper- having regard to the amounts of ties and its use, such a product was char- odoriferous substances or fragrant acterized as a resinoid. constituents as resinoid falling within According to the Hauptzollami, Note tariff subheading 33.01 C, even though (h) to Chapter 13 expressly provided that as vegetable extract it contains all the tariff heading 13.C3 did not apply to typical contents and constituent sub- resinoids, which were to be classified stances of the fruit of the pepper plant? under tariff heading 33.01. In addition to the essential oils, does for example piperine also belong to the It followed from the French and English odoriferous substances or fragrant versions of the Explanatory Notes to constituents?" the Customs Co-operation Council Nomenclature on tariff heading 13.03 The order for reference was lodged at that the character of resinoids was the Court Registry on 9 March 1981. determined by their fragrant (that is. as regards smell and taste) substances. The In its order for reference, the Bun- proportion of odoriferous substances desfinanzhof takes the view that it is contained in an extract was not decisive. impossible to classify the imponed product as essential oil because, in In the Hauptzollamt's opinion, the addition to oil of pepper as an essential Finanzgericht had made no error with oil, it contains other constituent sub- regard to the content, meaning and stances of pepper. Classification of the scope of the Explanatory Notes to the product in question under tariff heading Customs Tariff of the European 33.CI is therefore possible only if for the Communities on tariff headmp 33.01. purpose of the tariff it may be They were intended only as clarification considered to be a resinoid.

KADERS v HAUPTZOUAMT HAMBURG-ERICUS

essential oils. Nevertheless, it cannot be inferred from the wording of tariff headings 13.03 and 33.01 that vegetable The plaintiffs opinion that vegetable extracts must necessarily always be extracts fall under tariff heading 13.03 in classified as resinoids under tariff so far as thev contain all the typical heading 33.01 where, as in the case of constituents of the original product and may be considered to be essential oils the extract of pepper in question, they and resinoids only if they contain solely have a 16 % to 20 °/o content of essential the truly odoriferous constituents may be

13.03) and, on the other, valerian and The Bundesfinanzhof considers that the garlic oils or resinoids are listed in the Explanatory Notes to the Customs Co- Annex to the Explanatory Notes to operation Council Nomenclature and the Customs Co-operation Council those to the Customs Tariff of the Nomenclature regarding Chapter 33 as European Communities are not capable falling under tariff heading 33.01. of solving the existing problems of interpretation. The Explanatory Notes to the Customs Tariff of the European Communities on According to the Explanatory Notes to tariff subheading 33.01 C, adopted in the Customs Co-operation' Council June 1978, that is to say after the time of Nomenclature regarding tariff heading importation, which is determinant, also 13.03, (Subheading (A), note (k) on fail to remove the existing doubts as to excluded products), which were in force the classification of extract of pepper. at the time of importation, resinoids fall According to the notes, resinoids in accordance with Note (h) on Chapter extracted from certain parts of plants are 13 and the wording of tariff heading remarkable in that they reproduce the 33.01 not under tariff heading 13.03 but fragrance of the extracted substances under tariff heading 33.01. According to more fully than does the essential oil the Explanatory Notes, resinoids differ alone which is generally present in the from vegetable extracts under tariff raw material.

JUDGMENT OF 27. 5. 1982 — CASE 50/81

point. Furthermore, they establish a vegetable extracts described as resinoids connection between the fragrance and under tariff subheading 33.Cl C of the the essentia! oil contained in the raw Common Customs Tariff and how they material, which leads to the conclusion should be delimited in relation to other that in the main only essential oils and vegetable extracts under tariff heading not other flavouring substances such as 13.03. piperine, for example, are to be considered as odoriferous substances indicative of resinoids. In that regard, reference should first be made to tariff heading 13.03, which includes all vegetable saps and extracts Finally, the Bundesfinanzhof considers except for the products listed in Notes that there is also doubt whether the (a) to (ij) to Chapter 13 which are Explanatory Notes to the Customs Tariff classified under a more specific tariff of the European Communities should be heading. Those goods may be divided on applied retroactively, since they were not a systematic basis into four groups, published until after the time of impor- group (d) of which covers vegetable tation. extracts containing certain constituents

by the Commission of the European Chapter 33, "Essential oils and resinoids; Communities, represented by P. perfumery, cosmetic or toilet prep- Karpenstein, Legal Adviser, acting as arations", shows that the Customs Tariff Agent, assisted by Rolf Streckmann, tax equates essential oils and resinoids and consultant, Frankfurt am Main. that it classifies them among perfumery, cosmetic or toilet preparations. Upon hearing the report of the Judge- Rapporteur and the views of the Advocate General, the Court decided to It is clear from definitions to be found in open the oral procedure without any dictionaries that resinoids are obtained preparatory enquiry. By order of from odoriferous resins and balsams and 26 October 1981, the Court decided to are used as fragram and odoriferous assign the case to the First Chamber. The substances in the perfume and soap parties and the Commission were industry for the manufacture of per- requested to provide further information fumen·, toilet and cosmetic preparations. on the practice in the various Member The same is true of essential oils States in relation to the tariff classi- extracted from various plants by reason fication of the product concerned. of their odoriferous nature, which are

chiefly used as scented products in the precisely because of its odoriferous sub- soap, perfume and cosmetic industry. stances, and that in the process its other constituents should be removed in whole Essential oils and resinoids thus share an or in pan and that it should be used as a essential characteristic in so far as they fragrant or scenting substance. contain wholly or mainly odoriferous constituents (essential oils) of the As a result, according to the plaintiff, the original product, they are extracted for extract of pepper which it imported is that reason and are used as scented not a resinoid under tariff subheading products, in particular in the perfumery 33.01 C, because it was not extracted by and soap industry. As a result, they are reason of its odoriferous constituent different both in their composition and elements and also because it is not used the use to which they are put from all as a scenting product in the perfumen' the other vegetable extracts under tariff industry by reason of the tvpical heading 13.03, which do not contain constituents of its fragrance (essential wholly or mainly odoriferous constitu- oils). ents of plants, which are not extracted by reason of the existence of the latter and The imported extract of pepper is which are not used as odoriferous characterized far more by its other

Indeed, among resinoids. That shows that even Notes (g) and (h) on Chapter 13 contain balsams characterized by their odor- only an exception for vegetable extracts iferous substances are not classified characterized by their dveing, tanning among resinoids under tariff subheading and odoriferous substances and used 33.01 C because, in addition to accordingly. odoriferous constituents, thev also contain all the other constituem elements The plaintiff contends that it is clear and because resinoids differ from from the Explanatory Notes to the vegetable extracts under Chapter 13 in so Customs Co-operation Council No- far as, in essence, they contain onlv menclature that in order to determine odoriferous substances and not in whether a vegetable extract should be addition the other constituents of the classified under tariff heading 13.03 or raw material. under tariff heading 33.01, only the proportion of odoriferous constituents The plaintiff states that as regards the (essential oils) of the vegetable extract classification of a vegetable extract as a is determinant. If. in addition to resinoid under tariff subheading 33.01 C, the common odoriferous constituents it is not essential that in addition to us (essential oils), it contains a far higher other constituent elements it should also proportion of other plant substances, the contain at least the odoriferous sub- vegetable extract concerned should be stances typical of its fragrance (essential classified under tariff heading 13.03.

JUDGMENT OF 27. 5. 1982 — CASE 50/81

That shows that and essential oils and treats them equally the concepu of "fragrance" and from the point of view of tariff classi- "perfume" appearing in the Explanatory fication, regardless of the differences Notes to the Customs Tariff of the which exist between them in an European Communities on tariff sub- individual case. sheadings 33.01 B and C have the same meaning and refer to the general The Explanatory Notes to the Common impression of essential oil or resinoid Customs Tariff on tariff subheading provided by the smell. 33.01 C describe resinoids as follows:

raw material. Resinoids intended for the Chemistry Dictionary: food industry are also often called oleoresins". "Ambiguous concept which is used to refer to balsams on the one hand and The decisive criterion characterizing a concentrated extracts of spices on the resinoid is thus the fact that it other . . . " . reproduces the fragrance more fully than the essential oils contained in the raw In English, it is in general customary to material are generally able to do. The describe extracts of spices as oieoresins point of reterence which makes it whereas in German the use of the word possible to say that the fragrance is "extract" remains prevalent to describe reproduced more completelv is spices obtained from vepeiable extracts constituted by the essential oils of the However, apan from that, the English raw material which in their turn customs authorities regard extraits ot determine the odoriferous nature of the spices (usuallv called "oleoresins" in extract, as is shown bv the definition of English) as vegetable extracts falling essential oils in me Explanatory Notes to within tariff heading 13.C3 and not as the Customs Tariff of the European resinoids.

That shows that neither the name of The Commission observes that the Bun- oleoresin given by the American manu- desfinanzhofs first question concerns the facturer to the extract of pepper delimitation of tariff heading 13.03 in imponed by the plaintiff nor the use of relation to tariff subheading 33.01 C and the concept of oleoresin in the Explana- raises a problem of the interpretation tory Notes to the Customs Tariff of the of secondary legislation.

follows: In the Commission's view the third question asks whether the odoriferous "1. Tariff heading 13.03 covers all substances of an extract, such as vegetable extracts which are piperine, may also be taken into obtained by means of solvents and consideration to justify classification of contain all the typical plant sub- the extract as resinoid. stances (constituents). Seen in that way, the questions submitted Tariff subheading 33.01 C covers concern first the delimitation of tariff vegetable extracts which are heading 13.03 (vegetable extracts) and extracted by reason of their tariff subheading 33.01 C (resinoids) of odoriferous substances and used as the Common Customs Tariff.

pepper plant. For that reason it Notes and the Explanatory Notes to should be classified as a vegetable the Customs Co-operation Council extract falling within tariff heading Nomenclature and the Classification 13.C3, regardless of the fact that Opinions thereon are only explanatory among its natural constituent or clarificatory and cannot amend the elements there are also odoriferous provisions of the Common Customs substances (essential oils). Tariff itself. Therefore the Commission considers that the Notes in question are 3.

JUDGMENT OF 27. 5. 1982 — CASE 5=/81

apply to a scries of vegetable saps and jointly and simultaneously. That is extracts, which are to be classified under clearly demonstrated by the well-known other headings. The essential oils and apple-onion experiment: no difference in resinoids are to be classified under uste is perceptible if the sense of smell is subheading 33.01 C. Other products neutralized by blocking the nostrils." classified under Chapter 33 are distinguished from vegetable extracts Consequently odoriferous and fragrant classified under heading 13.03 by a substances cannot be clearly separated, pleasant smell or taste and are used as particularly because a large number of fragrant substances in the perfume odoriferous substances are also fragrant industry or as flavouring substances in substances and vice versa. The two sub- the food industry or constitute finished stances combined, but equally each of products in themselves. All those them separately, are described as the products are specifically characterized by aroma of a substance. The words the quality of their smell or uste, in "odoriferous", "pleasant-tasting" and short by their aroma. Under the scheme "fragrant" are virtually synonymous in of the Customs Tariff itself, fragrant raw German, English and French. materials are referred to in the first three tariff headings of Chapter 33, whereas The Common Customs Tariff itself does mixtures and basic substances intended not make a clear distinction between for certain industries are cited in the those concepts, because that would be third tariff heading and finished products impossible. That is shown by the in the two final tariff headings. wording of tariff heading 33.04 of the Common Customs Tariff, where it is a The Commission gives certain matter of odoriferous or fragrant sub- physiological details on human taste and stances ' in relation to the perfumery and smell. food industries.

The olfactory cells are to be found in the The Explanatory Notes to the Customs back nasal cavity. The nose is connected Co-operation Council Nomenclature on to the buccal cavity through the naso- tariff heading 13.03 provide that essential pharyngeal cavity. When one chews or oils and resinoids differ from the drinks, fragrant substances reach the vegetable extract covered by tariff olfactory cells in the course of breathing heading 13.C3 "in that they are through the naso-pharyngeal cavity and essentially composed of odoriferous sub- produce an olfactory sensation which stances." combines with the gustative sensation and is absorbed by the latter. All The Commission considers that odor- gustative sensations, except the tour pure iferous constituents and "odoriferous sensations referred to above, are mixed substances" are svnonymous. The perceptions of smell and taste. Much is Common Customs Tariff again eauates thought to be tasted when in fact it is odoriferous substances with fragrant smelled. but the two perceptions cannot I Tfam.jir: s n.rr trr Fncinr »rriir- .'· me writ; be separated since they are produced rrju.ni: fcirr, .»n.\ : "%?ii¿ttirr¿u\ >uot'.¿n.:r,"

KADERS v HAĽPTZOLLAMT RUIBURG-ERICUS

substances. It follows from that subheading 33.01 C of the Common "odoriferous" is synonymous with Customs Tariff. "fragrant" for the purpose of the Customs Tariff. The Commission considers that, in reserving the word The Commission suggests that the "odoriferous" to the sense of smell and questions submitted to the Coun for a refusing to attribute it also to the sense preliminary ruling should be answered as follows : of taste, the plaintiff is mistaken.

According to the well-established At the sitting on 17 December 1981 case-law of the Court, the objective oral argument was presented bv H. qualities of products, their objective Heemann. of Messrs Modest, Rechts­ characteristics and properties (judgment anwälte, Hamburg, for the plaintiff in of i : December 1975 in Case 53/73, the main action, and P. Karpensiein, Belgium v V'andertaeien and Maes, [1975] Legal Adviser, acting as Agent, assisted ECR 1647) are the decisive criteria bv H. Streckmann, tax consultant of for iheir customs classification. The Franktun am Main, tor the Commission characteristic of resinoids consists in of the European Communities. their fragrance Consequently, vegetable extracts of pans of plants or fruits, characterized bv their properties of The Advocate General delivered his flavour and smell, must be classified as opinion at the sitting on 18 February resinoid within the meaning of tariff 19S:

JUDGMENT OF 27. 5. 1982 — CASE 50/81

Decision

, By an order of 10 February 1981, which was received at the Court Registry on 9 March 1981, the Bundesfinanzhof [Federal Finance Court] referred to the Court for a preliminary ruling under Article 177 of the EEC Treaty a number of questions on the interpretation of heading 13.03 (vegetable extracts) and subheading 33.01 C (resinoids) of the Common Customs Tantt.

2 In May 1977 the plaintiff in the main action imported from the United States of America a product described as "Extract of Black Pepper". The Haupt- zollamt [Principal Customs Office] Hamburg-Ericus classified the product m question as vegetable extract falling within tariff heading 13.03 of the Common Customs Tariff. Subsequently, on the basis of a report of the Zolltechnische Prüfungs- und Lehranstalt [Customs Laboratory and Training Collegei Hamburg, the Hauptzollamt classified the product as resinoid falling within tariff subheading 33.01 C and made a retroactive levy of customs duty.

6 Chapter 33 covers "Essential oils and resinoids; perfumery, cosmetic or toilet preparations". Heading 33.01, "Essential oils (terpeneless or not), concretes and absolutes; resinoids" includes subheading 33.01 C, "resinoids".

7 The plaintiff in the main proceedings contends that the product in question falls within subheading 13.03 A VIII because, in addition to the common odoriferous constituents (essential oils), it includes a far larger proportion of other plant substances. If, on the other hand, it consisted essentially of odoriferous constituents (essential oils) and contained only trifling quantities of the plant, it should be classified under tariff heading 33.01 as an essential oil or resinoid.

8 The Commission, on the other hand, considers that vegetable extracts whose character is determined by their fragrance fall as resinoids within tariff heading 33.C1. The fragrance of resinoids under that tariff heading is determined by all of the extracted fragrant substances. The fact thai there is or is not a preponderance in weight or quantity of fragrant substances of an extract is not a decisive factor. The Commission relies on the consideration thai the taste of a substance cannot be judged separately from us smell. That is corroborated by the fact that, in the Explanatory Notes to the Customs Co-operation Council Nomenclature, the title of tariff heading 33.04 includes, in the German version, the reference to "Riech- oder Aromastoffen" (odoriferous or fragrant substances). It infers from this that the essential characteristic of resinoids consists both in their smell and in their taste.

KADERS v HAUPTZOLLA.\¡T H.AMBURG-ERICUS

On those grounds,

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

in answer to the question submitted to it bv the Bundesfinanzhof bv order of 10 February 1981 hereby rules:

1. "Essential oils and. resinoids" of products which contain, in addition to odoriferous substances, a far higher proportion of other plant sub- stances, such as chlorophyll, tannins, bitter principles or other flavouring substances, carbohydrates and other extractive matter which help to determine the typical character of the product, do not fall within heading 33.01 of the Common Customs Tariff.

2. A product such as pipeline is not among the odoriferous substances which fall within the said tariff heading, since its essential charac- teristics are determined largely by taste and not by smell.