C-129/81

J U D G M E N T O F T H E C O U R T (THIRD CHAMBER) 11 M A R C H 1982 1

Fratelli Fancon v Società Industriala Agricole Tresse (SIAT) (reference for a preliminary ruling from the Italian Corte Suprema di Cassazione)

(Classification for tariff purposes)

Case 129/81

Common Customs Tariff— Tariff headings — Residues resulting from the extraction of vegetable oils within the meaning of heading 23.04 — Flour extracted from soya — Product covered by the common organization of the market in oils and fats (Regulation No 136/66/EEC of the Council, Art. 1 (2))

Flour extracted from soya must be listed in Article 1 (2) of Regulation No classified in heading ex 23.04 of the 136/66 on the establishment of a Common Customs Tariff and is common organization of the market in therefore included among the products oils and fats.

I — Language of the Case: Italian.

JUDGMENT OF 11. 3. 19S2 — CASE 129/81

ation of the market in oils and fats (Official Journal, English Special Edition, 1965-1966, p. 221).

THE COURT (Third Chamber)

composed of: A. Touffait, President of Chamber, Lord Mackenzie Stuart and U. Everling, Judges,

Advocate General: Sir Gordon Slynn Registrar: H. A. Rühi, Principal Administrator

accordance with the conditions therein 15.17: Degras; residues resulting from stipulated, as SLAT contends, or with the treatment of fatty substances those prescribed by Decree-Law No 425, or animal or vegetable waxes as Fancon maintains. 23.04: Oil cake and other residues (except dregs) resulting from the During those proceedings, a preliminary extraction of vegetable oils question has arisen — according to the Cone Suprema di Cassazione [Supreme B. Other. Court of Cassation] — as to whether the exception provided for in the second paragraph of Article 1 of Decree-Law The Cone di Cassazione before which No 425 in favour of undertakings manu- this issue is pending took the view that in facturing or distributing products whose order to establish whether the exception prices are "subject to other provisions" provided for in the second paragraph of was valid in the case in point, in so far as Anicie 1 of Decree-Law No 425 of 1973 Regulation No 136/66/EEC of the is applicable, it is appropriate, in reliance Council of 22 September 1966 on the on the principles laid down by the Court establishment of a common organization of Justice in the Galli judgment, to ask of the market in oils and fats (Official the Court "whether or not flour Journal, English Special Edition, 1965- extracted from soya beans is included in 1966, p. 221) included oil-seeds and the list of products set out in Article 1 flour or meal derived from them. (2) of Regulation No 136/66/EEC of the Council of 22 September 1966, in particular under headings 12.02, ex 15.17 The Tribunale di Genova [District or ex 23.04 of the Common Customs Court, Genoa] and subsequently the Tariff". Corte d'Appello di Genova [Court of Appeal, Genoa] — despite having The order referring the matter to the reached contran' decisions in the case — Coun was received at the Coun on replied in the negative to that question 27 May 1981. on the ground that Regulation No 136/66, in expressly mentioning, by In accordance with Article 20 of the reference to heading 12.02 of the Protocol on the Statute of te Court of Common Customs Tariff, "non- Justice of the EEC written observations defatted" flours or meals of oil-seeds or have been submitted by the plaintiff in oleaginous fruit, excluded "defatted" the main action, represented by Mr flour which is what flour extracted from Leone of the Milan Bar, by the defend- soya is and that headings ex 15.17 and ant in the main action, represented by ex 23.04 of the Common Customs Mr Ubertazzi and Mr Capelli of the Tariff, likewise referred to in Regulation Milan Bar, by the Italian Government, No 136/66, similarly do not apply to represented by Mr Ferri, Avvocato dello that flour, since the latter is different Stato, and by the Commission of the from the "residues" mentioned in those European Communities, represented by headings. R. Wainwright, Legal Adviser to the Commission, acting as Agent, assisted by Mr Berardis, a member of the Legal The wording of the three headings was, Department of the Commission. at the time in question, as follows: On hearing the report of the Judge- 12.02: Flours or meals of oil seeds or Rapporteur and the views of the oleaginous fruit, non-defatted Advocate General, the Court decided by (excluding mustard flour) order of 26 October 1981 to assign this

case to the Third Chamber, pursuant to — essentially a protein s-ibstance Article 95 of the Rules of Procedure and containing no more than aboi: - 1% of to open the oral procedure without any oils and fats — is not an oil or fat and preparatory inquiry. must not therefore be considered as referred to by Regulation No 13c/66. In support of that view, it has produced nine certificates from research centres, II — W r i t t e n o b s e r v a t i o n s s u b - laboratories and universities. m i t t e d p u r s u a n t to A r t i c l e 20 of t h e P r o t o c o l on t h e Consequently, "any possibility that the S t a t u t e of t h e C o u r t of J u s - goods in question might objectively fall t i c e of t h e E E C within the scope of the Community provisions referred to must be excluded". A — Observations of the plaintiff in the main action Fancon nevertheless examines the specific question raised by the Corte Suprema di Cassazione. The plaintiff in the main action observes in the first place that flour extracted from soya is produced when the oil is As regards tariff heading 12.02, it is extracted from soya beans on an "easy to see that flour extracted from industrial scale using solvents. It is the soya, which is by definition a defatted best source of vegetable proteins for product, cannot fall within that heading animal feeds. The flour contains no more of the Common Customs Tariff, which, than 1.3 to 1.5°/c of oils and fats. The by contrast, deals with products rich in pressing of 100 kilograms of soya beans oil for extraction". produces: Flour extracted from soya does not fall approximately 79 to 82 kg of extracted within heading 15.17 either, principally flour; on the ground that it may not be regarded as a residue since it is the main approximately 17 to 20 kg of oil; product of the pressing of the beans and in that case it is the soya lecithin which is approximately 1 kg of soya lecithin the residue. (which is a by-product and residue of the processing). Nor, finally, does flour extracted from soya fall within heading 23.04, since it is It further observes that Regulation No not "oil cake", obtained by mechanical 136/66 does not relate to flour extracted pressing, but a flour obtained by the use from soya since such flour is not "subject of solvents and cannot be considered as a to anv 'levy' at the time of importation residue. from non-member countries" and more- over that that regulation could not refer The plaintiff in the main action further to soya beans before 24 July 1974 since adds that even if the product in question the first regulation relating to that did fall within heading 12.C2 or heading produce is Regulation No 1900/74 of 15 23.04 — which it denies — "only the Julv 1974, laying down special measures Common Customs Tariffis applicable to for sova beans (Official Journal 1974, it by virtue of Article 2 (1) of Regulation L 201,'p. 5). No 136/66/EEC and not also the system of prices and levies, so that the Moreover. Ditta Fratelli Fancon application of the price-freeze decided maintains thai flour extracted from soya upon by the Italian State as a temporary

Fancon is not unaware of that price B — Observations of the defendant in the increase and moreover does not contest main action that it entered into the contract with SIAT for LIT 43 800 per quintal but is The defendant in the main action is of the merely seeking to avail itself of the right opinion that the facts of this case are conferred on it by Decree-Law No 425 identical to those of the case which gave to pay a price lower than the price rise to the Galli judgment (cited above). voluntarily agreed. It therefore reproduces the same oral argument as that submitted to the Court Moving on to the question raised by the at that time with regard to the aspects Cone Suprema di Cassazione, the pertinent to this case. defendant in the main action contends that upon being imponed into the Returning then to the facts of this case, Community flour extracted from soya SIAT takes pains to demonstrate that should be classified under customs Fancon's claim that it should pay LIT heading ex 23.04. The same classification 30 000 per quintal of flour extracted may also be based on customs from soya — in accordance with the declarations accepted by the Ravenna provisions of the Italian decree-law at customs office, the declaration by the issue — instead of LIT 43 800, which competent offices, a communication was the contract-price voluntarily agreed from the Venice customs area authoruv to by Fancon in a contract of 2 July of 19 March 1976 and revision No 2 of 1973, would involve for SLAT "an the Common Customs Tariff of Februarv outright loss of more than LIT 10 000 1981.

This leads therefore to the conclusion the "products" derived from the "that flour extracted from soya mut be extraction of oil and not from "waste" classified within tariff heading ex 23.04 and contain a minimum percentage of oil and consequently is among the products (1 to 2%). The Explanatory Notes to referred to in Article 1 (2) of Regulation the Nomenclature of the Customs No 136/66/EEC" and the question Cooperation Council on heading 23.04 raised should therefore be answered in make' clear that soya-residues, among the affirmative. others, are well-regarded as a feed for

be classified as such. Despite a number of minor in- consistencies in the case-law of the Accordingly, the Commission proposes Court during the years 1976 to 1978 — that the questions raised should be according to the defendant in the main answered as follows: action — the latest judgments (judgment of 6 November 1979, Case 10/79 Toffoli "Flours extracted from soya falls within [1979] ECR 3301) and especially the subheading 23.04 B of the Common judgment of 6 November 1979 in Cases Customs Tariff." 16 to 20/79 (Dams [1979] ECR 3327) The Italian Government likewise wishes finally confirm the line of decisions that a positive answer be given to the followed in the Galli judgment. question raised. The Commission shares the view of the In its view, flour extracted from soya defendant in the main action and may fall within heading 12.02 "provided considers that flour extracted from soya that it is not a flour derived from a falls within subheading 23.04 B of the process involving total defatting".

FANCON v SUT

extracted from soya is or is not defatted by Mr Capelli of the Milan Bar, the since in the light of the note referred to defendant in the main action, represen- above "the presence in that flour of a ted by Mr Leone of the Milan Bar, and 'certain amount of fatty substances' is the Commission of the European not incompatible with that customs classi- Communities, represented by Mr fication". Berardis, acting as Agent, presented oral argument and answered questions put to them by the Court. Ill — Oral procedure The Advocate General delivered his At the sitting on 3 December 1981, the opinion at the sitting on 4 February plaintiff in the main action, represented 1982.

Decision

1 By order of 28 January 1981, received at the Court on 27 May 1981, the Cone Suprema di Cassazione [Supreme Court of Cassation], Second Civil Division, referred to the Court for a preliminary ruling under Article 177 of the EEC Treaty a question concerning the interpretation of Article 1 (2) of Regulation No 136/66/EEC of the Council of 22 September 1966 on the establishment of a common organization of the market in oils and fats (Official Journal, English Special Edition, 1965-1966, p. 221).

: This question is raised in the context of a dispute between two Italian under- takings one of which bought from the other Brazilian flour extracted from soya which was to be delivered between the end of July and September 1973. During the period between the conclusion of the contract and the commencement of its performance the Italian Government promulgated Decree-Law No 425 of 24 July 1973 (Gazzetta Ufficiale No 189 of 24 July 1973), convened into Law No 494 of 4 August 1973, relating to the regu- lation of the prices to be applied by undenakings of a cenain scale. The dispute turns on the question whether the contract must be performed in accordance with the terms stipulated in it or whether those terms must be revised on the basis of Decree-Lauw No 425.

ex 15.17: Residues resulting from the treatment of fatty substances or animal or vegetable waxes: A. Containing oil having the characteristics of olive oil: I. Soapstocks II. Other B. Other: I. Oil foots and dregs; soapstocks II. Other

FANCON v SIAT

ex 23.04 Oil-cake and other residues (except dregs) resulting from the extraction of vegebable oils: A. Oil-cake and other residues resulting from the extraction of olive oil B. Other."

7 It must first be noted that soya seeds come within this common organization of the market in oils and fats because they are oil seeds mentioned, generically, in heading 12.01 of the Common Customs Tariff, which appears in Article'l (2) of Regulation No 136/66/EEC.

8 It is then necessary to examine each tariff heading mentioned by the national court for the purposes of ascertaining whether or not flour extracted from soya comes within one of them.

? It is an undisputed fact that the industrial treatment of soya seeds yields several products including flour extracted from soya which is a product rich in proteins whose intended use is as a feedingstuff for cattle. It owes its nutritive quality, which is useful for the production of meat, to this charac- teristic and to the fact that most of the oil has been extracted by pressure or by the use of solvents.

is It must therefore be concluded that flour extracted from soya must be classified in heading ex 23.04 of the Common Customs Tariff and that it is therefore included among the products listed in Article 1 (2) of Regulation N o 136/66/EEC of the Council on the establishment of a common organiz- ation of the market in oils and fats.

i6 In view of this classification of flour extracted from soya, any examination of other headings to which the regulation refers would be purposeless.

Costs

17 The costs incurred by the Government of the Italian Republic and by the Commission of the European Communities, which have submitted obser- vations to the Court, are not recoverable. As this case is, so far as the parties to the main action are concerned, in the nature of a step in the action before the national court, the decision on costs is a matter for that court.

FANCON v SIAT

On those grounds,

OPINION OF ADVOCATE GENERAL SIR G O R D O N SLYNN DELIVERED O N 4 FEBRUARY 1982

My Lordi, whether Italian Decree Law No 425 of 24 July 1973 (GU No 189 of 24 July In this case the question in dispute 1973, later convened into Law No 494 before the Second Civil Division of the of 4 August 1973), which forbade price Italian Corte Suprema di Cassazione is increases after 28 June 1973, applies to