C-289/82

JUDGMENT OF THE COURT ( SECOND CHAMBER ) 6 OCTOBER 1983 1

Lohmann GmbH & Co. KG v Oberfinanzdirektion Frankfurt am Main (reference for a preliminary ruling from the Bundesfinanzhof)

( Common Customs Tariff — Classification of absorbent gauze — Heading No 30.04 and subheading 55.09 A I)

Case 289/82

Corninoti Customs Tariff— Tariff headings — "Wadding, gauze, bandages ... put up in retail packings for medical or surgical purposes" within the meaning of heading No 30,04 — Concept

Heading No 30.04 of the Common enable it to be sold by retail to any Customs Tariff must be interpreted as user, including individual persons. That meaning that the expression "put up in heading therefore excludes a product retail packings for medical or surgical which is packed in such a way that purposes" implies that a product, in it can be sold, without re-packing, order to be classified under that heading, only to hospitals or other large-scale must not exceed the dimensions which users.

OBERFINANZDIREKTION [ Principal Revenue Office] FRANKFURT AM MAIN

on the interpretation of heading No 30.04 of the Common Customs Tariff,

THE COURT ( Second Chamber )

composed of: P . Pescatore , President of Chamber , O . Due and K. Bahl- mann , Judges ,

Advocate General : G . F. Mancini Registrar : P . Heim

gives the following

under that tariff subheading were subject Common Customs Tariff under sub­ at the material time to an autonomous heading: customs duty of 17% and a conventional customs duty of 13 %. 55.09 Other woven fabrics of cotton:

A. Containing 85 % or more by 4. On 5 June 1981 the company lodged weight of cotton : an objection in respect of that decision with the Oberfinanzdirektion Frankfurt I. Of a width of less than am Main. 85 cm."

JUDGMENT OF 6. 10. 1983 — CASE 289/82

10. Upon hearing the report of the (b) The trade description of the Judge-Rapporteur and the views of the product in question corresponds to Advocate General, the Court decided to specifications in the Pharmacopoeia open the oral procedure without any Europaea. preparatory inquiry. Nevertheless it requested the plaintiff in the main (c) Lohmann sells the product in proceedings to transmit two documents question without altering it in any way, to it; this was done within the period laid _ without repacking it and without down. The Court also requested separating the individual pieces. 91.6% Lohmann and the Commission to clarify thereof is delivered in the Federal a number of questions at the hearing. Republic of Germany to hospitals, 4 . 3 % to chemists and 4 . 1 % to first-aid centres 11. By order of 9 March 1983 the in companies and other large-scale Court assigned the case to the Second consumers. The purchasers use the Chamber pursuant to Article 95 (1) and product directly in their medical and (2) of the Rules of Procedure of the surgical work and each time cut the Court. amount of gauze which they require.

(d) According to an expert report drawn up by the Bundesvereinigung II — Written observations sub­ Verbandsstoffe und medizinische Hilfs­ mitted to the Court mittel eV [Federal association for dressings and medical appliances] the 1. Lohmann, the plaintiff in the main gauze imported by Lohmann is, proceedings, considers that the product according to the terms of tariff heading in question is covered by heading No No 30.04, put up in retail packings for 30.04 of the Common Customs Tariff on medical or surgical purposes by virtue of the basis that it is gauze put up in retail the fact that it proceeds directly to the packings for medical or surgical consumer for use in the manner intended purposes. without any alteration.

According to the case-law of the Court unwritten expansion of the wording of the important factor is that the product tariff heading No 30.04 cannot be should, objectively, be in a form which deduced from Regulation No 2282/79. lends itself to retail sale without additional packaging; that requirement corresponds to the criterion laid down If Regulation No 2282/79 is presumed by the Customs Cooperation Council to be lawful, it provides that lengths of according to which the product must be cotton fabric (absorbent gauze) of a recognizable, by virtue of its packaging, clearly-defined size (100 m long and particularly from the labelling, as being 0.65 m wide) cannot be classified under intended exclusively for direct sale to tariff heading No 30.04. The regulation consumers without any other re­ relates to fabric the size of which is 65 packaging. square metres which is considerably different from the lengths which are the subject of the present proceedings and Thus in the interpretation of the wording the size of which is 32 square metres of tariff heading No 30.04 of the (40 x 0.8 m). The regulation is therefore Common Customs Tariff the question of only a guide in so far as a fabric possible maximum dimensions is of no exceeding a certain maximum length or significance. width can no longer, be "regarded" as put up in retail packing.

JUDGMENT OF 6. 10. 1983 — CASE 289/82

Edition 1969 (I), p. 12) authorizes the small quantities or with a variety of Commission to specify the content of the packets of gauze of all sorts of different headings and subheadings of the Com­ sizes. They require large pieces so that mon Customs Tariff without, however, an appropriate amount may be cut to amending the text thereof; but Regu­ meet medical or surgical needs or for lation No 2282/79 amounts to an operations. Maximum dimensions cannot amendment of the content of a tariff be fixed except inasmuch as they are heading, which is unlawful. In fixing customary, functional and economic. maximum dimensions the legislature determines when a product may no longer be regarded as put up in retail (b) The only appropriate actual packing regardless of its actual capability criterion for classification by reference to of being sold by retail. That amounts to the dimensions of the gauze is usage, an improper amendment of the content underlined by its functional and of the tariff heading in question. It economic characteristics; such usage is should be noted that until Regulation No laid down in advance by Standard 2282/79 came into force the tariff system DIN 61630 in the Federal Republic accorded with actual practice with of Germany. regard to retail sale.

It is necessary not to exceed the (d) No method of interpretation will maximum dimensions fixed by that lead to an interpretation of the express standard. wording of tariff heading No 30.04 to the effect that it involves conformity with certain maximum dimensions by way of 2. In essence the Commission submits an unwritten extension of the concept of the following observations. retail sale.

requirement depends on its objective and aimed at clinical establishments in characteristics at the time of importation, the form of packets "for hospitals". Such in particular its labelling and its lengths of gauze do not seem to dimensions. correspond to any direct requirement on the part of such institutions; the packets The concept of "retail sale" extends not "for hospitals", which contain, for only to sale at the retail stage but also to example, gauze for dressings in pieces direct sale to clinics and other medical between 40 cm and 1 m in width and institutions. between 40 m and 1 000 m in length, are cut to the required size, sterilized and packed for use only by the institution (c) As regards the purpose for which itself. the product is used ("for medical or surgical purposes") it is necessary to remember that absorbent gauze covered (e) The essential question is therefore by tariff heading No 30.04 may be used whether imported absorbent gauze the for other than medical or surgical dimensions of which are such that purposes in particular as a packaging hospitals and similar institutions have to material for certain types of cheese, as cut it to size, to sterilize it and to filter cloths for milk, as an ancillary package it may be classified under tariff material for heat insulation, as an heading No 30.04 of the Common ancillary material for book-binding and Customs Tariff. The reply to that for the manufacture of sanitary towels. question can only be in the negative. The possibility that the product may be used for other than medical purposes Hospitals and similar institutions may, it leads to greater importance being is true, be regarded as being included in attached to other aspects of the the concept of "retail trade" provided packaging, in particular the labelling and however that the product is offered in a the dimensions. form such that it may be used directly without the need for repackaging; in (d) As regards the customary dimen­ fact the fulfilment of that requirement sions it is necessary to note that in the depends in particular on the maximum retail trade and, in particular, in dimensions. To accept that the product chemists' shops absorbent gauze is may be reçut in hospitals and similar normally sold in pieces measuring 90 cm institutions on the basis of their special by 100 cm at most, that is to say in requirements and may be the subject of pieces of approximately 1 square metre, repackaging is tantamount to opening that the bandages usually available to the the door to abuse, the more so since it is public are generally either 1, 2, 3, 5 or not possible to ascertain the actual use to 10 cm wide and between 3 and 5 or which it will be put once the product has sometimes even 10 metres long and that been put into free circulation. it is also possible to obtain compresses of sterile gauze in squares 5 cm by 5 cm, (f) The reply to the first question put 10 cm by 10 cm and the like. Absorbent by the Bundesfinanzhof can only be gauze of the dimensions of that which is affirmative. the subject of the main proceedings (40 m by 0.80 m) is not sold in retail shops. B — Second question

gauze, bandages and the like which are pieces measuring 40 m by 80 cm does not capable, in practice, of being used comply with that requirement. immediately, regard being had to the needs of hospitals and similar institutions, without any further cutting. III — Oral procedure In that respect it is necessary to take into account the fact that the needs of At the sitting on 5 May 1983 Mr Ehle, hospitals and similar institutions are not for Lohmann, the plaintiff in the main necessarily the same as those of retail proceedings, and Mr Wägenbaur, for the shops, particularly of chemists shops. Commission of the European Com­ munities, presented oral argument and (b) It does not appear to be necessary answered questions put by the Court. for the Court to lay down maximum dimensions; in order to assist the Bun­ The plaintiff in the main proceedings desfinanzhof to give its judgment it is explained, in particular, the relevance of sufficient to state that absorbent gauze the fact that the contested product is offered in pieces measuring 40 m by packaged in accordance with Standard 80 cm is not capable of immediate use. DIN 61630, stated the reasons why the packaging of the gauze by consumers cannot affect its classification under C — Replies to the questions put heading No 30.04, provided information regarding the use of the product in The following reply may be given to the hospitals and outlined the reasons which questions put by the Bundesfinanzhof: preclude any departure from that tariff Tariff heading No 30.04 of the Common heading. Customs Tariff is to be interpreted as The Commission explained, inter alia, the meaning that the expression "put up in purpose and the scope of Regulation retail packings for medical or surgical No 2282/79 and enlarged upon the purposes" implies that the maximum considerations which preclude classi­ dimensions which correspond directly to fication of the contested product under the needs of the consumers, including heading No 30.04. hospitals and similar institutions, must be adhered to. A product described as The Advocate General delivered his gauze for dressings, which is imported in opinion at the sitting on 14 July 1983.

" Other woven fabrics of cotton :

A. Containing 85 % or more by weight of cotton: I. Of a width of less than 85 cm . .."

4 The plaintiff lodged an objection against that customs tariff opinion on the ground that the product was put up in retail packings for medical or surgical purposes and therefore fell within heading No 30.04 of the Common Customs Tariff.

5 The Oberfinanzdirektion rejected that objection on the ground that although the packaging and labelling of the gauze fulfilled the conditions for goods put up in retail packings, it could not be regarded as put up in retail packings for medical or surgical purposes because the dimensions of each piece, which were 40 metres long and 80 centimetres wide were not normal tor retail packings. In support of that view, the Oberfinanzdirektion relied upon Commission Regulation (EEC) No 2282/79 of 17 October 1979 on the classification of goods under subheading 55.09 A I of the Common Customs Tariff (Official Journal 1979, L 262, p. 23).

6 The plaintiff brought an action against that decision before the Bun­ desfinanzhof claiming that the gauze in question is sold almost exclusively to

JUDGMENT OF 6. 10. 1983 — CASE 289/82

8 For its part, the Bundesfinanzhof considers that, were it not for Regulation No 2282/79, the goods in question would undoubtedly come within heading No 30.04 precisely because they are put up in retail packings. In its opinion, it does not follow from the text of that heading that the dimensions of the goods are relevant for classification purposes. However, since the Commission has laid emphasis on that aspect in Regulation No 2282/79, the Bundesfinanzhof considers that the interpretation of the tariff heading in question is open to doubt and holds itself bound, under the first and third paragraphs of Article 177 of the EEC Treaty, to refer the questions raised by Regulation No 2282/79 to the Court of Justice for a preliminary ruling. If, in spite of its scope being limited to goods of specific dimensions, that regu­ lation is applicable to goods of different dimensions, the Bundesfinanzhof expresses doubt as to whether, in adopting the regulation, the Commission did not overstep the bounds of the authorization conferred upon it by Regu­ lation No 97/69.

9 In order to resolve those doubts, the Bundesfinanzhof referred the following two questions to the Court of Justice for a preliminary ruling:

" 1 . Is tariff heading No 30.04 of the Common Customs Tariff to be interpreted as meaning that the phrase 'put up in retail packings for

LOHMANN v OBERFINANZDIREKTION FRANKFURT AM MAIN

medical or surgical purposes' requires conformity with specific maximum dimensions?

2. If the answer to Question 1 is in the affirmative, what are those maximum dimensions?"

13 The Commission contended, during the proceedings before the Court, that the goods in question could still be used for other purposes, for example for wrapping certain types of cheese, as filter cloths for milk, as an ancillary material for thermal insulation or book-binding and for the manufacture of sanitary towels. It appears, however, that goods such as those at issue cannot be used for the above purposes in view of their specific packaging as described by the Bundesfinanzhof. That part of the Commission's obser­ vations must therefore be disregarded since it is not relevant to the questions raised.

JUDGMENT OF 6. 10. 1983 — CASE 289/82

14 Since it is thus established that the product in question can be used only for medical or surgical purposes, the crux of the problem is whether goods which are presented in the manner described may be regarded as "put up in retail packings".

15 The Explanatory Note to the Customs Cooperation Council Nomenclature throws some light on that point, specifying that the product must, by virtue of its packaging, clearly be "exclusively intended for sale directly without re-packing to users (private persons, hospitals, etc.)".

16 That note is based on a wide interpretation of the expression "put up in retail packings", inasmuch as it includes as possible purchasers not only typical retail customers but also establishments such as hospitals which use large quantities of the material in question. However, to extend that expression to cover goods that are suitable for use by hospitals or similar institutions but are not put up in packings that can also be sold to individuals in retail trade would be to exceed the scope of heading No 30.04.

55.09 Other woven fabrics of cotton:

A. Containing 85 % or more by weight of cotton:

I. Of a width of less than 85 cm."

19 The preamble to that regulation, which was adopted on the basis of Regu­ lation No 97/69 of the Council, states that "in order to ensure uniform application of the nomenclature of the Common Customs Tariff, provision must be made for the classification of lengths of absorbent cotton fabric (known as 'gauze'), not impregnated or coated with pharmaceutical sub­ stances 100 m long and 0.65 m wide concertina-folded, individually wrapped and labelled". The preamble repeats the wording of heading No 30.04 and goes on to state that "in view of their dimensions, these articles, even if they are individually wrapped and labelled, cannot be considered at the time of importation as being put up in retail packings for medical or surgical purposes" and that since they cannot be classified under heading No 30.04, they must, "having regard to their nature and dimensions", be classified under subheading 55.09 A I.

20 When asked the reasons underlying that measure, the Commission stated that it was adopted on a proposal from the French delegation within the Committee on Common Customs Tariff Nomenclature, established by Regulation No 97/69, and that the dimensions specified in Regulation No 2282/79 are the normal dimensions of gauze used in French hospitals.

21 The legislative technique adopted in Regulation No 2282/79 is undoubtedly open to question, since, by referring to the normal dimensions of surgical gauze in one Member State, that regulation has created uncertainty in the law for all the other Member States, as is shown by the present dispute. Nevertheless, as the Commission has explained, the principle of that regu­ lation is in conformity with the interpretation set out above, inasmuch as the criterion of "retail sale" excludes from heading No 30.04 woven fabrics which are packed in such a way that they can be used only by hospitals or other large-scale users.

On those grounds,

THE COURT (Second Chamber)

in answer to the questions referred to it by the Bundesfinanzhof by order of 12 October 1982, hereby rules:

LOHMANN v OBERFINANZDIREKTION PRANKFURT AM MAIN

Heading No 30.04 of the Common Customs Tariff must be interpreted as meaning that the expression "put up in retail packings for medical or surgical purposes" implies that a product, in order to be classified under that heading, must not exceed the dimensions which enable it to be sold by retail to any user, including individual persons. That heading therefore excludes a product which is packed in such a way that it can be sold, without re-packing, only to hospitals or other large-scale users.

Pescatore Due Bahlmann