C-298/82
ECLI:EU:C:1984:145
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J U D G M E N T O F T H E C O U R T (FIRST CHAMBER) 5 A P R I L 1984 1
Gustav Schickedanz KG ν Oberfinanzdirektion Frankfurt am Main (reference for a preliminary ruling from the Bundesfinanzhof)
( C o m m o n Customs Tariff — Sports shoes)
Case 298/82
Common Customs Tariff — Headings — Sports shoes with outer soles of rubber and uppers of textile fabric— Classification under subheading 64.02 B.
Sports shoes with outer soles of rubber function as protection and support and and uppers entirely of textile fabric to the special way in which they are which are sewn on, at the toecap, heel attached to the inner sole, are of vital piece, eyelets and outside and inside importance in the use of the goods as lateral sections, pieces of leather which sports shoes, must be classified under cover approximately 70 % of the textile subheading 64.02 Β of the Common fabric, are of greater value than the Customs Tariff. textile fabric and, because of their
In Case 298/82
R E F E R E N C E to the C o u r t u n d e r Article 177 of the E E C T r e a t y by the Bundesfinanzhof [Federal Finance C o u r t ] for a preliminary ruling in the proceedings p e n d i n g before t h a t court between
GUSTAV SCHICKEDANZ K G , Fürth,
and
O B E R F I N A N Z D I R E K T I O N F R A N K F U R T AM M A I N ,
1 — Language of the Casc: German.
JUDGMENT OF 5. 4. 1984 — CASE 298/82
for a preliminary ruling o n t h e interpretation a n d validity of C o m m i s s i o n Regulation N o 1074/80 of 29 April 1980, o n t h e classification of g o o d s u n d e r s u b h e a d i n g 64.02 Β of t h e C o m m o n C u s t o m s Tariff (Official J o u r n a l 1980, L 113, p . 54), a n d on t h e interpretation of s u b h e a d i n g 64.02 of the C o m m o n C u s t o m s Tariff in conjunction w i t h G e n e r a l Rule 3 for t h e Interpretation of the N o m e n c l a t u r e of t h e C o m m o n C u s t o m s Tariff,
T H E C O U R T (First C h a m b e r )
c o m p o s e d of: T . K o o p m a n s , President of Chamber, A. O'Keeffe and G. Bosco, J u d g e s ,
Advocate G e n e r a l : S. R o z è s Registrar: P . H e i m
gives the following
JUDGMENT
Facts and Issues
The facts of the case, the course of the shoes". In a notification issued on procedure and the observations sub- 14 April 1981 the goods were classified mitted under Article 20 of the Protocol as "sports shoes (training shoes) with on the Statute of the Court of Justice of outer soles of rubber and uppers of the EEC may be summarized as follows: textile fabric" under subheading 64.02 B of the Common Customs Tariff. As such they are liable to a duty of 20%.
I — Facts and written p r o c e d u r e
In 1981 Schickedanz imported gym Schickedanz thereupon objected, claim- shoes from the People's Republic of ing that as "sports shoes with outer soles China. It asked the Oberfinanzdirektion of rubber and uppers of leather" the [Principal Revenue Office) Frankfurt am goods came under heading 64 . 02 A of Main, for a binding customs tariff the Common Customs Tariff, which notification for goods described as "gym attracts duty at the rate of 8%.
SCHICKEDANZ / OBERFINANZDIREKTION FRANKFURT AM MAIN
Schickedanz's argument was based on heading 64.02 of the Common the fact that the leather was of special Customs Tariff, read in conjunction importance because, in view of its with General Rule 3 for the Inter strength and durability, it was inserted pretation of the Nomenclature of deep into the welt and thus joined to the the Common Customs Tariff, to be inner sole, whilst the underlying textile interpreted as meaning that sports layer serving as a lining inside the shoe shoes of the kind described in was shorter. The ratio of the cost of the Question 1 are to be classified under leather to the cost of the textile material subheading 64.02 Β of the Common was 4 to 1. Schickedanz was of the Customs Tariff? opinion that the shoes would be unusable for their intended purpose as sports shoes if the upper part were made of textile fabric without leather parts. The classification of the shoes, which all have an outer sole of rubber or artificial plastic material, depends on whether the The Oberfinanzdirektion dismissed the upper is to be regarded as artificial objection as unfounded, whereupon plastic material (64.01), leather (64.02 A) Schickedanz appealed to the Bundes or textile fabric (64.02 B). finanzhof, which by order of 19 October 1982 stayed the proceedings and referred the following questions to the Court for a preliminary ruling under Article 177 of It appears that the uppers of the shoes the Treaty: consist of a 3-layer material (two textile layers and an intermediate layer of expanded plastic). Variously shaped 1. Is Commission Regulation (EEC) pieces of leather are stitched on to this No 1074/80 of 29 April 1980 to be material. They provide support and interpreted as including a sports shoe protection in the areas of the toecap, the with a rubber outer sole, the upper of heel piece, the eyelets and the outside which consists entirely of textile fabric and inside lateral sections. A lateral to which are stitched in the areas of decorative border made of leather is also the front part of the vamp, heel piece, stitched to the shoe. The total area of the eyelets and outside lateral sections upper part of the shoe made out of and as decorative strips pieces of textile fabric (including the tongue and leather which cover about 7 0 % of the the parts of the fabric bonded to the textile fabric, account for more of the inner sole) amounts to 1 105 sq. cm.; value of the upper than the textile the total area of the leather pieces fabric and also, on account of the amount to 751 sq. cm., of which 98 sq. protection and support which they cm. are accounted for by the decorative provide and the special way in which strips. The textile fabric and the leather the upper is bonded to the insole, are are joined to the inner sole by means of of essential importance for the use of a welt. the product as a sports shoe?
2. If the answer to Question 1 is in Subheadings 64.02 A and Β are worded as follows: the affirmative: Is Regulation No 1074/80 valid?
"64.02 Footwear with outer soles of 3. If either Questions 1 or Question 2 leather and composition leather; is answered in the negative: Is sub footwear (other than footwear
JUDGMENT OF 5. 4. 1984 — CASE 298/82
falling within heading No 64.01) should be classified under subheading with outer soles of rubber or 64.02 A. artificial plastic material; Rule 3 (c) of the Rules for the In- A. Footwear with uppers of terpretation of the Nomenclature of the leather Common Customs Tariff reads as follows : B. Others." "When goods cannot be classified by reference to Rule 3 (a) or 3 (b), they are In the preamble to Regulation No to be classified in the heading which 1074/80 a distinction is made between (i) occurs latest among those which equally sports shoes in which it is "the textile merit consideration in determining their material which gives the uppers their classification." essential character, as it gives them the flexibility and lightness together required The order requesting a preliminary for sports use, while the strips or pieces ruling was lodged at the Court Registry of leather and/or plastic-coated textile on 25 November 1982. fabric are to the considered merely as accessories or reinforcements" and (ii) In accordance with Article 20 of the sports shoes of which the uppers "are Protocol on the Statute of the Court of covered with strips or pieces of leather Justice of the EEC written observations and/or plastic-coated textile fabric in were lodged by Schickedanz, represented such a way that the strips or pieces, by D. Ehle, Rechtsanwalt, Cologne, and given their importance, must be con- the Commission of the European Com- sidered, not merely as accessories or munities, represented by C. Bail, and X. reinforcements, but rather as one of the Yataganas, members of its Legal constituent materials of the uppers". Department, acting as Agents.
Article 1 of the regulation reads : Upon hearing the report of the Judge- Rapporteur and the views of the "Sports shoes (training shoes) the outer Advocate General, the Court decided to soles of which are of coarsely patterned open the oral procedure without any rubber or plastic material with uppers preparatory inquiry. By an order dated consisting of textile fabric on which 4 May 1983, made in pursuance of strips or pieces of leather and/or plastic- Article 95 (1) and (2) of the Rules of coated textile fabric are sewn externally Procedure, the Court assigned the case in various combinations covering the to the First Chamber. surface to a greater or lesser extent shall be classified in the Common Customs Tariff under subheading: 64.02 ... II — W r i t t e n o b s e r v a t i o n s sub- m i t t e d to t h e C o u r t B. Other."
The regulation was adopted after the (a) Observations of the plaintiff in the Commission had submitted a draft to the main proceedings Committee on Common Customs Tariff Nomenclature, which, after minor Schickedanz states in relation to the first drafting amendments, approved it by a question that the characteristics of the majority, notwithstanding the view ex- sports shoes referred to in Regulation pressed by the representatives of two No 1074/80 are as follows: Uppers of Member States that the relevant shoes textile fabric and strips of leather or
SCHICKEDANZ / OBERFINANZDIREKTION FRANKFURT AM MAIN
pieces of leather sewn outside. The latest among those which equally sports shoes in question do not have merit consideration. those characteristics.
The material visible on the upper surface Regulation N o 1074/80 relates solely to of the shoes in question is not of textile the last of the aformentioned cases so fabric but comprises two materials since that the shoes in question cannot be the uppers are made of leather and classified pursuant to that regulation. textile fabric. Regulation N o 1074/80 Where leather predominates on the applies only to uppers made solely of uppers of sports shoes (covering 7 0 % of textile fabric. the surface area) of where it is used at particularly critical points on the uppers (toecap, heel piece and lateral sections), The fact that the pieces of leather, apart it must be regarded as conferring the from the decorative lateral strips and the essential character. supports for the eyelets, are not "sewn o n " prevents tariff classification in ac cordance with Regulation No 1074/80. The leather pieces, which serve parti As regards the second question, cularly to give the sports shoes Schickedanz considers that Regulation protection, stability, durability and No 1074/80 has an amending effect in resistance to wear, are sewn "one upon relation to Rule 3 of the General Rules the other" on to the underlying textile and in that respect the Commission has fabric in the area of the toecap and heel patently exceeded its powers. Moreover, piece, the outside and lateral sections it is not explained in the preamble why in and the decorative strip. cases where the uppers of sports shoes are covered by strips or pieces of leather it is impossible to determine the material which gives the essential character, for it Rule 3 of the Rules for the Interpretation is rare that the different materials are of the Nomenclature provides three different methods of tariff classification, used in equal amounts. The principle namely: of legal certainty, which requires the Community legislature to enact clear and precise rules (Case 169/80 Admin istration des Douanes ν Gondrand [1981] (i) Classification under the heading ECR 1931), also requires that the which provides the most specific preamble to a Community measure description of the goods; should be drafted clearly and precisely. Finally, in the light of numerous judgments relating to the fundamental principle of equality of treatment, it must (ii) Classification according to the be held that sports shoes in respect of material or article which gives the which leather has been used at places goods their essential character; particularly subject to stress are just as appropriate for sports purposes as sports shoes in which the uppers are 100% (iii) Where the goods cannot be leather and therefore should be in the classified by reference to the same position as the latter. In the aforementioned rules, classification opinion of Schickedanz, Regulation under the heading which occurs No 1074/80 is therefore invalid.
JUDGMENT OF 5. 4. 1984 — CASE 298/82
As regards the third question, the practice of sport. Even though Schickedanz considers that for the covered to a large extent by leather, the purpose of determining the material textile fabric is not simply a lining or a which gives the goods their essential reinforcement without any effect upon character the following factors are im- the classification; it covers, and does so portant: with several layers, the whole inner and outer surface of the shoe. Even if it were The main material making up the uppers possible validly to maintain that the of the shoes; pieces of leather must be regarded as the material constituting the upper it would still be necessary, in the Commission's The way in which the materials are used; opinion, to apply Rules 3 (c) and 5 of the General Rules for Interpretation in Their function; view of the impossibility of clearly determining the material which gives the The value of the respective materials; essential character. and In addition to those three basic The use for which the goods are in- arguments, there are considerations of tended. convenience and expedience, since there is a considerable variety of shoes of the It follows that the leather is more kind in question on the world market important than the textile material in and their classification in subheading view of the shoe's function as conceived 64.02 Β would constitute a desirable by the manufacturer or the use for which simplification. It must also be pointed the sports shoe is intended. In fact, the out than when the Nomenclature report from the Prüf- und Forschungs- Committee of the Customs Cooperation institut für Schuhherstellung [Testing Council considered a draft of Chapter 64 and Research Institute for Shoe Manu- of the harmonized system a new Note facture] clearly states that without the 4 (a) was provisionally adopted, ac pieces of leather the shoe in question cording to which it is the textile fabric would no longer be suitable for the "use which gives the goods their essential for which it is intended". Accordingly, character since that extends over the the third question calls for an answer in whole upper whereas leather covers only the negative. a part of the surface. Although it is true that that note is not yet in force, it should nevertheless be taken into (b) Observations of the Commission account in determining the nature of the upper. The Commission contends that in spite of the large area of the pieces of leather According to its wording, Regulation N o and the value thereof in the shoes in 1074/80 covers the sports shoes referred question the following arguments favour to without taking account of the area or classification of the goods under heading value of the pieces of leather sewn on to 64.02 Β of the Common Customs Tariff. the textile fabric, or the function fulfilled by the leather in relation to the use of The structural part of the uppers is the shoe or the manner in which the entirely of textile fabric and that material leather and the textile fabric are joined is of primary importance for the use of to the inner sole. Nor is there any the shoes since it ensures that they have ground for interpreting the regulation the flexibility and lightness required for restrictively to the effect that it does not
SCHICKEDANZ / OBERFINANZDIREKTION FRANKFURT ΛΜ MAIN
cover sports shoes in which the leather procedural rules laid down in Article 3. parts are, in area or in value, prepon It simply helps to remove a doubt in derant. The question may be left open relation to the interpretation of heading whether in a borderline case, where the 64.02 A and Β of the Common Customs pieces of leather sewn on the textile Tariff in accordance with the General fabric are decisive, classification under Rules for Interpretation, in particular heading 64.02 A is conceivable on the Rule 3 (b). basis of General Rule 3 (b). That is not the case, even if the pieces of leather cover more than 7 0 % of the textile The Commission therefore considers that fabric or are greater in value than the the third question does not require to be answered. textile fabric. It is, on the contrary, much more important, also in relation to the function of protection and support allegedly fulfilled by the pieces of leather, to know which is the material III — Oral procedure which gives the shoes the requisite flexibility for the practice of sport and therefore is decisive from the point of At the sitting on 14 July 1983 oral view of use. As regards the shoes in issue argument was presented by the fol in the main proceedings, the decisive part lowing: for Schickedanz, Mr Schiller is not the leather but the textile fabric. and Mr Nehm, Rechtsanwälte, Cologne; and for the Commission of the European Communities, Mr Bail, a member of its It follows that the validity of Regulation Legal Department, acting as Agent. No 1074/80 is not in doubt. It is based on Regulation No 97/69 of the Council The Advocate General delivered her and was drafted in accordance with the opinion at the sitting on 6 October 1983.
Decision
1 By an o r d e r dated 19 O c t o b e r 1982, which was received at the C o u r t on 25 N o v e m b e r 1982, the Bundesfinanzhof referred several questions to the C o u r t for a preliminary ruling u n d e r Article 177 of the E E C T r e a t y on the interpretation and validity of Commission Regulation N o 1074/80 of 29 April 1980, on the classification of g o o d s u n d e r subheading 64.02 Β of the C o m m o n Customs Tariff (Official J o u r n a l 1980, L 113, p. 54), and on the interpretation of subheading 64.02 of the C o m m o n Customs Tariff in conjunction with General Rule 3 for the Interpretation of the N o m e n c l a t u r e of the C o m m o n Customs Tariff.
JUDGMENT OF 5. 4. 1984 — CASE 298/82
2 The plaintiff in the main proceedings, Schickedanz, imported from the People's Republic of China shoes which it described as "gym shoes" in an application for a binding customs tariff notification.
3 The Oberfinanzdirektion [Principal Revenue Office] Frankfurt am Main classified the goods as "sports shoes (training shoes) with outer soles of rubber and uppers of textile fabric" under subheading 64.02 B, which attracted import duty at the rate of 20%.
4 The plaintiff thereupon objected on the ground that, as "sports shoes with outer soles of rubber and uppers of leather", the goods came under sub heading 64.02 A, which attracted duty at the rate of 8%.
5 When that objection was dismissed Schickedanz challenged the decision of the Oberfinanzdirektion before the Bundesfinanzhof, which referred the following questions to the Court for a preliminary ruling:
1. Is Commission Regulation (EEC) N o 1074/80 of 29 April 1980 to be interpreted as including a sports shoe with a rubber outer sole, the upper of which consists entirely of textile fabric to which are stitched in the areas of the front part of the vamp, heel piece, eyelets and outside and inside lateral sections and as decorative strips pieces of leather which cover about 7 0 % of the textile fabric, account for more of the value of the upper than the textile fabric and also, on account of the protection and support which they provide and the special way in which the upper is bonded to the insole, are of essential importance for the use of the product as a sports shoe?
2. If the answer to Question 1 is in the affirmative: Is Regulation N o 1074/80 valid?
3. If either Question 1 or Question 2 is answered in the negative: Is sub heading 64.02 of the Common Customs Tariff, read in conjunction with General Rule 3 for the Interpretation of the Nomenclature of the Common Customs Tariff, to be interpreted as meaning that sports shoes of the kind described in Question 1 are to be classified under subheading 64.02 Β of the Common Customs Tariff?
SCHICKEDANZ / OBERFINANZDIREKTION FRANKFURT AM MAIN
6 According to the information before the Court, the shoes in question have rubber soles and uppers of a material consisting of two layers of textile fabric between which foam rubber is sandwiched. The leather pieces to which the national court refers are sewn on to the upper in the area of the toecap, heel piece, eyelets and the outside and inside lateral sections. They cover some 7 0 % of the textile fabric. According to the national court, the leather pieces are of greater value than the textile fabric and because of their function as protection and support and the special way in which they are attached to the inner sole they are of vital importance in the use of the goods as sports shoes.
7 Subheading 64.02 is worded as follows:
"64.02 Footwear with outer soles of leather or composition leather; footwear (other than footwear falling within heading No 64.01) with outer soles of rubber or artificial plastic material: A. Footwear with uppers of leather B. Other."
8 Thus the classification of the shoes under subheading A or Β depends on the material of which the uppers are made.
9 The Explanatory Notes to the Common Customs Tariff contain the following particulars :
"These uppers may consist of a mixture of leather and other materials. In such cases, classification is determined by application of General Rules 3 and 5 for the Interpretation of the Nomenclature of the Common Customs Tariff, and will not be affected by inner parts such as lining and reinforcements."
10 Rule 3 of the General Rules for the Interpretation of the Common Customs Tariff provides:
"When . . . goods are, prima facie, classifiable under two or more headings, classification shall be effected as follows: (a) ...
JUDGMENT OF 5. 4. 1984 — CASE 298/82
(b) Mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets, which cannot be classified by reference to 3 (a), shall be classified as if they consisted of the material or component which gives them their essential character, in so far as this criterion is applicable."
1 1 Rule 5 provides that the same rules apply mutatis mutandis when determining the appropriate subheading within a heading.
1 2 In a case where the external layer of the upper is made entirely of textile fabric to which pieces of leather are attached in different places covering no more than approximately 70% of the textile fabric and thus leaving the remainder of the external layer exposed, the Court considers that it is the textile fabric which gives the upper its essential character. The intrinsic value of the pieces of leather in relation to the textile fabric does not suffice for a finding that it is the leather which gives the essential character to the upper.
1 3 The national court considers that the pieces of leather, because of their function as protection and support and the manner in which they are attached to the inner sole, are of vital importance in the use of the shoes as sports shoes. In that respect it must be observed that, even if the pieces of leather are of importance in the use of shoes, the goods in question must be classified on the basis of the material which gives the upper its essential character and not on the basis of the use for which they are intended.
1 4 It follows from those considerations that the answer to the third question must be that the goods described by the national court are to be classified in subheading 64.02 B.
15 In view of the answer to the third question the first two questions cease to be relevant.
SCHICKEDANZ / OBERFINANZDIREKTION FRANKFURT AM MAIN
Costs
16 The costs incurred by the Commission of the European Communities, which has submitted observations to the Court, are not recoverable; as these proceedings are, in so far as the parties to the main proceedings are concerned, in the nature of a step in the action before the national court, costs are a matter for that court.
On those grounds,
T H E C O U R T (First Chamber)
in answer to the questions submitted to it by the Bundesfinanzhof by an order dated 19 October 1982, hereby rules:
Sports shoes with outer soles of rubber and uppers entirely of textile fabric to which are sewn on, at the toecap, heel piece, eyelets and outside and inside lateral sections, pieces of leather which cover approximately 70% of the textile fabric, are of greater value than the textile fabric and, because of their function as protection and support and the special way in which they are attached to the inner sole, are of vital importance in the use of the goods as sports shoes, must be classified under subheading 64.02 Β of the Common Customs Tariff.
Koopmans O'Keeffe Bosco
Deliverd in open court in Luxembourg on 5 April 1984.
J. A. Pompe T. Koopmans Deputy Registrar President of the First Chamber