C-327/82

JUDGMENT OF 18. 1. 1984 — CASE 327/82

2. For the precise anatomical definition 3. Regulation N o 2787/81 must be of the cut of meat called "thin flank" interpreted as meaning that export in subheading ex 02.01 A l l (a) 4. (bb) refunds are payable on cuts of meat of the list appended to Regulation N o comprising a portion of thin flank, 2787/81 reference must be made to provided that, having regard to the the method normally used in the consumer habits, trade practices and Member State or region concerned normal methods of cutting and for cutting and boning bovine boning beef and veal in the Member carcases. It is for the national court to State or region concerned, the portion establish what that definition is. of thin flank does not determine the essential character of the cut.

In Case 3 2 7 / 8 2

R E F E R E N C E t o t h e C o u r t u n d e r Article 177 of t h e E E C T r e a t y by t h e College v a n Beroep v o o r h e t Bedrijfsleven [administrative court of last instance in matters of t r a d e a n d industry] for a preliminary ruling in t h e action p e n d i n g before that court between

E K R O B V V E E - E N VLEESHANDEL, A p e l d o o r n ,

and

EKRO v PRODUCTSCHAP VOOR VEE EN VLEES

JUDGMENT

Facts and Issues

JUDGMENT OF 18. 1. 1984 — CASE 327/82

flank" is to be understood as the flank The decision referring the question for a meat belonging to the hindquarters preliminary ruling was lodged at the together with the part belonging to the Registry of the Court on 20 December two last ribs. 1982.

Furthermore, the parties to the main In accordance with Article 20 of the action disagree on the question of Protocol on the Statute of the Court of whether a refund is payable in respect of Justice of the European Communities the exportation of a piece of the breast written observations were submitted by or brisket of a bovine animal which Ekro acting through its Deputy Director, includes a piece of "thin flank". The A. Boovman, by the Board, represented Board answers that question in the by its Secretary J. J. Koch, acting for the negative. Ekro answers it in the affir- President of the Board, by the mative, stating that a refund ought to be Government of the Federal Republic of granted, calculated according to the Germany, represented by its Agents, weight of the meat exported less the Martin Seidel and Ernst Roder, and weight of the "thin flank" which it by the Commission of the European includes. Communities represented by its Legal Adviser, Robert Caspar Fischer. Considering that the dispute concerned questions of interpretation of Com- munity law the College stayed the On hearing the report of the Judge- proceedings and by a decision of 17 Rapporteur and the views of the December 1982 referred the following Advocate General, the Court decided to two questions to the Court pursuant to open the oral procedure without any Article 177 of the EEC Treaty: preliminary inquiry and to assign the case to the Fifth Chamber in accordance with Article 95 of the Rules of 1. On a correct interpretation of heading Procedure. It asked the Commission to 02.10. A l l (a) 4. ex (bb) of the reply in writing to certain questions. Common Customs Tariff what is to be understood by "thin flank" and how may "thin flank", which does not fall within that tariff heading, be distinguished from boned or boneless II — W r i t t e n o b s e r v a t i o n s cuts, which do?

As to the first question, the Board 3. Obsewations of the Government of the observes that heading 02.01 A II (a) 4. ex Federal Republic of Germany (bb) may be understood by reference to the fact that the Commission had established a separate system of refunds, varying according to destination, for With regard to the first question, the beef presented in the form of high-value Government of the Federal Republic of cuts, in particular boned cuts which were Germany first emphasizes that the individually wrapped. The refunds fixed question relates not to the interpretation for that heading are the highest available of the Common Customs Tariff heading for beef. Cuts of low value, such as "thin mentioned, but to the interpretation of flank", "shin" and "shank", should not the corresponding heading in the annex benefit from the higher refund. to Commission Regulation No 2787/81 of 25 September 1981. In its view, and in conformity with a decision of the Federal In the Netherlands "thin flank" [vang] is Minister of Finance of 18 November understood to mean the part of the 1982, "Knochendiinnung" [thin flank animal shown in the sketch annexed to with bone] is a piece which is cut out the Board's observations, including the between the eighth and the ninth ribs umbilical area. In the absence of an towards the hindquartcr and which anatomical definition of that term in includes the part situated around the Community regulations, the Netherlands next five ribs; "Fleischdiinnung" may and must define it according to the [boneless thin flank] includes the definition generally accepted in the abdominal muscles, marked off by the Netherlands. In each Member State, thigh, by the "thin flank" with bone and, there is a specific term for "thin flank", at the top, by the part of the sirloin a term which may not be exactly the known in Germany as "Roastbeef". same in substance in the different Member States because of the varying traditions in the meat trade. It follows that, at Community level, exporters are With regard to the second question the not subject to the same applications of Government of the Federal Republic of the tariff heading in question in the Germany is of the view that an export various Member States. refund should be granted for a boned or boneless cut including a piece of "thin flank" if the proportion of "thin flank" "Thin flank" may therefore be does not determine the essential nature distinguished from boned or boneless of the cut.

The regulation leaves in doubt the Therefore, according to the German question of how the cuts of beef which Government, the third solution must be include "thin flank", "shin" or "shank" adopted, the criterion being whether the should be treated. A cut consisting of part comprised of "thin flank" gives the shin or shank and of other meat would cut its essential nature. In the present not be shin or shank, and in the same case reference must be made to the first way a cut consisting af another meat and part of Article 20 (1) of Council Regu- of "thin flank". For such cuts three lation No 805/68 of 27 June 1968 which solutions may be put forward: provides that the general rules for the interpretation of the Common Customs Tariff and the ' special rules for its A boned or boneless cut including "thin application are to apply to the tariff flank" may not be eligible for any export classification of products covered by the refund; regulation, as decided by the Court in a similar case in a judgment of 1 July 1982 (Case 145/81 Hauptzollamt Hamburg- Jonas v Ludwig Wünsche & Co [1982] A boned or boneless cut including "thin ECR 2493). According to General Rule flank" may be eligible for an export of Interpretation 3 (b) of Section I, Part refund only for that part which is not A of the Common Customs Tariff, "thin flank"; composite goods must be classified as if they consisted of the material or component which gives them their A boned or boneless cut including "thin essential character. Boned or boneless flank" may be eligible for an export cuts including "thin flank" must refund for the whole cut, if the "thin therefore be considered eligible for flank" does not give the cut its essential refunds where that part of the meat character. which is not "thin flank" gives the product its essential character. The whole of the product whose classification depends on the element which gives it its The first solution was adopted in essential character must be treated as if it Commission Regulation (EEC) No were composed entirely of that element. 2773/82 of 13 October 1982 fixing the export refunds on beef and veal (Official Journal, L 292, p. 20) which, in Note 7 to the annex thereto, states that only boned cuts which do not consist, 4. Observations of the Commission "entirely or partially, of thin flanks" are to be eligible for an export refund. That regulation, which entered into force on 1 November 1982, is not applicable in the As a preliminary matter, the Commission present case. Before that regulation, the observes that for the definition of legal situation was different, or at least products which are eligible for export unclear, as the Commission itself has refunds, Regulation No 2787/81 is based admitted in a telex message of 3 August on the nomenclature of the Common 1982 to the Federal Minister of Food. Customs Tariff but often adds special conditions thereto, for example restrict- ing the grant of refunds to one part of The second solution mentioned above the products falling under a heading of could only be based upon an express the Common Customs Tariff (headings provision. designated "ex").

By contrast with other agricultural markets, the Community market for beef and veal does not have large structural As far as "thin flank" is concerned, surpluses. Although a relatively selective Community legislation does not contain system of refunds is applied to certain any precise definition. The Dutch term ways of presenting meat and for certain "vang" indicates the part situated destinations in order to support the between the thigh, the abdomen and the participation of the Community in inter­ groin. A publication of the European national trade, the low level of Com­ Productivity Agency of the Organization munity involvement in the world trade for European Economic Cooperation makes it unnecessary to fix refunds for dating from 1960, setting out the other products in the sector, which methods of cutting and the terms in use explains why refunds are applicable only in the various countries in diagrams and to limited categories of products. Fresh terminological tables, indicates that in or chilled meat, boned or boneless butchery, according to the method used cuts, excluding "thin flank", "shin" in the Netherlands, the "vanglap" ["thin and "shank", each piece individually flank"] is on the side of the abdomen wrapped, are relatively expensive kinds between the "spicrstnk" and the "slip van of beef or veal whose exportation is of de lende" which form part of the importance to the Community and for hindquarter, on the one hand, and the which it has fixed a relatively high export "dunne borst" on the other. refund. The "thin flank", the "shin" and the "shank", on the other hand, are of relatively low value and are intended in particular for the meat processing On the basis of the diagrams in question, industry; those cuts traditionally have as well as the terms used in the various large markets within the Community, so Community languages, the Commission

The answer to the first question should therefore be as follows: for the application of Commission regulation Examining the definitions suggested No 2787/81 to exports of the products by the parties to the main action, defined in the annex to that regulation the Commission observes that Ekro's under Common Customs Tariff heading position is based upon a misunder- 02.01 A l l (a) 4. ex (bb) "thin flank" standing. There are in fact two methods means the portion of flank lying between in use for cutting the hindquarter, the hindquarter and the breast or brisket namely on the one hand the "découpe of the carcase. droite" [straight cut], leaving the "thin flank" attached to the hindquarter in such a way that the forequarter includes the eight to ten other ribs and the breast or brisket, and on the other hand the With regard to the second question, it "découpe pistola" [pistol cut], leaving the follows from the terms and the objective "thin flank" and the lower parts of the of the disputed provision that a refund ribs attached to the forequarter. The cannot be granted unless the boned or "thin flank" does not therefore always boneless pieces do not contain any "thin belong to the hindquarter. Since, in the flank". present case, the disputed piece is cut "in the form of a pistol" it may be thought that it is a "découpe pistola" in which the "thin flank" normally remains attached to the forequarter. The criterion To grant a refund when the pieces according to which the "thin flank" contain only a small amount of "thin includes only the portion of flank on the flank" would mean granting a relatively last two ribs does not conform to the high refund for meat of relatively low usual cutting methods in the Nether- value and would indirectly encourage lands. In the terminology of the various exports of that meat, while "thin flank" Member States the "thin flank" includes would become scarce for the Community more often the portion of flank on the meat processing industry. Moreover, last three to five ribs. Flank meat of since the text does not provide for it, one

In answer to questions put by the Court to the Commission, the latter gave the following information: IV — O r a l p r o c e d u r e

1. There is great diversity in the methods by which beef and veal are butchered At the sitting on 26 October 1983 oral and boned, depending on commercial argument was presented by the practice and consumer tradition. following: Peter Wendt, Rechtsanwalt, Those traditions vary from one Hamburg, for Ekro; Ernst Roder, for country to another and often even the Government of the Federal Republic from one region to another. These of Germany; and Robert Caspar Fischer, differences are still greater as far as for the Commission. concerns the cutting and boning of the forequarters and hindquarters. It is therefore practically impossible to Ekro stated in particular that, in its view, find Community-wide definitions. the first question was asked only if, in Each Member State must therefore view of the answer to the second apply the definitions of the various question, the granting of refunds actually cuts of meat which are in use in that depends on the exact definition of "thin

JUDGMENT OF 18. 1. 1984 — CASE 327/82

2 T h o s e questions w e r e raised in proceedings between E k r o B V V e e - en Vleeshandel (hereinafter referred to as " E k r o " ) , which is a N e t h e r l a n d s c o m p a n y exporting beef and veal, and the P r o d u k t s c h a p v o o r V e e en Vlees [Cattle and M e a t Board, hereinafter referred to as " t h e B o a r d " ] , Rijswijk. T h e dispute concerns the Board's refusal to grant E k r o refunds o n exports of beef and veal to a n o n - m e m b e r c o u n t r y u n d e r Article 18 of Regulation ( E E C ) N o 8 0 5 / 6 8 of the Council of 27 J u n e 1968 o n the c o m m o n organi- zation of the m a r k e t in beef and veal (Official J o u r n a l , English Special Edition 1968 (I), p . 187) and u n d e r Commission Regulation N o 2 7 8 7 / 8 1 .

EKRO v PRODUKTSCHAP VOOR VEE UN VLEES

3 An annex to Commission Regulation No 2787/81 sets out the list of products which qualify for the export refund referred to in Article 18 of Regulation No 805/68. That list includes, under the heading "ex 02.01 A II" of the Common Customs Tariff, "Meat of bovine animals: (a) Fresh or chilled: . . .; 4. Other: . .. (bb) Boned or boneless, excluding the 'thin flank', the shin and the shank, each piece individually wrapped".

4 In October 1981 Ekro exported to the Vatican City two consignments of veal, weighing 2 380 kg und 2 062 kg, in respect of which it applied for export refunds under the provision cited above. Each of those consignments contained inter alia pieces of breast, weighing in total 1 156 kg, to which were attached pieces of meat cut in the shape of a pistol which, according to the Board, must be considered to form part of the "thin flank". The total weight of the last-mentioned pieces was 201 kg. The Board refused to grant Ekro export refunds on the 1 156 kg of breast.

7 The purpose of the first question is to establish a precise definition of the cut of meat from bovine animals which is designated "thin flank" in the list annexed to Commission Regulation No 2787/81.

s The Government of the Federal Republic of Germany and the Commission, in their written observations to the Court, and Ekro, in its submissions in the main proceedings, have each argued in favour of a different anatomical definition of the cut in question, explaining, where necessary with the aid of drawings, where that part of the abdominal wall is situated in relation to the hindquarters and forequarters of a bovine carcase and in relation to the ribs and breast.

9 It was argued by the Board and by the Commission, in its oral observations, that for the definition of the cut in question the authorities in each Member State should refer to the customs and practices existing in that State as regards the cutting and boning of bovine carcases. The Commission added, however, that in doing so they must pay heed to the purpose of the refund system set up by the Community regulations.

io It is clear from the evidence before the Court that, as regards the cutting and boning of bovine carcases, there are many customs and practices, which may vary not only from Member State to Member State but even from region to region. The various cutting and boning methods originate in particular in consumer habits and trade practices in the different Member States and regions. The meaning of the terms used in the various language versions of

EKRO v PRODUKTSCHAPVOOR VEE EN VLEES

H By thus accepting that those terms might have different meanings the Commission incorporated into its regulation an implied reference to the

JUDGMENT OF 18. 1. 1984 — CASE 327/82

cutting and boning methods used in the various Member States and regions. Therefore, notwithstanding the aforementioned principle that provisions of Community law should be interpreted uniformly, it is not for the Court to give a uniform Community definition of those terms.

is For the precise anatomical definition of the cut of meat called "thin flank" reference must therefore be made to the method normally used in the Member State or region concerned for cutting and boning bovine carcases. It is for the national court to establish what that definition is.

i6 The answer to the first question must therefore be that it is for the national court to establish what, according to the method normally used to cut and bone beef and veal in the Member State or region concerned, is the precise anatomical definition of the part of the abdominal wall which is designated "thin flank" in subheading ex 02.01 A l l (a) 4. ex (bb) of the list annexed to Commission Regulation N o 2787/81 of 25 September 1981. .

The second question

20 In this regard, it must first be observed that Articles 20 (1) of Council Regu- lation No 805/68 of 27 June 1968, on the basis of which the refunds in question are fixed, provides that: "The general rules for the interpretation of the Common Customs Tariff and the special rules for its application shall apply to the tariff classification of products covered by this regulation". General Rule 3 (b) for the interpretation of the nomenclature of the Common Customs Tariff states that "composite goods . . . shall be classified as if they consisted of the material or component which gives them their essential character".

2i Even though Regulation No 2787/81 does not simply refer to the nomenclature of the Common Customs Tariff but establishes its own nomenclature for the purpose of fixing export refunds, that general rule applies to the classification of commodities under the special nomenclature of Regulation No 2787/81, unless some other solution is dictated by the terms of that regulation or by the aims of the system of export refunds.

22 As far as the terms of the annex to Regulation No 2787/81 arc concerned, the wording of subheading ex 02.01 A l l (a) 4. ex (bb) — "boned or boneless, excluding the thin flank, the shin and the shank, each piece individually wrapped" — excludes only cuts consisting entirely of "thin flank", shin or shank; it says nothing about cuts consisting only partly of "thin flank", shin or shank. The interpretation of the provision in force at

JUDGMENT OF 18. 1. 1984 — CASE 327/82

the material time cannot be affected by the fact that the uncertainty about the treatment to be accorded to such cuts was subsequently removed without retroactive effect by the insertion in the annex to Regulation No 2773/82 of Note 7, which states that: "Boned cuts which consist, entirely or partially, of thin flanks, shin or shank are ineligible for the refund". .

EKRO v PRODUKTSCHAP VOOR VEE EN VLEES

Costs

26 The costs incurred by the Government of the Federal Republic of Germany and the Commission, which have submitted observations to the Court, are not recoverable. As the proceedings are, in so far as the parties to the main proceedings are concerned, a step in the action pending before the national court, costs are a matter for that court.

On those grounds,

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

in answer to the questions submitted to it by the College van Beroep voor het Bedrijfsleven by judgment of 17 December 1982, hereby rules: