C-46/83

REFERENCE to the Court under Article 177 of the EEC Treaty by the Tariefcommissie [Administrative Court of Last Instance in revenue matters], Amsterdam, for a preliminary ruling in the proceedings pending before that court between

GERLACH & Co. BV, Amsterdam,

and

1 — Language of the Case: Dutch.

JUDGMENT OF 16. 2. 1984 — CASE 46/83

INSPECTEUR DER INVOERRECHTEN EN ACCIJNZEN [Inspector of Customs and Excise], AMSTERDAM,

Facts and issues

The facts of the case, the course of oil. Subheading 15.04 AII". The goods the procedure and the observations originated in and were exported from submitted pursuant to Article 20 of the Spain. On receipt of that declaration, the Protocol on the Statute of the Court of Collector of Customs and Excise issued a Justice of the EEC may be summarized document classifying the goods in sub- as follows : heading 15.04 A II under which no import duty is payable.

I — Facts and written procedure On the basis of tests carried out on a sample, the official concerned considered On 8 August 1980 the appellant declared that the imported goods should be the importation for home use of goods classified under subheading 29.01 A I as described in the declaration as "fish-liver "acyclic hydrocarbons" which, being of

GERLACH ν INSPECTEUR DER INVOERRECHTEN EN ACCIJNZEN

Spanish origin, were liable, at the time of The Tariefcommissie considers that importation, to 6.7% ad valorem duty. heading No 15.12 must also be taken By a demand for payment, the collector into account. of Customs and Excise sought from the appellant the amount thus payable, HFL 11 942.80. The relevant provisions of the Corninoti Customs Tariff The report of the director of the Ministry of Finance Laboratory, dated Subheading 15.04 A is worded as 15 September 1980, stresses that: follows:

"Analysis of the product described in the import documents as 'fish-liver oil' "Fats and oils, of fish and marine revealed that it is: mammals, whether or not refined :

JUDGMENT OF 16. 2. 1984 — CASE 46/83

other substances added with a view to (c) the description and quantity of the therapeutic use. products to be used;

(d) in cases where Additional Notes 5 (n) and 6 to Chapter 27 of the • The fats and oils derived from fish and Common Customs Tariff apply, the marine mammals remain in this heading description, quantity and tariff classi- when refined, but are excluded if fication of the products obtained. hydrogenated, or solidified or hardened by any other process (heading 15.12)." The person concerned shall, in addition, Heading No 15.12 is worded as follows: enable the competent authorities, to their satisfaction, to trace the products in the "Animal or vegetable oils and fats, establishment or establishments of the wholly or partly hydrogenated, or undertaking during the course of the solidified or hardened by any other treatment." process, whether or not refined, but not further prepared: Headings No 15.04 and 15.12 are delimited from heading No 29.01 by the A. In immediate packings of a net rules contained in Note 1(d) to Chapter capacity of 1 kg or less 15 and Note 1 (a) to Chapter 29. B. Other." The relevant part of Note 1 (d) to Chapter 15 is worded as follows : Heading No 29.01 is worded as follows: "Hydrocarbons : " 1 . This Chapter does not cover:

subheading 29.01 A II, but such classi­ pursuant to Article 95 (1) and (2) of the fication would be subject to various Rules of Procedure. conditions set out in Regulation No 1775/75 which were not fulfilled by the Pursuant to Article 20 of the Protocol of appellant. the Statute of the Court of Justice of the EEC, written observations were The Tariefcommissie considers that the submitted by the Inspectie der In­ dispute raises the question under which voerrechten en Accijnzen [Inspectorate heading the product is to be classified of Customs and Excise], Amsterdam, and, if according to the system of the represented by K. P. Vroonland, acting Common Customs Tariff it is to be as Agent, and by the Belgian Govern­ classified under subheading 29.01 A II, ment, represented by W. Collins, acting how such classification is to be as Agent. reconciled with the procedure under the regulation, which requires authorization Upon hearing the report of the Judge- for classification under that subheading, Rapporteur and the views of the where such authorization has not been Advocate General, the Court (First obtained. Since the answer to those Chamber) decided to open the oral questions depends upon the interpret­ procedure without any preparatory ation of Community law, the Tarief- inquiry. commissie made an order referring to the Court under Article 177 of the EEC Treaty the following questions: 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 " 1 . Under which heading of the Common Customs Tariff should a completely hydrogenated animal oil The Inspectie der Invoerrechten en which is manufactured from fish Accijnzen contends that the imported liver and is at the same time an product does not display any charac­ acyclic hydrocarbon compound be teristic identifying it as fish oil falling classified? within heading No 15.04 of the Common Customs Tariff. The product is 2. If a product of the kind referred to a separate chemically defined organic in Question 1 is to be classified compound, falling under subheading under subheading 29.01 A of the 29.01 A of the Common Customs Tariff. Common Customs Tariff, does subheading I or II apply where, The Belgian Government observes that although the product is intended to it classifies "Perhydrosqualenc" under be used otherwise than as a power or subheading 29.01 A if it is a chemically heating fuel, no authorization within pure product within the meaning of Note the meaning of Commission Regu­ 1 to Chapter 29. lation (EEC) No 1775/77 of 28 July 1977 has been obtained?" The nature of the raw material from which it is manufactured and the manu­ facturing process are irrelevant. The order making the reference was lodged at the Court Registry on 24 Since it is established that no authoriz­ March 1983. ation within the meaning of Regulation No 1775/77 has been submitted, the By order of 19 October 1983, the Court goods can be classified in subheading assigned the case to the First Chamber, 29.01 A IIand thus enjoy the favourable

However, according to Chapter 29 of the Common Customs Tariff, Note la, III — Oral p r o c e d u r e that chapter applies only to "separate chemically defined organic compounds, whether or not containing impurities". Also, Note 6 to Chapter 29 in the Ex- At the sitting on 17 November 1983, planatory Notes to the Customs Tariff of Gerlach & Co. BV, represented by F. E. the European Communities provides that van Bruggen, company counsel, and the this chapter covers : Commission of the European Com- munities, represented by A. Haagsma, acting as Agent, presented oral argu- "ethane and other saturated acyclic ment. hydrocarbons (other than methane and propane), single isomers not less than 9 5 % pure on the anhydrous product, The Commission pointed out that calculated by reference to volume for the first question posed by the gaseous products and to weight for non- Tariefcommissie deals with a product gaseous products (a) ex 29.01 A)." which is simultaneously "a completely hydrogenated animal oil which is manu- factured from fish liver", and "an acyclic hydrocarbon". It considers that such a According to the Commission, that 9 5 % product cannot exist. Two types of purity cannot be attained in the case of constituents are normally found in fish- an "animal oil which is manufactured liver oils: one is glyceric and the other is from fish liver" and there is thus no unsaponifiable. Ordinarily, other unsapo- question of a "separate chemically nifiable components are also found in defined organic compound". them. It thus seems that a fish-liver oil is always a mixture of several constituents. Thus the Commission concludes that the statement in the first question that a It should be emphasized that the product can be both a "completely solidification process used in the present hydrogenated animal oil which is manu- case (hydrogénation) does not change factured from fish liver" and a hydro- the composition of the oil. Total hydro- carbon is incorrect and it is therefore not génation of the oil simply transforms the possible to reply to the first preliminary unsaturated constituents into saturated question. constituents. Thus, for example, un- saturated squalene is turned into squalane (perhydrosqualene). This is Being aware of the problems of classi- even true of certain shark-liver oils parti- fication which face the Tariefcommissie, cularly rich in unsaponifiable constitu- the Commission has none the less tried ents, these in their turn being largely to indicate under what heading the made up of squalene. Thus, in the most product in question should be classified. favourable case, the content of un- It relies on the factual information

supplied though this is extremely classification under subheading 29.01 A. summary. It is possible that the product is no longer a fish-liver oil, whether hydro­ The Commission shares the opinion of genated or not, but an oil having been the Tariefcommissie that only three tariff subjected to a process designed to isolate headings need to be taken into account: a specific substance, for example, tariff headings and subheadings 15.04 A, squalane. It may be deduced from 15.12 and 29.01 A. the application brought before the Tariefcommissie by Gerlach & Co. that the product in question is not fish-liver In its view, the products do not belong in oil but "perhydrosqualene derived from subheading 15.04 A because they have fish-liver oil". The applicant in the main been hydrogenated. They might come action thus appears to be saying that it is under heading 15.12, if the condition no longer a question of fish-liver oil therein mentioned is met, that is, if, properly so-called but of the squalene apart from being wholly or partly extracted from it. solidified and possibly refined, they are not further prepared. The application of a process designed so to isolate the squalene (perhydro­ As regards subheading 29.01 A, the squalene) contained in the fish-liver oil Commission points out that: might certainly result in a product having a pure squalene content of over 9 5 % . (a) according to Chapter 29, Note la, of That content might even reach 9 9 % or the Common Customs Tariff, that more. chapter applies only to "separate chemically defined organic com­ pounds"; However, since squalane (perhydro­ squalene) is an acyclic hydrocarbon, subheading 29.01 A is in this case the (b) as regards purity, Note 6 to Chapter appropriate classification for this 29 of the Explanatory Notes to the product. Customs Tariff of the European Communities requires a minimum level of 9 5 % for substances like those in the present case (saturated The preliminary questions acyclic hydrocarbons); According to the Commission, the first (c) in the most favourable case, fish-liver question, as formulated by the Tarief­ oil can contain only 8 1 % squalene commissie, cannot be answered. At most, (saturated acyclic hydrocarbon). the court might be provided with a number of guidelines which would allow it to make the necessary customs classi­ The Commission then draws attention to fication of the product in the case before the fact that the conclusion has thus been it. Because of the extremely summary drawn that a hydrogenated fish-liver oil character of the information concerning will never be able to meet the conditions the nature of the product, it is not of purity required to be classified in possible to state definitely what heading subheading 29.01 A. or subheading it should choose.

Decision

1 By o r d e r of 16 M a r c h 1983, which was received at the C o u r t o n 24 M a r c h 1983, the Tariefcommissie, A m s t e r d a m , referred to the C o u r t , p u r s u a n t to Article 177 of the E E C T r e a t y , t w o preliminary questions relating to the interpretation of tariff heading 29.01 A of the C o m m o n C u s t o m s Tariff and of Commission Regulation N o 1 7 7 5 / 7 7 of 28 July 1977 determining the conditions u n d e r which certain petroleum products are eligible o n import- ation for a favourable tariff a r r a n g e m e n t by reason of their end-use (Official J o u r n a l , L 195, p. 5).

2 O n 8 August 1980, Gerlach & C o . BV, the plaintiff in the main action, declared the importation for h o m e use of g o o d s , m a d e in and coming from Spain, which it described as "fish-liver oil, tariff subheading 15.04 A II". T h e

GERLACH ν INSPECTEUR DER INVOERRECHTEN EN ACCIJNZEN

customs authorities first accepted that classification, under which no import duty is payable.

3 On the basis of samples, the official concerned considered that the imported goods should be classified under subheading 29.01 A I as "acyclic hydro­ carbons" which, being of Spanish origin, were liable, at the time of import­ ation, to a 6.7% ad valorem duty.

JUDGMENT OF 16. 2. 1984 — CASE 46/83

heading I or II apply where, although the product is intended to be used otherwise than as a power or heating fuel, no authorization within the meaning of Commission Regulation (EEC) N o 1775/77 of 28 July has been obtained?"

7 In the order referring these questions to the court, the Tariefcommissie considers that not only should headings and subheadings 15.04 and 29.01 A, put forward by the parties, be taken into account, but also heading 15.12.

8 The first question therefore asks under which of these three headings the goods in question should be classified.

9 Heading 15.04 covers fats and oils, of fish and marine mammals, whether or not refined. According to the Explanatory Notes to the Customs Cooperation Council's Nomenclature, that heading covers oils and fats derived from fish and marine mammals which are extracted from the body or liver of the fish or from fish waste, and which usually have a characteristic fishy smell and a disagreeable taste. Their natural colour may vary from yellow to reddish-brown. When refined fats and oils derived from fish or marine mammals have been hydrogenated, solidified or hardened by any process, they are classified under heading 15.12. That heading covers animal or vegetable oils and fats, wholly or partly hydrogenated, or solidified or hardened by any other process, whether or not refined, but not further prepared.

10 In its order for reference, the Tariefcommissie found that the product in question was transparent, colourless and odourless and that it must be regarded as completely hydrogenated. That fact is sufficient to conclude that the goods cannot be covered by heading 15.04.

"the products below are classified in this Chapter when they satisfy the following criteria as to purity:

6. Ethane and other saturated acyclic hydrocarbons (other than methane and propane), single isomers not less than 9 5 % pure on the anhydrous product, calculated by reference to volume for gaseous products and to weight for non-gaseous products."

13 The reply to the first question must therefore be that a completely hydro- genated animal oil, manufactured from fish liver, which is at the same time an acyclic hydrocarbon, must be classified under subheading 29.01 A of the Common Customs Tariff.

1 4 In its second question, the Tariefcommissie enquires if a product classified under subheading 29.01 A falls under subheading 29.01 A I or subheading 29.01 A II when it is intended to be used otherwise than as a power or heating fuel, but where no authorization within the meaning of Commission Regulation (EEC) N o 1775/77 has been obtained.

15 Subheading 29.01 A is divided into two subheadings as follows:

" I . For use as power or heating fuels

17 The obligation to obtain a written authorization from the competent auth- orities is designed to facilitate the task of the customs authorities and to avoid fraud. In the interest of legal certainty and the smooth functioning of the administration, the procedure provided for in the Community rules must be followed.

18 Consequently, the reply to the second question must be that a product cannot be classified under subheading 29.01 A I I where an authorization within the meaning of Regulation N o 1775/77 has not been obtained.

19 As a result, the product referred to in the second question cannot be classified under subheading 29.01 A II, and must be classified under sub- heading 29.01 A I .

Costs

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

GERLACH ν INSPECTEUR DER INVOERRECHTEN EN ACCIJNZEN

Delivered in open court in L u x e m b o u r g on 16 F e b r u a r y 1984.

For the Registrar H. A. Rühi T. Koopmans Principal Administrator President of the First Chamber

OPINION OF MR ADVOCATE GENERAL REISCHL DELIVERED ON 11 JANUARY 1984 '

Mr President, the plaintiff in the main action, declared Members of the Court, goods, which it was importing from Spain, as "fish-liver oil, subheading In August 1980, Gerlach & Co. BV, 15.04 A II" of the Common Customs whose registered office is in Amsterdam, Tariff. Accordingly, the Netherlands

1 -— Translated from the German.