C-141/86

THE QUEEN ν HM CUSTOMS AND EXCISE EX PARTE IMPERIAL TOBACCO

O P I N I O N OF ADVOCATE GENERAL LENZ delivered on 22 September 1 9 8 7 *

Mr President, 4. It must further be mentioned that each Members of the Court, year under the Community system of gener­ alized preferences the Community determines for certain developing countries tariff quotas in respect of, inter alia, flue-cured Virginia type tobacco. The tariff A — Facts quota for 1985 was set by Council Regu­ lation No 3564/84. ' Annex I thereto refers in particular to Order No 50.00.20, which in turn refers to Common Customs Tariff 1. These proceedings arise from questions subheading 24.01 A, as set out in Regu­ referred to this Court by the Divisional lation No 3400/84 2 ('flue-cured Virginia Court of the Queen's Bench Division of the type and light air-cooled Burley type, High Court of Justice on the classification including Burley hybrids; light air-cured for customs purposes of stems of flue-cured Maryland and fire-cured tobacco'), and to Virginia tobacco, that is to say a particular Nimexe code Nos 24.01-02 and 24.01-09 type of tobacco which has been subjected to (in the version set out in Regulation a specific method of curing. No 3529/84 3 ), that is to say, not stripped or wholly or partly stripped flue-cured Virginia type tobacco.

Customs Tariff of, inter alia, flue-cured 3517/84 was incorrect. It therefore brought Virginia type tobacco is subject to presen­ an application for judicial review before the tation of a certificate of authenticity- Divisional Court of the Queen's Bench meeting the requirements specified in that Division of the High Court in which it regulation. sought a declaration that her Majesty's Customs and Excise had wrongly classified flue-cured Virginia tobacco stem .in subheading 24.01 B. 6. Whereas on previous occasions Her Majesty's Customs and Excise had 8. The national court considers that invariably classified flue-cured Virginia Imperial Tobacco's claim raises the problem tobacco stem in subheading 24.01 A, in the of the interpretation and possibly also the spring of 1985 they ceased to do so and validity of Commission Regulation No held subheading 24.01 Β ('Other') to be 3517/84. Consequently by an order dated applicable. This change was the outcome of 29 April 1986 it stayed the proceedings and Commission Regulation No 3517/84, 5 referred the following questions to the which was adopted pursuant to Regulation Court of Justice for a preliminary ruling No 97/69 of the Council on measures to be under Article 177 of the EEC Treaty: taken for uniform application of the nomen­ clature of the Common Customs Tariff6 after consultation of the Committee on '(1) Whether the correct interpretation of Common Customs Tariff Nomenclature. 7 Commission Regulation (EEC) No Article 1 of Regulation No 3517/84 3517/84 is such as to place within provides that leave-stalks [sic], stems, ribs subheading 24.01 Β of the Common and trimmings (small particles produced in Customs Tariff tobacco stem covered the threshing process) of tobacco leaves are by a certificate of authenticity which to be classified in the Common Customs establishes that it is of flue-cured Tariff within subheading 24.01 Unmanu­ Virginia type. factured tobacco; tobacco refuse: B. Other. It should also be mentioned that it appears (2) If so, whether the regulation is to that that Regulation No 3517/84 was adopted extent invalid in that it conflicts with when the Commission, which had always the terms of Council Regulation (EEC) been of the opinion that such stems should No 3400/84.' fall within subheading 24.01 B, became aware that in the United Kingdom stems of types of tobacco referred to in subheading 9. Observations have been submitted by the 24.01 A were being classified in subheading appellant in the main proceedings, the 24.01 A and were therefore also being United Kingdom, the Kingdom of Belgium counted towards the aforementioned quota. and the Commission of the European Communities. Their views are summarized in the Report for the Hearing, to which I refer. 7. Imperial Tobacco Ltd considers that the classification adopted by Her Majesty's Β — Analysis Customs and Excise in spring 1985 in reliance on Commission Regulation No I consider that the questions raised by the 5 — Official Journal 1984, L 328, p. 9. Divisional Court of the Queen's Bench 6 — Official Journal, English Special Edition 1969 (I), p. 12. Division of the High Court should be 7 — Article 1 of Regulation No 97/69. answered as follows:

10. 1. Manifestly, Imperial Tobacco Ltd is 12. It can therefore be stated that under the concerned to benefit under the aforemen relevant Council rules it is clear that stem of tioned system of generalized tariff pref flue-cured Virginia type tobacco was not erences since under the Common Customs eligible to benefit under the system of Tariff it certainly appears more advant generalized tariff preferences. (This may ageous — at least in many cases — for a perhaps appear hard to understand from the product to be classified in subheading development policy point of view since the 24.01 B. However, this immediately raises quota — as Imperial Tobacco Ltd has the question whether the relevant shown — apparently could not be Commission regulation has any bearing completely used up by lamina alone, only whatsoever on the main proceedings or in relatively cheap lamina being of interest for other words whether its interpretation and the system of generalized tariff preferences. consideration of its validity are in fact Furthermore, that interpretation may lead relevant to the main proceedings. increasingly to whole leaf being imported, resulting in a manufacturing process leaving the developing countries.

13. However, I am not proposing that the lation, but equally to the Nimexe goods national court should be answered in those nomenclature set out in Commission Regu terms only (and that its questions should not lation No 3529/84. However, reference to be given further consideration) because I am the Nimexe codes mentioned in Annex I to conscious of how extremely reluctant the Council Regulation No 3564/84 reveals that Court is to go into such problems of only not stripped and wholly or partly relevance, as is shown by the judgment in stripped flue-cured Virginia type tobacco is 8 Case 83/78 where the Court stressed that

stem being stripped. Main [1985] ECR 3001.

interpretation of Community law requested; 16. This is also clearly borne out by the the Court stressed in particular that it would preamble to Commission Regulation No refrain from answering questions referred to 3517/84, where appropriate, in conjunction it only where the provision to be interpreted with the aforementioned Regulation No was clearly inapplicable. In fact this is 3529/84 on Nimexe (from which it is probably not the case in these proceedings evident that tobacco refuse is not to be since Annex I of Council Regulation No classified in subheading 24.01 A but in 3564/84 on generalized tariff preferences 24.01 B). The preamble to Regulation No also refers to the Common Customs Tariff. 3517/84 states that — irrespective of the It is therefore quite conceivable that its type of tobacco from which they arise — all scope is partly determined by Commission the products in question are to be regarded Regulation No 3517/84 on the Common as tobacco refuse. But since, according to its Customs Tariff and for that reason it is not title, heading No 24.01 covers unmanu possible to refrain from answering the factured tobacco and tobacco refuse and questions raised on that regulation. subheading 24.01 A mentions only tobacco, it must be assumed that under the system of the Common Customs Tariff tobacco refuse falls within subheading 24.01 B.

15. This inevitably follows simply from the assumed that the Common Customs Tariff wording of Article 1 of Regulation No should be interpreted in another way (I shall 3517/84, which provides that leave-stalks, return to this point shortly). Naturally there stems, ribs and trimmings of tobacco leaves are limits on how far one can go in inter generally, that is to say of all tobacco preting an explanatory regulation in the leaves, are to be classified in subheading same way as the Common Customs Tariff 24.01 B. "What is more, that is the only in the interests of its validity, and any such interpretation that makes sense.

T H E QUEEN ν H M CUSTOMS AND EXCISE EX PARTE IMPERIAL TOBACCO

not consistent with the Common Customs words of the judgment in Joined Cases 87, Tariff as set out in Council Regulation No 112 and 113/79 2— is 'manifestly 3400/84. incorrect'.

10 — Judgment of 28 March 1979 in Case 158/78 P. Bicgi ν 12 — Judgment of 20 March 1980 in Joined Cases 87, 112 and Hauptzollamt Bochum [1979] ECR 1103, at p. 1117. 113/79 Gebrüder Bagusat KG ν Hauptzollamt Btrlin- 11 — Judgment of 23 October 1975 in Case 37/75 Bagutat KGv Packhof; Einkaufsgesellschaft der Deutschen Konseruenin- Hauptzollamt Berlin-Packhof [1975] ECR 1339; Judgment dustrie mbH ν Hauptzollamt Hamburg-Waltershof and in Case 158/78, loc. cit. Hauptzollamt Bad Reichenball [1980] ECR 1159, at p. 1171.

OPINION OF MR LENZ —CASE 141/86

23. (b) However, other references in the case-law clearly support the view that Commission Regulation No 3517/84 has not exceeded the limits laid down by the 26. (hb) I would also cite the judgment in Common Customs Tariff (in which the term Case 90/83 1 5 concerning the term 'animal in question is not defined). waste not intended for human consumption'. In that case importance was attached to what has to be regarded as the 'primary product' of animal slaughter (that is to say, the prime object of the production process) and it was held that this depended 24. (aa) I would cite first the judgment in on the value of that 'primary product' in Joined Cases 69 and 70/76 1 4 which was relation to other parts produced which were concerned with a product consisting of parts used in other industries. of fruit arising in the manufacture of fruit juice. In that case classification in Chapter 23 (residue and waste) was held to be correct. Furthermore, as far as the term 'fruit' (in Chapters 8 and 20 of the 27. Bearing in mind the facts that in the Common Customs Tariff) was concerned, present case the process of threshing the Court stressed that products falling tobacco is indeed intended primarily to within that chapter must still be identifiable obtain tobacco lamina, which is of dispro­ as parts of fruit in demand as such and also portionately greater importance for cigarette that the concept of fruit could not be manufacture than tobacco stem, and also extended so as to cover products lacking the that the value of lamina as opposed to stem essential constituents of the natural product is in the ratio of 5:1 (during the oral proceedings the Commission even 13 — Judgment of 19 November 1981 in Case 122/80 Analog mentioned a ratio of 12:1), together with Devices GmbH ν Hauptzollamt Mimchen-Mitte and Haupt­ zollamt München-West [1981] ECR 2781. 14 — Judgment of 15 February 1977 in Joined Cases 69 and 15 — Judgment of 22 March 1984 in Case 90/83 Michael 70/76 Rolf H. Dittmeyer ν Hauptzollamt Hamburs- Paterson and Others v Weddel & Company Ltd and Others Waltershof[1977] ECR 231. [1984] ECR 1567.

the inference which may be drawn from the Communities and reliance on the examples judgment in Joined Cases 69 and 70/76 of refuse given therein (which are all rather (that even products of some value may different from tobacco stem) is open to two constitute waste), it can only be concluded objections: not only are those Explanatory that the assessment expressed by the Notes of course simply a non-exhaustive list Commission in its regulation is not of examples, but also they refer quite manifestly incorrect but definitely appro­ generally as regards the term 'tobacco priate. refuse' to the Customs Cooperation Council Nomenclature Explanatory Notes men­ tioned in paragraph 21 above which in this 28. (c) Moreover, two further consider­ respect are unequivocal. ations support that view, whereas the arguments to the contrary adduced by Imperial Tobacco Ltd are not especially 32. In so far as Imperial Tobacco Ltd convincing. further refers to General Rule A3 (a) for the interpretation of the nomenclature of the Common Customs Tariff ('The heading 29. (aa) It is to me significant that which provides the most specific description apparently all the other Member States shall be preferred to headings providing a adopted the Common Customs Tariff classi­ more general description'), it can be fication that the Commission considers to be objected that that rule is inapplicable in the correct (which is consistent with the fact present case since subheading 24.01 A, that the Commission's draft regulation was which, in the view of Imperial Tobacco Ltd, endorsed by the representatives of all the provides the more specific description, Member States on the Common Customs covers only tobacco and not tobacco refuse. Tariff Nomenclature Committee — with the As a result, that general rule for the inter­ exception of the Danish and Irish represen­ pretation of the nomenclature of the tatives, who abstained). It is not possible to Common Customs Tariff can certainly not detract from this simply by stating that be relied on to have stem of the types of undertakings in the other Member States tobacco specifically named in subheading are not interested to the same extent as the 24.01 A also classified in that United Kingdom industry in imports from subheading — regardless of the scope of the countries to which the system of generalized term 'refuse'. preferences applies.

leaves, which points to the threshing process or in previously separated form, it must and not to the manufacture of the simply be recognized that this is the end-product). In addition, it is certainly not unavoidable result of the structure of the appropriate here to base an a contrario Common Customs Tariff and doubtless argument as regards the term refuse on the does not constitute a unique phenomenon wording used in the judgment in Case limited to the tobacco sector. A correction 90/83 (use in other industries). That it is can hardly be made by means of an appro­ unfounded is evident from the examples of priate interpretation of the Common tobacco refuse given in the Explanatory Customs Tariff; if some correction is Notes to the Customs Tariff of the considered to be called for, the only European Communities which are definitely solution is to modify the system of gener­ products — such as, for instance, alized preferences. cuttings — which can be used in the tobacco industry itself. 35. (d) Accordingly, it must be held as 34. While it is admittedly peculiar regards the second question that the validity — especially in view of the system of gener­ of Commission Regulation No 3517/84 alized preferences — that stem should be cannot be called in question on the ground treated differently depending on whether it that the Commission manifestly exceeded its is imported as part of whole tobacco leaves discretion in this area.

C — Conclusion

In the light of the foregoing, I propose that the questions referred to this Court by the Queen's Bench Division of the High Court of Justice should be answered as follows :