C-265/89

Background 3. According to Vismans, the imported goods should be classified under Chapter 23 2 of the Common Customs Tariff, entitled 'Residues and waste from the food industries; prepared animal fodder', more 2. The request for a ruling has been made specifically under subheading 23.01 B I: in connection with a dispute between Gebr. Vismans Nederland BV (hereinafter referred to as 'Vismans'), and the Inspecteur der Invoerrechten en Accijnzen (Inspector of import duties and excises) concerning the '23.03 — Beet pulp, bagasse and other classification under the Common Customs waste of sugar manufacture; brewing and Tariff of goods imported from the United distilling dregs and waste; residues of States which, in a declaration made on 27 starch manufacture and similar residues : April 1987, were described as 'beet pulp pellets'. In its order for reference the Tarief­ commissie states that the goods have the following objective characteristics: A. ...

(i) they are derived from sliced sugar beet B. Other: and they form the residue of a 2 — The customs tariff applicable at the time of the facts is that completed process of sugar extraction; contained in the Annex to Council Regulation (EEC) No 3618/86 of 24 November 1986 amending Regulation (EEC) No 3331/85 amending Regulation (EEC) No * Original language: Dutch. 950/68 on the Common Customs Tariff (OJ 1986 L 345, 1 — OJ 1985 L 140, p. 7. p. 1).

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I. Beet pulp, bagasse and other (EEC) No 97/69, 3set a limit for sucrose waste of sugar manufacture content as a criterion for distinguishing between sugar beet and beet pulp. Article 1 of Regulation No 1388/85 provides:

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'(1) Do the goods in issue, which contain 7. In my view, that interpretation is not 12% sucrose but must be regarded as consistent with the purpose or wording of pelletized "beet pulp" which has been the regulation. It is apparent from the de-sugared as far as economically preamble that the Commission wished to lay feasible, nevertheless fall under the down a specific criterion for determining term "partly de-sugared sugar beet" in whether the residue which remains after the Article 1 of Commission Regulation sugar has been extracted from sugar beet (EEC) No 1388/85 of 24 May 1985? should be classified as 'sugar beet' or as 'beet pulp'. The Commission opted for a single criterion, namely the remaining sugar content. Where the residue contains more than 10% sugar by weight, including the sugar contained in the binder, it is regarded (2) If so, is the regulation referred to in as 'sugar beet'. Other criteria, such as the Question 1 valid?' fact — referred to by Vismans — that it is not economically feasible to extract further sugar from the residue, are disregarded. It follows that the goods fall within the scope of Regulation No 1388/85 solely because of the finding that their sugar content The scope of Regulation No 1388/85 exceeds 10%.

6. The Tariefcommissie's first question is designed to establish whether goods having The validity of Regulation No 1388/85 the characteristics which it describes fall within the scope of Regulation No 1388/85.

the Classification of Goods in Customs In the regulation in question the 4 Commission undoubtedly used a criterion Tariffs. That restriction on the Commission's powers is moreover expressly which was objective and easy to verify in stated in the second recital of Regulation order to distinguish sugar beet more clearly No 97/69 5and it is also referred to in the from beet pulp, namely the remaining Court's case-law concerning the interpre­ sucrose content. The question remains tation of that regulation. 6 whether the Commission, by setting the sucrose content at a maximum of 10% by weight, did not arbitrarily — without applying an appropriate distinguishing criterion, that is to say one related to the determinant characteristics of the product 9. In those cases the Court stated that the (see paragraph 10 below) — classify as Commission, acting in close cooperation sugar beet a group of products which in with the customs experts of the Member reality constitute beet pulp and hence States, had a wide power of discretion in attribute to the terms 'beet pulp' and 'sugar clarifying the subject-matter of headings of beet' used in the Common Customs Tariff the Common Customs Tariff. However, meanings which resulted in those products that discretion, wide though it may be, may being classified, contrary to their nature, in not be exercised arbitrarily and may not, in a heading of the Common Customs Tariff the guise of clarification, consist in that was not intended for them. Specifying amendment of the Tariff nomenclature. tariff headings in such a manner so as to take no account of the essential charac­ teristics of the products concerned amounts in substance to an amendment of the Common Customs Tariff, something which As the Court has consistently held, the does not fall within the powers of the Commission must also take account of the Commission. 8 fact that:

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10. According to the Common Customs extraction process. A 'residue' is, on the Tariff, the essential characteristic of beet other hand, a product which is the direct pulp is that it is a waste product of the sugar result of the extraction process. In industry. That is apparent from the heading classifying beet pulp, Heading 23.03 uses to Chapter 23 and from the wording of the term 'waste' rather than 'residues'. I do subheading 23.03 B I. Beet pulp appears in not attach too much importance to the use Chapter 23 entitled 'Residues and waste of that term. Indeed in the Explanatory from the food industries' and is classified Notes of the Customs Cooperation Council under subheading 23.03 B I with 'other concerning Heading 23.03 of the Common waste of sugar manufacture'. It is also Customs Council Nomenclature, beet pulp apparent from the Explanatory Notes of the is described as a 'residue'. In my view, what Customs Cooperation Council, in which, as is important is that the Court's case-law I have already pointed out, beet pulp is states that the goods in question, whether described as the residue which remains after they are to be regarded as 'waste' or the sugar has been extracted from the root 'residues', are always the end result of an of the sugar beet. Finally, it is in accordance industrial extraction process. with the ordinary meaning attributed to the term. 9

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the sugar industry as a raw material. If the the Member States who based themselves on Commission wishes to clarify the term in a the sucrose content which usually remained regulation by establishing a limit for sucrose in practice following extraction of the sugar content, then that limit must be and not the sucrose content which would based — even by the use of suitable allow further economic extraction of sugar. margins — on whether or not it is possible The result of those discussions was initially for the sugar industry to extract further set out in an explanatory note to the sugar from the goods concerned. If that Customs Tariff of the European limit does not take account of that essential Communities. In that Note, goods with characteristic of beet pulp, then the more than 8% sucrose by weight, excluding Commission regulation will have the result the sucrose in the binder, were regarded as that the imported goods, which are in sugar beet. The percentage specified in that reality beet pulp and not sugar beet, are Note was adopted in Regulation No subject to the higher levy for sugar beet that 1388/85, except that the sucrose content in was introduced in order to prevent the the binder was now included and the total disruption of the Community sugar market, sucrose content rounded up to 10% by even though the goods cannot be used as a weight. From the background to the regu­ raw material by the sugar industry. For the lation it cannot be concluded that the limit most part this in practice has the effect of adopted to distinguish sugar beet from beet denying such products access to the pulp was fixed in a relevant and hence not Community for reasons which are unrelated an arbitrary manner, with reference to a to the common organization of the criterion which takes account of what the market. 2 1 Common Customs Tariff regards as the essential characteristic of beet pulp, namely that the goods can no longer be used as raw material by the sugar industry.

contemplate circumstances which may occur hearing it became apparent that the in the future, for example if prices on the Commission was unaware of any case in sugar market — a traditionally unstable which the sugar industry had in the past market — increased significantly. extracted sugar from sugar beet which had already undergone a process of sugar extraction. The Commission is undoubtedly correct in stating that Community rules must contemplate future circumstances; however, 14. For the foregoing reasons my its provisions must also be based on event­ conclusion is that the Commission has done ualities which may reasonably occur. On more than merely clarify the tariff headings that point the Commission did not refute concerned. It has on the contrary redefined Vismans' arguments to the effect that it them by setting, for the purpose of distin­ cannot reasonably be anticipated that guishing between sugar beet and beet pulp, market prices will ever fluctuate to such an a sucrose content so low that goods which extent that it becomes economically feasible by reason of what the Common Customs for the sugar industry, having regard to the Tariff regards as their essential (or 13 high costs associated therewith, to extract principal) characteristic constitute beet further sugar from beet pulp with a sucrose pulp may no longer be classified under content of 12 %. On the contrary, at the subheading 23.03 B 1.

Conclusion

15. In conclusion I propose that the Court should reply as follows to the questions submitted :

'(1) A product with a sucrose content of 12 % by weight, including the sucrose contained in the binder, which is the residue of a completed process of sugar extraction from sugar beet falls within the scope of Commission Regulation (EEC) No 1388/85 of 24 May 1985.