C-105/96

CODIESEL v CONSELHO TÉCNICO A D U A N E I R O

O P I N I O N OF ADVOCATE GENERAL FENNELLY delivered o n 24 April 1997 *

1. In this preliminary reference the Court is headings, omitting subheadings, except asked to interpret certain provisions of the where necessary, are as follows: 2 1986 version of the Common Customs Tariff (hereinafter 'the CCT'). The issue raised is whether certain separate units of electrical apparatus, designed to provide an uninter- ruptible power supply for computers, should, since they are designed to be used together, be classified under one single CCT heading and, if so, which. '84.53 Automatic data-processing machines and units thereof: magnetic or optical readers, machines for transcribing data onto data media in coded form and machines for processing such data, not elsewhere specified or included:

I — The legislative context

»

Since this is the specific heading effectively invoked by the plaintiff, reference must also be made to part of the subheading of the nomenclature adopted for statistical pur- poses by Commission Regulation (EEC) 2. The relevant version of the C C T in 1986 N o 3631/85 of 23 December 1985 3 amend- was contained in Council Regulation (EEC) ing the nomenclature of goods for the exter- N o 3331/85 of 5 December 1985 amending nal trade statistics of the Community and Regulation (EEC) N o 950/68 on the Com- statistics of trade between Member States mon Customs Tariff. ' The relevant tariff

b Digital machines:

2 Other: B. Other machines and apparatus:

cc Peripheral units, including con- trol and adapting units (connect- able directly or indirectly to the central unit):

II. Transformers, static converters, rectifiers and rectifying apparatus; inductors

33 Other

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(b) Mixtures, composite goods consisting of 4 — The invoice of the exporter. Merlin Gerlin, indicated that the different materials or made up of differ- rwo cabinets contained an 'Alpes 100 12Kva' worth FF 95 200 and an 'Armoire Batterie Autonomic 30 M N ' val- ent components, and goods put up in ued at FF 19 040.

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O P I N I O N O F MR FENNELLY — CASE C-105/%

be classified under tariff heading as the tension in the network resumes its 90 28 380 000 D of the Portuguese tariff normal values (or those within the toler- (concerning electrical measuring or control- ances), the rectifier/charger again feeds the ling apparatus). In the event, both of these A C converter and ensures that the set of bat- tariff headings have become irrelevant. teries is recharged at constant tension.'

However, the customs examiner maintained 7. Disagreeing with that opinion, the plain- his opinion, which was ultimately confirmed tiff's clearing agent, none the less, amended by the Conference of Supervisory Examiners the tariff heading which he had previously (Conferência dos Revificadores). The Cus- indicated to 84.53.890.900 C, for the follow- toms Office of Lisbon (Delegação Aduaneira de Alverca) accordingly classified the goods ing reasons: 5 under Portuguese heading 90 28 380 000 D.

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CODIESEL v CONSELHO TÉCNICO A D U A N E I R O

devices. Both the rectifier and the A C con- verter carry out functions which fall within 10. Before the national court, the plaintiff the scope of those performed by the static contended, inter aim, that the cabinets 'form converters referred to in Title V and the a unit whose sole and inseparable function is explanatory note for heading 85.01, which to regulate and guarantee the supply of elec- heading gives merely an illustrative list. In tricity to computers', and that pursuant to the second cabinet, the set of accumulators Rule 3(b) of the General Rules, coupled with constitutes an alternative source of accumu- explanatory note 3 to Section XVI of the lated energy designed to feed the AC con- CCT, 6 'the classification must take account verter when there are cuts or faults on net- of the main function' of the goods. 7 work 1: since the batteries are independent from the units they feed (which are complete in themselves), they must be classified sepa- rately, except where they are presented as part of those units; they are not stabilizer units of the kind referred to in paragraph D-6 of the explanatory notes to heading 84.53, since they are not units form- 11. In its reference, the national court states ing part of the data-processing system for that 'the fundamental question is whether the purpose of supplying an appropriate cur- the contested administrative measure was rent to each of the component parts at all unlawful in that it maintained the classifica- times as a result of monitoring by the sys-

9. O n 31 May 1994, the judgment of the Tri- tive of the Ministério Público (State Lawyer's Office) agreed with this submission, their use would not appear to be an bunal Técnico-Aduaneiro de 2a Instância issue in this reference.

'1. Having regard to the facts held to be 13. The plaintiff relies upon the conclusions proved in part 3 of this judgment (above of the expert technical opinion that it all those set out in paragraphs A to D requested for use in the national proceedings, and L, commencing on the 7th folio and which state, firstly, that the rectifier part of ending on the 12th folio) 9 and the the apparatus cannot function without the applicable Community provisions, is batteries, secondly, that the apparatus is not a the dual tariff classification assigned to regulator since its output is not the result of the goods in question by the Tribunal anything which it actually regulates and, Técnico de I a Instância and later con- finally, that it is not a converter since it nei- firmed by the Tribunal Técnico de 21 ther converts alternating current into direct Instância and the Tribunal Tributário current nor the latter into the former. These de 2 a Instância correct? conclusions conform, in the plaintiff's view, to both Rule 3(b) of the General Rules and explanatory note 3 to Section XVI of the 1986 version of the CCT, whereby products assembled from different components should be classified by reference to the component which gives them their essential character, namely, in this case, that which enables the apparatus to control and guarantee the con- tinuous supply of energy. 2. If not, what is the proper tariff classifi- cation?'

8 — The national court states that Portugal was obliged to apply the C C T nomenclature with effect írom 1 March 1986 (pur- suant to the Act of Accession of the Kingdom of Spain and the Republic of Portugal to the European Communities; OJ 1985 L 302, p. 23). 14. In Portugal's view, the impugned classi- 9 — These facts arc essentially set out in paragraphs 5 to 9 above. fication should be upheld. It submits that the

goods at issue may not be classified under ters 84 or 85 of the CCT. However, it main- one single heading pursuant to their essential tains that the combined function at issue character, because the batteries are indepen- here, viz. that of guaranteeing the uninter- dent of the electrical supply apparatus, the rupted supply of electricity, is not one that is latter being complete in itself and, hence, contained in that nomenclature. Moreover, capable of separate customs classification. that function is not fundamentally different from that performed by the cabinet contain- ing the rectifier, the AC converter and the static inverter switch (hereinafter 'Cabinet A') which, in the Commission's opinion, may consequently be viewed as constituting a complete apparatus in itself. O n its second reformulated question, the Commission, 15. The Commission, by way of a prelimi- referring in particular to the applicable nary observation, states that the Court has explanatory notes of the Customs Coopera- no competence under Article 177 of the tion Council (hereinafter 'the C C C ) , sub- Treaty to apply Community law to specific mits that subheading 85.01 B. II. f of the factual circumstances. It follows, in its view, Nimexe (namely, 'static converters, rectifiers that the questions referred should be refor- and rectifying equipment') should be inter- mulated. The Commission suggests that preted as encompassing Cabinet A. As for essentially three questions arise: (i) should the cabinet containing the set of accumula- Chapter XVI of the 1986 version of the C C T tors (hereinafter 'Cabinet B'), it contends be interpreted as containing provisions that that both the text of and accompanying permit the classification of goods such as explanatory note to subheading 85.04 B. I of those at issue in the main proceedings under the C C T (namely, 'lead-acid accumulators') a single tariff heading or subheading as con- support its classification under that subhead- stituting one functional unit; (ii) if the ing. answer to the first reformulated question is negative, should subheadings 85.01 B. II. f and 85.04 B. I be interpreted as covering such goods; (iii) if the answer to the second reformulated question is negative, under what other heading or subheading should the IV — Analysis goods be classified?

between the Court and national courts in most specific heading shall be preferred to Article 177 references, that it is for the refer­ headings providing a more general descrip­ ring court to apply the relevant provisions o r tion', whereas under Rule 3(b) '... composite rules of Community law which have been goods consisting of different materials or interpreted by the Court in the specific case made of different components... shall be n pending before it. In the circumstances of classified as if they consisted of the material the present case, where the first question or component which gives them their essen­ referred, on its face, asks the Court to deter­ tial character in so far as this criterion is mine whether the contested administrative applicable' (emphasis added). Guidance as to measure is correct, I agree with the reformu­ the interpretation of this rule may be lation of the questions proposed by the obtained from the relevant explanatory notes Commission. of the C C C . 1 2 Composite goods are therein defined as 'those in which the components are attached to each other to form a practi­ cally inseparable •whole' as well as 'those with separable components, provided those components are adapted one to the other and are mutually complementary and that together they form a whole which it would 18. The Commission, relying particularly be difficult to sell in different parts'. 1 3 upon the relevant explanatory notes of the According to the C C C commentary, the fac­ C C C , contends that, notwithstanding that tor determining the essential character of the essential character of a UPS system is to goods varies between different kinds of ensure the uninterrupted supply of electric­ goods and may be determined 'by the nature ity, goods such as those imported by the of the material or component, its bulk, quan­ plaintiff may not be classified by reference to tity, weight or value, or by the role of a con­ that character since it is not mirrored in the stituent material in relation to the use of the nomenclature contained in Chapters 84 or 85 goods'. 1 4 of the 1986 version of the CCT. I do not think that such an absolute position is appropriate in the present case. I think that Rule 3(b) of the General Rules is relevant and its potential application must, thus, be considered. 20. This approach is largely mirrored in the Court's case-law, though without any par­

ticular emphasis on the relevance of material supply of power, I am satisfied that, read in used. Thus, in ELBA v Hauptzoüamt Berlin- the light of the General Rules, the nomencla- Packhof,15 where it was concerned with the ture permits the classification of goods by classification of certain plastic frames con- reference to such a function. Consequently, taining 'flashing light circles' which were it is necessary, in my view, to determine, intended for use, among other things, on firstly, the essential purpose of a UPS system Christmas trees, the Court held that '... it and, secondly, which C C T classification cannot be argued that the "essential charac- most accurately defines that essential pur- ter" of the article within the meaning of the pose. General Rules ... is determined by the mate- rials used', but that, on the contrary, its essential character must be 'determined by its intended purpose as a decorative lighting appliance regardless of the material used for its frame'. 16 In Sportex v Oberfinanzdirektion Hamburg,17 where the Court was asked to rule on the classification of goods known as 'pre-impregnated carbon- fibres', it considered Rule 3(b) of the General Rules to be 'the sole provision to which recourse [might] be had' for classification purposes when the separate subheadings under which the goods might otherwise be classified were 'general in scope'. 1 8 It held 22. The essential purpose of a UPS system is that under Rule 3(b) 'it is necessary, in carry- to assure the continuous and balanced sup- ing out the tariff classification of a product, ply of electricity. In the present age of infor- to identify, from among the materials of mation technology such systems are often, which it is composed, the one which gives it but not invariably, used to maintain com- its essential character [and that] this may be puter networks and to protect data from done by determining whether the product accidental damage or deletion. I agree with would retain its characteristic properties if the view of the Commission that such sys- one or other of its constituents were tems cannot, in themselves, be regarded as removed from it'. 1 9 units of 'automatic data-processing machines ...' under C C T heading 84.53. The Commis- sion rightly emphasizes the finding of the Tribunal Técnico Aduaneiro de 2 a Instância that the goods at issue in the main proceed- ings 'are not stabilizer units of the kind 21. Although, as the Commission submits, referred to in paragraph D-6 of the explana- the 1986 version of the C C T nomenclature tory notes to heading 84.53, since they are contains no heading or subheading covering not units forming part of the data-processing the function of ensuring the uninterrupted system for the purpose of supplying an appropriate current to each of the compo- nent parts at all times as a result of monitor- 15 — Case 205/80 [1981] ECR 2097. ing by the system' (emphasis added). How- 16 — Paragraph 17 of the judgment. ever, it must ultimately be for the national 17 — Case 253/87 [1988] ECR 3351. court to make the final factual decision in 18 — Paragraph 7 of the judgmenL 19 — Paragraph 8 of the judgment. this respect.

(1) T h e p a r t of t h e a p p a r a t u s of an u n i n t e r r u p t i b l e p o w e r s u p p l y s y s t e m t h a t c o m p r i s e s a set of a c c u m u l a t o r s s h o u l d n o t b e assigned, u n d e r C o u n c i l R e g u ­ l a t i o n ( E E C ) N o 3331/85 of 5 D e c e m b e r 1985 a m e n d i n g R e g u l a t i o n ( E E C ) N o 950/68 o n t h e C o m m o n C u s t o m s Tariff, a tariff classification separate f r o m t h a t assigned t o t h e p a r t comprising a rectifier, a n A C c o n v e r t e r a n d a static inverter switch, w h i c h , in accordance w i t h R u l e 3(b) of t h e G e n e r a l R u l e s for t h e i n t e r p r e t a t i o n 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, s h o u l d b e r e g a r d e d as defining t h e essential c h a r a c t e r of s u c h a system.

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CODŒSEL v CONSELHO TÉCNICO ADUANEIRO

(2) Where the essential character of goods comprising an uninterruptible power supply system is defined by reference to the function performed by its recti- fier, A C converter and static inverter switch, imports containing those parts should be regarded for the purposes of the version of the Common Customs Tariff applied by Council Regulation (EEC) N o 3331/85 as falling within sub- heading 85.01 B. II.

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