C-405/97

MÖVENPICK DEUTSCHLAND ν HAUPTZOLLAMT BREMEN

OPINION OF ADVOCATE GENERAL SAGGIO delivered on 27 January 1999 *

1. In the present case, the Finanzgericht The relevant provisions (Finance Court), Bremen (Germany) asks the Court to give a ruling on the interpretation of Commission Regulation (EEC) N o 2551/93 of 10 August 1993, 1amending Annex I to Council Regulation (EEC) N o 2658/87 on the tariff and statistical nomenclature and the Common Customs Tariff. 2

'(a) 0802 Other nuts, fresh or dried, whether or not shelled or peeled:

4. Next we come to Article 109 of Council Regulation (EEC) N o 2913/92 establishing the Community customs code ('the code'). 6 — walnuts: It provides that imported goods placed under the customs warehousing procedure may, sub- ject to authorisation by the customs authori- ties, undergo 'the usual forms of handling', whether manual or not, intended to preserve 0802 32 00 shelled them, improve their appearance or market- able quality or prepare them for distribution or resale. 7

(b) 0811 Fruit and nuts, uncooked or cooked by steaming or boiling in water, frozen, whether or not containing added sugar or other sweet- ening matter: Article 112(2) provides that, where the goods have undergone the usual forms of handling within the meaning of Article 109, 'the nature

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MÖVENPICK DEUTSCHLAND ν HAUPTZOLLAMT BREMEN

of the goods, the customs value and the quan­ items of charge recognised or accepted for the tity to be taken into account in determining handled goods when they were entered for the amount of import duties shall, at the the procedure'. request of the declarant, be those which would be taken into account for the goods, at the 8 time referred to in Article 214 if they have not undergone such handling. However, derogations from this provision may be adopted under the committee procedure'. 9 6. Article 522 of Regulation N o 2454/93 was subsequently amended by Article 1(16) of Commission Regulation N o 3254/94 which entered into force on 7 January 1995. In the new version, the article no longer contains the restriction previously provided in sub­ paragraph 3.

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OPINION OF MR SAGGIO — CASE C-405/97

the batch was made up of 1 533 12.5 kg boxes the corresponding heading of the CCT. The of fresh walnut pieces, shelled and unsweet­ plaintiff maintained, moreover, that in the cir­ ened. For the purposes of customs handling, cumstances reference could not be made to the applicant used code C N 0802 32 00 0000 the judgment in Case 120/75 Riemer ν Haupt- of the combined nomenclature, which refers zollamt Lubeck West in which the Court of to 'walnuts, shelled, fresh or dried', declaring Justice had held that the term 'fresh berries' that the goods were thawed, and had under­ did not include berries which had been frozen gone the usual handling for the purposes of and then thawed, particularly as in the cir­ ensuring their preservation, distribution and cumstances the dried nuts had never under­ resale. gone irreversible changes as a result of those processes such as to alter the structure of the flesh or to cause them to lose their natural properties.

The customs office however classified the The plaintiff further maintained that Article goods as 'frozen walnuts' under heading C N 522(3) of Regulation N o 2454/93 was invalid 0811 9099. The customs duty was therefore for infringement of the provisions of superior fixed at 18%, whereas the classification used law referred to in Article 112 of the code, in by the plaintiff would have attracted duty at that the first, although adopted in implemen­ the rate of 8%. tation of the provisions of the code, does not make it possible to rely on the principle of the neutrality of 'the usual forms of handling' for the purposes of application of the rate of customs duties.

'1. Is the Common Customs Tariff in the version contained in Annex I to Com­ mission Regulation (EEC) N o 2551/93 11. O n 3 April 1996 the applicant brought an of 10 August 1993 (OJ 1993 L 241, p. 1) action challenging that decision before the amending Annex I to Council Regula­ Finanzgericht Bremen, where it in essence tion (EEC) N o 2658/87 on the tariff and repeated the submissions made before the statistical nomenclature and on the customs office. By order of 19 August 1996 Common Customs Tariff (Combined the Finanzgericht called for a technical expert's Nomenclature 1994) to be interpreted so report in order to establish whether walnut that dried walnut pieces imported from pieces, imported by sea and refrigerated at a a non-member country, which were temperature between 0 and 5°C, had under­ stored deep frozen in a customs ware­ gone alterations in flesh structure, taste and house in the Community and subse­ external appearance at the time at which they quently presented for admission to free were placed on the market, after being stored circulation in a thawed condition, are to in a refrigerated environment at a tempera­ be classified under heading N o 0802? ture of -24°C for a period of between one and 12 months. The expert concluded that the treatment described could not technically be regarded as a 'freezing procedure', since walnuts contain no freezable water. It was, in the expert's opinion, simply a chilling proce­ dure. Nevertheless, the Hauptzollamt adhered to its classification, arguing that the process 2. If not: to which the walnuts were subjected, even if it was not equivalent to freezing in the tech­ nical sense, was not without effects, since it prevented the ripening process and thereby prevented the oil from becoming rancid. The process could not therefore be ignored at the time of tariff classification. For its part, the Was Article 522(3) of Commission Regu­ applicant claimed to find confirmation of its lation (EEC) N o 2454/93 of 2 July 1993 line of reasoning in the technical expert's (OJ 1993 L 253, p. 1), which has since opinion: as explained by the report, the wal­ been replaced by the new version of nuts had never undergone 'freezing' in the Article 522 introduced by Commission strict sense, and therefore could not, ex Regulation (EC) N o 3254/94 of 19 hypothesis be classified under the C C T heading December 1994 (OJ 1994 L 346, p. 1), concerning frozen products. inoperative?

15. The solution to the problem of classi- fying the goods in question within the com- The first question bined nomenclature is therefore to be sought within that system. According to the explana- tory note, a 'frozen' product means a product which has been cooled to below its freezing point (frozen throughout), whereas a 'chilled' product is a product kept at a low tempera- 13. By its first question, the Finanzgericht ture but above freezing point. 1 2 As has been Bremen is asking the Court whether, on a pointed out above, for the purposes of Tariff proper interpretation of the wording of the classification only the objective characteristics C C T contained in Annex I to Commission Regulation N o 2551/93, heading 0802 includes the goods in question, notwithstanding the 10 — See for example Joined Cases C-59/94 and C-64/94 Ministre processes which they have undergone after des Finances v Pardo & Fils and Cárnicas [1995] ECR I-3159; Case C-177/91 Bioforce [1993] ECR I-45; Case C-11/93 their arrival within the territory of the Com- Siemens Nixdorf [1994] ECR 1-1945 and Case 200/84 Daiber munity. [1985] ECR 3363. 11 — See for example Case C-393/93 Stanner v Hauptzollamt Bochum [1994] ECR 1-4011, paragraph 15 of which states that according to 'the Court's case-law [...] both the explana- tory notes to the nomenclature of the Customs Coopera- tion Council and the classification slips issued by the Com- mittee on Common Customs Tariff Nomenclature are important means for ensuring the uniform application of the Tariff and as such may be regarded as useful aids to its inter- pretation ... In order to interpret the above Tariff headings, 14. In the observations presented by the Com- therefore, it is necessary to take account not only of the wording and scheme of the Common Customs Tariff but mission and by the applicant — which agree also of the content of those explanatory notes'. See also Case that the goods should be classified under C-395/93 Neckermann Versand v Hauptzollamt Frankfurt am Main-Ost [1994] ECR I-4027, paragraph 5, and Case heading 0802 — it is pointed out that in the 200/84 Daiber [1985] ECR 3363, paragraph 14. light of the case-law of the Court the decisive 12 — I would point out that the report drawn up by the technical expert appointed by the Finanzgericht Bremen states that criterion for the customs classification of dried walnuts cannot 'be frozen' because of their low water content, and also that the 'non-technical' freezing to which goods must be sought in their objective char- they were subjected in this case does not give rise to any acteristics and properties, as apparent to the changes to the structure of their flesh, but rather makes it possible to preserve the oil in them unspoilt stabilising the customs authorities of the Member States at flavour and thus improving conservation.

18. The conclusion reached above with respect to the first question referred, by virtue of which the goods in question ought to be clas­ sified under heading 0802 of the Common Customs Tariff, renders devoid of purpose 16. The objective characteristics of the the two following questions, which the product therefore warrant its classification national court has in fact made conditional under Tariff heading 0802, as pieces of 'other upon a negative response to the first ques­ nuts, fresh or dried, whether or not shelled or tion. However, if the Court should intend to peeled', and more specifically its classification reach a different solution, classifying the goods under Tariff subheading 0802 3200 'shelled in question as 'frozen' within the meaning of walnuts', whether they should be, after 3200 heading 0811 of the Customs Tariff, I would for which the fixed rate of duty payable is lay the following observations before the 8%. Court.

17. I therefore propose that the Court should 19. By its second question the national court answer the first question as follows: on a is asking the Court of Justice to rule on the proper construction of the Common Cus­ validity of Article 522(3) of Commission toms Tariff in the version contained in Annex Regulation N o 2454/93, repealed by Com­ I to Commission Regulation (EEC) N o mission Regulation N o 3254/94, but in force 2551/93 of 10 August 1993, walnut pieces at the material time. More specifically, the imported from a non-member country, which German court wishes to know whether that have been subjected to refrigeration in a cus­ provision, adopted by the Commission by way of delegation made by the Council, is compatible with the higher-ranking legisla­ 13 — Judgment cited above, paragraph 4. tion contained in the Code.

20. I would recall that the provision the Code would make it possible to apply the validity of which is in question concerns the duty corresponding to the characteristics of customs treatment of goods undergoing the the goods before treatment, thus more favour- 'usual forms of handling' mentioned in Article able than the duty under heading 0802, while 109 of the Code. It provides that where hand- Article 552 of the Commission regulation ling would result in higher import duties would require the application of the rate than those applying to the goods before hand- higher than that under heading 0811. ling, the person concerned is not to present the request referred to in Article 112(2) of the Code. 14 In other words, as a result of Article 522(3) of the Commission regulation, the person concerned may not profit from the principle of 'neutrality' of handling and, thereby, obtain the same treatment that he would have received if, at the time in which the customs obligation arose, the goods have

Neverthe- by the products, if it is understood techni- less, the last sentence of Article 112(2) of the cally as 'freezing', is undoubtedly to be under- Code permits the adoption of 'derogations' stood to be a 'usual form of handling' within from those rules, in accordance with the the meaning of Article 109 of the Code. That 'Committee procedure' referred to in Article treatment would therefore entail the applica- 249 of the Code. Therefore, since the Com- tion of duty at 18%, greater than the duty mission regulation, which contains Article (8%) to which the goods would have been 522 the validity of which is in issue, was cer- tainly adopted pursuant to Article 249 of the subject if they had not undergone the han- Code, 16 the question is definitely to assess dling referred to. O n that interpretation of whether that provision, as submitted by the the relevant legislation, Article 112 of the Commission, contains 'derogation' from the principle of neutrality, or whether it should rather be considered, as submitted by the applicant, to be new legislation of general application, incompatible with the system 14 — For ease of reading I now recall the text of that provision: where the imported goods 'have undergone the usual forms established by the Code. It is clear that only of handling within the meaning of Article 109, the nature of in the first hypothesis can the prescription in the goods, the customs value and the quantity to be taken into account in determining the amount of import duties question be considered to be valid inasmuch shall, at the request of the declarant, be those which would be taken into account for the goods, at the time referred to as it is compatible with the higher-ranking in Article 214 if they had not undergone such handling. rules. However, derogations from this provision may be adopted under the Committee procedure.' 15 — It should be borne in mind that the reasoning followed in the provision is based on the assumption that the goods in question are to be classified as 'frozen walnut' for the pur- poses of heading 0811 of the Common Customs Tariff. 16 — See the preamble to Commission Regulation N o 2454/93.

22. In support of its own position, the Com­ 23. I consider the solution put forward by mission refers to the ratio of the favourable the applicant to be correct. We cannot rea­ treatment which importers enjoy under Article sonably speak of 'derogations' from the rules 112 of the Code and consequently the power laid down by Article 112 of the Code when of derogation conferred on the Commission. there is a provision which actually substan­ The Commission observes that goods tially reduces its legislative content, denying imported from non-member countries appear the advantages provided for where the 'usual on the markets of those countries with char­ forms of handling' have been used. This is in acteristics which do not necessarily corre­ fact a 'derogation' from a higher-ranking spond to the characteristics of markets in the provision only if the latter remains in force as Member States. Goods must therefore be a general provision from which the former adapted to Community market conditions, makes 'derogations' restricting its scope by by means of treatment (forms of handling) so way of exception. In the case before the as to ensure their preservation, improve their Court, however, the provision in the Com­ appearance or commercial quality or prepare mission regulation has the effect of abolishing for their distribution or resale; those treat­ the advantage provided by the rules of the ments may be carried out without the person Code, by making it impossible for the per­ concerned having to waive the benefits of the sons subject to customs requirements to profit customs warehousing arrangements. None the from the advantages offered them by Article less, the Commission adds, in order to pre­ 112 of the Code. vent economic conditions and in particular competitive relationships with respect to equivalent products of Community origin, from being distorted to the detriment of Com­ munity products, the 'usual forms of hand­ ling' permitted must be minor, and not there­ fore such as to cause any in-depth change in the characteristics or use of the goods. 24. If that is so, it should be added that the rules under Article 522 of the Commission regulation cannot a fortiori be justified by the general authorisation provided by Article 249 of the Code in order to adopt 'the provisions required for implementation of this Code'. 1 7 It is sufficient to recall in this connection the general principle by which the Commission,

in adopting measures to implement funda­ event of an affirmative reply to the second mental rules drawn up by the Council, may question — thus, once Article 522(3) of Regu­ not derogate from the principles laid down lation N o 2454/93 has been held to be invalid therein. 1 8 In the area with which we are now — it is possible to apply the rules contained concerned, the Court has stated that, while it in Commission Regulation N o 3254/94 of 19 is true that the Council has conferred on the December 1994 to the customs declarations Commission, which acts in concert with the under consideration. customs experts of the Member States, a broad discretion as to the precise content of the cus­ toms headings for the purposes of classifying any given goods, that does not however permit the Commission to alter the wording of the Tariff. 19 Similarly, the implementing regula­ tion may not derogate from the provisions 27. Article 1(16) of that regulation, which favourable to persons subject to the customs came into force on 7 January 1995, replaces obligation contained in the Code. the wording of Article 522 of Regulation N o 2454/93. In its new version, the provision no longer includes the restrictions included in the previous version on access to the advan­ 25. For all the reasons set out above, I pro­ tages of the handling arrangements. pose that the Court should apply as follows to the second question referred by the Finan­ zgericht Bremen: Article 522(3) of Commis­ sion Regulation (EEC) N o 2454/93 of 2 July 1993 laying down provisions for the imple­ mentation of Council Regulation (EEC) N o 2913/92 is invalid in so far as it provides that 28. The national court is therefore asking the where a 'usual form of handling' would result Court of Justice whether the new version of in higher import duties than those applying Article 522 may have retrospective effect, and to the goods before handling, the person con­ whether it may thus govern the customs treat­ cerned is not to present the request referred ment of goods admitted to the 'usual forms to in Article 112(3) of the Customs Code. of handling' arrangements even when the cus­ toms declarations were made before the date on which the new regulation entered into force.

31. In the light of the preceding observations, I propose that the Court should reply as follows to the questions referred by the Finanzgericht Bremen:

(1) O n a proper construction of the combined nomenclature in the version con­ tained in Annex I to Commission Regulation (EEC) N o 2551/93 of 10 August 1993, walnut pieces imported from a non-member country, which have been subjected to refrigeration in a customs warehouse within the territory of the Community and subsequently released into free circulation at a temperature above freezing point must be classified under Tariff heading 0802.

(2) For all the reasons set out above, I propose that the Court should apply as fol­ lows to the second question referred by the Finanzgericht Bremen: Article 522(3) of Commission Regulation (EEC) N o 2454/93 of 2 July 1993 laying down provisions for the implementation of Council Regulation (EEC) N o 2193/92 is invalid in so far as it provides that where a 'usual form of handling' would result in higher import duties than those applying to the goods before handling, the person concerned is not to present the request referred to in Article 112(3) of the Customs Code.

(3) Customs declarations made before the entry into force of Commission Regulation E C N o 3254/94 are governed by Article 112(2) of Council Regula­ tion N o 2913/92 of 12 October 1992 establishing the Community Customs Code.

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