CELEX: 62005CJ0011
Community Customs Code
Arrangements for processing under customs control
Refusal by the national customs authorities of an application for authorisation for processing under customs control
Binding nature of the conclusions of the Customs Code Committee
None
Jurisdiction of the Court to rule on the validity of those conclusions in the context of Article 234 EC
None
Interpretation of Article 133(e) of the Customs Code
Interpretation of Articles 502(3) and 504(4) of Regulation (EEC) No 2454/93
Overall assessment of all the circumstances of the application for authorisation

This reference for a preliminary ruling concerns the interpretation of Article 133(e) of Council Regulation (EEC) No 2913/92
of 12 October 1992 establishing the Community Customs Code (OJ 1992 L 302, p. 1), as amended by Regulation (EC) No 2700/2000
of the European Parliament and of the Council of 16 November 2000 (OJ 2000 L 311, p. 17), (‘the Customs Code’) and Articles
502(3) and 504(4) of Commission Regulation (EEC) No 2454/93 of 2 July 1993 laying down provisions for the implementation of
Council Regulation (EEC) No 2913/92 (OJ 1993 L 253, p. 1), as amended by Commission Regulation (EC) No 993/2001 of 4 May 2001
(OJ 2001 L 141, p. 1) (‘the implementing regulation’).
The reference was made in the course of proceedings between the Dutch company Friesland Coberco Dairy Foods BV (‘Coberco Dairy
Foods’) and the Inspecteur van de Belastingdienst/Douane Noord/kantoor Groningen (Tax Inspector/Customs North/Groningen Office)
(‘the Inspector’), concerning an application for the grant of an authorisation for processing under customs control (‘the
application’).

Legal background

The Customs Code
The Customs Code establishes a number of customs procedures with economic impact, including, in Articles 130 to 136, ‘Processing
under customs control’.
Article 130 of the Customs Code is worded as follows:
‘The procedure for processing under customs control shall allow non-Community goods to be used in the customs territory of
the Community in operations which alter their nature or state, without their being subject to import duties or commercial
policy measures, and shall allow the products resulting from such operations to be released for free circulation at the rate
of import duty appropriate to them. Such products shall be termed processed products.’
Under Article 132 of the Customs Code:
‘Authorisation for processing under customs control shall be granted at the request of the person who carries out the processing
or arranges for it to be carried out.’
Article 133 of the Customs Code provides:
‘Authorisation shall be granted only:
…
(e)      where the necessary conditions for the procedure to help create or maintain a processing activity in the Community without
adversely affecting the essential interests of Community producers of similar goods (economic conditions) are fulfilled. The
cases in which the economic conditions are deemed to have been fulfilled may be determined in accordance with the committee
procedure.’
In accordance with Articles 247 to 249 of the Customs Code, the Commission of the European Communities is to be assisted by
a Customs Code Committee (‘the Committee’) under the conditions set out in those articles.
As regards the Committee, Article 249 of the Customs Code provides:
‘The Committee may examine any question concerning customs legislation which is raised by its chairman, either on his own
initiative or at the request of a Member State’s representative.’

The implementing regulation
Article 496 of the implementing regulation defines an ‘authorisation’ as permission by the customs authorities to use the
arrangements.
Article 502 of the implementing regulation provides:
‘1.       Except where the economic conditions are deemed to be fulfilled pursuant to Chapters 3, 4 or 6, the authorisation shall not
be granted without examination of the economic conditions by the customs authorities.
2.       For the inward processing arrangements (Chapter 3), the examination shall establish the economic unviability of using Community
sources taking account in particular of the following criteria, the details of which are laid down in Part B of Annex 70:
(a)      unavailability of Community-produced goods sharing the same quality and technical characteristics as the goods intended to
be imported for the processing operations envisaged;
(b)      differences in price between Community-produced goods and those intended to be imported;
(c)      contractual obligations.
3.      For the processing under customs control arrangements (Chapter 4), the examination shall establish whether the use of non-Community
sources enables processing activities to be created or maintained in the Community.
…’
According to Article 503 of the implementing regulation:
‘An examination of the economic conditions involving the Commission may take place:
(a)      if the customs authorities concerned wish to consult before or after issuing an authorisation;
(b)      if another customs administration objects to an authorisation issued;
(c)       on the initiative of the Commission.’
Article 504 of the implementing regulation provides:
‘1.       Where an examination in accordance with Article 503 is initiated, the case shall be sent to the Commission. It shall contain
the results of the examination already undertaken.
2.      The Commission shall send an acknowledgement of receipt or notify the customs authorities concerned when acting on its own
initiative. It shall determine in consultation with them whether an examination of the economic conditions in the Committee
is required.
3.      Where the case is submitted to the Committee, the customs authorities shall inform the applicant, or holder, that such a procedure
has been initiated and, if the handling of the application is not completed, that the time‑limits laid down in Article 506
have been suspended.
4.       The Committee’s conclusion shall be taken into account by the customs authorities concerned and by any other customs authorities
dealing with similar authorisations or applications.
…’
As regards the arrangements for processing under customs control, the first subparagraph of Article 551(1) of the implementing
regulation provides:
‘The arrangements for processing under customs control shall apply for goods the processing of which leads to products which
are subject to a lower amount of import duties than that applicable to the import goods.’
According to Article 552 of the implementing regulation:
‘1.       For the types of goods and operations mentioned in Annex 76, Part A, the economic conditions shall be deemed to be fulfilled.
For other types of goods and operations examination of the economic conditions shall take place.
2.       For the types of goods and operations mentioned in Annex 76, Part B and not covered by Part A, the examination of the economic
conditions shall take place in the Committee. Article 504(3) and (4) shall apply.’
Annex 76, Part B, to the implementing regulation includes all the goods subject to agricultural policy measures.

Regulation (EC) No 1260/2001
In order to achieve the objectives of the common agricultural policy, and in particular to ensure that Community growers of
sugar beet and sugar cane continue to benefit from the necessary guarantees in respect of employment and standards of living,
measures to stabilise the market in sugar have been adopted by Council Regulation (EC) No 1260/2001 of 19 June 2001 on the
common organisation of the markets in the sugar sector (OJ 2001 L 178, p. 1).

The main proceedings and the questions referred for a preliminary ruling
Coberco Dairy Foods produces fruit drinks using as raw materials fruit juice concentrates, sugars, flavourings, minerals and
vitamins, purchased from companies, some of which are established in Member States and others in third countries. Processing
consists largely of mixing the fruit juices with water and sugar, pasteurising the product and then packaging it.
In accordance with Article 132 of the Customs Code, on 23 July 2002, Coberco Dairy Foods made an application for authorisation
for processing under customs control to the Dutch customs authorities in respect of three products: apple juice containing
added sugar, orange juice containing added sugar and white sugar, other than cane sugar. It was stated in that application,
under the heading of economic conditions, that the use of materials from third countries enabled processing activities to
be maintained in the Community.
As the goods and the processing envisaged feature in Annex 76, Part B, to the implementing regulation, the file was submitted
to the Committee for examination of whether the economic conditions had been fulfilled.
On 22 August 2003, the Commission lodged a working document with the Committee, from which it appears that Coberco Dairy Foods
made its application for authorisation on account of serious competition from producers from Central and Eastern Europe. It
was considering an initial investment of approximately EUR 750 000 in the construction of a processing plant which was expected
to create two jobs. Without the application of the arrangements for processing under customs control, Coberco Dairy Foods
would probably have decided to process the products in Central or Eastern Europe rather than in the Netherlands.
The Committee examined that document at its meeting on 18 September 2003. The minutes of that meeting state that a representative
of the Commission’s Directorate‑General for Agriculture had informed the Committee, first, of reductions in guarantees for
the disposal of sugar in order to comply with the Community’s international commitments and, second, of the fact that Community
sugar producers were ‘under pressure’ and that ‘duty‑free’ imports under the processing under customs control arrangements
would increase that pressure. Consequently, the Directorate‑General for Agriculture did not support the application. Therefore,
the Committee decided that the economic conditions were not fulfilled in this case.
By decision of 27 October 2003, the Dutch customs authorities based their decision on the Committee’s conclusion recommending
refusal of Coberco Dairy Foods’ application. The complaint brought by the latter was dismissed by the Inspector on 2 April
2004.
Coberco Dairy Foods therefore brought an action, on 10 May 2004, before the Gerechtshof te Amsterdam (Amsterdam Regional Court
of Appeal).
It is in those circumstances that by order of 28 December 2004 the Gerechtshof te Amsterdam decided to stay its proceedings
and to refer the following questions to the Court for a preliminary ruling:
‘(1)      How should the words “without adversely affecting the essential interests of Community producers of similar goods” in Article
133(e) [of the Customs Code] be interpreted? Can only the market for the finished product be considered or must the economic
situation with regard to the raw materials for processing under customs control also be investigated?
(2)      In relation to the assessment of the “processing activities to be created or maintained” under Article 502(3) [of the implementing
regulation], is there a specific number of jobs which must, as a minimum, be made possible by the activities? What other criteria
also apply to the interpretation of the cited text of the regulation?
(3)      In the light of the answers to Questions 1 and 2, can the Court of Justice examine the validity of a conclusion of the Committee
in preliminary ruling proceedings?
(4)      If so, is the conclusion in this case valid with respect to both the reasons and the economic arguments adduced?
(5)      If the Court of Justice cannot examine the validity of a conclusion, what interpretation should then be given to the words
“[t]he Committee’s conclusion shall be taken into account by the customs authorities” in Article 504(4) [of the implementing
regulation] if – in the first instance – the customs authorities and/or – on appeal – the national courts consider that the
Committee’s conclusion cannot justify the rejection of the application for processing under customs control?’

The fifth question
By the fifth question, which it is appropriate to examine first, the national court raises the question of the interpretation
of the words ‘[t]he Committee’s conclusion shall be taken into account by the customs authorities’ in Article 504(4) of the
implementing regulation. It asks, essentially, whether that provision means that the Committee’s conclusion is binding on
national customs authorities determining an application for authorisation for processing under customs control.
It must be observed, first, that it is not apparent from the wording of Article 504(4) of the implementing regulation that
the Committee’s conclusion is binding on the national customs authorities. According to the wording of that provision, the
Committee’s conclusion need only be taken into account by the customs authorities dealing with the application, as well as
by any other customs authorities dealing with similar authorisations or applications.
That provision does not by any means require the national customs authorities automatically to follow the Committee’s conclusion.
The national customs authorities may disregard the conclusion adopted by the Committee provided that they give reasons for
their decision in that respect.
That assessment of the legal nature of the Committee’s conclusion, and the extent of the obligation on the customs authorities
when they consider that conclusion, is supported by the objective pursued by the establishment of the Committee. As is clear
from the seventh recital in the preamble to the Customs Code, the establishment of the Committee seeks merely to ensure close
and effective cooperation between the Member States and the Commission in the field of the Customs Code. As far as concerns
applications for processing under customs control, that cooperation may and, sometimes, must give rise to an examination of
the economic conditions referred to in Article 133(e) of the Customs Code and Article 502 of the implementing regulation and
a consultation with the Committee before the customs authorities concerned issue an authorisation or after that authorisation
has been issued.
Although the Committee’s conclusion is intended to inform the customs authorities as to the economic conditions at issue,
as provided by the Customs Code and the implementing regulation, it is not apparent anywhere in the implementing regulation,
in particular in Article 504(4) thereof, or from the Committee’s role or the objective pursued by consultation with the Committee
that the customs authorities concerned are thereby bound by the Committee’s conclusion.
Furthermore, both Article 133(e) of the Customs Code, which provides that the cases in which the economic conditions are deemed
to have been fulfilled may be determined in accordance with the committee procedure, and Article 249 thereof, which provides
that the Committee may examine any question concerning customs legislation, confirm that the Committee’s role consists, in
general, in assisting the competent national authorities to take decisions, not in imposing constraints on them.
That interpretation of Article 504(4) of the implementing regulation, according to which the Committee’s conclusion is not
binding, cannot be called into question by the fact that in certain circumstances, particularly where, as in the main proceedings,
goods subject to agricultural policy measures are concerned, consultation with the Committee is compulsory by virtue of Article
552(2) of the implementing regulation. Even in such cases, the competent national authorities must only take account of the
Committee’s conclusion and are not bound by it. A duty to consult the Committee cannot be treated as a duty to adopt its conclusion.
As regards the practice followed by a number of Member States, particularly the Kingdom of the Netherlands, by which the customs
authorities concerned automatically follow the Committee’s conclusion when it is negative, it must be observed that, under
the relevant provisions of the Customs Code and the implementing regulation, those authorities are none the less free to adopt
a position different from that of the Committee after making their own assessment of the circumstances and having given adequate
reasons for their decision in that respect.
In those circumstances, the answer to the fifth question must be that the Committee’s conclusion is not binding on national
customs authorities when they are determining an application for authorisation for processing under customs control.

The third and fourth questions
By its third question, which it is appropriate to examine next, the national court asks essentially whether the validity of
a conclusion of the Committee issued pursuant to Article 133(e) of the Customs Code may be examined in proceedings under Article
234 EC. If the Court rules that it has jurisdiction to undertake such an examination, the national court asks, by its fourth
question, about the validity of the Committee’s conclusion at issue in the main proceedings, both as regards its statement
of reasons and the economic arguments relied on therein.
Article 234 EC provides that the Court has jurisdiction to give preliminary rulings concerning the validity and interpretation
of acts of the Community institutions and the European Central Bank.
According to settled case-law, that provision confers on the Court jurisdiction to give a preliminary ruling on the validity
and interpretation of all acts of the institutions of the Community without exception (Case C-322/88
Grimaldi
[1989] ECR 4407, paragraph 8).
In that connection, it is not disputed that the Committee’s conclusion cannot be imputed to the Commission. Since the Commission
and the Member States may and, sometimes, must consult the Committee in the course of examining an application for authorisation
for processing under customs control, the Committee’s conclusion cannot be regarded as constituting an act of the institutions,
within the meaning of that case-law. That conclusion also follows from the objective pursued by the establishment of the Committee,
which seeks merely to ensure close and effective cooperation between the Member States and the Commission in the field of
the Customs Code.
As regards the legal nature of the Committee’s conclusion, it must be recalled, first of all, as is clear from paragraphs
26 to 33 of this judgment, that it is not binding on national customs authorities which are determining an application for
authorisation for processing under customs control.
That interpretation is confirmed by the case-law of the Court relating to other types of opinions, of a similar kind, such
as, in particular, the opinions of the Committee on Common Customs Tariff Nomenclature established by Council Regulation (EEC)
No 97/69 of 16 January 1969 on measures to be taken for uniform application of the nomenclature of the Common Customs Tariff
(OJ, English Special Edition 1969(I), p. 12). It must be observed, as far as concerns the Committee’s conclusions, that, although
they constitute an important means of ensuring the uniform application of the Customs Code by the customs authorities of the
Member States and as such they may be considered as a valid aid to the interpretation of the Code, they do not have legally
binding force (see, to that effect, Joined Cases 69/76 and 70/76
Dittmeyer
[1977] ECR 231, paragraph 4; Case 798/79
Chem-Tec
[1980] ECR 2639, paragraphs 11 and 12; and Case C‑35/93
Dr. Eisbein
[1994] ECR I‑2655, paragraph 21).
Since the Committee was established in order to ensure close and effective cooperation between the Member States and the Commission
in the field of the Customs Code, the customs authorities of the Member States are only required to take its conclusions into
account and are not bound to follow them when adopting a final decision. It is in fact the latter decision which must, if
necessary, be subject to judicial review by the national court.
Therefore, the answer to the third question must be that the validity of conclusions of the Committee issued in accordance
with Article 133(e) of the Customs Code cannot be examined within the framework of Article 234 EC.
In the light of the answer to the third question, there is no need to reply to the fourth question.

The first question
By its first question, the national court raises the question of the interpretation of the terms ‘without adversely affecting
the essential interests of Community producers of similar goods’ in Article 133(e) of the Customs Code. It asks, essentially,
whether, in the assessment of an application for authorisation for processing under customs control under that provision,
account must be taken not only of the market for the finished products but also of the economic conditions of the market for
raw materials used to produce those goods.
Coberco Dairy Foods takes the view that the notion of ‘essential interests of Community producers of similar goods’, within
the meaning of Article 133(e) of the Customs Code, must be interpreted as covering only an assessment of the interests of
the Community producers of processed goods, that is to say finished products.
The Greek and Netherlands Governments and the Commission take the view that, having regard to the terms, the context and the
objectives of Article 133(e) of the Customs Code, an examination of the economic conditions requires that both the interests
of the producers of the processed goods and those of the producers of goods similar to those used in the processing be taken
into account.
The Italian Government submits, first, that the examination of the economic conditions must cover raw materials, since they
are goods which benefit from the arrangements for processing under customs control and that the protection measures in these
advantageous arrangements were provided for those goods. Second, and for the same purposes, that examination should be conducted
by taking account of the Community market. Third, the decision which is taken should be applied in the same manner in all
the Member States.
It must be observed that the wording of Article 133(e) of the Customs Code, which refers to ‘the essential interests of Community
producers of similar goods’ without stating whether it refers to producers of finished products or whether it also includes
producers of raw materials used to produce those goods, does not provide a clear answer to the question referred, so that
the context of that provision must be taken into account, namely the customs procedure with economic impact to which that
provision applies and the objectives pursued by that procedure.
Under Article 130 of the Customs Code, the procedure for processing under customs control allows non-Community goods to be
used in the customs territory of the Community in operations which alter their nature or state, without their being subject
to import duties or commercial policy measures, and allows the products resulting from such operations to be released for
free circulation at the rate of the import duty appropriate to them. That procedure applies, in accordance with the first
subparagraph of Article 551(1) of the implementing regulation, to goods the processing of which leads to products which are
subject to a lower amount of import duty than that applicable to the import goods.
The arrangements for processing under customs control were adopted in order to avoid negative consequences for processing
operations in the Community from an automatic application of the Community Customs Tariff. However, by conferring an advantage
on Community processors, who are not, under those arrangements, bound to pay customs duties on goods imported from third countries,
those arrangements may none the less adversely affect the essential interests of any Community producers of the raw materials
used in the processing.
Given that potential conflict of interests, it is clear that the examination of the economic conditions laid down in Article
133(e) of the Customs Code is intended to take account of those various interests, namely those of the processors of raw materials
and those of Community producers of similar goods. The objective of that provision is, as the Commission rightly submits,
that the advantages of an authorisation for processing under customs control in respect of processing operations should be
assessed in the light of the possible impact of the issue of such an authorisation on the situation of the Community producers
of goods similar to those being processed.
That interpretation of the objective pursued by Article 133(e) of the Customs Code, that the interests of all Community producers
must be protected, namely both those of the producers of finished products and those of the producers of raw materials used
to produce those products, is, moreover, the only interpretation capable of taking account of the requirements of the common
Community policies, including those of the common agricultural policy, as required by the third and fourth recitals in the
preamble to the Customs Code.
Therefore, the answer to the first question must be that, in the assessment of an application for authorisation for processing
under customs control pursuant to Article 133(e) of the Customs Code, account must be taken not only of the market for the
finished products but also of the economic situation of the market for the raw materials used to produce those products.

The second question
By its second question, the national court asks what criteria are to be applied in order to interpret the expression ‘processing
activities to be created or maintained’ in Article 502(3) of the implementing regulation, and whether, in particular, account
must be taken of the creation, on account of the processing operations envisaged, of a minimum number of jobs.
Coberco Dairy Foods argues that since that provision does not provide for any limit as to the number of jobs to be maintained
or created, the number of jobs does not constitute therefore a relevant criterion.
Before granting an authorisation for processing under customs control, the national customs authorities have a duty, in accordance,
in particular, with Article 133(e) of the Customs Code and Article 502(3) of the implementing regulation, to examine whether
certain economic conditions have been fulfilled, in particular as regards goods subject to agricultural policy measures, such
as sugar.
Pursuant to Article 133(e) of the Customs Code, that examination must establish whether the authorisation for processing under
customs control may help create or maintain a processing activity in the Community without adversely affecting the essential
interests of Community producers of similar goods. The criterion that the authorisation must be such as to enable processing
activities in the Community to be created or maintained is repeated in Article 502(3) of the implementing regulation.
While the provisions of the Community rules applicable to the arrangements for processing under customs control do not state
the various criteria to be taken into consideration in the assessment of the economic conditions for which they provide, it
is appropriate to recall the objectives pursued by those arrangements, set out in paragraphs 50 to 52 of this judgment, and
the fact that the examination of those conditions is designed to take account of the different interests of the processors
of raw materials and those of the Community producers of similar goods, while complying with the requirements of common policies.
Having regard to those considerations, the Court observes, like the Netherlands and Greek Governments and the Commission,
that the economic conditions referred to by those provisions must be assessed by reference to a number of factors, such as
the value of the investment made, the permanence of the activity and its viability, the stability of the jobs created and
any other relevant factor relating to the creation or maintenance of a processing activity. Although the creation of a minimum
number of jobs on account of the processing activities envisaged constitutes a relevant factor in the examination of the economic
conditions required by the Customs Code and the implementing regulation, it is not necessarily the only factor to be taken
into consideration. The criteria to consider in that examination depend on the nature of the processing activity concerned
and each examination of the economic conditions must be undertaken in the light of the specific circumstances of the situation.
Accordingly, the answer to the second question must be that the criteria to be taken into consideration when assessing ‘processing
activities to be created or maintained’ within the meaning of Article 133(e) of the Customs Code and Article 502(3) of the
implementing regulation, may include the criterion relating to the creation of a minimum number of jobs on account of the
processing activities envisaged, but is not limited to that criterion. Those criteria depend on the nature of the processing
activity concerned, and the national customs authority responsible for examining the economic conditions under those provisions
must make an overall assessment of all the relevant factors, including those concerning the number of jobs created, the value
of the investment made and the permanence of the activity envisaged.

Costs
Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court,
the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs
of those parties, are not recoverable.
On those grounds, the Court (Third Chamber) hereby rules:
1.
In the assessment of an application for authorisation for processing under customs control pursuant to Article 133(e) of
Council Regulation (EEC) No 2913/92 of 12 October 1992 establishing the Community Customs Code, as amended by Regulation (EC)
No 2700/2000 of the European Parliament and of the Council of 16 November 2000, account must be taken not only of the market
for the finished products but also of the economic situation of the market for the raw materials used to produce those products.
2.
The criteria to be taken into consideration when assessing ‘processing activities to be created or maintained’ within the
meaning of Article 133(e) of Regulation No 2913/92, as amended by Regulation No 2700/2000, and Article 502(3) of Commission
Regulation (EEC) No 2454/93 of 2 July 1993 laying down provisions for the implementation of Council Regulation (EEC) No 2913/92,
as amended by Commission Regulation (EC) No 993/2001 of 4 May 2001, may include the criterion relating to the creation of
a minimum number of jobs on account of the processing activities envisaged, but is not limited to that criterion. Those criteria
depend on the nature of the processing activity concerned, and the national customs authority responsible for examining the
economic conditions under those provisions must make an overall assessment of all the relevant factors, including those concerning
the number of jobs created, the value of the investment made and the permanence of the activity envisaged.
3.
The validity of conclusions of the Customs Code Committee issued in accordance with Article 133(e) of Regulation No 2913/92,
as amended by Regulation No 2700/2000, cannot be examined within the framework of Article 234 EC.
4.
The Customs Code Committee’s conclusion is not binding on national customs authorities when they are determining an application
for authorisation for processing under customs control.
[Signatures]
*
Language of the case: Dutch.