**Case C-140/08**

**Rakvere Lihakombinaat AS**

**v**

**Põllumajandusministeerium**

**and**

**Maksu- ja Tolliameti Ida maksu- ja tollikeskus**

(Reference for a preliminary ruling from the Tallinna Halduskohus)

(Common Customs Tariff – Combined Nomenclature – Tariff classification – Frozen cuts or offal of cocks and hens – Accession of Estonia – Transitional measures – Agricultural products – Surplus stocks – Regulation (EC) No 1972/2003)

Summary of the Judgment

1.        *Accession of new Member States to the Communities – Accession Act 2003 – Community legislation not published in the Official
Journal of the European Union in the language of a new Member State which is an official language of the European Union –
Non-enforceability against individuals – Limits*

*(Accession Act 2003, Art. 58)*

2.        *Common Customs Tariff – Tariff headings – Cuts of poultry meat, deboned and frozen*

*(European Parliament and Council Directive No 853/2004, Annex I, point 1.14; Council Regulation No 2658/87, Annex I; Commission
Regulation No 1789/2003)*

3.        *Accession of new Member States to the Communities – Estonia – Agriculture – Common organisation of the markets – Transitional
measures in respect of trade in agricultural products*

*(Commission Regulations No 1972/2003, Art. 4(2), and No 230/2004)*

4.        *Accession of new Member States to the Communities – Estonia – Agriculture – Common organisation of the markets – Transitional
measures in respect of trade in agricultural products*

*(Commission Regulations No 1972/2003 and No 230/2004)*

1.        Article 58 of the Act concerning the conditions of accession of the Czech Republic, the Republic of Estonia, the Republic
of Cyprus, the Republic of Latvia, the Republic of Lithuania, the Republic of Hungary, the Republic of Malta, the Republic
of Poland, the Republic of Slovenia and the Slovak Republic and the adjustments to the Treaties on which the European Union
is founded precludes the obligations contained in Community legislation that has not been published in the Official Journal
of the European Union in the language of a new Member State, although that language is an official language of the Union,
from being imposed on individuals in that Member State, even though those persons could have learned of that legislation by
other means.

However, the fact that a Community regulation is not enforceable against individuals in a Member State in the language of
which it has not been published has no bearing on the fact that, as part of the acquis communautaire, its provisions are binding
on the Member State concerned as from its accession. Thus, the adoption by a Member State before the date of accession of
legislation which implements the obligations under a Community regulation creates obligations for individuals, notwithstanding
the fact that the regulation cannot be enforced against them before they have had an opportunity to learn of it by proper
publication in the Official Journal of the European Union, in the language of that Member State. In those circumstances, the
provisions of the regulation that were taken up in the national legislation can be enforced against individuals. Conversely,
to the extent that other provisions have not been implemented by national legislation, the Member State cannot rely on them
against individuals before the official publication of the regulation in the language of that Member State. It is for the
national court to verify whether and to what extent the national law took over the Community provisions at issue.

(see paras 31-35)

2.        Regulation No 2658/87 on the tariff and statistical nomenclature and on the Common Customs Tariff, as amended by Regulation
No 1789/2003, must be interpreted as meaning that products constituted of frozen mechanically separated meat obtained after
the mechanical deboning of fowls and destined for human consumption must be classified in subheading 0207 14 10 of the Combined
Nomenclature. Such products cannot be classified in subheading 0207 14 99, since they do not have the objective characteristics
and properties of offal to which that subheading refers, but rather are, before freezing, in the form of stock composed of
leftovers of meat and tissue obtained after a mechanical pulverisation of flesh-covered bones in accordance with the definition
of frozen cuts of poultry meat, deboned using mechanical means appearing in point 1.14 of Annex I to Regulation No 853/2004
laying down specific hygiene rules for food of animal origin.

(see paras 49-50, 53, operative part 1)

3.        Article 4(2) of Regulation No 1972/2003 on transitional measures to be adopted in respect of trade in agricultural products
on account of the accession of the Czech Republic, Estonia, Cyprus, Latvia, Lithuania, Hungary, Malta, Poland, Slovenia and
Slovakia, as amended by Regulation No 230/2004, does not preclude national legislation under which an operator’s surplus stock
is determined by deducting from the stock actually held on 1 May 2004 the transitional stock defined as the average stock
on 1 May of the previous four years of activity multiplied by a coefficient of 1.2 corresponding to the growth of agricultural
production observed in the Member State in question during that four‐year period. That coefficient makes it possible to update
the average stock on 1 May of the years 2000 to 2003 in the light of that rate of growth and to determine a transitional stock
– and hence a surplus stock – which reflects proportionately the development of growth observed across the whole agricultural
sector of the Member State concerned from 1 May 2000 to 1 May 2004. It thus helps to establish a basis of comparison between
the stock on 1 May 2004 and the average stock on 1 May of the previous four years.

The application of such a coefficient, chosen pursuant to the discretion which the new Member States enjoy to define the relevant
period or the method of calculating the averages of stocks available, does not undermine the objectives pursued by Regulation
No 1972/2003 and does not infringe the principles of proportionality and equal treatment.

(see paras 59-62, 64, operative part 2)

4.        Regulation No 1972/2003 on transitional measures to be adopted in respect of trade in agricultural products on account of
the accession of the Czech Republic, Estonia, Cyprus, Latvia, Lithuania, Hungary, Malta, Poland, Slovenia and Slovakia, as
amended by Regulation No 230/2004, does not preclude the levying of a charge on an operator’s surplus stock, even if he is
able to prove that he obtained no advantage when marketing that stock after 1 May 2004. That charge, the objective of which
was to preserve the common organisation of markets by avoiding, by means of a system of deterrent charges on surplus stocks
in the new Member States, certain agricultural products being moved artificially to their territory with a view to enlargement,
is applicable to all surplus stocks within the meaning of the regulation, regardless of whether the holders of the stocks
have actually derived an advantage from marketing them.

(see paras 71-74, operative part 3)

JUDGMENT OF THE COURT (Third Chamber)

29 October 2009 (*)

(Common Customs Tariff – Combined Nomenclature – Tariff classification – Frozen cuts or offal of cocks and hens – Accession of Estonia – Transitional measures – Agricultural products – Surplus stocks – Regulation (EC) No 1972/2003)

In Case C‐140/08,

REFERENCE for a preliminary ruling under Article 234 EC from the Tallinna Halduskohus (Estonia), made by decision of 19 March
2008, received at the Court on 7 April 2008, in the proceedings

**Rakvere Lihakombinaat AS**

v

**Põllumajandusministeerium,**

**Maksu- ja Tolliameti Ida maksu- ja tollikeskus,**

THE COURT (Third Chamber),

composed of J.N. Cunha Rodrigues, President of the Second Chamber, acting as President of the Third Chamber, P. Lindh (Rapporteur),
A. Rosas, U. Lõhmus and A. Arabadjiev, Judges,

Advocate General: D. Ruiz-Jarabo Colomer,

Registrar: C. Strömholm, Administrator,

having regard to the written procedure and further to the hearing on 3 September 2009,

after considering the observations submitted on behalf of:

–        Rakvere Lihakombinaat AS, by K. Kask, advokaat,

–        the Estonian Government, by L. Uibo, acting as Agent,

–        the Commission of the European Communities, by A. Sipos, H. Tserepa-Lacombe and K. Saaremäel-Stoilov, acting as Agents,

having decided, after hearing the Advocate General, to proceed to judgment without an Opinion,

gives the following

**Judgment**

1        This reference for a preliminary ruling concerns the interpretation of Annex I to Council Regulation (EEC) No 2658/87 of 23
July 1987 on the tariff and statistical nomenclature and on the Common Customs Tariff (OJ 1987 L 256, p. 1), as amended by
Commission Regulation (EC) No 1789/2003 of 11 September 2003 (OJ 2003 L 281, p. 1), and the interpretation of Commission Regulation
(EC) No 1972/2003 of 10 November 2003 on transitional measures to be adopted in respect of trade in agricultural products
on account of the accession of the Czech Republic, Estonia, Cyprus, Latvia, Lithuania, Hungary, Malta, Poland, Slovenia and
Slovakia (OJ 2003 L 293, p. 3), as amended by Commission Regulation (EC) No 230/2004 of 10 February 2004 (OJ 2004 L 39, p. 13;
‘Regulation No 1972/2003’).

2        The reference was made in the course of proceedings between Rakvere Lihakombinaat AS (‘RLK’) and the Põllumajandusministeerium
(Ministry of Agriculture) and Maksu- ja Tolliameti Ida maksu- ja tollikeskus (Eastern Tax and Customs Centre of the Tax and
Customs Office; ‘MTA’) concerning the levying of charges on surplus stocks of frozen chicken meat.

**Legal context**

*Community law*

Combined Nomenclature

3        The Combined Nomenclature (‘CN’) established by Regulation No 2658/87 is based on the international Harmonised Commodity Description
and Coding System (‘the HS’) drawn up by the Customs Cooperation Council, now the World Customs Organisation, adopted by the
International Convention concluded in Brussels on 14 June 1983, which was approved on behalf of the European Community by
Council Decision 87/369/EEC of 7 April 1987 (OJ 1987 L 198, p. 1). The CN reproduces the headings and subheadings of the HS
to six digits, with only the seventh and eighth figures creating subheadings which are unique to it.

4        In the version of the HS from the year 2002, heading 0207, which appears in Chapter 2 and which is entitled ‘Meat and edible
offal, of the poultry of heading No 0105, fresh, chilled or frozen’, contains, for the purpose of classifying cocks and hens,
the subheading 0207 14, itself entitled ‘Cuts and offal, frozen’.

5        According to the General Explanatory Notes to Chapter 2 of the HS, concerning meat and edible offal:

‘This Chapter applies to meat in carcasses (i.e., the body of an animal with or without the head), half carcasses ..., quarters,
pieces, etc., to meat offal, and to flours and meals of meat or meat offal, of all animals ..., suitable for human consumption.

...

Offal generally can be grouped in four categories:

(1)      That which is mainly used for human consumption (e.g., heads and cuts thereof (including ears), feet, tails, hearts, tongues,
thick skirts, thin skirts, cauls, throats, thymus glands).

(2)       That which is used solely in the preparation of pharmaceutical products (e.g., gall bags, adrenal glands, placenta).

(3)       That which can be used for human consumption or for the preparation of pharmaceutical products (e.g., livers, kidneys, lungs,
brains, pancreas, spleens, spinal cords, ovaries, uteri, testes, udders, thyroid glands, pituitary glands).

(4)      That, such as skins, which can be used for human consumption or for other purposes (e.g., manufacture of leather).

...

This Chapter covers meat and meat offal in the following states only, whether or not they have been previously scalded or
similarly treated but not cooked:

(1)       Fresh ...

(2)       Chilled ...

(3)       Frozen ...

(4)       Salted, in brine, dried or smoked.

...

Meat and meat offal in the states referred to in Items (1) to (4) above remain classified in this Chapter whether or not they
... have been cut, chopped or minced (ground).’

6        The version of the CN applicable to the facts at issue in the main proceedings flow from Regulation No 1789/2003, which entered
into force on 1 January 2004. The second part thereof contains the schedule of duties. Section I of that part, entitled ‘Live
animals; animal products’, includes a Chapter 2 entitled ‘Meat and edible meat offal’ in which appears heading 0207, worded
as follows:

‘0207 Meat and edible offal, of the poultry of heading 0105, fresh, chilled or frozen:

– Of fowls of the species *Gallus domesticus*:

...

0207 14 ––– Cuts and offal, frozen:

––– Cuts

0207 14 10 –––– Boneless

...

––– Offal:

0207 14 91 –––– Livers

0207 14 99 –––– Others.’

7        In the Explanatory Notes to the Combined Nomenclature of the European Communities, published on 23 October 2002 (OJ 2002 C 256,
p. 1), under ‘General’ Nos 2, 4 and 5 concerning the second part, Section I, Chapter 2, of the CN states:

‘2.      For the purposes of this chapter the scope of the words “meatˮ and “offalˮ is as described in the HS General Explanatory Notes
to this chapter.

...

4.      Guidance is also given, in the HS General Explanatory Notes to this chapter, on the distinction between meat and offal of
this chapter and that of Chapter 16. However, this chapter covers meat offal, raw, minced, or finely chopped but not further
prepared, wrapped in plastic material (even in the form of sausages) solely for ease of handling or transport.

5.       For the purposes of distinguishing between bone-in and boneless cuts, cartilage and tendons shall not be regarded as bone.’

8        The Explanatory Note concerning subheadings 0207 14 10 to 0207 14 99 indicates that the Explanatory Notes to subheadings 0207
13 10 to 0207 13 99 apply, *mutatis mutandis*. The latter are worded as follows:

‘0207 13 10 Boneless

This subheading covers meat of fowls, without bones, regardless of the part of the carcase from which it comes.

...

0207 13 99  Other

This subheading covers edible offal, in particular hearts, combs and wattles, but excluding livers.

This subheading also includes the feet of fowls.’

9        The general rules for the interpretation of the CN, which are set out in Part One, Title I A, provide, in particular:

‘Classification of goods in the Combined Nomenclature shall be governed by the following principles:

1.      The titles of sections, chapters and sub-chapters are provided for ease of reference only; for legal purposes, classification
shall be determined according to the terms of the headings and any relative section or chapter notes and, provided such headings
or notes do not otherwise require, according to the following provisions.

2.      ...

(b)      Any reference in a heading to a material or substance shall be taken to include a reference to mixtures or combinations of
that material or substance with other materials or substances. ... The classification of goods consisting of more than one material
... shall be according to the principles of rule 3.

3.      When by application of rule 2(b) or for any other reason, goods are prima facie classifiable under two or more headings, classification
shall be effected as follows:

(a)      The heading which provides the most specific description shall be preferred to headings providing a more general description.
However, when two or more headings each refer to part only of the materials or substances contained in mixed ... goods ..., those
headings are to be regarded as equally specific in relation to those goods, even if one of them gives a more complete or precise
description of the goods.

(b)      Mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets for
retail sale, which cannot be classified by reference to 3(a), shall be classified as if they consisted of the material or
component which gives them their essential character, in so far as this criterion is applicable.

...’

Regulation No 1972/2003

10      The first paragraph of Article 41 of the Act concerning the conditions of accession of the Czech Republic, the Republic of
Estonia, the Republic of Cyprus, the Republic of Latvia, the Republic of Lithuania, the Republic of Hungary, the Republic
of Malta, the Republic of Poland, the Republic of Slovenia and the Slovak Republic and the adjustments to the Treaties on
which the European Union is founded (OJ 2003 L 236, p. 33) allows the Commission of the European Communities to adopt measures
to facilitate the transition of the new Member States to the regime resulting from the application of the common agricultural
policy. That provision lays down that those transitional measures ‘may be taken during a period of three years following the
date of accession and their application shall be limited to that period’. The Commission adopted Regulation No 1972/2003 in
reliance inter alia on that provision.

11      As stated in recital 1 in the preamble to Regulation No 1972/2003, that regulation seeks to ‘avoid the risk of deflection
of trade, affecting the common organisation of agricultural markets due to the accession of 10 new States to the European
Union on 1 May 2004’. In view of that risk, recital 3 in the preamble declares that provisions should be made for ‘deterrent
charges to be levied on surplus stocks in the new Member States’.

12      To that end, Article 4(1) of Regulation No 1972/2003 requires the new Member States to levy charges on holders of surplus
stocks at 1 May 2004 of products in free circulation. Article 4(5) lays down that that obligation is to apply, in the case
of Estonia, inter alia, to products covered by code 0207 14 10 of the CN.

13      Article 4(2) of that regulation provides:

‘In order to determine the surplus stock of each holder, the new Member States shall take into account, in particular:

(a)      averages of stocks available in the years preceding accession;

(b)      the pattern of trade in the years preceding accession;

(c)      the circumstances in which stocks were built up.

The notion surplus stocks applies to products imported into the new Member States or originating from the new Member States.
The notion surplus stocks applies also to products intended for the market of the new Member States.

...’

14      In order to ensure that the charge on surplus stocks is correctly applied, Article 4(4) of that regulation lays down that
the new Member States are, without delay, to carry out an inventory of stocks available as at 1 May 2004 and to notify the
Commission of the quantity of products in surplus stocks by 31 October 2004 at the latest.

15      Pursuant to Article 10 of Regulation No 1972/2003, that regulation applied from 1 May 2004 to 30 April 2007.

Regulation No 853/2004

16      Point 1.14 of Annex I to Regulation (EC) No 853/2004 of the European Parliament and of the Council of 29 April 2004 laying
down specific hygiene rules for food of animal origin (OJ 2004 L 139, p. 55, and corrigendum OJ 2004 L 226, p. 22) defines
mechanically separated meat (‘MSM’) in the following terms:

‘... the product obtained by removing meat from flesh-bearing bones after boning or from poultry carcases, using mechanical
means resulting in the loss or modification of the muscle fibre structure.’

*National law*

17      On 7 April 2004, the Estonian Parliament adopted the Law on the surplus stock charge (Üleliigse laovaru tasu seadus, RT I 2004,
30, 203).

18      By judgment of 5 October 2006, the Riigikohus (Supreme Court) declared Article 6(1) of that law inapplicable as being contrary
to Regulation No 1972/2003. The court found that the requirement introduced by that provision to apply a coefficient of 1.2
in calculating the transitional stock did not allow a sufficiently differentiated treatment of each operator.

19      In order to give effect to that judgment, the Estonian Parliament, by a law adopted on 25 January 2007 (RT I 2007, 12, 65),
made several amendments to the initial law. That law as amended (‘the ÜLTS’) entered into force on 16 February 2007 and applies
retrospectively to situations that have arisen from 1 May 2004.

20      Under Article 7 of the ÜLTS, the surplus stock is equal to the difference between the stock actually held on 1 May 2004 and
the transitional stock.

21      Article 6(1) of the ÜLTS defines the ‘transitional stock’ as the annual average stock held during the four years preceding
the accession of the Republic of Estonia to the Union (2000 to 2003) multiplied by 1.2. To mitigate the strictness of that
rule for operators who did not carry on a relevant activity during those four reference years, Article 6 enacted in addition
two special rules. First, an operator whose activity in the relevant market has started after 2003 must show that his stock
at 1 May 2004 is equal to ‘the stock ... customarily produced, sold, or otherwise transferred or acquired by him for payment
or without payment’. Second, pursuant to Article 6(3), for operators who as at 1 May 2004 have carried on business on the
relevant market for at least one year, the transitional stock is ‘the average stock on 1 May of the last years of operation’
or the stock on 1 May 2003, the quantity so determined being multiplied by 1.2.

22      Under Article 10 of the ÜLTS, the transitional stock and the surplus stock are calculated by the Ministry of Agriculture on
the basis of a declaration by the operator. If the operator makes a reasoned application, the ministry can take account of
certain factors which may explain an increase in stocks not caused by speculation, such as the growth of the operator’s production,
processing or sales volume in the previous year, the maturation period of agricultural products, the fact that the stocks
were built up before the third quarter of 2003, the reduction of the export or sales volume for reasons independent of the
operator, or other circumstances independent of the latter.

23      Those provisions are supplemented by Article 23 of the ÜLTS, which defines a number of circumstances in which the transitional
stock may be revised upwards if it is attributable to the development of the economic operator’s activity in the period from
1 May 2003 to 1 May 2006.

**The dispute in the main proceedings and the questions referred for a preliminary ruling**

24      RLK is an Estonian undertaking in the food-processing sector. In preparing its products, it uses frozen cuts of poultrymeat,
deboned using mechanical means, called MSM.

25      By decision of 30 March 2007, the Minister for Agriculture fixed the surplus stock of frozen chicken cuts held by RLK at 83 462
kg. On 30 April 2007, MTA accordingly issued a tax notice for EEK 1 337 237 (approximately EUR 90 000 at the current exchange
rate) pursuant to the charge on surplus stocks.

26      In the context of the action which it brought against the tax notice in the national court, RLK claims that the products concerned
fall not under subheading 0207 14 10 of the CN, but under subheading 0207 14 99, so that they could not be subject to that
charge. In effect, those products are not frozen chicken cuts, but are presented in the form of stock composed of cuts of
meat and soft tissue obtained from the mechanical treatment of chicken bones. In addition, RLK claims that Regulation No 1972/2003
is counter to certain provisions of the ÜLTS concerning the calculation of surplus stocks.

27      Having doubts as to the tariff classification of the products concerned in the main proceedings and the interpretation of
Regulation No 1972/2003, the Tallinna Halduskohus (Tallinn Administrative Court) decided to stay the proceedings and refer
the following questions to the Court for a preliminary ruling:

‘(1)      Must [MSM] (mechanically separated meat was defined for the first time in point 1.14 of Annex I to [Regulation No 853/2004])
be classified as from 1 May 2004 under CN code 0207 14 10 or CN code 0207 14 99 ...?

(2)      If the product described in Question [1] must be classified under CN code 0207 14 10 ...:

(a)      Does Article 4(1) and (2) of [Regulation No 1972/2003] preclude the ascertainment of the amount of [the] operator’s surplus
stock by automatically deducting ... (... as transitional stock) the operator’s average stock as at 1 May of the four years
of activity preceding 1 May 2004, multiplied by 1.2?

(b)      If the answer is in the affirmative, would the answer be different if in determining the amount of the transitional stock
and [the] surplus stock it were possible also to take into account the growth of the operator’s production, processing or
sales volume, the maturation period of the agricultural product, the time when the stocks were built up, and other circumstances
independent of the operator?

(3)      Is it compatible with the objective of [Regulation No 1972/2003] to levy the surplus stock charge where the operator is found
to have a surplus stock as at 1 May 2004 but the operator shows that he has not obtained a real advantage in terms of a price
difference from marketing the surplus stock after 1 May 2004?’

*Preliminary question*

28      RLK argues that Regulations No 1789/2003 and No 1972/2003 cannot be enforced against it in so far as, at the date of accession
of the Republic of Estonia to the Union, they had not been published in Estonian in the *Official Journal of the European Union*. It relies in that regard on the judgment in Case C‐161/06 *Skoma-Lux* [2007] ECR I‐10841.

29      RLK submits that the unenforceability of Regulation No 1972/2003 also prevents application of the ÜLTS, for the ÜLTS, published
officially in its original version on 27 April 2004, contains in particular numerous references to that regulation. It says
that the late publication of the ÜLTS did not enable economic operators to be informed early enough of the system of surplus
stock charges applicable from 1 May 2004.

30      Although the order for reference does not address this question, in order to provide the referring court with guidance, it
should be recalled that an act of a Community institution, such as Regulations No 1789/2003 and No 1972/2003, cannot be enforced
against natural and legal persons in a Member State before they have the opportunity to make themselves acquainted with it
by its proper publication in the Official Journal (*Skoma-Lux*, paragraph 37 and the case-law cited).

31      Article 58 of the Act of Accession, referred to in paragraph 10 above, provides that ‘[t]he texts of the acts of the institutions,
and of the European Central Bank, adopted before accession and drawn up by the Council, the Commission or the European Central
Bank in the Czech, Estonian, Hungarian, Latvian, Lithuanian, Maltese, Polish, Slovak and Slovenian languages shall, from the
date of accession, be authentic under the same conditions as the texts drawn up in the present 11 languages. They shall be
published in the *Official Journal of the European Union* if the texts in the present languages were so published.’

32      The Court has already held that that provision precludes the obligations contained in Community legislation which has not
been published in the *Official Journal of the European Union* in the language of a new Member State, although that language is an official language of the Union, from being imposed on
individuals in that Member State, even though those persons could have learned of that legislation by other means. However,
the fact that a Community regulation is not enforceable against individuals in a Member State in the language of which it
has not been published has no bearing on the fact that, as part of the *acquis* *communautaire*, its provisions are binding on the Member State concerned as from its accession (*Skoma-Lux*, paragraphs 51 and 59).

33      By adopting the original version of the ÜLTS on 7 April 2004, the Republic of Estonia implemented the obligations under Regulation
No 1972/2003 by introducing a charge on surplus stocks of agricultural products and defining how it was to be calculated.
The ÜLTS thus creates obligations for individuals in Estonia, notwithstanding the fact that the regulation cannot be enforced
against them before they have had an opportunity to learn of it by proper publication in the *Official Journal of the European Union* in the language of that Member State.

34      In those circumstances, the Court has previously held that the rule stated in *Skoma-Lux* does not prevent the enforcement against individuals of those of the provisions of Regulation No 1972/2003 which were taken
up in the ÜLTS. That rule might nevertheless remain of residual application if certain provisions of that regulation which
were not implemented by the ÜLTS were relied on by the Estonian authorities against individuals before the official publication
of the regulation in Estonian. It is for the national court, if necessary, to interpret the ÜLTS in order to ascertain whether
such circumstances exist (Case C-560/07 *Balbiino* [2009] ECR I‐0000, paragraph 32).

35      Regulation No 1972/2003 determines the products subject to the charge on surplus stocks by reference to the subheadings of
the CN under which those products fall. It is, therefore, for the national court to verify whether and to what extent the
national law took over the CN applicable to the facts at issue in the main proceedings resulting from Regulation No 1789/2003,
before the official publication of that regulation in Estonian, thus permitting individuals to take note of the content and
structure of tariff subheading 0207 14, relevant to the case in the main proceedings.

*The first question*

36      The national court asks whether frozen poultry MSM falls under tariff subheading 0207 14 10 or 0207 14 99.

Observations submitted to the Court

37      RLK argues that frozen poultry MSM is not comparable to boneless cuts of poultrymeat falling under subheading 0207 14 10.
Having regard to the characteristics of frozen poultry MSM and the definition which is given of it in point 1.14 of Annex I
to Regulation No 853/2004, that product must be classified under subheading 0207 14 99.

38      RLK points out that, during the period from 16 February to 1 May 2004, national legislation classified MSM in a subheading
0207 14 99 11. It could not therefore expect that that tariff classification would be called into question subsequently.

39      According to the Estonian Government, that first question must be examined solely in the light of the CN in force on 1 May
2004. The fact that national legislation classifying frozen poultry MSM under a subheading 0207 14 99 11 had been in force
from 16 February to 1 May 2004 is irrelevant. None the less, that government points out that, in 2002, in response to a request
for binding tariff information made by RLK, the customs authorities gave a decision in favour of the classification of frozen
poultry MSM in subheading 0207 14 10. Pursuant to that decision, the applicant in the main proceedings continued to import
that type of product until 1 May 2004, despite the entry into force from 16 February 2004 of the Estonian legislation classifying
that product in subheading 0207 14 99 11.

40      The Estonian Government points out, according to the Explanatory Notes to the CN, that subheading 0207 14 99 covers inter
alia ‘edible offal, in particular hearts, combs and wattles, but excluding livers’. It is not contested in the dispute in
the main proceedings that the products concerned do not contain any offal of that type. The tariff classification must be
determined according to the essential character of those products, in the present case poultrymeat. Consequently, frozen poultry
MSM falls under subheading 0207 14 10.

41      The Commission shares that view. Neither the descriptions nor the notes relating to subheadings 0207 14 10 and 0207 14 99
give detailed indications as to the difference between meat and offal. The description of the products concerned provided
by the national court do not correspond to the notion of offal, but fall under the category of frozen boneless cuts of fowls
corresponding to the subheading 0207 14 10.

Answer of the Court

42      It is settled case-law that, in the interests of legal certainty and for ease of verification, the decisive criterion for
the classification of goods for customs purposes is in general to be sought in their objective characteristics and properties
as defined in the wording of the relevant heading of the CN and the notes to the sections or chapters (see, in particular,
Case C‐183/06 *RUMA* [2007] ECR I-1559, paragraph 27, and Joined Cases C‐208/06 and C‐209/06 *Medion and Canon Deutschland* [2007] ECR I‐7963, paragraph 34).

43      The Court has already held that the Explanatory Notes to the CN and those to the HS are, for their part, an important aid
for interpreting the scope of the various tariff headings but do not have legally binding force. The wording of those notes
must therefore be consistent with the provisions of the CN and cannot alter their scope (Case C‐495/03 *Intermodal Transports* [2005] ECR I‐8151, paragraph 48; Case C‐445/04 *Possehl Erzkontor* [2005] ECR I‐10721, paragraph 20; and Case C‐500/04 *Proxxon* [2006] ECR I‐1545, paragraph 22).

44      As the wording of subheading 0207 14 99 includes only the term ‘Others’, it is necessary to refer to heading 0207 as a whole.
It follows from the wording of that heading that ‘Meat and edible offal, of the poultry of heading 0105, fresh, chilled or
frozen’, that it concerns meat and offal from poultry capable of being used for human consumption.

45      With regard to frozen meat cuts and offal falling under subheading 0207 14, which alone is relevant in the present case, the
CN makes a distinction between, first, ‘cuts’ of meat and, second, ‘offal’, the latter being, in turn, classified in two subcategories,
one of which is specifically reserved for livers (0207 14 91) and the other of which is residual, including all other types
of offal (0207 14 99).

46      Because subheading 0207 14 does not provide for any category other than meat cuts and offal, any product covered by that subheading
which does not fall within one of those categories can only be classified in the other. It should be pointed out that that
structure of subheading 0207 14 conforms to the normal meaning of the word ‘offal’, designating the edible parts other than
the meat of animals for human consumption.

47      It is therefore necessary to examine whether products such as those concerned in the main proceedings fall, as RLK claims,
under the categories of offal other than livers, covered by subheading 0207 14 99.

48      The Explanatory Notes to the CN specify that that subheading includes edible offal such as hearts, combs and wattles along
with the feet of fowls.

49      In the present case, it follows both from the order for reference and the observations submitted to the Court that the products
concerned in the main proceedings are, before freezing, in the form of stock composed of leftovers of meat and tissue obtained
after a mechanical pulverisation of flesh-covered bones in accordance with the definition of MSM appearing in point 1.14 of
Annex I to Regulation No 853/2004.

50      It follows that products such as those at issue in the main proceedings cannot be classified in subheading 0207 14 99, since
they do not have the objective characteristics and properties of offal to which that subheading refers.

51      Accordingly, those products fall under subheading 0207 14 10.

52      Lastly, the circumstance that, before the accession of the Republic of Estonia, the Estonian customs authorities classified,
pursuant to the national legislation, that type of product in another individual subheading has no impact on the interpretation
of the Community legislation applicable in that Member State from 1 May 2004.

53      In the light of those considerations, the answer to the first question is that Regulation No 2658/87, as amended by Regulation
No 1789/2003, must be interpreted as meaning that products such as those at issue in the main proceedings constituted of frozen
MSM obtained after the mechanical deboning of fowls and destined for human consumption must be classified in subheading 0207 14 10
of the CN.

*The first part of the second question*

54      The national court asks whether Article 4(1) and (2) of Regulation No 1972/2003 precludes the method adopted by the ÜLTS for
calculating the surplus stock of an operator consisting in applying to transitional stock a coefficient of 1.2.

Observations submitted to the Court

55      RLK argues that Article 4 of Regulation No 1972/2003 precludes the method of calculating transitional stock adopted by Article 6
of the ÜLTS inasmuch as it provides for the application of a coefficient of 1.2, for that method does not allow that stock
to be determined with precision and proportionality of the charge on surplus stocks to be ensured.

56      The Estonian Government is, on the other hand, of the view that the use of that coefficient is consistent with the objectives
pursued by Regulation No 1972/2003. It maintains that that regulation does not restrict or exclude the use of such a coefficient,
and leaves the Member States free to choose the method of calculation suited to local circumstances. The coefficient allows
the transitional stocks of all operators to be increased so as to take account of economic growth during the years preceding
accession of the Republic of Estonia to the Union.

57      Despite supporting RLK’s position in its written pleadings, at the hearing the Commission adopted the position of the Estonian
Government.

Answer of the Court

58      The Court has already held that Article 4(2) of Regulation No 1972/2003 does not contain any provision requiring the Member
States to apply, or prohibiting them from applying, a coefficient uniformly to operators’ transitional stocks for the purpose
of calculating the surplus stock (*Balbiino*, paragraph 47).

59      That provision provides that, to determine each holder’s surplus stock, the new Member States are to take into account in
particular the ‘averages of stocks available in the years preceding accession’. In the absence of more precise rules as to
the relevant period or the method of calculating the averages of stocks available, such a formulation gives the Member States
a discretion in defining the criteria on the basis of which those elements are implemented, in compliance with the objectives
pursued by the regulation and the general principles of Community law (*Balbiino*, paragraph 37).

60      Thus, Article 4(2) of Regulation No 1972/2003 sets out a non-exhaustive list of certain criteria for the calculation of operators’
surplus stocks, while leaving the Member States the option of supplementing them as they think fit in accordance with the
discretion on their part (see, to that effect, *Balbiino*, paragraph 47).

61      Applying a coefficient of 1.2 to the transitional stock is prima facie favourable to operators, since it tends to reduce the
surplus stock. According to the Estonian Government, the coefficient was fixed on the basis of the rate of growth of Estonian
agricultural production observed during the period from 2000 to 2004. The coefficient thus makes it possible to update the
average stock on 1 May of the years 2000 to 2003 in the light of that rate of growth and to determine a transitional stock
– and hence a surplus stock – which reflects proportionately the development of growth observed across the whole agricultural
sector in Estonia from 1 May 2000 to 1 May 2004. It thus helps to establish a basis of comparison between the stock on 1 May
2004 and the average stock on 1 May of the previous four years (see, to that effect, *Balbiino*, paragraph 48).

62      Having regard to those characteristics, the choice of such a coefficient does not undermine the objectives pursued by Regulation
No 1972/2003 and does not infringe the principles of proportionality and equal treatment (see, to that effect, *Balbiino*, paragraph 49).

63      Thus, Article 4(2) of Regulation No 1972/2003 does not preclude the application of a coefficient such as that provided for
in Article 6(1) of the ÜLTS for the purpose of calculating the transitional stock (see, to that effect, *Balbiino*, paragraph 50).

64      In those circumstances, the answer to the first part of the second question is that Article 4(2) of Regulation No 1972/2003
does not preclude a national measure, such as Article 6(1) of the ÜLTS, under which an operator’s surplus stock is determined
by deducting from the stock actually held on 1 May 2004 the transitional stock, which is defined as the average stock on 1 May
of the previous four years of activity multiplied by a coefficient of 1.2 corresponding to the growth of agricultural production
observed in the Member State in question during that four-year period.

*The second part of the second question*

65      In view of the answer to the first part of the second question, it is unnecessary to answer the second part of that question.

*The third question*

66      The national court asks whether Regulation No 1972/2003 precludes the levying of a charge on an operator’s surplus stock where
he is able to prove that he obtained no advantage from the marketing of that stock after 1 May 2004.

Observations submitted to the Court

67      RLK argues that Regulation No 1972/2003 seeks to combat speculation. However, in the case in the main proceedings, any speculation
is ruled out. First, the nature of the products concerned in the main proceedings precludes any price jobbing of a speculative
nature. The price of frozen poultry MSM was not affected by the accession of the Republic of Estonia. In the Community, those
products do not give rise to any form of export refund nor to any other support mechanism implying a difference in price between
the Community market and the world market. Second, all the quantities purchased by RLK were destined for its own needs and
corresponded to normal stocks in view of the production.

68      RLK claims that the establishment of a charge on surplus stocks must conform to the principle of proportionality and the general
principles of Community law, and refers, to that effect, to the order in Case C-30/00 *William Hinton & Sons* [2001] ECR I‐7511. However, in the absence of any advantage obtained from the surplus stock concerned in the main proceedings,
RLK is of the view that the charge claimed from it is disproportionate. If Regulation No 1972/2003 were to lead to the establishment
of a charge in the circumstances such as those in the case in the main proceedings, that regulation must be invalid in view
of the principle of proportionality. It is no longer a question of a system of deterrent charges, but a system of penalties
intended to penalise the holding of certain goods.

69      The Estonian Government and the Commission contend that the levy of a charge on an operator who has not obtained an advantage
from the sale of his surplus stock is consistent with the purpose of Regulation No 1972/2003.

70      According to the Commission, the aim of that regulation is not to penalise the conduct of operators but to preserve the proper
functioning of the common organisation of markets, in the general interest of the Community.

Answer of the Court

71      It is apparent from recitals 1 and 3 of Regulation No 1972/2003 that its objective was to preserve the common organisation
of markets by avoiding, by means of a system of deterrent charges on surplus stocks in the new Member States, certain agricultural
products being moved artificially to those States with a view to enlargement. The aim was thus to prevent abnormal patterns
of trade from disrupting the common organisation of markets (*Balbiino*, paragraph 57).

72      That regulation was not intended to penalise speculative conduct on the part of operators but, first, to prevent, by a system
of deterrent charges, stocks from being built up for speculative purposes and, second, to neutralise the economic advantages
anticipated by those holding them (*Balbiino*, paragraph 69).

73      Consequently, the surplus stock charge established by Regulation No 1972/2003, intended to protect the common organisation
of agricultural markets, is applicable to all surplus stocks within the meaning of the regulation, regardless of whether the
holders of the stocks have actually derived an advantage from marketing them (see, to that effect, *Balbiino*, paragraph 71).

74      The answer to the third question is therefore that Regulation No 1972/2003 does not preclude the levying of a charge on an
operator’s surplus stock even if he is able to prove that he obtained no advantage when marketing that stock after 1 May 2004.

**Costs**

75      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.      **Council Regulation (EEC) No 2658/87 of 23 July 1987 on the tariff and statistical nomenclature and on the Common Customs Tariff,
as amended by Commission Regulation (EC) No 1789/2003 of 11 September 2003, must be interpreted as meaning that products such
as those at issue in the main proceedings constituted of frozen mechanically separated meat obtained after the mechanical
deboning of fowls and destined for human consumption must be classified in subheading 0207 14 10 of the Combined Nomenclature.**

2.      **Article 4(2) of Commission Regulation (EC) No 1972/2003 of 10 November 2003 on transitional measures to be adopted in respect
of trade in agricultural products on account of the accession of the Czech Republic, Estonia, Cyprus, Latvia, Lithuania, Hungary,
Malta, Poland, Slovenia and Slovakia, as amended by Commission Regulation (EC) No 230/2004 of 10 February 2004, does not preclude
a national measure such as Article 6(1) of the Law on the surplus stock charge (Üleliigse laovaru tasu seadus), as amended
by the law of 25 January 2007, under which an operator’s surplus stock is determined by deducting from the stock actually
held on 1 May 2004 the transitional stock, which is defined as the average stock on 1 May of the previous four years of activity
multiplied by a coefficient of 1.2 corresponding to the growth of agricultural production observed in the Member State in
question during that four-year period.**

3.      **Regulation No 1972/2003 does not preclude the levying of a charge on an operator’s surplus stock even if he is able to prove
that he obtained no advantage when marketing that stock after 1 May 2004.**

[Signatures]

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- Language of the case: Estonian.