Judgment;Abstract — ECLI:EU:C:2021:400
Date: 2021-05-20
Language of the case: English
Court formation: Third Chamber
Subject matter: Free movement of goods;Customs Union
Procedure: Reference for a preliminary ruling
Origin: United Kingdom

summary of the arguments of the parties
17. Renesola submits that the Upper Tribunal was correct, for the reasons it gave, to hold that, 
applying Article 24 of the Customs Code, the process of manufacturing modules was origin- 
conferring. In particular, despite the position of HMRC as set out at §25 below, Renesola 
points out that the Upper Tribunal came to the clear conclusions on the evidence before it 
that “the increase in ‘durability’ conferred by the process of manufacturing modules is both 
more substantial than that identified in Zentrag[17 and also is qualitatively different as it enables 
the cells to perform their desired function: the production of electricity from sunlight in an 
outdoors environment in a robust and sustainable way” and that “the manufacture of solar 
modules does not involve a mere presentational change: solar modules have properties and a 
composition that the individual solar cells did not possess.”18 Those conclusions were based 
on the detailed (and essentially unchallenged) evidence produced by Renesola and 
summarised, in particular, at §§40(1) and (2) of the UT decision. The answer to the second 
question referred (whether the module stage, absent the Contested Regulation, confers origin) 
is therefore “yes”.
18. As to the first question referred (validity of the Contested Regulation), on the basis of the 
facts as found by the Upper Tribunal, it is not open to the Commission to provide for a 
different rule of origin: the Commission's power to define “the abstract concepts of [Article 24] 
with reference to specific working or processing operations19" does not extend to laying down a rule of 
origin that is contrary to Article 2420.
19. Further, that power applies where such definition is "justified on the one hand by the needfor legal 
certainty and on the other hand by the problems of definition in multiple economic circumstances""21. But the
16 UT decision, §51(2)
17 Case 93/83, [1984] ECR 1095
18 UT decision, §§48-49
19 Case 162/82 Cousin [1983] ECR 1102, §17
20 Case C-48/98 Sohl & Sohlke v Hauptyollamt Bremen ECLI:EU:C:1999:548, §36
21 Cousin, §17
7 
 
application of the Contested Regulation is justifiable by reference to the Commission’s margin 
of discretion in defining the abstract concepts in Article 24.16 
 
: ief s ary of t e rgu e ts of t e ti  
 
  l
  
 l
 17
:  
 
: i
18  
i l
  
t  
 
  
 : t ept f rtic
i r r proc rati ns19  
20  
l   ed  al 
ertai  t r  pr f fi cono  i nces 21   
                                                          
16  
17 [  
18  
19 / [  
20 ö l  ö z t : : :  
21  
8 
 
uncontested evidence before the FTT was that there was no variation in the manufacture of 
solar modules that could amount to "multiple economic circumstances", and HMRC did not 
seek to suggest the contrary. 
20. Moreover, the fifth recital to the Contested Regulation records that the manufacture of the 
module is “a major step”.  But there is no dispute that the module manufacturing stage is the 
“last” stage.  It is impossible to see how the Commission could (on the one hand) accept that 
the module stage is a “major” step while simultaneously denying (in the seventh recital) that it 
is a “substantial” step.  The manifestly self-contradictory and unsatisfactory nature of the 
Commission’s reasoning – which is sufficient on its own to lead to the annulment of the 
Contested Regulation – is even more starkly exposed when one considers the German text of 
the Contested Regulation, where the Commission simultaneously asserts in the fifth recital 
that the module stage is one of the wesentlichen stages while denying in the seventh recital that 
the module stage is wesentliche.   
21. For the reasons summarised below HMRC submits the Commission acted within its powers. 
To the extent the second question referred arises, HMRC submits the assembly of modules 
from cells is not origin conferring because that process is not a substantial processing or 
working within the meaning of Article 24.22 
22. Given the nature of the module assembly process, the test laid down in §19 of Brother is 
applicable, under which module assembly will only be origin conferring if it represents the 
decisive production stage during which the use to which the component parts are to be put 
becomes definite and the goods are given their specific qualities. This accords with the sixth 
and seventh recital to the Contested Regulation.23 HMRC also submits, if necessary, that the 
changes at the modules stage are merely presentational. 
23. So far as the application of the test in Brother is concerned, the use to which the component 
parts of a module are put is the production of electricity from sunlight as part of a PV system. 
The specific qualities of modules consist in their ability (derived from their constituent cells) 
                                                          
22 HMRC has also expressly reserved the right to argue in due course and if necessary that the operation of module 
assembly in India is not economically necessary within the meaning of Article 24 of the Customs Code, a contention 
in relation to which the FTT and the Upper Tribunal have not made any findings of fact at this stage. 
23 It is apparent from the English language version of the Contested Regulation that the fifth recital simply refers to 
“major” steps, and is not intended to state that the legal test of last substantial transformation under Article 24 is met 
at the modules stage. 
9 
 
to convert sunlight into electricity. That use becomes definite, and those qualities are present, 
in manufactured cells.24 It is cells which are able to produce electricity from sunlight, and they 
are able to do this prior to their assembly into modules.25 The ancillary criterion of value added 
is inapplicable because origin is determined by these technical criteria.26 
24. As regards the central issue of output, Renesola did not dispute before the Upper Tribunal 
that the only components of a module with the quality of being able to produce electricity 
from sunlight are its cells. The cells have that quality before they are assembled into modules. 
HMRC submits that the only material difference between the output of a single cell and a 
module arises from the fact that a module is an aggregation of cells. The reported 3% 
efficiency increase in output (which Renesola pointed out to the Upper Tribunal was not 
achieved by developments in solar technology until after the time the Contested Regulation 
was made) does not amount to a substantial change. 
25.  HMRC does not accept that Renesola has shown durability is a ‘specific quality’ of modules 
or something required before the use of modules becomes ‘definite’. These qualities and use 
reside in the production of electricity from sunlight after incorporation in a PV system. HMRC 
respectfully does not accept that adequate explanations or evidence have been provided 
regarding the operation of PV systems, the use of modules therein or the nature and 
perspective of the ‘users’ who incorporate modules into PV systems, to show that the test in 
Brother is satisfied by the modules stage by reason of durability. 
26. Furthermore, the Court of Justice has held that the Commission has a margin of discretion.27 
HMRC submits that the Contested Regulation is within that margin, ensuring legal certainty 
and addressing any problems of multiple economic circumstances arising over time from 
technological developments (such as the Upper Tribunal’s findings regarding the subsequent 
3% efficiency gain referred to at paragraphs 12(c) and 24 above). 
                                                          
24 Whilst it is accepted that this was in a different legal context, HMRC relies in this regard on the reasoning of the 
General Court in Case T-158/14 JingAo Solar C. Ltd v Council of the European Union ECLI:EU:T:2017:126, §76, §91, §92 
§94, §98, §102 and §114. 
25 HMRC also respectfully submits that the fact a cell might be used in another product whose end is not electricity 
generation, such as an irradiance metre, a light sensitive switch or an auto control device, is nothing to the point. It is 
the role cells play in modules which must be assessed.  
26 Brother, §20 and §23. 
27 Cousin, §17 
D: The Questions referred for a ruing
10 
 
 red  l  
 
27. The Upper Tribunal therefore refers the following Questions to the Court of Justice for a 
preliminary ruling under Article 86(2) of the Withdrawal Agreement and Article 267 of 
TFEU:- 
1. Is Commission Implementing Regulation 1357/2013/EU, to the extent that it 
purports to determine the country of origin of solar modules manufactured from 
materials coming from several jurisdictions by ascribing origin to the country where 
the solar cells were manufactured, contrary to the requirement in Article 24 of Council 
Regulation 2913/92/EEC (the Community Customs Code), namely that goods whose 
production involves more than one country shall be deemed to originate in the country 
where they underwent their last substantial economically justified processing or 
working in an undertaking equipped for that purpose and resulting in the manufacture 
of a new product or representing an important stage of manufacture, and hence 
invalid? 
 
2. If Regulation 1357/2013 is invalid, is Article 24 of the Community Customs Code to 
be interpreted as meaning that the assembly of solar modules from solar cells and other 
parts constitutes a substantial processing or working?  
 
Dated 22 May 2020 
The Upper Tribunal (Tax and Chancery Chamber), Mr Justice Marcus Smith and Judge Jonathan 
Richards 
Reference to be sent to the Court Registry of the Court of Justice by email (DDP-
GreffeCour@curia.europa.eu) or by post to the Registry of the Court of Justice, Rue du Fort 
Niedergrünewald, L-2925, Luxemburg, LUXEMBOURG).   
 
List of documents attached to the reference: - 
1. The Decision of the Upper Tribunal dated 4 March 2020 
2. The Decision of the FTT 
3. The decision of HMRC dated 28 December 2016  
4. Letter to HMRC from Renesola’s solicitors dated 19 May 2017 and attachments  
5. The witness statement of Mr Xu Zhongyu dated 23 May 2018, including Annex 1