Opinion of the Advocate General — ECLI:EU:C:2001:119
Date: 2001-02-22
Based on: Treaty establishing the European Economic Community (1957)
Subject matter: Free movement of goods;Common customs tariff;Customs Union
Procedure: Reference for a preliminary ruling
Origin: Germany

summary of the arguments presented by the parties, I will now give my opinion on the first question referred by the national court, starting with the Court's case-law on the matter. 28. It is common knowledge that the Court has repeatedly held that the decisive criterion for the customs classification of goods must be sought in their objective characteristics and qualities, as defined in the relevant headings of the Common Customs Tariff and in the notes to the sections or chapters. (11) It follows that, even for the goods under consideration, the functions that the product (unit) enables an automatic data-processing machine, as a whole, to perform are not decisive. (12) 29. That is particularly true as regards network cards. Such cards, in fact, in so far as they are designed solely for automatic information processing machines, ... are directly connected to those machines and their function is to supply and accept data in a form which those machines can use, (13) are comparable to any other means whereby an ADP machine accepts or delivers data. Hence, they do not perform a specific function which they would be able to exercise independently without the assistance of such machines. It was precisely on that basis that the Court concluded in Peacock that Note 5(B) to Chapter 84 of the Combined Nomenclature does not exclude network cards from being classified under heading 8471 of the CN. (14) 30. To complete the classification of the cards in question, the Court queried, in the same judgment, whether they should be regarded as units of automatic data-processing machines, coming under heading 8471 of the CN, or as parts or accessories of those machines, thus coming under heading 8473 of the CN. To this end, the Court explained that the units referred to in Note 5(B) to Chapter 84 of the Combined Nomenclature meet the requirements established therein since they can be connected to the central unit and are specifically designed as parts of an automatic data-processing system; (15) the word part, on the other hand, implies a whole for the operation of which the part is essential. (16) Since network cards, which come in the form of slot-in cards, may also take other forms, in particular that of a standalone unit, the Court concluded that they, like video cards, must be classified as units of automatic data-processing machines under heading 8471 of the CN. The applicability of Community case-law to the customs classification of sound cards 31. Can this case-law also be used to resolve the question referred by the national court in relation to the customs classification of sound cards? In reply to that question it is necessary to ask whether the technical and functional characteristics of sound cards are such as to differentiate them from video cards and network cards, thus requiring different criteria to be laid down for their classification. 32. The answer to that question can, in my opinion, only be a negative one. In the first place, like video cards and network cards, sound cards also perform a data-processing function and, on the one hand, convert external analogue signals into digital information so that they can be processed by the machine and, on the other hand, convert digital data contained in certain software into analogue signals. 33. As CBA Computer points out, there are three fundamental components of a sound card just as there are of a video card: (17) (1) an analogue/digital converter which converts analogue signals into digital signals so that the automatic data-processing machine can process and possibly record them; (2) a graphics or audio processor which processes data and directs the electronic operations and (3) a digital/analogue converter which converts digital signals processed or recorded by the automatic data-processing machine into analogue signals processed by the output unit (the screen or the speakers). 34. The only difference, then, is that in one case images are processed and in the other sounds. Furthermore, the Commission itself accepted at the hearing that there are no differences between the two types of cards as far as their use and function is concerned. 35. It can therefore be concluded, on that point, that sound cards, that is to say electronic assemblies which enable ADP machines and units thereof to process audio signals, do not perform a specific function within the meaning of Note 5(B) to Chapter 84 of the Combined Nomenclature, (18) but rather a data-processing function. They should therefore be regarded as units of automatic data-processing machines and thus be classified under heading 8471 of the CN. 36. I noted above that, although the Commission agrees with that appraisal of the function of sound cards, it considers that they should nevertheless be classified under heading 8543 of the CN, either on the ground that there is a similarity between their function and that of a CD reader, or because sound, as distinct from images, is not an essential or traditional function of a computer. 37. In light of the considerations which I have set out above, I consider that from a functional point of view a sound card cannot be compared to a CD reader. The former is a means by which an automatic data-processing machine accepts or delivers data, but outside the machine a sound card has no functions which it could perform independently. Moreover, as CBA Computer noted at the hearing, there is no comparison with sound recording or sound reproduction equipment because, unlike sound recording or sound reproduction cards, sound cards cannot store a sound for recording or reproduction, but they can process data consisting of sounds. It must therefore be concluded that, unlike CD readers, sound cards cannot perform an independent function outside the machine. 38. Second, I do not think that it can seriously be argued, as the Commission contends, that on-screen representation and the screen itself are essential components of a computer, while sound and speakers cannot be regarded as such. As CBA Computer noted at the hearing, there are computers, such as mainframe computers, which perform their function without necessarily being connected to a screen. On the other hand, in more general terms it seems to me that the criterion of the traditional function of a computer is too vague to be of any use for specifying the typical features of that function in so far as it is not based on the technical characteristics of the product in question and takes no account of the extremely rapid developments which have occurred in recent years in the information technology sector. 39. In light of the above, I therefore conclude that electronic assemblies which enable automatic data-processing machines and units thereof to process audio signals (sound cards), in so far as they do not perform a specific function within the meaning of Note 5(B) to Chapter 84 of the Combined Nomenclature, must be classified as units of automatic data-processing machines under heading 8471 of the CN. The second question 40. By its second question, the national court asks the Court of Justice to rule on the validity of Regulations Nos 1153/97 and 2086/97 in so far as they provide for sound cards to be classified under heading 8543 of the Combined Nomenclature. In the order for reference, the national court notes that the European Community, under Article 3(1)(a) of the international Convention on the harmonised system of 14 June 1983, entered into a commitment not to modify the scope of the customs headings established therein, which it has in fact done by the incorrect classification of the sound cards referred to. As the case-law of the Court has also confirmed, (19) while the Commission has considerable latitude, for the purposes of Article 9(1) of Regulation No 2658/87, in defining the scope of the customs headings established on the basis of the HS, it is not authorised to alter their subject-matter. 41. According to CBA Computer, as is to be expected, the doubts expressed by the national court are well founded: Regulations Nos 1153/97 and 2086/97 should be regarded as invalid in relation to the classification of sound cards on the ground that they provide an incorrect interpretation of headings 8471 and 8543 of the HS. 42. For its part, the Commission supports the opposite argument, albeit with the changes I referred to at length above. In particular, during the hearing it claimed that, on the one hand, Regulation No 1153/97 is not invalid in so far as the HS does not provide for the classification of sound cards under a subheading distinct from 8543 89 and, on the other hand, that Regulation No 2086/97 is inapplicable to the facts of the case as the imports referred to in the proceedings before the national court had occurred in July 1997, whereas the regulation only entered into force on 1 January 1998. According to the Commission, that means that the question of validity is irrelevant for the purposes of the proceedings pending before the national court. 43. In my opinion there is some truth in the positions adopted by each of the parties, but neither provides an appropriate reply to the question under consideration. 44. First, I note that Regulation No 1153/97 does not contain any provision concerning the classification of independent sound cards, in other words without speakers and/or a microphone, such as those with which we are concerned in this case. It is only by means of interpretation that the Commission is able to contend that the cards in question should be classified under subheading 8543 89 of the CN. If that is the case, then it is clear that no question about the validity of that regulation arises, not even if it could be demonstrated, as I believe I have done in the preceding paragraphs, that the interpretation proposed by the Commission is without foundation. 45. On the other hand, in Regulation No 2086/97 the Commission specifically classified independent sound cards under subheading 8543 89 79 of the CN. The validity of that regulation could well be questioned because, if one subscribed to the view that such a classification was incorrect, it would mean that the Commission's appraisal was manifestly mistaken and that it had exceeded the limits of its powers to define the subject-matter of a heading of the Combined Nomenclature. 46. It should also be remembered that Regulation No 2086/97 entered into force on 1 January 1998 and does not have retroactive effect. Nor could such effect, as the Hauptzollamt Aachen contends, (20) be regarded as the presumed intention of the regulation because, as noted above, that regulation instead departs from the rules previously established by Regulation No 1153/97. Moreover, the Court itself has held that a regulation specifying the conditions for classification in a tariff heading or subheading is of a legislative nature and cannot have retroactive effect. (21) 47. Although the doubts of the national court about the validity of the regulation in question may to a large extent be well founded, the fact remains that that regulation is not applicable to the facts of the case, which relate to imports that occurred in July 1997. The question of its validity is therefore not relevant to resolving the dispute pending before the national court and consequently the circumstances in which the Court would be required to rule on that question do not, in my opinion, exist. Conclusion 48. In light of the above, I therefore propose that the Court answer the questions referred to it by the national court for a preliminary ruling as follows: (1) Electronic circuit boards which enable automatic-data processing equipment and units thereof to process audio signals (sound cards) and which were released for free circulation into the Community in July 1997, in so far as they do not perform a specific function within the meaning of Note 5(B) to Chapter 84 of the Combined Nomenclature, must be classified under heading 8471 of the CN as units of such machines. (2) In so far as Commission Regulation (EC) No 1153/97 of 24 June 1997 amending Annex I to Council Regulation (EEC) No 2658/87 on the tariff and statistical nomenclature and on the Common Customs Tariff does not provide for the classification of sound cards without speakers and/or a microphone under heading 8453 and in so far as Commission Regulation (EC) No 2086/97 of 4 November 1997 amending Annex I to Council Regulation (EEC) No 2658/87 on the tariff and statistical nomenclature and on the Common Customs Tariff is not applicable to the facts of the case in the main proceedings, the circumstances which would require the Court to declare the two abovementioned regulations invalid do not exist. 1: - Original language: Italian. 2: - Commission Regulation (EC) No 1153/97 of 24 June 1997 amending Annex I to Council Regulation (EEC) No 2658/87 on the tariff and statistical nomenclature and on the Common Customs Tariff (OJ 1997 L 168, p. 35). 3: - Commission Regulation (EC) No 2086/97 of 4 November 1997 amending Annex I to Council Regulation (EEC) No 2658/87 on the tariff and statistical nomenclature and on the Common Customs Tariff (OJ 1997 L 312, p. 1). 4: - OJ 1987 L 256, p. 1. 5: - The Harmonised Commodity Description and Coding System introduced by the International Convention of 14 June 1983, approved for the Community by Council Decision of 7 April 1987, 87/369/EEC (OJ 1983 L 198, p. 1). 6: - Concluded in Singapore on 13 December 1996 under the auspices of the WTO, the agreement, to which the European Community is party, accounts in total for some 90% of world trade in information technology products. Under it, all customs duties on such products are to be eliminated as between the parties by 1 January 2001, with progressive reductions in 1997, 1998 and 1999. It covers HS heading 8471 and its relevant subheadings and subheading 8473 30 (parts and accessories of the machines of heading No 8471). 7: - Also provided for in Regulation No 2658/87. 8: - The Harmonised Commodity Description and Coding System. Explanatory notes. Second edition (1996). Volume 3. Sections XII-XVI, Chapters 64-84. 9: - Case C-382/95 Techex Computer [1997] ECR I-7363. 10: - Judgment in Case C-339/98 Peacock [2000] ECR I-8974. 11: - See, in particular, Case C-11/93 Siemens Nixdorf [1994] ECR I-1945, paragraph 11, Techex, cited above, paragraph 11 and Peacock, already cited, paragraph 9. 12: - See Peacock, cited above, paragraph 15. 13: - Ibid., paragraph 16. 14: - In Techex (paragraphs 20 and 21), the Court also held that the Vista board ... is a unit intended to be incorporated into an automatic data-processing machine, providing the function to convert external analogue signals to make them available in a form enabling that machine to process them and to provide an on-screen representation of the result of the operations carried out by the machine. Such function comes within the concept of data processing and is not to be regarded as the performance of a specific function for the purposes of the last paragraph of Note 5(B) to Chapter 84 of the Combined Nomenclature. Vista boards should therefore be regarded as units of an automatic data-processing machine. 15: - Peacock, cited above, paragraph 20. 16: - Ibid., paragraph 21. 17: - According to Techex, cited above, paragraph 16, the three components do nothing else than process data (in that case, processing images). 18: - As Advocate General Jacobs observed in his Opinion in Peacock, paragraph 75, the interpretation of the last paragraph of Note 5(B) means that the type of machine excluded from heading 8471 is an entity in its own right performing a specific task which either could also be performed, albeit more laboriously, without an ADP machine or is in any event quite distinct from data processing. 19: - As the Court stated, In such matters the Council has conferred upon the Commission, acting in cooperation with the customs experts of the Member States, a broad discretion to define the subject-matter of tariff headings falling to be considered for the classification of particular goods. However, the Commission's power to adopt the measures mentioned in Article 9(1)(a), (b), (d) and (e) of Regulation No 2658/87 does not authorise it to alter the subject-matter of the tariff headings which have been defined on the basis of the harmonised system established by the Convention whose scope the Community has undertaken, under Article 3 thereof, not to modify (Case C-267/94 France v Commission [1995] ECR I-4845, paragraphs 19 and 20). See also Cases C-401/93 GoldStar Europe [1994] ECR I-5587, paragraph 17 et seq.), C-309/98 Holz Geenen [2000] ECR I-1975, and the Opinion of Advocate General Jacobs in Case C-463/98 Cabletron System v Revenue Commissioners [2001] ECR I-0000, paragraph 76 et seq. 20: - See above, point 16. 21: - Case 158/78 Biegi v Hauptzollamt Bochum [1979] ECR 1103, paragraph 11.