61977C0111
OPINION OF MR ADVOCATE GENERAL CAPOTORTI
DELIVERED ON 16 FEBRUARY 1978 (
1
)
Mr President,
Members of the Court,
1.
The problems which have given rise to the present proceedings for a preliminary ruling relate to the interpretation of the Common Customs Tariff and in particular to Chapter 78 thereof on lead. The question is essentially to find a criterion for defining the concept of unwrought lead as against lead scrap.
I shall first of all summarize the facts. In May 1974 Bleiindustrie of Hamburg imported from Denmark a consignment of metal bars obtained by the melting of waste type-metal composed of approximately 84 % lead, 4 % tin and 12 % antimony. The new bars of this alloy are used directly in printing works to supply the printing presses which produce type such as linotypes. The printing works themselves re-melt the used type a certain number of times in the form of bars which are suitable for their linotypes. But repeated use in printing causes impurities to accumulate in the material in question and above a certain level this makes them no longer suitable without prior refining for re-melting in printing works for the production of print.
The above-mentioned bars imported from Denmark were precisely the result of the melting of printing material which could no longer be re-used directly by printing works because of the level of impurity which had been reached.
The following month Bleiindustrie imported from the United States a consignment of fragments of bars of the same alloy which did not however contain impurities because they resulted from the accidental breakage of new bars for type-casting machines.
The German customs authority classified these products under tariff heading 78.01 A II, which covers unwrought lead not containing at least 0.02 % of silver. The undertaking concerned, having unsuccessfully protested against that decision to the Hauptzollamt Hamburg-Waltershof, brought proceedings against the Hauptzollamt before the Finanzgericht (Finance Court) Hamburg. It requested that the products in question should be classified under letter B of the same tariff heading, 78.01, which covers lead waste and scrap. According to the applicant, the melting of used type which is no longer suitable for ‘feeding’ a type-casting machine does not prevent the bar thus obtained from being classified as lead scrap since neither that bar nor the material from which it is made is usable for printing purposes without a refining process. As or the new broken bars, they also must previously undergo a remelting process so as to be capable of being inserted into the type-casting machine. In both cases however, according to the applicant, it is necessary to speak of ‘scrap’ and not of ‘unwrought material’.
The German customs office however considered that the criterion for the delimitation between tariff subheadings 78.01 A and 78.01 B consisted only in the outward appearance of the goods. Thus the process of melting down into bars undergone by the residual type imported from Denmark was sufficient to make that material lose its character of ‘scrap’. It is not clear from the order for reference whether the customs office put forward a separate argument in respect of the fragments of new bars of type-metal imported from the United States which were obviously the result of breakage because the outward appearance was that of fragments of bars.
Within the context of the proceedings pending before the Finanzgericht Hamburg, that court, by decision of 25 August 1977, which was entered in the Register of the Court of Justice on 14 September 1977, referred the following questions to the Court of Justice under the second paragraph of Article 177 of the EEC Treaty:
‘1.
Does tariff subheading 78.01 A also include melted-down lead scrap in the form of bars for type-casting machines which are no longer usable?
2.
Does tariff subheading 78.01 A also include broken bars for type-casting machines or must they be classified under tariff subheading 78.01 B or heading 78.02?’
2.
The products which are to be classified are composed, as I have said, of an alloy of base metals; it is therefore appropriate to recall Note 3 (b) contained in Section XV of the Common Customs Tariff which, referring to the various ferro-alloys and master alloys as defined in Chapters 73 and 74, provides that: ‘Any other alloy of base metals is to be classified as an alloy of the metal which predominates by weight over each of the other metals’.
In both consignments of goods in question in this case lead clearly predominates by weight over the other constituents. There is therefore no doubt that it is necessary to classify them for customs purposes under Chapter 78 of the Common Customs Tariff which relates precisely to lead. It is however necessary to see what headings contained in that chapter might come into consideration in this case.
The parties to the proceedings before the court making the reference have disputed the classification of the two consignments of goods in question merely by reference to tariff heading 78.01. However, as we have seen, in its second question the Finanzgericht also took into consideration tariff heading 78.02, the subject-matter of which is: ‘Wrought bars, rods, angles, shapes and sections, of lead; lead wire’.
In fact the expression ‘lead bars’ would seem to be appropriate with regard to the products with which we are concerned in this case. However, Note 1 (b) to Chapter 78 of the Common Customs Tariff must not be overlooked; the concept of wrought bars, rods, angles, shapes and sections coming under tariff heading No 78.02 is defined thus: ‘Rolled, extruded, drawn or forged products of solid section, of which the maximum cross-sectional dimension exceeds 6 mm and which, if they are flat, have a thickness exceeding one-tenth of the width. Also cast or sintered products, of the same forms and dimensions, which have been subsequently machined (otherwise than by simple trimming or de-scaling)’. The Commission has pointed out that the bars obtained by melting old type have not undergone any machining; for this reason they cannot be classified under tariff heading 78.02.
On the other hand it is necessary to observe that the court making the reference referred to tariff heading 78.02 only with regard to the broken bars for type-casting machines. It seems to me to be obvious that the fragments of bars can in no way come within that tariff heading if, as the Commission considers, and as it seems justified to admit, the same bars whole and free from impurities would remain outside that tariff heading because they had not undergone any refining process after melting.
The question of the classification for customs purposes of the goods in question must therefore be considered within the context of tariff heading 78.01. The alternative remains: are they unwrought lead or lead scrap? It seems to me however that, in accordance with the wording of the questions submitted by the Finanzgericht, it is helpful to make a clearer distinction than have the parties to the present proceedings between the product resulting from the melting into bars of old type (which in the present case was what was imported from Denmark) and the product consisting of fragments of new bars for type-casting machines (like the consignment of goods imported from the United States).
In fact the two products, although consisting of alloys of the same metals, show important differences both with regard to their actual chemical composition, since only the former contains impurities resulting from the prolonged use in printing of the type from which it is made, and as regards their possible uses: it is true that in both cases an alloy suitable for printing is involved, but in the first case such use is impossible without a prior refining process, whilst in the second case simple re-melting is sufficient to reconstitute whole new bars for type-casting machines.
It is therefore necessary to examine the question of the classification for customs purposes which was indicated above with regard to each of these two products.
3.
I shall begin with an examination of the tariff position of the bars resulting from the melting of type which can no longer be used, on account of the accumulated impurities, for ‘feeding’ the type-casting machines without prior refining.
The Commission admits that the used type constitutes lead scrap; but the bars resulting from the mere melting thereof must be classified as ‘unwrought lead’ solely on account of their outward appearance; in fact they do not look like old material or material for recovery. Once the type has been melted what is involved is metal which has already been recovered. The Commission considers that the fan that the metal thus recovered cannot be directly used to manufacture new type by linotype machines without a prior refining process is irrelevant. The fact that the product in question is in the form of bars is sufficient, according to the Commission, for it to be considered as unwrought lead and not scrap; the fact that it is impossible to put the metal alloy in question to the direct use for which it was designed is irrelevant.
It seems to me however that thus to exclude the criterion of the objective intended purpose of the product as totally irrelevant does not take into account Note 6 to the above-mentioned Section XV of the Common Customs Tariff, which provides that the expression ‘waste and scrap’ means waste and scrap metal fit only for the recovery of metal or for use in the manufacture of chemicals.
There is no doubt that the intended purpose of the bars involved is the recovery of metal. It is true, however, on the other hand, as indicated by the Explanatory Notes to the Brussels Nomenclature on tariff heading 73.03, that the process generally used for the recovery of metal is re-melting. This does not however imply that any process of melting scrap completes the recovery process. This certainly does not apply when, as in the present case, the metal resulting from the melting of the old type is, like it, not appropriate for use in printing and recovery requires a further chemical process.
Apart from this, it is necessary to take into account the fact that the Explanatory Notes to the Brussels Nomenclature on tariff heading 78.01 state that the explanatory note to heading 73.03 applies to lead scrap, but mutatis mutandis, that is, taking into account the differences which may be relevant. However, it is not in fan certain taht the re-melting of lead scrap of the type in question in this case can simply be treated in the same way as that of ferrous or steel scrap to which the above-mentioned note on tariff heading 73.03 refers. It is probable that an ingot obtained by the melting of ferrous or steel scrap is normally appropriate for uses for which the scrap from which it is derived would not be suitable; whereas we know that there is no difference in this respect between the old type involved and the bars obtained by the melting thereof, which are unsuitable as such for use in printing.
4.
One might wonder whether an interesting precedent which exists in the case-law of this Court — I am referring to the judgment of 16 December 1976 in Case 38/76, LIMA v Hauptzollamt Duisburg ([1976] ECR 2028) — provides arguments for or against the criterion of the intended purpose of the product for a given use. In that case it was a question of specifying the scope of the concept of ferro-alloys coming under tariff heading 73.02. The court making the reference had asked whether the expression ‘ferro-alloys’ meant only those products which were manufactured from new metals or ores or also material for re-melting which satisfied the requirements laid down in the appropriate note to Chapter 73. The Court observed that in the interests of legal certainty and ease of verification by the customs authorities, in the Common Customs Tariff ‘it is generally preferred’ to employ criteria for classification based on the objective characteristics and properties of products which can be easily ascertained when customs clearance is obtained. The Court therefore gave priority to the composition of the goods; stating that when that factor results in classifying a product under a specific tariff heading there is no possibility of having recourse to other methods, which according to the rules for the interpretation of the nomenclature may only be considered in relation to goods not falling within any heading of the tariff. The Court did not thereby exclude the possibility of taking into account the manufacturing process or the use for which the goods are intended (on the contrary it recalled that the customs tariff in certain cases contains references to one or the other) but gave priority to the criterion of the physical composition of the goods, naturally on the assumption that that criterion was valid for the purpose of solving the problem of classification.
In the present case, however, the criterion of the physical composition of the goods does not have the same conclusive effect. The metal content is identical in the case of the worn type, which it seems incontestable is scrap, and in the case of the bars obtained by the remelting of the type and in the case of the bars of type-metal which are not yet used. If then the impurities are also taken into consideration it follows clearly that the bars which are in consideration in this case are identical to the scrap from which they originated and clearly different from the new bars.
However, in my opinion it is necessary to place emphasis above all on the criterion of the use for which the goods are intended, which is the basis of the above-mentioned Note 6 to Section XV of the Common Customs Tariff.
We know that the alloy concerned (lead, antimony and tin in the abovementioned proportions) may be used as such exclusively for printing purposes. We also know that the physical characteristics of the bars obtained by remelting worn type which is no longer suitable for direct re-use in printing because of the impurities which have accumulated with use are no different from those of the old type from which they are derived. In fact, the melting of the latter into bars is carried out exclusively for ease of transportation, but the properties of the material remain unchanged. Whether it takes the form of a heap of letters of lead or whether such pieces are combined by compression or, as in the present case, by melting into bars it is still used material the ultimate intended purpose of which, in view of the composition of the alloy, is printing, but only after a remelting process in the first two cases and in all three cases a refining process. In short, in each of these cases (loose type, type compressed into ingots or type melted into ban) they are materials ‘fit only for the recovery of metal’ in accordance with the definition of scrap given in the above mentioned Note 6 to Section XV. Consequently, on the basis of the criterion upon which that definition is based, that of the intended purpose of the product for a given use, the ban in question come within the concept of scrap.
5.
What objections does the Commission raise to the arguments accepted here? In the view of the Commission, the classification of the goods concerned as scrap is impossible only because of their outward appearance as bars rather than as the constituents used to prepare them. Outwardly, the goods in question are, so it seems, the same as the bars suitable for ‘feeding’ the type-casting machines. Can the object of easing the task of the customs authorities ever justify rejecting any possibility of basing the classification for customs purposes on the intrinsic properties and characteristics of the product which may be objectively ascertained and giving instead precedence to external characteristics only?
The outward appearance is certainly of importance but there is no reason to attach paramount importance thereto as if it were the most significant feature of goods such as those with which we are concerned. The objective of easing the work of the customs authorities must not lead to the extreme of giving priority to the appearance as opposed to the actual nature of the goods even in cases in which the actual nature may easily be proved. This is all the more so since, as counsel for the applicant stated at the hearing, if the decisive criterion for the classification for customs purposes were to be the outward appearance of the goods it would not be difficult for those concerned to leave the goods involved in the outward form of ‘scrap’, perhaps compressing them for ease of transportation.
The presence in the bars in question of impurities arising exclusively from repeated use in printing, distinguishes them clearly from the new printing bars and, more generally, from the unrefined raw material which could never reveal such impurities stemming from the use of the material in the form of printing type, in other words as a finished product. The Commission does not deny that upon analysis the bars in question reveal objectively their origin in old printing material because of the presence of the said impurities; nor does it contest that the level of impurity which makes the material unsuitable for its original intended purpose may be established by means of objective criteria. In case of doubt, a simple analysis would enable the product concerned to be identified even if it appeared in the form of ban similar to those for type-casting machines.
It is appropriate to recall what was stated in the judgment of this Court of 12 December 1973 in Case 149/73, Witt v Hauptzollamt Hamburg-Ericus [1973] ECR 1587; in other words that the similarity between given products cannot exclude different customs treatment on the basis of other objective factors of which evidence can be given when the goods are submitted for customs clearance. In that case the Court referred in particular to certificates of origin capable of showing that what was involved was meat of wild reindeer and not of domestic reindeer. A fortiori in this case it is possible to refer to certificates attesting the results of the technical analysis of the components of the product and possibly also to the invoices indicating the market value of the product.
The reference to the outward appearance, according to the argument put forward by the Commission, seems to me therefore to be too superficial a criterion to be acceptable. At the very most it would be possible to permit the customs authorities to use such a criterion prima facie for practical reasons without however excluding the opportunity for the importer to adduce evidence to the contrary as was stated by the Court in the above-mentioned Case 149/73 with regard to the classification for customs purposes of caribou meat.
6.
It remains to be seen how the fragments of bars for type-casting machines like those which, in the present case, were imported from the United States must be classified. The Explanatory Notes to the Brussels Nomenclature on tariff heading 78.01 classify under scrap products which have become unusable for their original purpose as a result of breakage. It seems therefore that the goods in question must also be classified under tariff subheading 78.01 B. The Commission however takes the view that the abovementioned definition applies only when the complete product has undergone a process suitable to destine it for a particular purpose and it can no longer e employed for such specific purpose as a result of breakage. In the present case however it seems that the whole new bar for type-casting machines is classified, within the context of the Common Customs Tariff, simply as unwrought lead (and I have mentioned above the reasons which preclude classification as lead bars.
Having said this, one might be induced to accept that the fact that the mineral itself, instead of being in whole bars, appears in the form of fragments of bars cannot affect its character as an unwrought mineral. However, I have emphasized above the importance of the factor of the intended purpose also in the case of the bars in question which are made from an alloy which renders them suitable only for use in printing. This fan concerning their composition and the intended purpose which follows from that composition takes precedence, I believe, over the argument put forward with regard to the absence of a process designed to render the product suitable for a given purpose. On the other hand, I also recalled above that one of the distinctive features of scrap is that it must undergo a re-melting process (although sometimes re-melting alone is not sufficient) in order to be used afresh. This is no doubt true in the case of the fragments of lead bars for printing purposes which are suitable for feeding the linotypes only on condition that they are re-melted into whole bars (with no need for refining, of course). It seems to me finally therefore that there are at least two grounds which confirm the indication resulting from the abovementioned Explanatory Notes to the Brussels Nomenclature on tariff heading 78.01.
7.
I conclude by suggesting to the Court that it should reply to the questions referred for interpretation by the Finanzgericht Hamburg by decision of 25 August 1977 by ruling that:
1.
The bars obtained by melting remnants of type-metal alloy when they can no longer be used directly to feed type-casting machines because of the level of the impurities which have accumulated as a result of repeated use in printing must be considered as lead waste within the meaning of tariff heading 78.01 B;
2.
The fragments of lead bars for type-casting machines must also be considered as lead scrap within the meaning of the same tariff heading 78.01 B.
(
1
)	Translated from the Italian.