OPINION OF ADVOCATE GENERAL SIR GORDON SLYNN

DELIVERED ON 8 JULY 1982

My Lords,

On 16 November 1979, a German finn which I shall call “almadent” cleared for free circulation into Germany a consignment of goods which, according to the order for reference, it described as “modelling plaster”. The German customs authorities classified the goods under subheading 38.19 U of the Common Customs Tariff (the “CCT”) and levied duty at 14.4%. almadent objected, claiming that the goods were a phosphate-bound refractory moulding compound (or embedding composition) used for casting precious metals for dental purposes by the lost-wax process and that it should be classified under subheading 38.19 K which carries a duty of 3.2%. In the regulation in force at the time, Regulation No 2800/78 of 27 November 1978 (OJ L 335/1 of 1 December 1978), the two subheadings in question are defined as follows: “Chemical products and preparations of the chemical or allied industries (including those consisting of mixtures of natural products), not elsewhere specified or included; residual products of the chemical or allied industries, not elsewhere specified or included ... K. Refractor) cements, mortars and similar compositions ... U. Other”.

The goods were sent to the customs laborators- for analysis and found to be put up in sets comprising the following products :

(1) a white, odourless powder composed of silicic acid, ammonium phosphate, magnesium oxide and graphite packed in sealed bags containing 60 grams and apparently called “Complete Investment”

(2) a dear, light red liquid composed of coloured water-glass put up in a plastic bottle containing 946 millilitres and described as “Complete Liquid Concentrate”

(3) a rolled-up strip of light grey asbestos board about 35 mm wide; and

(4) a plastic measuring cylinder.

Applying general rule 3 (b) of the Rules for the interpretation of the CCT Nomenclature, the customs authorities decided to classify the goods as if they consisted of the component which gave them their essential character, here, the powder called “Complete Investment” which, when mixed with the liquid concentrate and diluted with some water, forms the embedding composition, almadent does not appear to have challenged this. The customs authorities nevertheless maintained that the correct subheading was 38.19 U. They refused to accept that the goods were a refractory composition within the meaning of subheading 38.19 K on the ground that the CCT Explanatory Notes say that “one of the essential characteristics of the refractory compositions of this subheading is that they show pyroscopic resistance of 1500oC at least (determined in accordance with ISO Recommendations R 528-1966 and R 1146-1969)”. When tested the embedding composition did not have this degree of resistance.

almadent brought an action before the Finanzgericht to challenge this decision and the latter referred the following question to the Court for a preliminary ruling: “Must tariff subheading 38.19 K of the 1979 Common Customs Tariff be construed as meaning that only products having a pyroscopic resistance of at least 1500o C determined in accordance with ISO Recommendations R 528-1966 and R 1146-1969 may be classified as ‘refractory’ compositions covered by that subheading, or may products having a lower melting point be ‘refractory’ products for the purposes of that tariff subheading (depending on constituent material and intended use)?”

almandent relies on the third sentence of the CCT Explanatory Notes to subheading 38.19 K which reads: “Also included in this subheading are silica-based refractory compositions used for making moulds for dental purposes or for jewellery by the lost-wax process” and contends that the goods fall precisely within the description given in this sentence. According io almadent, none of the silica-based products sold on the German market for this use have been tested for a pyroscopic resistance of at least 1500o because it is not necessary to do so, the metals used having a lower melting point. Counsel for the Commission agreed with this but said that the true meaning of the Notes is that retractors compositions used for making moulds for dental purposes can fall within subheading 38.19 K only if they have a pvroscopic resistance of at least 1 50C oC. In mv opinion, this is the correct interpretation to be given to the Notes: they first set out the basic criterion for classification under the subheading (the minimum pyroscopic resistance of 1500oC) and then proceed to itemize examples of different products which fall within the subheading if, but only if, they satisfy the basic criterion. This is true of the “preparations composed of refractory materials” referred to in the second sentence of the Notes and of the “silica-based refractory compositions” referred to in the third sentence. It seems to me to be quite impossible to read the second or the third sentences in isolation and without reference to the first sentence. “Refractory” has the same meaning in each. Goods which are of the descriptions given which do not satisfy the basic criterion are, on a proper construction of the Notes, excluded from the heading.

It is true that, in every day parlance, “refractory” means heat-resistant and that, as counsel for the Commission pointed out, many substances can be said to be heat-resistant to a greater or lesser degree. Nevertheless, for customs purposes, the refractory nature of a particular substance provides no certain criterion for distinguishing it from a large number of other substances, in the absence of an accepted standard of heat resistance. The requirement of pyroscopic resistance or 1500o C at least provides the necessary element of certainty to ensure a consistent application of the Tariff.

The standard adopted in the CCT Explanatory Notes is based on what appears to be the generally accepted scientific and technical definition of a refractory product, as can be seen from the extracts from the various encyclopaedias and dictionaries put before the Court. It is also the standard adopted in the Customs Cooperation Council (“CCC”) Explanatory Notes. Subchapter I of Chapter 69 of the CCC (and the CCT) Nomenclature covers ceramic products which are described as “heat insulating and refractory goods”. The CCC Explanatory Notes refer to the latter as “fired articles having the special property of resisting high temperatures as met in metallurgy, the glass industry, etc. (e.g. of the order of 1500oC and higher)...”. They go on to say “headings 69.02 and 69.03 do not cover articles which, though sometimes described as refractory or semi-refractory, are incapable of withstanding industrial temperatures of the type described above”. Such articles are to be classified under subchapter II, which covers “other ceramic products”

The restriction in the Notes of subheading 38.19 K to products having a minimum pyroscopic resistance of 1500oC is not, in my opinion, contrary to the true construction of the subheading. It simply gives a more precise indication of what is meant by “refractory”. Although the goods in this case can be described as being heat resistant and, so far as can be seen, are intended to be so up to a temperature somewhat lower than 1500oC, that does not mean that, for the specific purposes of the CCT, they are to be considered as refractory compositions within the meaning of subheading 38.19 K.

For these reasons it is my opinion that the question referred to the Court should be answered to the effect that only products having a pyroscopic resistance of at least 1500oC determined in accordance with ISO Recommendations R 528-1966 and R 1146-1969, may be classified as refractory compositions covered by that subheading.