3.

The first question submitted by the Finanzgericht München concerns the concept of “miniaturized discrete component” which is used in two passages in Note 5 (B), namely in subparagraph (a) and in the last sentence of subparagraph (c). The order making the reference to the Court provides a clearer explanation of what the German court wishes to ascertain concerning the concept of discrete component: whether it covers exclusively components which are mounted as such separately (and provided with electrical connections), whether reference should be made to other criteria or whether, in addition to components consisting of a single electric circuit element, the same concept may also include circuits made up of several elements, such as monolithic integrated circuits or ceramic plates with a printed resistor network. In technical terms, the expression “discrete component” (in French “composant discret”, in Italian “componente discreto” and in German “Einzelbauelement”) is used to denote an entity which forms part of a more complex circuit but is an individual physical entity. It is therefore possible to state, in approximate terms, that the discrete components of a given module (electronic circuit) are basic units employed in the manufacture of the module itself. However, as regards the interpretation of the expression “discrete components” in connection with the above-mentioned Note 5 (B), the position of the Commission diverges markedly from that of the plaintiff in the main action. Counsel for the plaintiff argues that discrete components are independent units forming part of the electronic circuit (that is to say, diodes, transistors, resistors, condensers and the like) characterized not only by their original physical individuality but also by the fact that they each fulfil a single function. Instead, the Commission takes the view that a discrete component is to be understood as meaning any element of the circuit which constitutes an indivisible physical unit. Each of these interpretations results in a different answer to the question raised by the German court: if the Commission's view is accepted, a monolithic integrated circuit may be an element in an electronic circuit inasmuch as, though itself composed of different elements, it constitutes a unit from a physical point of view, regardless of whether or not it has a single function. If, on the other hand, we adopt the argument adduced by the plaintiff in the main action, that possibility is ruled out on the ground that a monolithic integrated circuit does not always fulfil a single function but may have several functions, particularly in view of the fact that it may be used in conjunction with different items of equipment. I should like to state straight away that the Commission's interpretation strikes me as the more convincing of the two primarily because it is in conformity with the general criteria on which the Common Customs Tariff is based. It is well known that in order to be correctly applied, the tariff headings must identify on the basis of clear and objective factors the goods which come within their respective spheres. That enables the customs authorities to carry out the necessary checks swiftly and at the same time guarantees importers a reasonable degree of certainty in legal relationships. The Court has recently reaffirmed that concept by stating that “the principle of legal certainty requires that rules imposing charges on the taxpayer must be clear and precise so that he may know without ambiguity what are his rights and may take steps accordingly” (judgment of 9 July 1981 in Case 169/80, Administration des Douanes ν Gondrand and Garancini, [1981] ECR paragraph 17 of the decision). If the classification of electronic circuits were to be influenced by the varying functions for which they were intended, the factors to be taken into account by the customs authorities in determining the appropriate heading would include one which is difficult to assess, and that would also complicate the carrying out of the necessary administrative checks. That argument accords with the last paragraph of Note 5 which states that: “For the classification of the articles defined in this note, heading No 85.21 shall take precedence over any other heading in the tariff which might cover them by reference to, in particular, their function”. That implies that, at least in relation to the articles covered by heading 85.21, their function is not relevant for the purposes of thier classification. Additional evidence in support of the interpretation which I favour may be derived from the notes to the Nomenclature of the Customs Cooperation Council established by the Brussels Convention. In that connection I would point out, to begin with, that those notes may be used for the interpretation of the Common Customs Tariff, but within certain limits. The Court has had occasion to state that: “Where no Community explanatory notes have yet been issued in respect of the tariff headings to the Common Customs Tariff, the observance of these explanatory notes and opinions” (issued by the Customs Cooperation Council in Brussels) “is a useful means of ensuring that the common external tariff is uniformly interpreted and applied at all the frontiers of the common market” (judgment of 8 December 1970 in Case 14/70 Bakels [1970] ECR 1001, paragraph 10 of the decision). Consequently, where, as in the present case, explanatory notes have been issued by the Community, it is inevitable that the notes drawn up by the Customs Cooperation Council will not be as significant as they would be in cases where no Community explanatory notes whatsoever exist and, in any event, notes originating in the Community must take precedence. Having said that, I would point out that, according to the second paragraph of the note to Section XVI, Chapter 85, paragraph F, “Electronic micro-circuits fall into two groups, according to manufacturing process: micro-assemblies and integrated circuits”. The expression “according to manufacturing process”, which constitutes a clear reference to the manner in which they are constructed, implies that the classification of micro-circuits into groups has been carried out by reference to physical criteria. Therefore, in my opinion, there can be no doubt that recourse to the notes of the Brussels Convention is justified for the purpose of interpreting the Common Customs Tariff since the division of electronic micro-circuits into micro-assemblies and integrated circuits, as set out in Note 5 (B) to the Common Customs Tariff, is based without variation on the identical division set forth in the classification of the Customs Cooperation Council. There is therefore more than one argument militating in favour of the Commission's view that circuits (whether monolithic or hybrid) which are “integrated” and thus constitute inseparable physical units come within the concept of “discrete components” and may therefore form part of a micro-assembly as defined in subparagraph (a) of Note 5 (B). Against that, the plaintiff in the main action relies above all on an argument deduced from the context of Note 5 (B) to the Common Customs Tariff. Subparagraph (c) of that note specifies that hybrid integrated circuits may also include elements obtained by semiconductor technology, for example, monolithic integrated circuits. It follows, according to the plaintiff, that in the absence of a similar express provision, monolithic integrated circuits cannot be discrete components of the micro-assemblies covered by subparagraph (a) of the same note. In my opinion, however, such a peripheral point in the text cannot have any significance for the purposes of interpretation. One need only consider that, in defining micro-assemblies, subparagraph (a) merely states that they consist of discrete, active or both active and passive, components without identifying such components, unlike subparagraph (c) which does so, albeit in brackets and by way of illustration, in the case of the elements of hybrid integrated circuits. Therefore, in my opinion there is nothing in the text to preclude a monolithic integrated circuit incorporated in a micro-assembly from being regarded as a discrete component. Next, the plaintiff relies on the notes to the Brussels Nomenclature. Section XVI, Chapter 85, paragraph (F), (I) (micro-assemblies) lists the discrete components (diodes, transistors, capacitors, inductances and resistors) in paragraph (1) but makes no mention of integrated circuits, whether monolithic or hybrid. The plaintiff seeks to deduce from that omission that integrated circuits cannot be included in the list of discrete components. That argument seems to me to carry little weight for the purpose of clarifying the concept of discrete component. It is necessary to bear in mind that the list contained in the aforesaid paragraph does not refer to discrete components in general but has been incorporated in the context of paragraph (1), which covers only a particular category of modules (cordwood or fagot modules). The plaintiff undertaking also refers to another aspect of the notes to the Brussels Nomenclature. It observes that the fourth subparagraph of Section XVI, Chapter 85 (F) (II) (2), contains an exception to the effect that “assemblies formed by adding to an electronic micro-circuit other devices or other micro-circuits of the same or different type”, leaving aside hybrid integrated circuits consisting of combinations which are to all intents and purposes indivisible, are excluded from the heading “Electronic micro-circuits”. In the plaintiff's opinion, the inclusion of an integrated circuit as a component of a micro-assembly would result in an “assembly” of the type envisaged in the aforesaid passage. That assembly could not therefore be classified as a micro-assembly consisting of discrete components. If the contents of the relevant note to the Brussels Nomenclature are applied to the interpretation of the concept of electronic micro-circuit contained in heading 85.21 D of the Common Customs Tariff, the resultant conclusion should be that a micro-assembly which includes an integrated circuit amongst its components cannot be classified as an electronic micro-circuit under the above-mentioned heading. That argument is also open to criticism. I would point out that the exception referred to in the note to the Brussels Nomenclature applies only to assemblies which constitute a complete machine or appliance or machine parts. The fifth paragraph of Part F makes clear that assemblies which cannot be defined as electronic micro-circuits are to be classified as machines or machine parts; in other words, such assemblies, unlike electronic micro-circuits, are identified essentially by reference to their function. We have seen, however, that the last paragraph of Note 5 to the Common Customs Tariff gives precedence to tariff heading 85.21 over any other heading capable of being applied to the same article if the function for which it is intended is taken into account. In my opinion, that rule on the order of priority must, in view of its general nature, also apply within the framework of the Common Customs Tariff to those combinations which would not be classifiable as micro-circuits if the notes to the Brussels Nomenclature referred to above (Section XVI, Chapter 85 (F) (II) (2), fourth subparagraph) were to be employed. To put it another way, the rule on the order of priority, established by the Community note, does not permit account to be taken of the approach discernible in the notes to the Brussels Nomenclature on “assemblies” since that approach lays emphasis on the function for which the articles in question are intended.