OPINION OF MR ADVOCATE-GENERAL WARNER

DELIVERED ON 14 JULY 1976

My Lords,

This case comes to the Court by way of a reference for a preliminary ruling by the Tribunale of Pavia, before which there is pending an action for breach of a contract for the sale of goods: The plaintiff in that action is ‘Import Gadgets’, S.à.r.l., of Paris. The defendant is L.A.M.P., S.p.A., of Pavia.

The question referred to the Court by the Tribunale concerns the interpretation of Chapter 97 of the Common Customs Tariff. This is entitled ‘Toys, Games and Sports Requisites; Parts thereof’. More precisely the question is as to the correct classification within that Chapter of certain ‘laughing devices’ bought by the plaintiff from the defendant and intended to be incorporated into dolls. Your Lordships saw (and heard) a specimen of those devices, which was supplied to the Court, at its request, by the plaintiff. It is a small battery-powered gadget, in a pink plastic casing, which, when a button on it is pressed, makes a noise like human laughter. In the case of this particular specimen the laughter was masculine and somewhat sardonic. The question that the Tribunale wishes to have the assistance of the Court in deciding is whether that gadget is within Heading 97.02 or Heading 97.03 of the Common Customs Tariff. So far as material, Heading 97.02 covers, under A, ‘Dolls’ and, under B, ‘Parts and accessories’ thereof, whilst Heading 97.03 covers ‘Other toys’.

The way in which the question arises is this.

In February 1970 the plaintiff bought 2000 of the devices in question from the defendant, taking delivery of them at Pavia, and, through forwarding agents, imported them into France. The date of importation was 24 April 1970. For the purposes of clearing them through French Customs the goods were entered by the forwarding agents under Heading 97.02, which was the Heading shown in the defendant's invoice. The French Customs asked for a certificate of origin and this was obtained by the Defendant from the Chamber of Commerce of Pavia on 5 May 1970. It certified the goods to be of Italian origin. They were cleared through customs on 12 May 1970.

In February 1971 the Plaintiff bought a second batch of 1600 of the devices from the defendant. Again the Plaintiff took delivery of them at Pavia and again it imported them into France, through the same forwarding agents. The importation took place on 15 February 1971. On this occasion, however, although the defendant's invoice showed the goods as falling under Heading 97.02, the forwarding agents entered them under Heading 97.03. The French Customs having again asked for a certificate of origin, such a certificate, stating that the goods were of Italian origin, was obtained by the defendant from the Chamber of Commerce of Pavia on 18 February 1971. When, however, the French Customs came to inspect the goods (which they had not done on the previous occasion) they found that some were marked ‘Made in Japan’ whilst others bore traces of such a mark having been erased.

The importance of this discovery for the French Customs lay in the fact that France had a Commercial Agreement with Japan, under which it imposed a quota on imports from Japan of goods falling under Heading 97.03. By successive Decisions of the Council, adopted under Articles 111 and 113 of the EEC Treaty, France had been authorized to maintain that Agreement in force, pending the adoption by the Member States of a common policy as to imports of such goods from Japan. (The relevant Decisions are cited in the Observations of the Commission).

The position was quite different in the case of goods falling under Heading 97.02. Imports of these from Japan have, ever since 1968 been on the common liberalization list maintained by the Council, originally under Articles 111 and 113 of the Treaty, and now under Article 113 alone. They are not therefore subject to any quantitative restrictions in any Member State. (There again the relevant Regulations are cited in the Observations of the Commission).

The immediate outcome of the discovery by the French Customs of the falsity of the declaration of origin of the goods comprised in the plaintiff's second importation was that those goods were forfeited and that the Plaintiff was required to pay a penalty of FF 10000. A further outcome was that the French Customs re-opened the matter of the earlier importation. They held that the goods involved in that should have been entered under Heading 97.03 and they imposed a penalty of FF 5000 on the plaintiff in respect of the false declaration of the origin of those goods. To make matters worse, it seems that, in order to avoid anyone's prosecution, the forwarding agents signed a document renouncing the plaintiff's rights of recourse to the French Courts.

Although no question as to the compatibility with Community law of the action of the French Customs authorities is referred to this Court by the Tribunale of Pavia, the Commission drew attention to the fact that such a question does arise.

The Commission points out that, whichever was the correct Tariff classification of the goods in question, no certificate as to their origin was called for if they had been in free circulation in Italy. By the combined effect of Articles 9, 10 and 30 of the Treaty they could then be freely imported into France. The only exception to that would have been if, assuming them to fall within Heading 97.03, and therefore subject, if imported direct from Japan into France, to the quota provided for by the Franco-Japanese Commercial Agreement, there had been in force a Decision of the Commission under Article 115 of the Treaty authorizing France to treat them as subject to that quota even though they were in free circulation in another Member State. There was however no such Decision in force at the time of the importations here in question. Decisions to that effect covered only the periods 17 July to 31 December 1970 and 30 September 1971 to 31 March 1972. (See, for particulars of those Decisions, the Observations of the Commission).

Thus the question whether the action of the French authorities was compatible with Community law depends upon whether in fact the goods in question were in free circulation in Italy before being brought into France. On behalf of the plaintiff it was vigorously asserted at the hearing that they were not. It appears from the Order for Reference that the Defendant (which was not represented at the hearing) asserts that they were. The Commission agrees with the defendant. The French Republic has not thought fit to intervene, even though the attention of its Government was expressly drawn to the question by the Court.

In the circumstances Your Lordships cannot, in my view, do other than leave the matter open. It may have to be determined by the Tribunale of Pavia. As to that we know too little about the issues that are relevant in the action before that Court for me to be able to say. But in any case the matter must be pursued by the Commission. Indeed Counsel for the Commission told us at the hearing that a letter had already been sent by the Commission to the French Government about it. Quite properly he added that the contents of that letter were confidential, since they might lead to the Commission invoking its powers under Article 169 of the Treaty.

So I revert to the actual question referred to the Court by the Tribunale. In its Order for Reference the Tribunale expresses the view that ‘it is possible to maintain that the laughing devices constitute mechanisms capable of being used by themselves as toys (97.03) or, on the contrary, that they merely constitute parts of dolls (97.02 B)’. In effect the Tribunale asks the Court to choose between those two possibilities.

As was pointed out at the hearing, both on behalf of the plaintiff and on behalf of the Commission, the problem is unfortunately not quite as simple as that.

There are two Notes to Chapter 97 that have to be taken into account. The first is Note 3, which reads:

‘In heading No 97.02 the term “dolls” is to be taken to apply to such articles as are representations of human beings’.

The second is Note 4, which provides that ‘parts and accessories which are suitable for use solely or principally with articles falling within any heading of this Chapter are to be classified with those articles’.

From those provisions it can be deduced that laughing devices are within Heading 97.02 only if they are ‘suitable for use solely or principally’ in dolls that are ‘representations of human beings’.

For the plaintiff it was submitted that the laughing devices here in question could as readily be used in dolls which were representations of animals, e.g. teddy bears or Mickey Mouses, which are within Heading 97.03. The Commission added that they could also be used in articles falling within the description ‘novelty jokes’ in Heading 97.05. As an example of such an article Counsel for the Commission showed us at the hearing a ‘laughing sack’. Nor do I doubt that the Tribunale of Pavia is right in suggesting that laughing devices can be used as toys on their own.

If the matter rested there one might be driven to the highly unsatisfactory conclusion that each time a customs officer or a judge in any Member State was confronted with a batch of laughing devices he must decide, on such evidence as might be available, whether those particular devices were most suitable for use in human dolls, in toy animals, in novelty jokes or as toys in themselves.

Happily the matter does not rest there. The Explanatory Notes to the Brussels Nomenclature, which the Court has many times held to constitute an authoritative guide to the interpretation of the Common Customs Tariff, state, under Heading 97.02.

‘Parts and accessories of dolls falling within this heading include … voice and other mechanisms …’ (in the French text the reference is to ‘les voix et cris’).

On the other hand the long list of examples of toys falling within Heading 97.03 given by the Notes does not include anything resembling laughing devices. Nor, for that matter, does the list of examples of novelty jokes falling within Heading 97.05.

I conclude that the compilers of those Notes have taken the view that ‘voice and other mechanisms’ are suitable for use, if not solely, at least principally, in human dolls. That indeed was the view urged upon us by the Commission. I see no reason to differ from it.

I am therefore of the opinion that, in answer to the question referred to the Court by the Tribunale of Pavia, Your Lordships should declare that laughing devices suitable for use in dolls that are representations of human beings are within Heading 97.02 B of the Common Customs Tariff notwithstanding that they may be suitable also for other uses.