Judgment of the Court of 29 May 1974. - Hauptzollamt Bielefeld v Offene Handelsgesellschaft in Firma H. C. König. - Preliminary ruling requested by the Bundesfinanzhof - Germany. - Case 185-73.



European Court reports 1974 Page 00607

Greek special edition Page 00313

Portuguese special edition Page 00321



Summary

Parties

Subject of the case

Grounds

Decision on costs

Operative part



Keywords

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1 . EUROPEAN COMMUNITIES - TREATY OF ACCESSION - INTERPRETATION - COMMUNITY TREATIES - INCOMPATIBLE MEASURES - VALIDATION - INADMISSIBILITY

2 . AGRICULTURE - AGRICULTURAL PRODUCTS - LIST - ADDITIONS - EEC REGULATION NO 7A/59 OF THE COUNCIL - BELATED PUBLICATION - VALIDITY

3 . AGRICULTURE - AGRICULTURAL PRODUCTS - PRODUCTS OF FIRST-STAGE PROCESSING - CONCEPT

( EEC TREATY, ARTICLE 38 ( 1 ))

4 . COMMON CUSTOMS TARIFF - DESCRIPTION OF GOODS - CRITERIA

5 . COMMON CUSTOMS TARIFF - DESCRIPTION OF GOODS - INTERPRETATION - ABSENCE OF COMMUNITY PROVISIONS - BRUSSELS CONVENTION ON NOMENCLATURE - EXPLANATORY NOTES - AUTHORITATIVE

6 . COMMON CUSTOMS TARIFF - DESCRIPTION OF GOODS - ETHYL ALCOHOL UNDER TARIFF SUBHEADING NO 22.09-A - PRODUCTS UNDER SUBHEADING NO 22.09-C-V - DISTINCTION - CRITERIA

Summary

1 . NO PROVISION THE TREATY OF ACCESSION OR IN THE ACTS ACCOMPANYING IT CAN BE CONSTRUED AS VALIDATING MEASURES, WHATEVER THEIR FORM, WHICH ARE INCOMPATIBLE WITH THE TREATIES ESTABLISHING THE COMMUNITIES .

2 . THE VALIDITY OF EEC REGULATION NO 7A/59 OF THE COUNCIL IS NOT AFFECTED BY THE CIRCUMSTANCE THAT PUBLICATION IN THE OFFICIAL JOURNAL DID NOT TAKE PLACE UNTIL AFTER THE EXPIRY OF THE TIME LIMIT OF TWO YEARS FROM THE ENTRY INTO FORCE OF THE TREATY, SINCE THIS BELATEDNESS HAS NO SIGNIFICANCE SAVE AS TO THE DATE FROM WHICH THE REGULATION COULD BE APPLIED AND HAVE EFFECT .

3 . THE CONCEPT OF 'PRODUCTS OF FIRST-STAGE PROCESSING DIRECTLY RELATED' TO THE BASIC PRODUCTS, MUST BE INTERPRETED AS IMPLYING A CLEAR ECONOMIC INTERDEPENDENCE BETWEEN BASIC PRODUCTS AND PRODUCTS RESULTING FROM A PRODUCTIVE PROCESS, IRRESPECTIVE OF THE NUMBER OF OPERATIONS INVOLVED THEREIN .

PROCESSED PRODUCTS WHICH HAVE UNDERGONE A PRODUCTIVE PROCESS, THE COST OF WHICH IS SUCH THAT THE PRICE OF THE BASIC AGRICULTURAL RAW MATERIALS BECOMES A COMPLETELY MARGINAL COST, ARE THEREFORE EXCLUDED .

4 . IN THE INTERESTS OF LEGAL CERTAINTY AND THE SIMPLIFICATION OF ADMINISTRATIVE PROCEDURES, IT IS THE CHARACTERISTICS AND THE OBJECTIVE PROPERTIES OF PRODUCTS WHICH, AS A GENERAL RULE, AFFORD THE DECISIVE CRITERION FOR THEIR CLASSIFICATION IN THE COMMON CUSTOMS TARIFF .

5 . IN THE ABSENCE OF COMMUNITY EXPLANATORY NOTES IN THIS FIELD, THE NOTES PROVIDED FOR BY THE BRUSSELS CONVENTION ON NOMENCLATURE FOR THE CLASSIFICATION OF GOODS IN THE CUSTOMS TARIFF AFFORD AN AUTHORITATIVE SOURCE FOR THE INTERPRETATION OF COMMON HEADINGS .

6 . ETHYL ALCOHOL, UNDER SUBHEADING NO 22.09-A OF THE COMMON CUSTOMS TARIFF, IS DISTINGUISHED FROM THE PRODUCTS UNDER SUBHEADING NO 22.09-C-V BY THE PRESENCE IN THOSE PRODUCTS OF FLAVOURING SUBSTANCES OR DISTINCTIVE PROPERTIES OF TASTE .

Parties

IN CASE 185/73

REFERENCE TO THE COURT UNDER ARTICLE 177 OF THE EEC TREATY BY THE BUNDESFINANZHOF FOR A PRELIMINARY RULING IN THE ACTION PENDING BEFORE THAT COURT BETWEEN

HAUPTZOLLAMT BIELEFELD

AND

OFFENE HANDELSGESELLSCHAFT IN FIRMA H . C . KOENIG

Subject of the case

ON THE VALIDITY OF EEC-REGULATION NO 7A/59 OF 18 DECEMBER 1959 ( OJ 1961, P . 71 ) AND THE INTERPRETATION OF TARIFF HEADINGS NOS 22.09-A-II AND 22.09-C-V-B OF THE COMMON CUSTOMS TARIFF

Grounds

1 BY ORDER OF 16 OCTOBER 1973 OF THE BUNDESFINANZHOF, FILED AT THE REGISTRY ON 3 DECEMBER 1973, A PRELIMINARY RULING WAS REQUESTED OF THE COURT AS TO THE VALIDITY AND INTERPRETATION OF EEC REGULATION NO 7A/59 OF THE COUNCIL, BEARING THE DATE 18 DECEMBER 1959 ( OJ 1961, P . 71 ), AS WELL AS TO THE INTERPRETATION OF TARIFF SUBHEADINGS NOS 22.09-A-II AND 22.09-C-V-B OF THE COMMON CUSTOMS TARIFF .

2 DURING THE ORAL PROCEDURE THE COUNCIL ADDUCED ARGUMENTS FROM THE ACTS RELATING TO THE ACCESSION TO THE COMMUNITIES OF THE KINGDOM OF DENMARK, OF IRELAND AND OF THE UNITED KINGDOM, IN ORDER TO CHALLENGE THE JURISDICTION OF THE COURT TO PRONOUNCE UPON THE VALIDITY OF REGULATION NO 7A .

ACCORDING TO SUCH ARGUMENT, AS AN ADDITION TO THE EEC TREATY, THE REGULATION IN QUESTION WAS, IN ANY EVENT, VALIDATED BY ARTICLE 1 OF THE TREATY OF ACCESSION, WHICH PROVIDES THAT THE STATES ACCEDING BECOME PARTIES TO THE TREATY ESTABLISHING THE COMMUNITIES 'AS AMENDED OR SUPPLEMENTED '.

MOREOVER, PROTOCOL NO 19, ANNEXED TO THE ACT OF ACCESSION, CONCERNING SPIRITUOUS BEVERAGES OBTAINED FROM CEREALS WOULD HAVE NO MEANING WITHOUT THE SUPPORT OF A VALID ORGANIZATION OF THE MARKET IN ALCOHOL, WHICH, IN ITS TURN, NECESSARILY PRESUPPOSES THE VALIDITY OF THE PROVISIONS MADE BY REGULATION NO 7A .

3 THE ACTS RELATING TO THE ACCESSION OF THE NEW MEMBER STATES HAVE AS THEIR ESSENTIAL PURPOSE THE EXTENSION TO THOSE STATES OF THE ENTIRETY OF COMMUNITY LAW IN FORCE AT THE TIME OF ACCESSION .

ALTHOUGH CERTAIN CLAUSES IN THESE ACTS, SUCH AS ARTICLE 3 OF THE TREATY OF ACCESSION, MAY BE CONSIDERED AS A RECOGNITION, BY ALL THE PARTIES, OF THE BINDING CHARACTER OF DECISIONS TAKEN OR AGREEMENTS REACHED WITHIN THE GENERAL SYSTEM OF COMMUNITY LAW, NO PROVISION IN THE TREATY OF ACCESSION OR IN THE ACTS ACCOMPANYING IT CAN BE CONSTRUED AS VALIDATING MEASURES, WHATEVER THEIR FORM, WHICH ARE INCOMPATIBLE WITH THE TREATIES ESTABLISHING THE COMMUNITIES .

4 ACCORDINGLY, IT WOULD APPEAR THAT THE PRELIMINARY OBJECTION OF THE COUNCIL MUST BE REJECTED .

AS TO THE FIRST QUESTION

5 THE FIRST QUESTION ASKS WHETHER REGULATION NO 7A OF THE COUNCIL, ADDING CERTAIN PRODUCTS TO THE LIST IN ANNEX II TO THE TREATY, IS VALID, ALTHOUGH NOT ADOPTED UNTIL AFTER THE EXPIRY OF THE PERIOD OF VALIDITY OF THE POWER CONFERRED BY ARTICLE 38 OF THE TREATY ESTABLISHING THE EEC .

THE NATIONAL COURT POINTS OUT IN THIS CONNEXION THAT REGULATION NO 7A, ALTHOUGH BEARING THE DATE OF 18 DECEMBER 1959, WAS NOT PUBLISHED IN THE OFFICIAL JOURNAL UNTIL OVER A YEAR AFTER THE EXPIRY OF THE TIME LIMIT SET BY ARTICLE 38 .

THE FACT THAT THAT REGULATION WAS TO HAVE TAKEN EFFECT AS FROM 31 DECEMBER 1959, THE LAST DAY OF THE SAID TIME LIMIT, DOES NOT ALTER THE LEGAL POSITION, SINCE THE PUBLICATION OF A REGULATION HAS A CONSTITUTIVE EFFECT .

6 ACCORDING TO THE WORDING OF THE SECOND SENTENCE OF ARTICLE 38 ( 3 ), 'WITHIN TWO YEARS OF THE ENTRY INTO FORCE OF THIS TREATY, HOWEVER, THE COUNCIL SHALL, ACTING BY A QUALIFIED MAJORITY ON A PROPOSAL FROM THE COMMISSION, DECIDE WHAT PRODUCTS ARE TO BE ADDED' TO THE LIST IN ANNEX II TO THE TREATY .

THIS PROVISION, BY GIVING THE COUNCIL POWER TO DECIDE THE PRODUCTS TO BE ADDED TO THE LIST, COULD NOT, AFTER 31 DECEMBER 1959, PROVIDE A LEGAL BASIS FOR A DECISION OF THE COUNCIL SUPPLEMENTING THAT LIST .

IN ANY CASE, IT HAS BEEN SHOWN THAT WITHIN THE TIME LIMIT SET BY ARTICLES 38 ( 3 ) THE COUNCIL HAD IN FACT DECIDED, ON A PROPOSAL FROM THE COMMISSION, TO INSERT IN ANNEX II THE PRODUCTS WITH WHICH REGULATION NO 7A IS CONCERNED, AS IS SHOWN IN THE TEXT OF THE REGULATION - DATED 18 DECEMBER 1959 - AS PUBLISHED IN THE OFFICIAL JOURNAL .

THE VALIDITY OF THIS REGULATION IS NOT AFFECTED BY THE FACT THAT THIS PUBLICATION, ON 30 JANUARY 1961, DID NOT TAKE PLACE UNTIL AFTER THE EXPIRY OF THE TIME LIMIT, SINCE THIS BELATEDNESS HAS NO SIGNIFICANCE SAVE AS TO THE DATE FROM WHICH THE REGULATION COULD BE APPLIED AND TAKE EFFECT .

7 FOR PRESENT PURPOSES, THE COURT IS NOT CALLED UPON TO EXAMINE THE COMPATIBILITY WITH GENERAL PRINCIPLES OF LAW OF THE PROVISION IN ARTICLE 2 ( 1 ) OF THE REGULATION, UNDER WHICH THE REGULATION WAS TO 'ENTER INTO FORCE' ON A DATE PRIOR TO ITS PUBLICATION, THIS QUESTION NOT HAVING BEEN RAISED BY THE NATIONAL COURT .

8 ACCORDINGLY, EXAMINATION OF THE FIRST QUESTION DOES NOT REVEAL ANY ELEMENTS SUCH AS TO AFFECT THE VALIDITY OF REGULATION NO 7A OF THE COUNCIL .

AS TO THE SECOND QUESTION

9 THE SECOND QUESTION ASKS WHETHER THE COUNCIL WAS PERMITTED TO ADD ETHYL ALCOHOL TO THE SAID LIST WITHOUT REGARD TO ITS ALCOHOLIC STRENGTH .

10 THE NATIONAL COURT, FORMING THE VIEW THAT ONLY THOSE PRODUCTS COULD BE ADDED TO THE LIST WHICH COMPLIED WITH THE DEFINITION OF AGRICULTURAL PRODUCTS GIVEN IN THE FIRST PARAGRAPH OF ARTICLE 38, EXPRESSES DOUBT AS TO WHETHER ETHYL ALCOHOL CAN COME WITHIN THIS DEFINITION, BY REASON OF THE FACT THAT ALCOHOLS OF A STRENGTH OF LESS THAN 80 PER CENT WOULD, IN PRACTICE, BE SUBJECTED AFTER THEIR DISTILLATION TO AN ADDITIONAL PROCESS, THAT IS, DILUTION WITH WATER .

11 THE INTERVENING GOVERNMENTS DENY THAT THE COUNCIL HAD, IN ANY CIRCUMSTANCES, ACTING WITHIN THE SCOPE OF ARTICLE 38 ( 3 ), THE OPTION OF ADDING ALCOHOL TO THE LIST IN QUESTION .

THEY SUBMIT THAT THE COMPETENCE OF THE COUNCIL WAS LIMITED BY THE DEFINITION OF AGRICULTURAL PRODUCTS GIVEN IN THE FIRST PARAGRAPH OF ARTICLE 38, SO THAT IT WAS NOT PERMITTED, IN INTERPRETING THE CONCEPT OF 'PRODUCTS OF FIRST-STAGE PROCESSING' CONTAINED THEREIN, TO RELY ON THE LIST OF PRODUCTS GIVEN IN ANNEX II BY THE AUTHORS OF THE TREATY .

THEY SUGGEST THAT THE CONCEPT OF FIRST-STAGE PROCESSING SHOULD BE INTERPRETED AS BEING RESTRICTED TO A SINGLE OPERATION ON THE RAW MATERIAL .

12 ACCORDING TO THE DEFINITION IN ARTICLE 38 ( 1 ), AGRICULTURAL PRODUCTS ARE 'THE PRODUCTS OF THE SOIL, OF STOCKFARMING AND OF FISHERIES AND PRODUCTS OF FIRST-STAGE PROCESSING DIRECTLY RELATED TO THESE PRODUCTS '.

PARAGRAPH ( 3 ) OF THAT ARTICLE PROVIDES THAT THE PRODUCTS SUBJECT TO THE PROVISIONS OF ARTICLES 39 TO 46 ARE LISTED IN ANNEX II TO THE TREATY .

IN THIS LIT APPEAR, NOT ONLY THE PRINCIPAL AGRICULTURAL PRODUCTS, BUT ALSO A CERTAIN NUMBER OF FOODSTUFFS, THE REMOTENESS OF WHICH IN INDUSTRIAL TERMS FROM THE BASIC AGRICULTURAL PRODUCT GOES BEYOND THE POINT OF FIRST-STAGE PROCESSING AS UNDERSTOOD IN A RESTRICTED SENSE .

THE ELEMENT COMMON TO THESE PRODUCTS RESIDES IN THE CLOSE ECONOMIC INTERDEPENDENCE BETWEEN THEM AND THE BASIC PRODUCTS, SO THAT IT WOULD NOT BE JUSTIFIABLE TO APPLY THE AGRICULTURAL SYSTEM TO THE BASIC PRODUCTS, WHILE APPLYING TO THE PROCESSED PRODUCTS THE GENERAL RULES OF THE TREATY .

13 THE DEFINITION OF AGRICULTURAL PRODUCTS, PLACED AT THE HEAD OF THE TITLE DEVOTED TO AGRICULTURE, WOULD BE DEVOID OF PRACTICAL MEANING IF IT WERE NOT TO BE INTERPRETED, AS REGARDS THE POWER OF THE COUNCIL TO FILL THE GAPS WITH WHICH ARTICLE 38 ( 3 ) IS CONCERNED, IN THE LIGHT OF THE AIMS OF THE COMMON AGRICULTURAL POLICY AND WITH REFERENCE TO THE PRODUCTS WITH WHICH THE AUTHORS OF THE TREATY CONSIDERED THAT POLICY TO BE CONCERNED .

THE CONCEPT OF 'PRODUCTS OF FIRST-STAGE PROCESSING DIRECTLY RELATED' TO BASIC PRODUCTS MUST, ACCORDINGLY, BE INTERPRETED AS IMPLYING A CLEAR ECONOMIC INTERDEPENDENCE BETWEEN BASIC PRODUCTS AND PRODUCTS RESULTING FROM A PRODUCTIVE PROCESS, IRRESPECTIVE OF THE NUMBER OF OPERATIONS INVOLVED THEREIN .

PROCESSED PRODUCTS WHICH HAVE UNDERGONE A PRODUCTIVE PROCESS, THE COST OF WHICH IS SUCH THAT THE PRICE OF THE BASIC AGRICULTURAL RAW MATERIALS BECOMES A COMPLETELY MARGINAL COST, ARE THEREFORE EXCLUDED .

14 THERE IS NO REASON TO CONSIDER THAT ETHYL ALCOHOL FALLS WITHIN THIS CATEGORY .

SINCE THE NUMBER OF OPERATIONS NECESSARY TO OBTAIN A PROCESSED PRODUCT IS NOT THE CRITERION FOR DETERMINING ITS CLASSIFICATION AS A PRODUCT OF FIRST-STAGE PROCESSING, THE DILUTION OF ETHYL ALCOHOL WITH WATER AFTER DISTILLATION DOES NOT AFFECT ITS CLASSIFICATION .

15 ACCORDINGLY, THE FACT THAT THE COUNCIL ADDED ETHYL ALCOHOL TO THE LIST IN ANNEX II, WITHOUT REGARD TO ITS ALCOHOLIC STRENGTH, DOES NOT AFFECT THE VALIDITY OF REGULATION NO 7A .

AS TO THE THIRD QUESTION

16 THE THIRD QUESTION ASKS HOW THE PRODUCTS LISTED UNDER TARIFF SUBHEADINGS NOS 22.09-A-II AND 22.09-C-V-B ARE TO BE DISTINGUISHED FROM ONE ANOTHER .

17 HEADING NO 22.09 IN THE BRUSSELS NOMENCLATURE COVERS BOTH UNDENATURED ETHYL ALCOHOLS OF A STRENGTH OF LESS THAN 80 PER CENT, AND BRANDIES, LIQUEURS AND OTHER SPIRITUOUS BEVERAGES WHATEVER THEIR DEGREE OF ALCOHOLIC STRENGTH .

IN THE COMMON CUSTOMS TARIFF, THIS HEADING IS SUBDIVIDED INTO NO 22.09-A, ETHYL ALCOHOL, UNDENATURED, OF A STRENGTH OF LESS THAN 80 PER CENT, AND NO 22.09-C-I TO V, SPIRITUOUS BEVERAGES .

18 IN THE INTERESTS OF LEGAL CERTAINTY AND THE SIMPLIFICATION OF ADMINISTRATIVE PROCEDURES, IT IS THE CHARACTERISTICS AND OBJECTIVE PROPERTIES OF PRODUCTS WHICH, AS A GENERAL RULE, AFFORD THE DECISIVE CRITERION FOR THEIR CLASSIFICATION IN THE COMMON CUSTOMS TARIFF .

IN THE ABSENCE, AT THE MATERIAL TIME, OF COMMUNITY EXPLANATORY NOTES IN THIS FIELD, THE NOTES PROVIDED FOR BY THE BRUSSELS CONVENTION ON NOMENCLATURE FOR THE CLASSIFICATION OF GOODS IN THE CUSTOMS TARIFF AFFORD AN AUTHORITATIVE SOURCE FOR THE INTERPRETATION OF COMMON HEADINGS;

IN THESE NOTES IT IS SPECIFIED THAT HEADING NO 22.09 INCLUDES 'ETHYL ALCOHOL, UNDENATURED, WHETHER RECTIFIED OR NOT, OF A STRENGTH OF LESS THAN 80 PER CENT ... WHETHER INTENDED FOR HUMAN CONSUMPTION OR FOR INDUSTRIAL USES ...' WHICH IS 'DISTINGUISHED FROM "SPIRITUOUS BEVERAGES" BY THE FACT THAT IT IS DEVOID OF ALL FLAVOURING SUBSTANCES '.

SUBHEADINGS NOS 22.09-C-I TO V OF THE COMMON CUSTOMS TARIFF ARE SUBDIVIDED ACCORDING TO THE TYPES OF BEVERAGE KNOWN TO THE TRADE, SUBHEADING NO 22.09-C-V BEING A RESIDUAL SUBHEADING .

19 ACCORDINGLY, ETHYL ALCOHOL, UNDER SUBHEADING NO 22.09-A, IS DISTINGUISHED FROM THE PRODUCTS UNDER SUBHEADING NO 22.09-C-V BY THE PRESENCE IN THOSE PRODUCTS OF FLAVOURING SUBSTANCES OR DISTINCTIVE PROPERTIES OF TASTE .

Decision on costs

20 THE EXPENSES INCURRED BY THE GOVERNMENT OF IRELAND AND THE GOVERNMENT OF THE UNITED KINGDOM, BY THE COUNCIL AND BY THE COMMISSION OF THE EEC, WHICH HAVE SUBMITTED OBSERVATIONS TO THE COURT, ARE NOT RECOVERABLE, AND AS THESE PROCEEDINGS ARE, INSOFAR AS THE PARTIES TO THE MAIN ACTION ARE CONCERNED, A STEP IN THE ACTION BEFORE THE NATIONAL COURT, COSTS ARE A MATTER FOR THAT COURT .

Operative part

THE COURT

IN ANSWER TO THE QUESTIONS REFERRED TO IT BY THE BUNDESFINANZHOF BY ORDER OF 16 OCTOBER 1973, HEREBY RULES :

1 . EXAMINATION OF THE QUESTIONS REFERRED DOES NOT REVEAL ANY ELEMENTS SUCH AS TO AFFECT THE VALIDITY OF REGULATION NO 7A OF THE COUNCIL .

2 . ETHYL ALCOHOL, UNDER SUBHEADING NO 22.09-A-II OF THE COMMON CUSTOMS TARIFF, IS DISTINGUISHED FROM THE PRODUCTS UNDER SUBHEADING NO 22.09-C-V-B BY THE PRESENCE IN THOSE PRODUCTS OF FLAVOURING SUBSTANCES OR DISTINCTIVE PROPERTIES OF TASTE .