3.

On importing the T 50, Telefunken applied to the Oberfinanzdirektion München [Principal Revenue Office, Munich] for a binding customs tariff ruling; a ruling was issued on 14 April 1982. The Oberfinanzdirektion classified the T 50 under subheading 85.15 A III b 2 of the Common Customs Tariff, which covers ‘receivers, whether or not incorporatingsound recorders or reproducers’. Such a classification results in an autonomous duty of 22% or a conventional duty of 14%. The classification was based on Rule 3 (b) of the Rules for the Interpretation of the Nomenclature of the Common Customs Tariff. That rule provides as follows: ‘3. When for any reason goods are, prima facie, classifiable under two or more headings, classification shall be effected as follows: (a) ... (b) Mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets, which cannot be classified by reference to 3 (a), shall be classified as if they consisted of the material or component which gives them their essential character, in so far as this criterion is applicable.’ Rule 3 (a) provides as follows: ‘The heading which provides the most specific description shall be preferred to headings providing a more general description.’ The Bundesfinanzhof states that the Oberfinanzdirektion considered the colour-television receiver to be the component which gave the T 50 its essential character within the meaning of Rule 3 (b). Telefunken challenges that ruling on the ground that the T 50 cannot function on its own and cannot therefore be regarded as a television reception apparatus. In particular, it does not reproduce directly the signals received and cannot therefore be equated with a receiver. It maintains that the T 50 should be classified under tariff subheading 92.13 D, which reads as follows: ‘92.13 Other parts and accessories of apparatus falling within Heading No 92.11: ... D. Other’. The T 50 should, in its view, be regarded as a part of a ‘television image and sound recorder or reproducer’, falling under tariff subheading 92. 11 B. Such a classification would lead to the imposition of an autonomous customs duty of 18% or conventional duty of 9%. Telefunken emphasizes that the function of the T 50 is not to reproduce images but to transmit signals to the VR 510 video recorder for the purpose of recording. In its view, a technical distinction must be drawn between the markets in radio and television equipment. Radio tuners are independent units which may be linked to amplifiers and loudspeakers of any make; they may therefore be classified as independent goods. Television tuners, on the other hand, are necessarily incorporated in television sets and enable images to be received; they cannot therefore be marketed as independent goods. According to Telefunken, video recorder design has reached a stage of development which lies between the stages reached by television and radio equipment. Whereas originally video recorders were manufactured with tuners incorporated (‘video compact’) as in the case of television sets, demand from customers led to the manufacture of two units, the timer/tuner on the one hand and the video recorder on the other. However, the T 50 can still only be used with the VR 510 video recorder. According to Telefunken, it follows that the T 50 must be regarded as an accessory of the video recorder and hence should be classified under tariff subheading 92.13 D. Alternatively, Telefunken considers that it would also be possible to classify the T 50 under subheading 92.11 B of the Common Customs Tariff on the ground that it is a necessary part of the video recorder that is sold as a separate unit simply because of demand and should be regarded as an unassembled part of the video recorder. It bases that view on Rule 2 (a) of the Rules for the Interpretation of the Nomenclature of the Common Customs Tariff, which provides as follows: ‘2 (a) Any reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as imported, the incomplete or unfinished article has the essential character of the complete or finished article. It shall also be taken to include a reference to that article complete or finished (or falling to be classified as complete or finished by virtue of this rule), imported unassembled or disassembled.’ Such a classification would give rise to an autonomous duty of 13% or a conventional duty of 8%.