Proposal for a COUNCIL REGULATION amending Annex I to Regulation (EEC) No 2658/87 on the Tariff and Statistical Nomenclature and on the Common Customs Tariff
Date: 2013-04-10
Institutions: European Commission
Subjects: Combined Nomenclature, computer equipment, specification of tariff heading

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EXPLANATORY MEMORANDUM 

1. 

CONTEXT OF THE PROPOSAL 

The purpose of  the present  draft Council  Regulation is to provide, on an autonomous basis, 
duty  free  treatment  for  flat  panel  displays  which  are  able  to  display  signals  from  automatic 
data-processing  (ADP)  machines  with  an  acceptable  level  of  functionality.  This  expression 
refers to flat panel displays which, even though they are not solely or principally used in an 
ADP  system,  are  able  to  display  signals  from  ADP  machines  with  a  sufficient  standard  of 
performance for the user. 

Harmonised  System  (HS)  subheading  8528  51  comprises  monitors  "of  a  kind  solely  or 
principally  used  in  an  ADP  system  of  heading  8471".  The  conventional  duty  rate  for  these 
monitors is "free". Monitors "other than of a kind solely or principally used in an automatic 
data-processing  system  of  heading  8471"  are  classified  under  HS  subheading  8528  59.  The 
conventional duty rate for this second type of monitors is "14 %". 

In  its  ruling  in  case  C-376/07  (Kamino),  the  Court  of  Justice  of  the  European  Union  stated 
that classification of monitors should be made in the light of the characteristics and objective 
properties of those monitors, both as to the degree to which they are capable of performing a 
number  of  functions  and  as  to  the  standard  of  performance  which  they  achieve  when 
performing those functions.  

The convergence of digital technologies has however led to a situation where it has become 
very  difficult  to  determine,  by  reference  to  mere  technical  and  objective  characteristics, 
whether or not a particular monitor is of a kind solely or principally used in an ADP system of 
heading  8471.  In  particular,  ensuring  the  correct  and  uniform  classification  of  flat  panel 
displays which can display, with an acceptable level of functionality, signals from both ADP 
systems and other sources (for example, DVD players, video cameras, satellite receivers), has 
become technically impossible.  

Currently, a significant part of the monitors imported to the EU are flat panel displays which 
can  display,  with  an  acceptable  level  of  functionality,  signals  from  both  ADP  systems  and 
other  sources.  This  in  particular  applies  to  the  highly  professional  types  which  are  used  in 
specialised  sectors  (such  as  in  diagnostics  or  research).  In  order  to  ensure  a  rational 
development  of  production  and  an expansion  of  consumption  within  the  territory  of  the  EU 
and to promote trade between Member States and third countries, it is both in the interest of 
European  consumers  and  industry  to  provide  duty  free  treatment  for  the  above-mentioned 
monitors.  

The attached proposal is considered to be a balanced approach taking into account the legal 
context and the interests of European consumers and industry.  

The proposal is in line with the Union's external trade and industry policies.  

In the light of the foregoing it is proposed to amend Council Regulation (EEC) No 2658/87 
accordingly. 

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2. 

RESULTS OF CONSULTATIONS WITH THE INTERESTED PARTIES AND 
IMPACT ASSESSMENTS 

The  Tariff  and  Statistical  Nomenclature  Section  of  the  Customs  Code  Committee  was 
consulted on 27 September 2012. 

The Union Industry was consulted on 13 November 2012. 

3. 

LEGAL ELEMENTS OF THE PROPOSAL 

The legal basis of this proposal is Article 31 and 32 of the Treaty on the Functioning of the 
European Union. 

The  subsidiarity  principle  does  not  apply,  as  the  proposal  falls  under  the  exclusive 
competence of the Union. 

The proposal complies with the proportionality principle given that, as foreseen in the Treaty, 
it  promotes  trade  between  Member  States  and  third  countries  and  balances  the  commercial 
interest of economic operators (manufacturers in the Union and importers) without changing 
the EU WTO schedule. 

By virtue of Article 31 of the Treaty on the Functioning of the European Union autonomous 
tariff rate is fixed by the Council acting by qualified majority on the basis of a Commission 
proposal.  

4. 

BUDGETARY IMPLICATION 

Loss  of  revenue  in  Traditional  Own  Resources  in  the  range  of  20.5  Million  Euros  on  an 
annual basis (based on the import statistics of 2011). 

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2013/0098 (NLE) 

Proposal for a 

COUNCIL REGULATION 

amending Annex I to Regulation (EEC) No 2658/87 on the Tariff and Statistical 
Nomenclature and on the Common Customs Tariff 

THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  on  the  Functioning  of  the  European  Union,  and  in  particular 
Article 31 thereof, 

Having regard to the proposal from the European Commission, 

Whereas: 

(1) 

(2) 

(3) 

(4) 

HS  subheading  8528  51  comprises  monitors,  other  than  cathode-ray  tube  (CRT) 
monitors, of a kind solely or principally used in an automatic data-processing system 
of  heading  8471.  Monitors  other  than  of  a  kind  solely  or  principally  used  in  an 
automatic data-processing system of heading 8471 are classified under HS subheading 
8528 59. 

In accordance with settled case- law of the Court of Justice of the European Union1, 
classification  of  monitors  under  either HS  subheading  8528  51 or 8528 59 has to  be 
based on an overall assessment of the objective characteristics and properties of each 
particular monitor.  

Due  to  the  convergence  of  digital  technologies  it  has  become  very  difficult  to 
determine,  by  reference  to  mere  technical  characteristics,  whether  or  not  a  particular 
monitor is of a kind solely or principally used in an automatic data-processing system 
of heading 8471. In particular, ensuring the correct and uniform classification of flat 
panel  displays  which  can  display,  with  an  acceptable  level  of  functionality,  signals 
from  both  automatic  data-processing  systems  and  other  sources  has  become 
technically impossible. 

In  order  to  ensure  a  rational  development  of  production  and  an  expansion  of 
consumption within the territory of the Union and to promote trade between Member 
States and third countries, it is both in the interest of Union consumers and industry to 
provide for a duty free treatment for the above-mentioned monitors.  

(5) 

Annex I to Regulation (EEC) No 2658/87 should therefore be amended accordingly, 

1 

Case C-376/07 Kamino [2009] ECR I-1167. 

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HAS ADOPTED THIS REGULATION: 

Article 1 

1.  Annex  I  to  Regulation  (EEC)  No  2658/87  is  amended  as  set  out  in  the  Annex  to  this 
Regulation. 

2. The amendments to the CN subheadings provided for in this Regulation shall be applicable 
as TARIC subheadings until they are inserted into the Combined Nomenclature in accordance 
with Article 12 of Regulation (EEC) No 2658/87. 

This Regulation shall enter into force on 1 June 2013. 

Article 2 

This Regulation shall be binding in its entirety and directly applicable in all Member States. 

Done at Brussels,  

For the Council 
The President 

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In Part Two, Section XVI, Chapter 85 of Annex I to Regulation (EEC) No 2658/87 the rows 
for CN codes 8528 59, 8528 59 10, 8528 59 40 and 8528 59 80 are replaced by the following: 

ANNEX 

"8528 59  

– – Other: 

– – – Flat Panel Displays able to display signals from automatic 
data-processing machines with an acceptable level of 
functionality: 

8528 59 20(1) – – – – Monochrome 

– – – – Colour: 

8528 59 31(2) 

– – – – – With a screen of the liquid crystal display (LCD) 
technology 

8528 59 39(3)  – – – – – Other 
8528 59 70(4)  – – – Other 

(1) 

TARIC code 8528 59 10 20 

(2) 

TARIC code 8528 59 40 91 

(3) 

TARIC code 8528 59 80 91 

(4) 

TARIC codes 8528 59 10 90, 8528 59 40 99 and 8528 59 80 99 

(5) 

Autonomous rate of duty: Free" 

14(5) 

p/st 

14(5) 

p/st 

14(5) 

14 

p/st 

p/st. 

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LEGISLATIVE FINANCIAL STATEMENT 

1. 

FRAMEWORK OF THE PROPOSAL/INITIATIVE  

1.1.  Title of the proposal/initiative 

Council Regulation amending Annex I to Council Regulation (EEC) No 2658/87 on 
the Tariff and Statistical Nomenclature and on the Common Customs Tariff. 

1.2.  Nature of the proposal/initiative 

Provide  autonomous  exemption  from  duties  for  certain  industrial  products  falling 
under heading 8528 of Annex I to Council Regulation (EEC) No 2658/87 of 23 July 
1987 on the Tariff and Statistical Nomenclature and on the Common Customs Tariff. 

1.3.  Objective 

To provide, on an autonomous basis, duty free treatment for flat panel displays which 
are able to display signals from automatic data-processing (ADP) machines with an 
acceptable level of functionality. This expression refers to flat panel displays which, 
even  though  they  are  not  solely  or  principally  used  in  an  ADP  system,  are  able  to 
display signals from ADP machines with a sufficient standard of performance for the 
user. 

1.4.  Grounds for the proposal/initiative 

The convergence  of digital technologies has led to a situation where it has become 
very  difficult  to  determine,  by  reference  to  mere  technical  and  objective 
characteristics, whether or not a particular monitor is of a kind solely or principally 
used  in  an  ADP  system  of  heading  8471.  In  particular,  ensuring  the  correct  and 
uniform  classification  of  flat  panel  displays  which  can  display,  with  an  acceptable 
level  of  functionality,  signals  from  both  ADP  systems  and  other  sources  (for 
example,  DVD  players,  video  cameras,  satellite  receivers),  has  become  technically 
impossible.  

Currently,  a  significant  part  of  the  monitors  imported  to  the  EU  are  flat  panel 
displays  which  can  display,  with  an  acceptable  level  of  functionality,  signals  from 
both  ADP  systems  and  other  sources.  This  in  particular  applies  to  the  highly 
professional  types  which  are  used  in  specialised  sectors  (such  as  in  diagnostics  or 
research). In order to ensure a rational development of production and an expansion 
of consumption within the territory of the EU and to promote trade between Member 
States  and  third  countries,  it  is  both  in  the  interest  of  European  consumers  and 
industry to provide duty free treatment for the above-mentioned monitors.  

1.5.  Duration and financial impact 

Duration: proposal of unlimited duration. 

Financial impact: loss of revenue in Traditional Own Resources in the range of 20.5 
Million Euros on an annual basis (based on the import statistics of 2011). 

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1.6.  Management method envisaged 

Application  of  the  monitoring,  control  and  management  provisions  of  the  Union 
Customs Code. 

2. 

ESTIMATED FINANCIAL IMPACT OF THE PROPOSAL  

ESTIMATED IMPACT ON REVENUE  

–  (cid:133)  Proposal/initiative has no financial impact on revenue. 

–  x  Proposal/initiative has the following financial impact: 

– 

– 

x 

(cid:133) 

on own resources  

on miscellaneous revenue  

Budget 
line: 

revenue 

Appropriations available for the ongoing budget 
year 

Article 120 

/ 

The proposal is of unlimited duration. 

Specify the method for calculating the impact on revenue. 

EUR million (to 3 decimal places) 

Impact of the 
proposal/initiative2 

Year 
N 

8 months x 20.5 MEUR 
12 months 

Year 
N+1 

20.5 
MEUR 

The calculation of the loss of revenue in Traditional Own Resources is based on the 
value  of  imports  in  the  EU  during  the  year  2011  of  products  under  TARIC  codes 
8528  59  10  90,  8528  59  40  90  and  8528  89  80  90.  The  figures  were  provided  by 
Eurostat. 

Firstly,  the  total  value  of  imports  of  monitors  with  TARIC  codes  8528  59  10  90, 
8528 59 40 90 and 8528 89 80 90 during the reference year 2011 was multiplied by 
the ad valorem duty rate (14%).  

Secondly, the amount of the collection costs (25%) has been deduced to obtain the 
total revenue of Traditional Own Resources for the EU for the year 2011.  

The result of this calculation is as follows: 

- TARIC code 8528 59 10 90: (€ 10 891 640 x 14%) x 75% = € 1 143 622, 20 

- TARIC code 8528 59 40 90: (€ 233 167 690 x 14%) x 75% = € 24 482 607, 45 

2 

As regards traditional own resources (customs duties, sugar levies), the amounts indicated must be net 
amounts, i.e. gross amounts after deduction of 25% for collection costs. 

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- TARIC code 8528 89 80 90: no trade in 2011 

With the adoption of this draft proposal not all products which are classified under 
these TARIC codes will enjoy duty free treatment. The measure is only applicable to 
certain  monitors  ("flat  panel  displays  which  are  able  to  display  signals  from 
automatic data-processing machines with an acceptable level of functionality").  

Taken into account the intended scope of the measure and the nature of the products 
available  on  the  EU  market,  it  can  be  estimated  that  at  least  80  %  of  the  products 
which are currently imported under the mentioned TARIC codes will fall within the 
scope of this definition.  

The estimated total loss of revenue in Traditional Own Resources on an annual basis 
should therefore be calculated as follows: 

(€ 1 143 622, 20 + € 24 482 607, 45) * 80% = 

€ 20 500 983, 72 

For the year in which the proposal will enter into force the financial impact is to be 
calculated proportionally. 

The loss of revenue in Traditional Own Resources shall be compensated by Member 
States contributions based on the GNI.  

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